Strategic Service Management

Strategic Service Management

Edited By
PROF R D SHARMA
DR HARDEEP CHAHAL
DR SANDEEP TANDON

EXCEL BOOKS
iv  Strategic Service Management

DISCLAIMER
The Editors take no responsibility about the originality and authenticity of papers of the contributors.

ISBN: ****

First Edition: New Delhi, 2010

Copyright © 2010, Prof R D Sharma, Dr Hardeep Chahal and Dr Sandeep Tandon

All Rights Reserved

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 Contents  v

Contents

Foreword vii
Preface ix
Acknowledgements xi
About the Editors xiii
List of Contributors xiv
PART I: HUMAN RESOURCE DEVELOPMENT
Chapter 1 Human Resource Development in University System: A Study of
Jammu University 3
Prof R D Sharma and Jyoti Bahl
Chapter 2 Exploring the Role of OCB in Healthcare Sector 15
Dr Hardeep Chahal and Shivani Mehta
Chapter 3 Managing Human Capital through Retention Management 26
Dr Sandeep Tandon and Jyoti Bahl
Chapter 4 Need for Induction Tranings for Employees in
Indian Service Organizations 32
Prof Mufeed and Naila Khanday
Chapter 5 Effect of Job Satisfaction on Turnover/Attrition Among
Non-teaching Employees 42
Dr. Jeevan Jyoti Gupta and Poojai Gupta
Chapter 6 Strategies for Entrepreneurship Development in Jammu Province 61
Dr Neetu Chopra
Chapter 7 Entrepreneurial Motivation of Women Entrepreneurs of Jammu 69
Dr Aruna Dubey and Dr Seema Bhasin
PART II: MARKETING
Chapter 8 Clustering Consumers to Investigate Quality of
Public Health Care Services 81
Dr Hardeep Chahal and Neetu Kumari
Chapter 9 Customers Consideration for Making Choice of Public and Private Sector
Banks and their Views Regarding Service Quality and Relationship 99
Dr. Atul Dhyani, Dr Ashok Pokhriyal and Dr Jaskaran S Dhillon
Chapter 10 Impact of Service Quality on Student Satisfaction of
Jammu University 113
Jeevan Jyoti and Jyoti Sharma
Chapter 11 Online Customers Attitude Customers’ Attitude Towards
Service Quality of Full Service Airlines 126
Dr Hardeep Chahal and Mamta Sharma
vi  Strategic Service Management

Chapter 12 Logistics Management in Retailing: Concerns and Solutions 136

Amit Manglani and Dr H K Singh
Chapter 13 Assuring Quality Service in Distance Education 142
Dr Sandeep Tandon and Puneet Kaur
Chapter 14 Services Provided by Merchant Bankers in India 151
Anand Singh and Prof C P Mall
Chapter 15 Study of Burnout among Face to Face and Distance
Mode Male Teachers in Relation to their Job Satisfaction 163
Jaspal Singh and Dr Khushvinder Kumar
Chapter 16 Justifying Warehouse Management Systems and the Supply Chain 169
Bhupinder Kaur and Vipul Chalotra
Chapter 17 Potential for Service Trade Liberalisation in SAARC: An Overview 175
Neelam Chowdhary
PART III: BUSINESS PERFORMANCE
Chapter 18 Impact of IT-Applications on the Performance of Small-Scale Industries:
A Comparative Study 187
Dr Ruchi Kohli and Dr Hardeep Chahal
Chapter 19 Economic Impact of Tourism in an Era of Recession 204
Amisha Gupta and Jaya Bhasin
Chapter 20 Forensic Accounting: A Measure of Performance Measurement in
Digital Age 215
Ankita Sharma
Chapter 21 Cloud Commerce: A New Era of E-Commerce 223
Indu Gandotra and Pavnesh Abrol
Chapter 22 Perception of Agriculture Extension Personnel toward TOTP 230
Dr Sunita Raina and Dr Hardeep Chahal
Chapter 23 Effectiveness of Artificial neural networks in Forecasting BSE
Sensex Index Values 245
Dr Suparn Sharma and Tarun Soni
Chapter 24 Role of Banks to Solve the Problem of Financial Exclusion 263
Reena Rani and Reeta Menia
Chapter 25 Managerial Perception towards Corporate Governance
Disclosure Practices in J&K Bank Private Ltd 267
Dr Hardeep Chahal and Archana Kumari
Chapter 26 Review of Corporate Governance Practices in J&K Bank Ltd. 280
Preeti Aggarwal
 Contents  vii

Forewor
orewordd

Service organisations, being main contributor towards socio-economic development of the

country, experience competitive advantage when their operations become consistent with
market changes. In fact service providers by establishing themselves as brand and not mere
commodity, create economic value and establish themselves as a source of economic
leadership. Such efforts increase overall perceived value of the firms’, relative to the perceived
value of the products/services in the long-run and make the firms move on a trajectory
growth path from customer satisfaction to customer delight and thereafter towards customer
dazzling. For attaining such a continual sustenance, coordinated approach encompassing
varied business areas viz, marketing, human resources, finance and accounting, production,
research and development etc. needs to be implemented. In short, integrated service
marketing approach is a significant tool for the organisations to build green brand loyalty
to sustain competitive advantage in the hyper competitive market.
The efforts of Prof R D Sharma, Dr Hardeep Chahal and Dr Sandeep Tandon in editing the
selected papers, presented in the Two-Day National Seminar on “Integrated Service
Marketing Approach to Sustain Competitive Advantage” on March 21-22, 2009 in
University of Jammu, under SAP scheme of UGC, and bring the same as a book, are highly
appreciated. The papers, focusing on empirical research covering varied sectors such as
banking, education, healthcare, tourism, logistics, information technology, agriculture etc.,
draw the attention of the all the concerned towards contemporary topics such as corporate
governance, forensic accounting, neural networking, knowledge management, organisational
citizenship etc. besides viewing significant core issues such as market orientation, service
quality, customer satisfaction, organizational performance, retail management etc.
The book will prove to be a great source of knowledge to academicians, students, and
professionals who will get acquainted with varied research oriented papers relating to three
prime areas - marketing, human resources and business performance and will also understand
the unfolding dynamics of business functions.

Dr Haseeb A Drabu
Chairman, Jammu and Kashmir Bank
 Preface

The hyper competitive environment along with highly aware customers and their ever
increasing capacity to spend have compelled the business and service organisations to look
beyond customer satisfaction. Since competition often renders good service quality inadequate
for gaining a competitive advantage and makes harder to win back the customers that are
lost, there is a strong need for the organisations to protect their customer base. The marketing
literature has long back recognised that developing strong relationships with stakeholders,
differentiating themselves and their products from other competitors and retaining loyal
customers are most significant strategies for business and service organisations to sustain
competitive advantage. More recently the development of service science concept has provided
additional impetus for the organisations to focus on service system that creates and delivers
value through organisational resources such as people, technology, organisations and shared
information service between the provider and the customer. As such service science discipline
emphasises value constellation perspective over a value chain perspective. According to this
perspective, value is co-produced by varied stakeholders who interface with each other
directly or indirectly. The co-producers constantly reassess each other and redesign tasks
according to their new values of the comparative advantage. The concept has rejuvenated
integrated service marketing concept which focuses not only on the unified and coordinated
approach among varied functional areas of the organisation but also among the value
constellation members.
Certain number of competitive firms, particularly hospitality and airlines operating in private
sector, have recognised this and have shifted their focus from putting the major marketing
resources in attracting new customers, to caring for existing customers, and providing them
with relational benefits to value constellation approach. However large majority of the
firms are trailing back on the path and follow past business practices which are quite
inadequate in the present situation. The picture is not bright in the public organisations
also. There is a dire need for policy-makers, practitioners and researchers to deliberate on
factors responsible for such uncompetitive attitude of business and service organisations.
Besides, the business sector to grow more holistically requires the varied organisations to
meet the existing and upcoming needs of stakeholders and challenges to recognise
opportunities to make them more competitively sound.
It is in this context, SAP recognised Department of Commerce, University of Jammu had
organised Two-Day National Seminar on “Integrated Service Marketing Approach to Sustain
Competitive Advantage” on 21 & 22 March 2009. Seventy five papers from participants
across the country on sub-themes namely customer value creation, human resource
management and business performance were presented respectively in three exclusive working
sessions of the seminar. The book comprises twenty seven selected papers divided in three
sections viz, marketing (eleven papers), human resources (nine papers) and business
performance (seven papers) relating to varied service and business organisations operating
in sectors such as banking, education, health, information, manufacturing etc. The book is
x  Strategic Service Management

a significant addition to the existing literature on emerging business issues and trends
relevant for practitioners, policy-makers and researchers in the development of strategies
useful to strengthen business value. It can also act as a supplementary text and reference
book for post-graduate and research students of not only commerce and management but
also for students of behavioural disciplines.
 Contents  xi

Acknowledgements

The edited volume is the outcome of the proceedings of the research papers presented in a
Two-Day National Seminar on “Integrated Service Marketing Approach to Sustain
Competitive Advantage” held on 21 & 22 March 2009. This integrated effort is the result
of the number of individuals whom we have to acknowledge. First of all, we are obliged to
the active participation of 183 registered participants and about 20 resource persons from
across the country for creating sound platform to concretise such an academically useful
project. We acknowledge our sincere thanks to Dr Haseeb A Draboo, Chairman, J&K Bank
for the foreword and sharing his valuable thoughts and experience with the audience on the
inaugural ceremony of the seminar. We extend our sincere thanks to Prof Varun Sahni, Vice
Chancellor, University of Jammu for extending his full support in organizing the seminar.
We are indeed indebted to the contributors not only for their paper presentation but also
for further improving the papers as per the comments of the reviewers. The editors are also
highly grateful to University Grants Commission and University of Jammu for the financial
support for the organising the two day national seminar which motivated the contributors
for the presentation of their research work.

Prof R D Sharma
Dr Hardeep Chahal
Dr Sandeep Tandon
 About the Editors

Prof R D Sharma has multifaceted experience of teaching, research and extension in

commerce and management, and administrative experience at different levels. He is one of
the senior most faculty members of Jammu University and Senior Most Professor of Business
Education in Jammu and Kashmir. He has also worked as Fulbright Visiting Professor of
Business Administration, URI, USA, Rector, Kathua Campus, Dean, Faculty of Commerce,
Convener, Board of Studies in Commerce, Convener, Board of Studies in Marketing
Management; Head, Department of Commerce, Dean Students Welfare, Director Physical
Education, and. Controller of Examination, University of Jammu. At present, he is working
as Professor of Commerce, Convener; Board of Studies in Commerce, and Coordinator;
SAP in Commerce, University of Jammu, Jammu. Dr Sharma has actively participated
across the globe in academic deliberations held at various universities and institutions in
US, India, Nepal, Srilanka, and China. Prof Sharma has the honour of being conferred as
Fellow of Indian Commerce Association. He has completed two major research projects
funded by UGC and one funded by ICSSR. His research work stands published in the
refereed journals of global repute being issued by the top class centres of excellence like
Managing Service Quality, UK, Total Quality Management and Excellence, USA,
Technovation, USA, Marketing Intelligence and Planning of Research Institute for Business
and Management, Manchester Metropolitan University Business School, Manchester, UK,
Sage Publications, New Delhi, Thosand Oaks, and London, Institute of Management,
Ahmedabad, Indian Institute of Management, Lucknow, Indian Institute of Management,
Banglore, Indian Institute of Management, Kolkata., National Institute of Bank Management,
Pune, Tata Institute of Social Sciences, Mumbai, and National Institute of Rural
Development, Hyderabad. Till-date twenty-five M Phil and sixteen Ph D students have
completed their research under his supervision and nine more candidates are working at
different stages of their research work for these degrees in Commerce. He has eleven books
(authored: 5, edited: 6) and Ninety One papers published. Similarly, besides membership
on different administrative and academic bodies like University Council, Syndicate, Faculty
of Commerce, Board of Studies, Academic Council, Board of Research Studies, Board of
Inspection etc. invariably of both University of Jammu and University of Kashmir, Dr.
Sharma remained associated with several other reputed universities and institutions of the
country like University of Delhi, BHU, M D University, Guru Nanak Dev University,
ICSSR, Finance and Education Ministries of J&K State, J&K Public Service Commission,
UGC, AICTE etc. Dr Sharma has organised several academic meets like industrial visits,
workshops, seminars, extension lectures, conferences etc. Besides academic contribution,
Dr Sharma has also served the teaching community as Chairman, Campus Welfare
Committee, and President; Vice President; and Treasurer of Jammu University Teachers
Association.
Dr. Hardeep Chahal is Associate Professor at Department of Commerce, University of Jammu,
Jammu. She has earned Commonwealth Fellowship under British Academy Awards for
xiv  Strategic Service Management

International Collaboration and Visiting Fellowship to Gandhi Institute of Business and

Technology, Jakarta, Indonesia. Dr Chahal has wide teaching and research experience. She
is actively involved in various research activities such as member of review board for
international and national journals and conferences, editorial board member of University
Journal, Ph.D and M.Phil supervision and funded research projects. Her research work has
been acknowledged in refereed International journals like International Journal of Business
and Globalisation, International Journal of Indian Culture, Business and Management,
International Journal of Health Quality and Assurance, Total Quality Management and
Excellence and national journals of International repute like Vikalpa, Metamorphosis,
Decisions, Journal of Social Work, Journal of Health Management, Vision, Journal of Services
Research and Journal of Rural Development. She has also co-edited books on Research
Methodology in Commerce and Management and Strategic Service Marketing. She has
participated and presented papers in number of international and national seminars and
conferences. Dr. Chahal has been associated with various universities like GND University,
Punjab University, Patiala University etc. and presently actively associated with the
development of accounting education and business research. She is also actively involved in
the organisation of academic events like national seminars and workshops and is also associated
with campus cultural events and other activities at University of Jammu.
Dr. (Mrs) Sandeep Tandon is Associate Professor in Commerce and Head, Faculty of
Commerce at Directorate of Distance Education (D.D.E.), University of Jammu. She is in
teaching profession since 1991. She has participated in number of national and international
workshops, seminars and conferences. She has got one book and about fifteen research
papers published. Besides this, she has developed course material for various undergraduate
and post graduate courses for distant learner of University of Jammu and other universities
as well. Dr. Tandon is also associated with various university extension activities viz.
curriculum designing, course inspection, cultural activities. She is also involved in research
activities such as research projects and M.Phil projects. She is also instrumental in organizing
national seminar and workshops at university level.
 Contents  xv

List of Contributors

Dr Aruna Dubey Lecturer, P G Dept. of Community Resource Management

and Extension, Govt College for Women, Parade Jammu
Dr Ashok Pokhriyal Reader in Commerce, HNB Garhwal University, Srinager
Garhwal, Uttrakhand
Dr Atul Dhyani Reader in Commerce, HNB Garhwal University, Srinager
Garhwal, Uttrakhand
Dr C P Mall Professor, Faculty of Commerce, B.H.U, Varanasi
Dr F B Singh
Dr H K Singh Professor, Faculty of Commerce, Banaras Hindu University,
Varanasi
Dr Hardeep Chahal Associate Professor, Department of Commerce, University
of Jammu, Jammu
Dr Jaskaran S. Dhillon aculty, Mata Gujri College, Fategarh Shaib (Punjab)
Dr Jeevan Jyoti Asst. Professor, Department of Commerce, University of
Jammu, Jammu
Dr Mufeed S A The Business School & Director Convention Centre,
University of Kashmir
Dr Neetu Chopra
Dr R D Sharma Coordinator, SAP in Commerce, University of Jammu
Dr Ruchi Kohli Lecturer, A & M Institute of Management and Technology
Institute, Pathankot
Dr Sandeep Tandon Associate Professor in Commerce, DDE, University of
Jammu
Dr Seema Chabra
Dr Sunita Raina Lecturer, Government Dergree College (Boys), Kathua
Mr Ajay Pratap Yadav
Mr Amit Manglani UGC-JRF, Research Scholar, Faculty of Commerce,
Banaras Hindu University, Varanasi
Mr Anand Singh Research Scholar, Faculty of Commerce, B.H.U.
Mr Awadesh Kumar Tiwari
xvi  Strategic Service Management

Mr Pavnesh Abrol Department of Computer Science & IT, University of

Jammu, Jammu
Mr Tarun Soni MBA(BE),Project Fellow Department of Commerce,
University of Jammu
Mr Vipul Chalotra Research Scholar, Department of Commerce, University
of Jammu, Jammu
Ms Amisha Gupta Assistant Professor, The Business School, University of
Jammu, Jammu
Ms Ankita Gupta Research Scholar, Department of Commerce, University
of Jammu, Jammu
Ms Anuradha
Ms Archana Kumari Research Scholar, Department of Commerce, University
of Jammu, Jammu
Ms Bhupinder Kaur Lecturer, Department of Commerce, University of Jammu,
Jammu
Ms Indu Gandotra MCA Department, MIET, Kot Bhalwal, Jammu
Ms Jaya Bhasin Assistant Professor, The Business School, University of
Jammu, Jammu
Ms Jyoti Bahl Lecturer in Commerce, Udhampur Campus, University
of Jammu
Ms Mamta Sharma Assistant Lecturer, GDC, Parade, Jammu
Ms Naila Khanday Faculty, Jammu and Kashmir Entrepreneurship
Development Institute J&K
Ms Neelam Chowdhary Assistant Professor, Economics, DDE, University of Jammu
Ms Neetu Kumari Research Scholar, Department of Commerce, University
of Jammu, Jammu
Ms Pooja Gupta Research Scholar, Department of Commerce, University
of Jammu, Jammu
Ms Pooja Mengi
Ms Preeti Aggarwal
Ms Puneet Kaur Assistant Professor in Education, Directorate of Distance
Education, University of Jammu, Jammu
Ms Reena Rani Lecturer, Government Degree College, R S Pura, Jammu
Ms Reeta Menia Lecturer, Government Degree College, Gandhinagar,
Jammu
Ms Shivani Mehta Ph.D.Scholar. Department of Commerce, University of
Jammu, Jammu
Part I: Human Resource Development
 1

Human Resource Development in University System

Resource
A Study of Jammu University

Prof R D Sharma*
Jyoti Bahl**

The HRD Climate, being burning issue nowadays in the context of fierce global competition of
the liberalised era, has made organisations perceive manpower as a great ever lasting asset. Every
organisation, thus, pays needed timely attention to the ever-appreciating asset—human resource.
Human resource is the most crucial variable in the organisational dynamics because when
people of an organisation make things work, no absurdity of structure or any thing else can come
in way. Even the universities, which are meant for exploring, generating, conserving and
transmitting knowledge, are no exceptions. Particularly, university teachers play pivotal role in
the development of higher education and other life long academic activities. The present research
work is a case study with focus on the nature and extent of Human Resource Development
(HRD) within all the widely accepted dimensions of its domain and accordingly it suggests the
needed action plan for better HRD climate in the Jammu University system. Since the HRD
Climate in the university figured out to be moderate, i.e. neither very high nor too low, there is
lot of scope for improvement keeping in view certain critical areas viz. proper infrastructure for
sound HRD mechanism, interpersonal relationships and role of leadership, which decelerate the
growing pace of development of the University System as a whole.
Keywords: HRD Climate, Global Competition

INTRODUCTION
The HRD acronym has become almost a fad from the latter part of the previous decade and
today it is key with the organisations to become sustainably more competent and forward
looking. The fierce competition of the liberalised era has made organisations to perceive it
as an always appreciating great asset (Tiwari and Thakkar 2005, p 2). The human resources

* Coordinator, SAP in Commerce, University of Jammu

** Lecturer in Commerce, Udhampur Campus, University of Jammu
4  Strategic Service Management

possess managerial and work skills, creative abilities, commitment to work and organisation,
values, sagacity and competence, identifying the same as the most crucial variable of the
organisational dynamics (Ahmad, 1999 p 3-4).
Dr Manmohan Singh in his address in the University of Jammu on July 15, 2007, when he
was conferred with the Degree of Doctor of Letters (Honoris Causa) at a special convocation,
emphasised forcefully on the contribution of human resources on the all round development
of the society. He opined that the huge pool of young women and men, adequately skilled,
can become India’s greatest force for progress and this soft power, not just the military
strength, will be the real marker of India’s greatness.
The HRD climate in an organisation, in fact its collective personality, is outgrowth of
socio-professional interactions of its personnel. It shapes and applies the approach for
accomplishment of goals and resolving the problems, determining the attitude towards
continuous personnel growth and development, creativity and generation of new ideas and
functional improvements (Pashiardis, 1998).
The HRD climate develops institutional policy of treating the manpower as the most
important resource and having faith in its capability to change and acquire new competencies
at any stage of life. It ensures open communication, encouragement in risk taking and
experimentation, trust, collaboration, team spirit, top management support and supportive
HRD practices and personnel policies (Rao and Abraham, 1991).

HRD CLIMATE IN UNIVERSITY SYSTEM

The concept of HRD climate is gaining its importance very significantly these days. There
is a considerable literature on HRD status and trends in manufacturing as well as service
sectors, especially indicating it as the most crucial variable in the organisational dynamics.
In fact no absurdity of structure or any thing else can come in the way of an organisation if
its people are determined to make things work, (Rohmetra, 1995).
The universities, being centres of excellence for exploring, generating, conserving and
transmitting knowledge, are thus, no exceptions (Sharma and Gupta, 1997), thus, playing
a very creative role in the socio-economic transformation of the Indian society. The measuring
gauge of the effectiveness and efficiency of the university efforts in meeting such rising
expectations of the society and the country as a whole depends upon how best the university
system has cared for the development of its employees (Ahmad 1999, p 3-4). The teaching
human resources of a university act as the pivot in the development of higher education and
over all socio-economic scenario of the country.

HYPOTHESES
The existing literature facilitates the formulation of various hypotheses and objectives as under:
Srimannarayana (2007) found the perceptions of the both male and female employees
regarding HRD Climate same but varying with their age and occupational positions.
Similarly, Shukla and Mishra (2006) observed both male and female teachers of Professional
 Human Resource Development in University System  5

Colleges having the same status of the developmental climate in their institutions. They
too found the perceptions of the teachers regarding various dimensions of the developmental
climate of employees varying with their age, qualification, length of service and designation.
Pashiardis (1998) found the perceptions of the faculty members regarding the university
climate becoming better with increased length of their service. All this leads to formulation
of the following hypothesis:
H1: The demographic and professional factors affect perception of teachers regarding the
HRD Climate in the University.
O1: To find out the effect of demographic and professional factors on the perception of
teachers regarding HRD Climate of the Jammu University.
The managers create work centric and caring organisational climate that induces employees
to perform their task well (Sinha et. al. 2001). They influence their employees at work and
help them in attaining satisfaction and their empowerment. In the educational institutions,
the leadership works towards fostering a climate in which teachers feel safe and able to work
together, collaboratively and professionally (Edwards et. al. 2002). Further, the managers
who perceive organisation as being operated by human values such as trust, fairness, integrity,
and broadmindedness were found to be working in participative style of leadership. They
involve their subordinates in decision-making and show high concern for them (Ghosh and
Shejwal, 2006). Thus, leadership plays an important role in framing positive HRD climate.
Thus, the aforesaid literature facilitates the formulation of the following hypothesis and
objective:
H2: The leadership has positive impact on HRD Climate.
O2: To find out the impact of leadership on HRD Climate.
Employee satisfaction is well predicted by sound HR practices (Hassan et al. 2006),
particularly by learning and training system, reward and recognition system, information
system, performance guidance and development, potential appraisal and promotion system,
etc. The employees’ perceptions regarding HRD climate is significantly better in the
organisations having sound HR practices including training and development, performance
appraisal and reward mechanism, and feedback system (Purang, 2006). Rodrigues (2005)
also found relevance of sound HR practices for improving the overall HRD climate in
educational institutes. Thus all this leads to formulation of next hypothesis and objective:
H3: Sound H R practices have an impact on HRD Climate.
O3: To study the impact of HR practicesc in enhancing HRD Climate.

RESEARCH DESIGN AND METHODOLOGY

The present study studies the nature of H R D climate in university system as well as its
different dimensions within the domain of the problem in question. All the major aspects
the research design and methodology of the study are summarised as under:
6  Strategic Service Management

Research Population
At the time of research the Jammu University had 270 permanent teachers and all of them
were approached personally for the data. Majority of them were Professors and Associate
Professors. In all 218 teachers responded through the questionnaire supplied to them. To
make the study much specific and prcise, the respondents were further classified on the
basis of demographic and social factors.

Scale Purification
Data was purified through the multivariate data reduction technique of factor analysis.
Univariate descriptive analysis has been used to analyse mean and standard deviation of
each variable (Field 2000, p 445). The principal component analysis with a varimax rotation
stands sused, as the number of respondents was greater than the number of variables and
the technique of Varimax rotation is the best rotation procedure in minimising the number
of items with high loading on one factor (Malhotra 2002, p 595). Eigen value remained
the basis for describing the factor structure with reasonable number of components extracted
for further analysis (Stewart 1981, Sharma, Kaur and Gupta, 2001). The test of
appropriateness of factor design has been verified through KMO measure of sample adequacy,
where the value greater than 0.5 is acceptable, values between 0.5 and 0.7 are mediocre,
0.7 and 0.8 are good, 0.8 and 0.9 are great and above 0.9 are superb (Malhotra 2002, p
455). Further, Bartlett test of sphericity, also known as zero identity matrix, has been used
to determine correlation among variables (Hair et.al. 1995, p 374, Field, p 457).

STATISTICAL TOOLS AND TESTS

Besides factor analysis, the information collected for the study has been processed and
analysed with the help of appropriate statistical tools like mean, standard deviation and
frequency distribution (Tull and Hawkins 1993, p 613-616 and Beri 2005, p 223). ANOVA
has been used to test the difference among group means (Field 2000, p 244-286). Further,
Regression Analysis and Multiple Regression Analysis have been used to study the impact
of leadership and HR practices respectively on the overall HRD Climate (Field 2000,
p 103-118).

Overall Validity and Reliability

The various dimensions of HRD Climate have been converged with the ‘Career
Enhancement Policies’ and ‘Competence Development’. The data proved convergently valid
as majority of respondents having given high values for HRD climate have fallen under
‘above average’ region of ‘Career Enhancement Policies’ and ‘Competence Development’
by assigning mean values of about 3.5 in both cases. Further, both the factors and items
contained in the factors are totally different from each other. Therefore, discriminant validity
also gets established.
To check the internal consistency, the reliability tests viz., split half and Cronbach’s Alpha
values have been workedout. The reliability of the responses has been examined by dividing
the data into two halves taking the first 109 as group A and the next 110 to 218 as group B.
 Human Resource Development in University System  7

The mean values in the first group, before and after data purification, remained same (3.5).
The mean value of the second group before and data purification also remained almost
same (3.5 and 3.4).
Further, Cronbach’s Alpha value of 0.985 reflects internal consistency of entire data.

FINDINGS

Factor-wise HRD Climate

The overall mean value of HRD climate arrived at 3.41. Out of eight dimensions, two have
highest mean scores on five-point Likert scale falling between ‘4-5’ range of HRD Climate
(Table 2) that too with lesser variance. These dimensions are ‘Human Resource Development’
(4.1) and ‘Competence Development’ (4.3). The other dimensions having ‘above average’
mean score are ‘Vision, Mission and Strategy’ (3.5) and ‘Work Culture and Environment’
(3.37) (Table 1).
TABLE 1: FACTOR-WISE MEAN AND STANDARD DEVIATION

Factor No. Factors Mean Standard Deviation

1 Human Resource Development 4.1 0.76
2 Performance Appraisal and Feedback 2.9 0.98
System
3 Competence Development 4.3 0.81
4 Inter-Personal Relationship and 3.2 1.01
Communication
5 Vision, Mission and Strategy 3.5 0.74
6 Leadership 3.1 0.92
7 Human Resource Information System 2.8 0.99
8 Work Culture and Environment 3.4 0.94
Grand Total 3.4 0.89

TABLE 2: FACTOR WISE PERCENTAGE OF JAMMU UNIVERSITY TEACHERS UNDER FOUR

REGIONS OF SCALE
Factor Regions
1-2 2-3 3-4 4-5
F1 02 11 40 47
F2 26 47 23 04
F3 02 12 34 52
F4 25 37 26 12
F5 03 19 76 02
F6 33 21 45 01
F7 40 32 25 03
F8 21 23 49 07
8  Strategic Service Management

The variable wise study reveals 87% respondents considering the promotion policy of
Jammu University as unbiased and objective in nature. The variable influencing promotion
of the teachers is ‘Competence Development’ where 84-86% respondents have considered
it above average (Table 3). The statements covering the general climate component of HRD
show respondents ranging between 44% and 86%, thus with greater variance in this context.
The teachers feel the policies of the University favouring them to move ahead (86%
respondents fall above average) on the one hand and on the other, the number of teachers
finding leadership’s positive role in the development of Human Resources is low as only
44% respondents consider it above average. ‘Work Culture and Environment’ variables
have gone ‘above average’ with the respondents ranging from 53%-56% (Table 3).

TABLE 3: VARIABLE WISE PERCENTAGE OF JAMMU UNIVERSITY TEACHERS UNDER THREE

REGIONS OF SCALE
Variables Regions
Below Average Average Value Above Average
Value Value
G1 15 20 65
G2 15 23 62
G3 15 20 65
G4 13 22 65
G5 34 20 46
G6 33 23 44
G7 34 19 47
G10 28 16 56
G11 23 24 53
G12 25 19 56
G13 02 12 86
G14 02 13 85
G15 02 14 84
G16 02 13 85
G17 02 13 85
O19 28 34 38
O20 30 37 33
O21 28 39 33
O22 29 37 34
O23 28 35 37
H45 35 38 27
H46 30 43 27
H47 28 45 27
H48 40 33 27
Contd...
 Human Resource Development in University System  9

H49 32 41 27
H50 32 41 27
H52 04 13 83
H53 03 14 83
H54 04 13 83
H55 03 10 87
H56 03 14 83
H57 04 13 83
H58 04 13 83
H59 40 32 28
H60 40 32 28
H61 40 32 28
G- General Climate,
O- OCTAPAC Culture,
H- HRD Mechanism

The respondents have considered the OCTAPAC culture in Jammu University quite low.
The variables under the dimension ‘Interpersonal Relationship and Communication’ and
scored ‘above average’ values from the respondents ranging between 33% and 38% only
(Table 3).
The H R practices can be broadly divided into three dimensions. Out of these three, the
variables under ‘Performance Appraisal and Feedback System’ have only 27% of respondents
scoring ‘above average’. The other variables under the dimension ‘Human Resource
Development’ have 83% respondents scoring ‘above average’ (Table 3).
Thus, it can be inferred from the above data that the teachers of Jammu University are less
satisfied with the ‘Performance Appraisal and Feedback System’. ‘Interpersonal Relationship
and Communication’ is also not very satisfactory. They feel leadership not supporting and
guiding them in their career development to make their job more satisfactory. They also
feel that their grievances are not handled with more promptness.
The above discussion tests of two hypotheses viz. H2 and H3.
The 2nd hypothesis, i.e. ‘the leadership has positive impact on HRD Climate’ stands accepted.
Regression analysis has been done by taking the factor six – ‘leadership’ as the predictor
and overall HRD climate as the dependent variable. The summary table provides the R has
0.51, representing positive correlation between the leadership and overall HRD climate.
The value of coefficient of determination (R2 = 0.257) implies leadership role accounting
for 25.7% of the variation in the perception of overall HRD climate along with the F-ratio
of 74.8, as significant at p < 0.05. Thus, the regression model results in significant prediction
of the overall HRD Climate. The results further indicate that one unit increase in the value
of predictor variable, i.e. ‘leadership’ shall increase the dependent variable value, i.e. the
overall HRD climate value by 0.271. The t-value of 8.648, is quite large and significant
(p < 0.05). Thus, all this indicates the leadership making a significant impact on the
perception of the overall HRD climate along with the following egression equation:
10  Strategic Service Management

HRD CLIMATE = β0 + β1(F6)

HRD CLIMATE = 2.730 + (0.271 × F6)
The third hypothesis i.e. ‘the sound HR practices have an impact on the HRD Climate’
holds true.
Multiple Regression analysis has been done by taking factor one – ‘Human Resource
Development’ (F1), factor two – ‘Performance Appraisal and Feedback’ (F2) and factor
seven – ‘Human Resource Information System’ (F7) as the predictors and overall HRD
climate as the dependent variable. The summary table provides R value of 0.45, indicating
positive correlation between sound HR practices and overall HRD climate. The value of
coefficient of determination (R2=0.201) implies HR practices accounting for 20.1% of the
variation in the perception of overall HRD climate along with F-ratio of 17.99, as significant
at p<0.001. Thus, the regression model results in significant prediction of the HRD Climate.
The β1 is 0.307, β2 is 0.075 and β3 is 0.198 showing individual contribution of the three
predictors towards the overall HRD Climate. The t-values for the three predictors viz. F1,
F2 and F7 arriving at 5.590, 2.063 and 4.464 respectively are significant (p < 0.05). Thus,
it can be concluded that the sound HR practices makes a significant impact on the perception
of the overall HRD climate.
The regression equation that emerges out of the aforesaid analysis is
HRD CLIMATE = β0 + β1(F1) + β2(F2) + β3(F7)
HRD CLIMATE = 1.373 + (0.307 × F1) + (0.075 × F2) + (0.198 × F7)

Group-wise HRD Climate

The one-way ANOVA, comparing the overall means of the groups formed on the basis of
demographic and professional factors, indicates sex having no significant effect on the
perception of HRD climate [F(1, 216) = 0.005, p > 0.05].
However, several other factors viz. age [F (2,215) = 6.573, p < 0.05], length of service
[F (2,215) =3.636, p < 0.05], designation [F (2,215) = 3.495, p < 0.05], qualification
[F (2,215) = 5.916, p < 0.05], and stream [F (5,212) = 27.693, p < 0.05] have significant
effect on the perception of HRD climate. Thus, the second hypothesis i.e. ‘the demographic
factors affect the perception of HRD climate’ stands accepted as all factors except sex,
affect the perceptions of the teachers regarding HRD climate. The dimension wise one-way
ANOVA indicates the ‘age’ affecting ‘Leadership’ (F6) [F (2,215) = 6.42, p, 0.05] and
‘Human Resource Information System’ (F7) [F (2,215) = 5.84, p <0.05]. The ‘length of
service’ influences ‘Vision, Mission and Strategy’ (F5) [F (2,215) = 3.17, p < 0.05],
‘Leadership’ (F6) [F (2,215) = 8.99, p < 0.05] and ‘Human Resource Information System’
(F7) [F (2,215) = 3.88, p < 0.05]. The ‘designation’ influences ‘Vision, Mission and Strategy’
(F5) [F (2,215) =3.77, p < 0.05] ‘Leadership’ (F6) [F (2,215) = 6.92, p < 0.05] and
‘Human Resource Information System’ (F7) [F (2,215) = 4.18, p < 0.05]. The ‘qualification’
influences the ‘Performance Appraisal and Feedback’ (F2) [F (2,215) = 3.21, p < 0.05],
‘Interpersonal relationship and Communication’ (F4) [F (2,215) = 3.75, p < 0.05],
‘Leadership’ (F6) [F (2,215) = 5.28, p < 0.05] and ‘Work Culture and Environment’ (F8)
[F (2,215) = 6.04, p < 0.05].
 Human Resource Development in University System  11

There is significant effect of ‘stream’ on all the eight identified dimensions of HRD climate.
Thus, in order to improve HRD climate in Jammu University in terms of the perception of
the respondents the above-mentioned dimensions need to be taken care of.

DISCUSSION AND CONCLUSION

The overall HRD climate in the University can be termed as slightly ‘above average’ (3.41),
i.e. neither very high nor too low (Table 1), leaving lot of scope for improvement. The
major findings are:
 The University makes positive efforts towards its Human Resources and builds the
morale of teachers through enthusiastic quite encouraging Career Enhancement Policies.
 The Academic Staff College of the University organises periodically the Refresher and
Orientation Courses for upgrading the teacdhing and research skills of the teachers
and these courses are being perceived to be truly help to them in developing their
skills.
 The system of rotation of Heads of the Departments and Deans creates a very
significantly a conducive work environment in the University.
 University takes all possible steps for competence development among its teachers
and policies are framed in such a manner as to help the teachers to move ahead and
attain status and fame through teaching, research, extension and publications.
 The Univeristy tries to clarify its Vision and Mission, besides to all other stakeholders,
to teachers, the basic paramount on which the whole edifice is structured, to increase
the chances of its success many folds.
 Teachers feel satisfied about the well palnned and adequately communicated targets
and goals of the University to all and which are in line with its Vision and Mission.
 The teachers feel motivated and encouraged with the conducive work culture and
environment of the University to get their work accomplished in more innovative and
interesting manner.
Thought perceptions of the teachers regarding HRD climate in the University vary according
to their age, qualification, designation, length of service and stream, yet gender-wise it does
not have any significant difference. The senior teachers in the entire University and the
respondents in the Arts stream are much more satisfied with the overall HRD climate of
the University.

Critical Areas
As already stated that HRD climate in the Jammu University is at moderate state, due to
following critical areas, decelerating the growing pace of developmental activities and teacher
friendly efforts.
 Lack of proper and adequate infrastructure comes in the way of building sound HRD
Mechanism. The Performance Appraisal System, Potential Appraisal System,
Counselling and Feedback System, and Human Resource Information System, etc.
12  Strategic Service Management

are not yet in proper shape in providing full need based and timely assistance to the
university teachers.
 Young teachers are not much satisfied with the leadership and various systems
introduced informally under performance appraisal, potential appraisal and grievance
handling procedures, thus causing lot of discouragement even in their routine work.
 Besides, the Interpersonal Relationships also lack the right and purposefull directions.
The faculty members, no doubt, do encourage and motivate one another; still there is
lack of the elements of the OCTAPAC culture in the University System.
In order to improve HRD climate in the university it is important to focus on these issues,
as these are the major hurdles in further improving its teaching and research standard and
taking the same to new hights.

Strategic Actions
The aforesaid findings of the study thus lead to the formulation of the following stragic
action plan:
 University should strengthen HRD climate and optimal utilisation of its human
resources: HRD climate contributes a lot to the overall competence development of
the teachers. To meet the high standards, teachers need to be inspired for higher
perspectives and must spontaneously go beyond their formal professional commitments.
Thus, an effective, transcendent and positive HRD climate needs to be induced in
the university so that teachers become more creative, innovative and flexible.
 Leadership must take human resources as always appreciating assets and thu ensures
job satisfaction to the faculty members: The leadership needs to create climate in the
university making the teachers work cooperatively. The university ought to take HRD
climate measures for enhancing professionalism, academic and research excellence,
mindfulness towards the work, while focussing on the university goals & mission,
adequate communication, optimal use of power, proper use of available resources,
higher level of cohesiveness, high morale, innovativeness, autonomy, high adaptations
and problem solving adequacy.
 University needs develop an effective Performance Appraisal and Feedback System:
The existing Performance Appraisal and Feedback System in the University needs to
be modified and a more effective Performance Appraisal and Feedback System should
be developed as it has a direct bearing on its Performance Appraisal System (Ghosh,
2005). For this the university must ensure an unbiased and objective system assessing
the performance of the teachers. Thus, special efforts have to be made to gain confidence
of the teachers by making their participation in the Appraisal System providing feedback
to them to improve subsequent performance, promoting personal and professional
growth and competence, giving reward and support to the teachers.
 University should ensure better interpersonal relationships and communications among
the teachers: The strong interpersonal relationships among the senior-junior as well as
among peers generate open communication, trust, operational freedom and individual
 Human Resource Development in University System  13

development. The University of Jammu needs to develop quality interpersonal

relationships among the teachers so that they have better working atmosphere and
overall development in the system. In fact developing good interpersonal relationships
is a joint venture of both the university leadership and the teaching faculty. Thus, in
order to have good interpersonal relationships teachers and leadership to have good
working partnership.
 University must establish sound Human Resource Information System: The efficient
dissemination of the information can surely improve the HRD climate and check
frustration among the faculty members (Pashiardis, 1998). The university leadership
thus, needs to find ways to disseminate information across the university effectively
and efficiently so that teachers get updated about the happenings in the institutions
much frequently
 University should introduce proper Counselling and Feedback System: Human Resource
Development requires human interaction of a caring, supportive and useful nature,
i.e. Counselling (Boyatzis and Burruss, 1995). Thus, the university should set up a
sound counselling system for the teachers. Counselling certainly acts as a catalyst and
an essential programmatic component for implementation of developmental
programmes. University has thus, a lot of scope for improvement and development of
HRD climate has a whole.

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Organisations, Indian Journal of Industrial Relations 41 (3), 407-419.
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Organisational Climate, and Managers’ Self-Perceptions. Vikalpa 26 (1), 33-47.
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 2

Exploring the Role of OCB in Healthcare Sector

Dr Hardeep Chahal*
Shivani Mehta**

The study examines Organizational Citizenship Behaviour (OCB) of medical employees using
Organ's five dimensions namely altruism, conscientiousness, sportsmanship, civic virtue and
courtesy. The data for the study was collected from one hundred five medical employees viz.,
doctors, nurses and para-medical staff who have been associated with two biggest teaching and
research hospitals: Government Medical College (GMC) Hospital, Bakshi Nagar and ASCOMS
Hospital Sidra, Jammu. The result of factor analysis reveal OCB to be the two dimensional
construct in which four OCB dimensions namely altruism, conscientiousness, sportsmanship
and civic virtue are given equal importance in factor one (ACCS) as against the second factor
namely courtesy. The paper concludes with implications, limitations and directions for future
research.
Keywords: Altruism, Conscientiousness, Sportsmanship, Civic virtue and Courtesy

INTRODUCTION
Organisational Citizenship Behaviour (OCB) is a special type of work behaviour, and defined
as individual behaviour that is beneficial to the organisation, discretionary, and not directly
or explicitly recognised by the formal reward system (Organ, 1995 &1998). In simple
words, such behaviour is primarily matter of personnel choice and its omission is not
considered punishable in the organisations. Smith, Organ & Near (1983), the pioneers of
OCB concept, conceptualised it with two dimensions, i.e. altruism (behaviour targeted
specifically at helping individuals) and generalised compliance (behaviour reflecting
compliance with general rules, norms and expectations). Later Organ (1988) found OCB
to be multidimensional concept comprising altruism, courtesy, civic virtue, conscientiousness

* Associate Professor, Department of Commerce, University of Jammu, Jammu

** Ph.D.Scholar. Department of Commerce, University of Jammu, Jammu
16  Strategic Service Management

and sportsmanship. Altruism remained common dimension in the multidimensional OCB

concept whereas general complaince is found to be composite behaviour comprising four
behaviours namely courtesy, civic virtue, conscientiousness and sportsmanship. He, further,
elaborated that OCB maximises the efficiency and productivity of both the employees and
the organisation that ultimately contribute to effective functioning of the organisations.
Later, McNeely & Meglino (1994) and Williams & Anderson (1991) elaborated OCB
from person specific aspect. They have made distinction between organisational citizenship
behaviours directed at individuals (OCBI) and those directed at organisations (OCBO).
OCBO is specific behaviour that is mainly beneficial for employee transactions. Further,
they remarked that citizenship behaviours such as altruism and courtesy are related with
co-workers whereas sportsmanship, civic virtue and conscientiousness are related with the
organisation. Later Podsakoff et. al. (2000) reviewed OCB literature to examine its impact
on organisational performance. The literature authenticates positive relationship between
OCB, employee performance, pay rise and promotion vis-a-vis organisational performance
and success. The authors further remarked that effect of organizational citizenship behaviours
on actual organisational effectiveness will be positive when organisations make effort to
enhance the productivity of co-workers by helping them to learn new skills and by providing
them with useful feedback about specific work tasks. Further, other strategic actions such as
freeing up resources that can be used for more productive functions, reducing the need to
devote resources that are scarce for purely maintenance functions, coordinating activities
between team members and across work groups by showing courtesy and keeping members
of others teams ‘in the loop’, increasing group cohesiveness and morale etc. can make the
workplace attractive and thus easier to attract and retain the best people. However, there is
a debate to the extent to which the different dimensions of OCB are actually distinct from
expected in-role behaviour (Morison, 1994). The dimensions of OCB given by Organ
(1988) which include altruism, conscientiousness, sportsmanship, civic virtue and courtesy,
are well-accepted in the literature. Altruism (helping) primarily concerns with the helping
approach of the members of the organisation. Jahangir, Akbar & Haq (2004); Khalid & Ali
(2005) and Emmerik, Jawahar & Stone (2005) have remarked that altruism involves the
voluntarily helping of colleagues and prevention of work-related problems which subsequently
help employees in enhancing their productivity. The next dimension of OCB relates to
conscientiousness (rules) which has been explored by Jahangir, Akbar & Haq (2004);
Podsakoff, Mackenzie & Fetter (1993) and Hannam & Jimmieson (2002). The elements
leading to conscientiousness behaviour include obeying rules, avoiding personal talks during
working hours, maintaining congenial environment, punctuality, etc. Sportsmanship (team
spirit) is the willingness to tolerate less than ideal behaviour without complaining and
refraining from activities such as complaining about petty grievances. Further, sportsmanship
focuses on positive attitude and outlook of employees even during tense situations and
these may reflect in terms of avoiding fault finding, not expressing resentment with changes,
etc. (Smith, Organ & Near, 1983; Podsakoff & Mackenzie, 1997 and Jahangir, Akbar &
Haq, 2004). Civic virtue (participation) is another significant dimension of OCB, supported
by Jahangir, Akbar & Haq (2004); Khalid & Ali (2005) and Emmerik, Jawahar & Stone
(2005), which basically means willingness of employees to participate actively in the
operations of the organisation. Participating in important functions/meetings, helping in
organising get-together, attending voluntary functions, etc. are some behaviours that reflect
 Exploring the Role of OCB in Healthcare Sector  17

the presence of civic virtue. Marockzy & Xin (2004) have supported courtesy as last dimension
of OCB. It implies the discretionary behaviour of individuals aimed at assessing and doing
what is best for the organisation as well as for the employees.

RESEARCH JUSTIFICATION AND HYPOTHESIS FORMULATION

Since 1980s there has been significant development on the OCB conceptual framework.
Recently, Le Pine, Erez & Johnson (2002) conducted meta-analysis on OCB dimensions
and indicated that there is strong relationship among the different OCB dimensions. The
literature has authenticated significant role of OCB in various organisations such as
educational (Smith, Organ & Near, 1983 and Podsakoff & Mackenzie, 1997), hotel (Khalid
& Ali, 2005 and Emmerik, Jawahar & Stone, 2005), informational technology (Mc Neely
& Meglino, 1994 and Williams & Anderson, 1991), etc., however, the literature on OCB
in health care sector is scarce. Although, studies such as Jahangir, Akbar & Haq (2004);
Podsakoff, Mackenzie & Fetter (1993); Hannam & Jimmieson (2002) and Emmerik, Jawahar
& Stone (2005) have also remarked the need to explore the influence of OCB dimensions
on medical employees but a few, and that too only with a single dimension, have examined
OCB in their research. In the present paper an endeavor is made to explore all five OCB
dimensions viz: altruism, conscientiousness, sportsmanship, civic virtue and courtesy in
health care sector from doctors, nurses and para-medical perspectives. Understanding of
the OCB behaviour of medical employees can strengthen patient-medical employee
relationship which is the need of the hour, specially in third world countries. For instance,
altruism behaviour can help the medical staff (doctors, nurses, paramedical) in accomplishing
common organisational goals. On the other hand, conscientiousness behaviour can ensure
them to avoid casual talks or spend lengthy time on personal telephone conversation and
make them more duty conscious and responsible to attend patients on time and perform
their duties as required. Further, the inculcation of sportsmanship behaviour works towards
avoiding finding faults and blowing problems out of proportion within or outside the
medical department and helps in increasing constructive endeavours for improving
organisational performance. Furthermore, courtesy behaviour enables them to assess and
do what is best for the patients as well as for the organisation.
Perse, the study on the basis of aforesaid background, hypothesised that all OCB dimensions
viz, altruism, conscientiousness, sportsmanship, civic virtue and courtesy are significant in
health care sector.

RESEARCH DESIGN AND METHODOLOGY

Generalisation of Scale Items

All measures altruism, conscientiousness, sportsmanship, civic virtue and courtesy used in
this study are extracted from existing scales on OCB dimensions. The scale items were
adapted to suit the health care sector (Appendix 1). Altruism was measured through four
statements related to helping co-workers, orient new people about job, helping others in
accomplishing tasks and enhancing productivity (Jahangir, Akbar & Haq, 2004; Khalid &
Ali, 2005 and Emmerik, Jawahar & Stone, 2005). The conscientiousness contained five
18  Strategic Service Management

statements related to availability on job, avoiding personal talks, attend patients on time,
maintaining clean workplace and completion of work (Podsakoff, Mackenzie & Fetter, 1993
and Hannam & Jimmieson, 2002). Further, sportsmanship contained three statements
related to complaining, avoiding finding faults and expressing resentment (Smith, Organ &
Near, 1983; Podsakoff & Mackenzie, 1997 and Jahangir, Akbar & Haq, 2004). Civic virtue
was measured with help of three statements namely work assignments, sharing information
and paying attention given by Akbar & Haq (2004); Khalid & Ali (2005) and Emmerik,
Jawahar & Stone (2005). Lastly, Courtesy is measured with three items namely informed
before taking important decisions, assess and do what is best for the organisation and
consult others to solve work related problems (Marockzy & Xin (2004).
All constructs used a 7-point likert scale, with anchors of very strongly agree (7) and very
strongly disagree (1).

Participants
The total sample size consisted of 105 respondents including 35 doctors, 35 nurses and 35
para-medical staff selected from two hospitals operating in Jammu region namely Govt.
Medical College, Bakshi Nagar and Sri Acharya Chandra Medical College and Hospital,
Sidra. The employees viz: doctors, nurses and para-medical staff were contacted on the
basis of their availability to supply the information.

Demographic Profile
The sample of medical employees consisted of 44.7 percent females (47 females) and 55.23
percent males (58 males). Further, the sample profile of respondents was classified on the
basis of four socio-demographic aspects i.e. age, grouped into three classes namely between
24-30 years, between 30-40 years, and above 40 years, which included 27 percent, 18
percent and 54 percent respondents respectively. Similarly monthly income groups viz,
below Rs 10000, between Rs 10000-Rs 20000, between Rs 20000-Rs 30000 and income
above Rs 30000 included 17 percent, 49 percent, 21 percent and 0.01 percent respondents
respectively. Further, the proportion of respondents with post graduate, MBBS, M.D,
Diploma in ANM and Diploma in GNM arrived at 20 percent, 24 percent, 5.7 percent,
40 percent and 10 percent respectively. The staff was also grouped according to experience
under four classes i.e. less than 5 years, between 5-10 years, between 10-20 years and above
20 years and which included 11 percent, 45 percent, 22 percent and 20 percent respondents
respectively.

Data Analysis
Exploratory factor analysis, i.e. data reduction and summarisation technique is used to
delete measures from the initial battery of items based on the well defined statistical and
theoretical grounds related with inter-item correlation, KMO, MSA and factor loading
values. Before initiating exploratory factor analysis, response scores of negative items were
changed and all items were checked for normal distribution. Later, from a statistical
standpoint, less than .03 item to total correlation were targeted for deletion. This also
checked the significance of inter-correlation among items as required for effective factor
 Exploring the Role of OCB in Healthcare Sector  19

structure identification. Further, Kaiser – Meyer – Olkin (KMO) value equal to and greater
than 0.50 is used to find out relevance of data reduction and grouping for factor analysis.
Using the Cronbach alpha (á) estimate (less than 0.7), factor loading (less than 0.50) and
cross-loadings criteria, items insignificantly related were also deleted. As a result of these
efforts, altruism dimension which earlier consisted of 4 items was reduced to 3 items and
conscientiousness which comprised of 5 items was reduced to 4 items on the basis of
selected criteria. Lastly, factor analysis was applied on the refined overall OCB scale items
and it resulted in two factors. The factors are explained under next section. The first factor
(ACCS) includes four OCB dimensions viz: altruism, conscientiousness, civic virtue and
sportsmanship where as the second factor focuses only on items of courtesy dimension of
OCB.

Data Reliability and Validity

The internal consistency and split-half reliability methods were used to assess the reliability
of the employees scale (Hair et. al, 2003; Malhotra, 2002 and Tull & Hawkins, 1998). The
Cronbach alpha values of the factor one (ACCS) and factor two (courtesy) were found to be
0.92 and 0.37 where as for the sample variables it was found to be 0.57 for altruism, 0.87
for conscientiousness, 0.77 for sportsmanship, 0.77 for civic virtue, and 0.43 for courtesy.
The over-all alpha value was found to be 0.95 which further indicated the reliability of the
variables. The convergent validity of the sample was also assessed. The degrees of correlation
coefficients were found to be significant for the majority of the statements indicating the
convergent validity of the items. Further, the KMO, measure of sampling adequacy values,
variance explained and communalities values are used to check the construct validity (Hair
et. al., 1995). All values are found acceptable which supported construct validity of the
scales (Table 1).

RESULTS
The results of the study are identified with the help of a quartimax rotation method as it
maximises the number of items with high loadings on one factor, thereby enhancing the
interpretability of the factors (Malhotra 2002, p.595). Two factors were identified for OCB
dimensions. Four OCB dimensions namely altruism, conscientiousness, sportsmanship and
civic virtue emerged in factor one with communality values ranging between 0.431 to
0.847. The second factor includes two items of courtesy dimension of OCB having
communality values 0.785 and 0.727. The factors explain 74.25 and 34.75 percentage of
variance.

Factor 1(ACCS)
The Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy value for factor one (ACCS)
comprising altruism, conscientiousness, civic virtue and sportsmanship was found to be 0.864
(Table 2). The altruism dimension of OCB includes helping co-workers (MS = 4.68,
S.D = 1.41, F.L. = 0.81), orienting new people about job (MS = 5.04, S.D = 1.16,
F.L. = 0.85) and helping others in accomplishing tasks (MS = 5.06, S.D = 1.33, F.L. = 0.92).
The results revealed that the employees are willing to help each other in solving work
20  Strategic Service Management

related problems. The conscientiousness includes four items viz; availability on job (MS=
4.68, S.D= 1.41, F.L. = 0.81), avoiding personal talks (MS= 5.04, S.D= 1.16, F.L. =
0.81), attend patients on time (MS= 5.06, S.D= 1.33, F.L. = 0.93) and completion of
work (MS= 4.87, S.D= 1.47, F.L. = 0.86). It reflected that employees are responsibility
conscious and always discharge their duties in an organised and best possible manner. Civic
virtue the next OCB dimension comprised of three items namely work assignments (MS=
4.69, S.D= 1.40, F.L. = 0.84), sharing information (MS= 4.50, S.D= 1.55, F.L. = 0.67)
and paying attention (MS= 4.25, S.D= 1.61, F.L. = 0.62). The results of the items revealed
that employees always exhibit information sharing attitude about developments in the
hospital. The sportsmanship consists of three items namely complaining (MS= 5.07, S.D=
1.20, F.L. = 0.84), avoiding finding faults (MS= 4.70, S.D= 1.26, F.L. = 0.77) and expressing
resentment (MS= 4.39, S.D= 1.60, F.L. = 0.80) indicating that the medical employees
enhance the morale and team spirit of their colleagues and try to avoid findings faults
within and outside the department. Only one item of courtesy dimension of OCB viz; well
informed employees (MS= 5.15, S.D= 1.29, F.L. = 0.89) fall in factor one which reflected
that employees consult each other before taking any important decision.

Factor 2(courtesy)
The KMO value for factor two was found to be 0.467 (Table-2). The items pertaining to
courtesy dimension of OCB includes assessing and doing best for the hospital (MS= 4.78,
S.D= 1.29, F.L. = 0.75), and consulting others (MS= 5.38, S.D= 1.00, F.L. = 0.71) which
revealed that employees rationally concern about the organisation.

HYPOTHESIS TESTING
The significant relationship among OCB dimensions viz: altruism, conscientiousness,
sportsmanship, civic virtue and courtesy is tested using t-test at different test values, i.e. 2,
3, 4, 6 and 7 (Table 3). The study results support the hypothesis for all the test values and
reflect that OCB play significant role in creating conducive environment in the organisation
which consequently help in enhancing patient satisfaction and employee satisfaction.

DISCUSSION
The results of the factor analysis reflect OCB to be two dimensional construct in which
four OCB statements namely altruism, conscientiousness, sportsmanship, civic virtue and
courtesy are given equal importance with average scores. The results of the study indicate
that although OCB dimensions are significant, however, distinctions among them are difficult
to assume. Further, the results reveal that ACCS behaviour comprising altruism,
conscientiousness, civic virtue and sportsmanship in medical employees viz., doctors, nurses
and para-medical staff help in solving their work-related problems like orienting newly
recruited people about the functions to be performed, accomplishing common organisational
goals, familiar with the administrative rules, avoiding casual talks during their working
hours, attending patients on time, etc. Further, the medical employees try to avoid activities,
such as complaining about petty grievances and blowing problems out of proportion within
and outside the department. To add, the medical employees are rationally concerned about
 Exploring the Role of OCB in Healthcare Sector  21

the organisation and take responsibility in handling important issues. Though the results
for courtesy factor (factor 2) revealed good factor loading and mean score but the overall
alpha value and the variance explained do not show its much significance in health care
sector. Overall, the results indicated that there is a need to give more consideration to make
courtesy as an important and significant dimension of OCB.

MANAGERIAL IMPLICATIONS
Organisational Citizenship Behaviour (OCB) is being considered as behaviour based strategy
which adds to the knowledge of managers and provides broader benefits to their organisations
by enhancing employees’ satisfaction and loyalty which subsequently leads to reduced
turnover and absenteeism (Podaskoff & Mackenzie, 1997). Better understanding of factor
one (ACCS) help the employees in enhancing the productivity of co-workers by helping
them learn new skills and best practice as well as in timely discharge of their obligations in
the best possible manner. Further, the factor two which consists of courtesy behaviour help
in increasing group cohesiveness and morale which in turn makes the workplace attractive
and thus easier for the organisation to attract and retain the best people (Podsakoff, Mackenzie
& Fetter, 1993 and Hannam & Jimmieson, 2002). Understanding of the individual
behaviour in organisation (OCB) will help the practioners in general and doctors, nurses
and paramedical staff in particular in exhibiting commitment towards their organisation
and permit the specialised medical departments to delegate more responsibility to medical
employees which may lead to increase in employees’ job satisfaction and loyalty as well as
patient satisfaction (Meyer et. al., 2007).

LIMITATIONS AND FUTURE RESEARCH

In the wake of its growing significance, pursuing research on OCB has become essential to
establish OCB framework. The study is not free from limitations. Firstly, data was collected
conveniently, i.e. only those persons were contacted who were willing to provide information
relating to health care. Secondly, the present research is based on a small sample consisting
of only 105 respondents and thus it is difficult to generalise the findings in health care
sector at national and international level. However, the reliability and validity of the items
came out to be quite satisfactory. Thirdly, the present study aims to explore only OCB
dimensions in health care sector so there is also a need to explore the relationship between
antecedents such as role clarity, leadership, motivational drives, organisational commitment,
organisational justice and individual traits and consequences namely reduced turnover,
reduced absenteeism, employees satisfaction and loyalty, consumer satisfaction and loyalty
and organisational performance of OCB with large randomly selected respondents.

References
1. Emmerik, Van Hetty I J., M.I Jawahar and H.Thomas Stone (2005), “Associations among Altruism,
Burnout Dimensions and Organizational Citizenship Behaviour”, Work and Stress, 19(1), 93-100.
2. Hair, Joesph Jr., Rolph E. Anderson, Ronald L. Tatham and William C. Block (2003), Multivariate
Data Analysis with Readings, New Jersey: Prentice Hall.
22  Strategic Service Management

3. Hannam Rachel and Nerina Jimmieson (2002), “The Relationship Between Extra-role Behaviours
and Job Burnout for Primary School Teachers: A Preliminary Model and Development of an
Organizational Citizenship Behaviour Scale”, School of Psychology, University of Queensland,
www.aare.edu.au/02pap/han02173.htm.
4. Jahangir Nadim, Mohammad Muzahid Akbar and Mahmudul Haq (2004), “Organizational Citizenship
Behaviour: Its Nature and Antecedents”, Journal of BRAC University, 1(2), 75-85.
5. Khalid, S.A and Ali Hassan (2005), “The Effects of Organizational Citizenship Behaviour on Withdrawal
Behaviour: A Malaysian study,” International Journal of Management and Entrepreneurship, 1(1), 30 -
40.
6. Lepine, J.A., Erez, A. and Johnson, D.E. (2002), “The Nature and Dimensionality of Organizational
Citizenship Behavior: A Critical Review and Meta-Analysis”, Journal of Applied Psychology, 87, 52-65.
7. Markoczy Livia and Katherine Xin (2004), “The Virtues of Ommision in Organizational Citizenship
Behaviour”, Anderson Graduate School of Management, 1(28), 1-29.
8. Mcneely, B.L. and Meglino, B.M. (1994), “The Role of Dispositional and Situational Antecedents in
Prosocial Behaviour: An Examination of the Intended Beneficiaries of Prosocial Behavior”, Journal of
Applied Psychology, 79, 836-844.
9. Meyer, J P, D.W Organ and J.W Graham (1997), “Individual Performance Attitudes and Behaviour”,
Journal of International Review of Industrial and Organizational Psychology, 12, 175-228.
10. Morrison, E.W. (1994), “Role Definitions and Organizational Citizenship Behavior: The Importance
of the Employee’s Perspective”, Academy of Management Journal, 37, 1543-1567.
11. Organ D.W (1988), “OCB: The Good Soldier Syndrome, Lexington, MA, Lexington Books”.
12. Organ D.W. and Ryan, K. (1995), “A Meta-Analytical Review of Attitudinal and Dispositional Predictors
of Organizationl Citizenship Behaviour”, Personnel Psychology, 48, 775-802.
13. Podsakoff, Philip M. and Scott B. Mackenzie (1997), “Impact of Organizational Citizenship Behaviour
on Organizational Performance: A Review and Suggestions for Future Research”, Human Performance,
10(2), 133-151.
14. Podsakoff, Philip M., Scott B. Mackenzie and Richard Fetter (1993), “The Impact of Organizationl
Citizenship Behaviour on Evaluations of Salesperson Performance”, Journal of Marketing, 57(1), 70-80.
15. Williams, L.J. and Anderson, S.E. (1991), “Job Satisfaction and Organizational Commitment as
Predictors of Organizationl Citizenship and In-Role Behaviors”, Journal of Management, 17, 601-617.
 Exploring the Role of OCB in Healthcare Sector  23

TABLE 1: OCB DIMENSION- WISE AND OVERALL ALPHA (RELIABILITY) AND COEFFICIENT OF
CORRELATION VALUES (CONVERGENT VALIDITY) AMONG MEDICAL EMPLOYEES
OCB Dimensions Alpha values Coefficient of correlation
(reliability) values(convergent validity)
Altruism 0.57 1.000 0.973 0.924 0.738 0.603

Conscientiousness 0.87 0.973 1.000 0.918 0.758 0.675

Sportsmanship 0.77 0.934 0.918 1.000 0.763 0.640

Civic-virtue 0.77 0.738 0.758 0.763 1.000 0.592

Courtesy 0.43 0.603 0.675 0.640 0.592 1.000
Alpha values (Factor 1: accs = 0.92, Factor 2: courtesy = 0.37, Overall = 0.95)

TABLE 2: FACTOR MATRIX FOR OCB DIMENSIONS IN HEALTH CARE SECTOR

Factor Communalities % of KMO Mean Std. Factor Corrected
matrix variance value score deviation loading item
correlation

Alt1 0.767 4.68 1.41 0.817 0.73

Alt2 0.804 5.04 1.16 0.859 0.76

Alt3 0.847 5.06 1.33 0.927 0.80

Con1 0.792 4.68 1.41 0.817 0.80
Con2 0.723 5.04 1.16 0.848 0.73
Con3 0.838 5.06 1.33 0.935 0.83
Con5 0.812 4.87 1.47 0.865 0.82
Factor1 S1 0.744 5.07 1.20 0.844 0.67
S2 0.783 4.70 1.26 0.778 0.63

S3 0.733 4.39 1.60 0.806 0.58

Cv1 0.785 4.69 1.40 0.844 0.79
Cv2 0.466 4.50 1.55 0.672 0.47
4.25 0.787
Cv3 0.431 4.25 1.61 0.627 0.43
CO2 0.6687 4.78 1.29 0.752 0.117

CO1 0.785 5.15 1.01 0.896 0.268

Factor2 CO3 0.727 34.75 0.467 5.38 1.00 0.709 0.461
24  Strategic Service Management

TABLE 3: MEAN, STANDARD DEVIATION, STANDARD ERROR MEAN, T-VALUES AND P-VALUES
FOR VARIED TEST VALUES FOR OVERALL OCB
Test Mean Standard Standard t-value Sig.2-tailed
value deviation error mean (p-value)

2 4.871 0.918 0.896 32.02 .000

3 4.871 0.918 0.896 20.87 .000
4 4.871 0.918 0.896 9.72 .000

6 4.871 0.918 0.896 -12.58 .000

7 4.871 0.918 0.896 -23.74 .000

 Alt - altruism,
 Con - conscientiousness
 S- sportsmanship
 Cv- civic virtue
 Co- courtesy
 Exploring the Role of OCB in Healthcare Sector  25

APPENDIX 1
Altruism
 You help others who have heavy workload (Alt1)
 You orient new people about job tasks voluntarily or even when not asked (Alt2)
 You help employees who jointed after a long leave (Alt3)
 You help employees in enhancing their productivity (Alt4)
Conscientiousness
 You are on your job on time (Con1)
 You avoid personal talks or spent lengthy time on personal telephone conversation
(Con2)
 You attend patients on time (Con3)
 You maintain a clean workplace (Con4)
 You complete your work on time (Con5)
Sportsmanship
 You complain a lot about trivial matters (S1)
 You avoid finding faults and blowing problems out of proportion within or outside the
medical department (S2)
 Your express resentment with any changes introduced by hospital management (S3)
Civic virtue
 You never complain about work assignments (CV1)
 You share information about developments in the hospital with your colleagues (CV2)
 You never pay attention to announcements, messages or printed materials that provide
information abut the hospital (CV3)
Courtesy
 You are informed before taking any important actions (Co1)
 You assess and do what is best for the hospital (Co2)
 You consult others to solve work-related problems (Co3)
26  Strategic Service Management

Managing Human Capital thr ough

through
Retention Man ag
Manag ement
agement

Dr Sandeep Tandon*
Jyoti Bahl**

The success of an organisation depends on how it attracts, recruits, motivates, and retains its
workforce. The organisations need to be more flexible so that they can develop their talented
workforce and gain their commitment. The human resources in an organisation are equally
important to the overall business success as technology and other physical resources. Thus, retention
of qualitative and committed human capital should be one of the core issues for every organisation.
Retention management is a process in which the employees are encouraged to remain with the
organisation for the maximum period of time or until the completion of the project. Retention
management is beneficial both for the organisation as well as for the employees. This paper
discusses different issues related to retention management in the organisations. Retention process
includes compensation, organisation environment, growth and career development of employees,
cordial interpersonal relationships and positive support from management. The paper also
highlights the benefits the organisation derives from the implementation of retention process
and the ways to enhance the employees' retention in the organisation.

INTRODUCTION
The global developments in the field of management reveal that human resource management
is becoming an important area of management consultancy, which speaks of its criticality
in business (Saini 2006). Human resource development is an important tool for any
organisation in improving performance of the personnel as well as motivating and retaining
them (Nisa & Warsi 2004). Employee retention thus needs to be clearly understood by
organisations. It’s not just retaining a single or a few employees but it’s the retaining of

* Associate Professor in Commerce, DDE, University of Jammu

** Lecturer in Commerce, Udhampur Campus, University of Jammu
 Managing Human Capital through Retention Management  27

manpower, the key asset of any organisation so that competitive sustainability can be ensured
for the future (Isukapally 2006). Employees today are no longer static. They are always in
search of better opportunities. As soon as they feel dissatisfied with the current job or the
employer and get better opportunity, they switch over to the other job. Thus, it becomes
the concern of the employer to explore various ways to retain their best employees.

COMPONENTS OF RETENTION MANAGEMENT

Retention management broadly involves five major components:
1. Compensation: Compensation constitutes the largest part of the retention management
process. The employees always have high expectations regarding their compensation
packages. Compensation packages vary from industry to industry. Therefore, an
attractive compensation package plays a vital role in retaining the employees.
Compensation includes salary and wages, bonuses, benefits, stock options, vacations, etc.
2. Organisation Environment: People want to work for an organisation, which provides
appreciation for the work done, many opportunities to grow and a friendly and
cooperative environment. Thus, for retaining employees in an organisation, the
organisation environment needs to possess values, qualities, trust, risk taking and
employee development.
3. Growth and Career: Growth and development are the integral part of every individual’s
career. If an employee cannot foresee his career development in his current organisation,
there are chances that he will leave the organisation as soon as he gets better
opportunity. The important factors in employee growth that he looks for his professional
growth include work profile, personal growth, training and development.
4. Interpersonal Relationships: A supportive work culture helps employees to grow
professionally and boosts their level of satisfaction. To enhance good professional
relationships at work, the management should respect every individual in the
organisation, promote team work, provide proper place and duties to their employees,
support them and take care of employees’ development.
5. Support: Lack of support from management can sometimes serve as a barrier in
employees’ retention. Employer should support his subordinates in such a way that
each one of them contributes his maximum to the success of the organisation. This
support can be further strengthened through recognition and appreciation. Besides,
management should try to focus on its employees and support them not only in their
difficult times at work but also at the time of personal crisis.

FACTORS INFLUENCING THE SYSTEM OF RETENTION MANAGEMENT

Retention of employees in an organisation is strengthened not only by providing benefits,
incentives, loans, etc. but also by considering and solving their major psychological and
social issues. The policies of theme parties, skip-level meetings, appreciation mailing system,
continuous development programmes, flexible work culture, career path management
activities, have been adopted by many organisations as a measure of employee retention.
28  Strategic Service Management

However, different factors that influence the system of retention of employees in the
organisations can be categorised into three broad areas, namely, professional factors,
psychological factors and societal factors (Jigeesh 2006).
1. Contribution of Professional factors: Employees keenly look at the policies and work
structure of the organisation designed for the employees. The pay and its enhancement,
system of performance evaluation and offer of incentives, rewards and promotions, etc
attract the employees to continue in the same organisation for a long-time.
2. Contribution of Psychological factors: Personal security, job security, recognition of
work and changes in work are psychological factors affecting employees in the
organisations. Employees often get bored of monotonous work, so they quit their job
and join other companies, which have different work culture.
3. Contribution of Societal factors: Gender equality and transparency of work and its
value are major societal factors affecting retention of employees. Some of the traditional
and superstitious views of our society that bar female employees to work till late hours
are throwing lots of problems and challenges for them.

IMPORTANCE OF EMPLOYEE RETENTION

Despite so much being done by organisations to retain its employees, the importance of
employees’ retention in the organisation is becoming increasingly desirable. It is not only
the cost incurred by a company that emphasises the need of retaining employees but also
the need to retain talented employees from getting poached.
The retention management process thus benefits the organisation in the following ways:
1. The cost of employee turnover adds hundreds of thousands of money to a company’s
expenses. While it is difficult to fully calculate the cost of turnover industry experts
often quote 25% of the average employee salary as a conservative estimate.
2. When an employee leaves, he takes with him valuable knowledge about the company,
customers, current projects and past history. Often much time and money has been
spent on employee in expectation of a future return. When the employee leaves, the
investment is not realised.
3. Customers and clients do business with a company partly because of the people.
Relationships are developed that encourage continued sponsorship of the business.
When an employee leaves, the relationships that employee built for the company are
severed, which could lead to potential customer loss.
4. When an employee terminates, the effect is felt throughout the organisation. Co-
workers are often required to pick up the slack. The unspoken negativity often intensifies
for the remaining staff.
5. The goodwill of a company is maintained when the attrition rates are low. Higher
retention rates motivate potential employees to join the organisation.
6. If an employee resigns, then good amount of time is lost in hiring a new employee
and then training him and this goes to the loss of the company directly which many
 Managing Human Capital through Retention Management  29

a times goes unnoticed. And even after this you cannot assure us of the same efficiency
from the new employee.

COSTS AND EMPLOYEE ATTRITION

There exists an impact of employee turnover on organisations to an extent that employee
turnover often causes far-reaching consequences which at the extreme, may also jeopardise
efforts to attain organisational objectives. The total cost of replacing an employee in an
organisation ranges from 1-2.5 times the annual salary of the employee. There always exists
a number of other costs that are more difficult to estimate like emotional costs, loss of
morale, burnout/absenteeism among remaining employees, loss of experience, continuity,
and corporate memory. Thus, there is significant economic impact when an organisation
loses any of its critical employees (Vohra 2005).
Different costs incurred by the company due to employee attrition are as follows:
1. Recruitment Costs: This includes the cost of advertisements; agency costs; employee
referral costs; internal posting costs and also the cost of various candidates’ pre-
employment tests to assess their skills abilities, aptitude, attitude, values and
behaviours.
2. Training Costs: This includes cost of orientation, departmental training cost, cost of
the persons who conduct the training and cost of various training materials needed.
3. Productivity Costs: As the new employee is learning the new job, the company policies
and practices, etc. they are not fully productive.
4. New Hire Costs: This includes the cost of bringing the new person on board plus the
cost to put the person on the payroll, establish computer and security passwords and
identification cards, telephone hookups, cost of establishing email accounts, or leasing
other equipment such as cell phones, automobiles. Further, there is cost of manager’s
time spent developing trust and building confidence in the new employee’s work.
5. Lost Sales Costs: Whether an employee contributes directly or indirectly to the
generation of revenue, their purpose is to provide some defined set of responsibilities
that are necessary to the generation of revenue. Thus, revenue loss is incurred when
position of the employee remains vacant for a particular period (Isukapally 2006).

MANAGING EMPLOYEE RETENTION

It is viewed that employee retention is controllable element by the organisation. However,
there is no single plan that fits every situation. Instead, management has to discover the
proper definition for the employee retention goals as well as right strategies and tactics for
implementation of those goals (Sharika 2004). The task of managing employee retention is
a three-stage process, which is discussed as under:
1. Identify the cost of employee turnover: The organisations should start with identifying
the employee turnover rates within a particular time period and benchmark it with
the competiting organisations. This will help in assessing whether the employee
30  Strategic Service Management

retention rates are healthy in the company or not. On an average, attrition cost to the
company includes 18 months’ salary of permanent employee who leaves, and 6 months’
pay of temporary employee who leaves the organisation.
2. Understand why employees leave: Why employees leave often puzzles top management.
Exit interview is an ideal way of recording and analysing the factors that led employees
to leave the organisation as these allow an organisation to understand the reasons for
leaving and underlying issues of jobs. For objective interview results, it is necessary to
appoint an impartial person with whom the employees feel comfortable in expressing
their opinions.
3. Implement retention strategy: Once the causes of attrition are found, a strategy may
be framed to reduce employee turnover. The most effective strategy is to adopt a
holistic approach to ensure:
(i) Attraction, recruitment and selection of the ‘right’ candidate for the right job.
(ii) Positive initial experiences of the new employees.
(iii) Appropriate development opportunities for employees.
(iv) Reward strategy to boost the employee morale.
(v) Effective management of leaving process.

SUGGESTIONS
Realising the importance of retaining their quality workforce, the organisations are spending
more time in identifying the needs and problems of the employees, which if addressed
properly will make them not to look for other options in the market. Tools such as employee
satisfaction surveys, focussed group discussions and climate surveys, exit interviews are all
the means to find out what are the various drivers of turnover in their company (Vohra 2005).
Four basic factors that play an important role in increasing employee retention include
salary and remuneration, providing recognition, benefits and opportunities for individual
growth. However, basic salary, these days, hardly reduces turnover. Today, employees look
beyond the money factor.
In addition to this, the organisations need to inculcate certain practices that can increase
the level of employee retention. These are discussed as under:
1. Open communication: A culture of open communication enforces loyalty among
employees. Open communication tends to keep employees informed on key issues.
Most importantly, they need to know that their opinions matter and that management
is 100 % interested in their input.
2. Employee Reward Programme: A positive recognition for work boosts the motivational
levels of employees. Recognition can be made explicit by providing awards like best
employee of the month or punctuality award. Project based recognition also has great
significance. The award can be in terms of gifts, appreciation letter, public appreciation,
etc.
 Managing Human Capital through Retention Management  31

3. Career Development Programmes: Every individual is worried about his/her career.

He is always keen to know his career path in the company. Organisations can offer
various technical certification courses, which will help employees in enhancing his
knowledge.
4. Performance Based Bonus: A provision of performance linked bonus can be made
wherein an employee is able to relate his performance with the company profits and
hence will work hard. This bonus should strictly be productivity based.
5. Recreation Facilities: Recreational facilities help keeping employees away from stress
factors. Various recreational programmes should be arranged from time to time. These
may include taking employees to trips annually or biannually, celebrating anniversaries,
sports activities, etc.
6. Provision of gifts at the time of Festivals: Giving some gifts at the time of festivals to
the employees make them feel good and understand that the management is concerned
about them.

CONCLUSION
The organisations in dynamic institutional contexts should focus on retaining the right
kind of employees. In addition, for retention of its critical employees, the organisations
should understand what their employees need and then devise the retention strategy best
suited to them. Organisations need to understand the real motivating factors applicable to
the employees at all the levels. Management need to respect and value employees’ competency,
pay attention to their aspirations, assure challenging work, value the quality of work life
and provide chances for learning, and finally can have loyal and engaged employees. Therefore,
management of the organisation can play an active and vital role in employee retention.
The managers and team leaders can reduce attrition levels considerably by creating a
motivating team culture and improving the relationships with team members. They can
create a motivating environment, provide coaching, delegate powers, giving extra
responsibility and focussing on future career.

References
1. Gupta S (2004), Employee Retention- Conceptual Strategies, http://ssrn.com/640430.
2. Isukapally M (2006), Employee Retention- Talent Management, www.ssrn.com.
3. Jigeesh, N (2006), Retention Management in Business Process Outsourcing (BPO) industry in India.
Indian Journal of Training and Development XXXVII (3), July –September: 55-60.
4. Nisa, Syeedun and K A Warsi (2004), Retention of Personnel- A Case Study, http:/ssrn.com/638841
5. Saini, D B (2006). Managing Employee Relations Through Strategic HRM: Evidence From Two Tata
Companies. Indian Journal of Industrial Relations. 42 (2): 170-187.
6. Vohra K (2005), Systems Approach to Retention of Critical Employees, http:/ssrn.com/662442.
32  Strategic Service Management

Need for Induction T raining for Employees in

Training
Indian SSer
er vice Or ganizations
Organizations

Prof Mufeed S A*
Naila Khanday**

The objective of the study is to analyze the system and status of induction trainings, to what
extent such inductions are being carried out and finally its relative impact on employee
satisfaction across cadres of management, age and education groups in the sample banks. The
study has been conducted in all the metropolitan cities of India with special reference to State of
Jammu and Kashmir. The study is a comparative investigation of some of the major players of
the Indian service sector predominantly of banking industry which include State Bank of
India (SBI), Jammu & Kashmir Bank Ltd (JKB) and Industrial Credit and Investment
Corporation of India (ICICI). On the basis of analysis and results it can be inferred that the
induction trainings in SBI, JKB and ICICI differ significantly as proved by the perceptions of
employees across cadre, age and education respectively. Moreover, no significant difference of
opinions across managers and non managers within each bank under study is also recorded. The
paper concludes with valuable suggestions for the management of the banks which can have
direct bearing on the policy implications concerned with manpower development in general
and induction trainings in particular.
Keywords: Induction Training, JKB, ICICI, SBI

INTRODUCTION
Induction Training is vital for new recruits which ensures increased level of employees
retention which subsequently plays constructive role in the development of the organization.
According to Mufeed (2009), new employees need to understand organization’s goals,
values, philosophy, personnel practices and other significant characteristics of the job. The
induction program familiarizes the new employee about the culture, accepted practices

* The Business School & Director Convention Centre, University of Kashmir

** Faculty, Jammu and Kashmir Entrepreneurship Development Institute J&K
 Need for Induction Training for Employees in Indian Service Organizations  33

and performance standards of the organization and establishes clear foundations and
expectations in terms of ethics, integrity, corporate social responsibility, and all the other
converging theories in the areas that are the bedrock of all responsible modern enterprises.
Professionally organized and delivered induction training creates first impression about the
organization in the minds of new employees’. The literature authenticates that a fresh
recruit rarely meets the expectations of an organisation in the beginning months and thereby
necessitates defining his productivity individually.
According to Mufeed (2008), induction training is very essential for the organization as it
helps a new recruits to grow within a company and thereby motivating them to be with the
organization for long time. Majority of the organizations have recognized the significance
of formal induction training methodology, the duration of which ranges between 2-3 days
to 45-55 days.
Priyadarshini and Venkatapathy (2003-04) in their research study revealed that top
performing American private banks have highest extent of induction training imparted.
However, in India training is not imparted as required. In India only about 2-3 days per
year are devoted for training per employee, whereas, employees in countries like USA and
Japan spend 45-55 days on training each year for their employees. Sayyadain (2001) observed
that average cost of human resources in India comes to 9.86% of the total turnover, whereas
the average cost of training is about 0.017% of the total cost of human resources. The
National Trade Policy of Government of India (1996) is making progressive efforts in building
competencies and ensuring that all are able to acquire the required competencies through
training programmes at the induction stage.
Most of the global companies outsource their induction jobs to India. This ensures 30-
50% savings in costs for MNCs which send their new employees to India for induction
trainings. After induction the employees are deputed to locations of work across the world.
US-based IT consultancy firm Thoughtworks, for instance, sends all its new employees from
across the world to Bangalore for induction. This is because the company feels India as a
hub for inducting employees and moulding employees into a global mindset and train
them to understand different cultures. In India, the domestic majors like Genpact, Infosys,
Tata Consultancy Services also fly new recruits from foreign universities to India for orientation
and training.

REQUIREMENTS FOR INDUCTION TRAININGS

Identify the business objectives and desired benefits: Effective induction can have many benefits
including reducing turnover costs, engaging and motivating new and existing employees,
contributing to the implementation of good systems and processes; and gaining feedback
and ideas from new hires through “fresh eyes”. A new or improved induction process benefits
an organization in determining and the new shape of the organsiation.
Secure early Commitment: A good induction programme has positive impact in developing
commitment of new recruits towards their organization. A good induction process shows
that the company cares and is committed for the employees success. It can also help to
identify problems or barriers at an early stage and allow the appropriate action to be taken
34  Strategic Service Management

in removing them. Conversely a poor induction experience could make some new entrants
doubt their decision to join the organization, representing a risk in terms of future retention.
Roles and Responsibilities of different players in the Process: Roles and responsibilities should
be clearly identified for the different players in the induction process. These include various
functions relating to HR/L&D, administration, line manager, mentors and individual.
These functions are best achieved via a detailed induction checklist which allocates specific
responsibilities to achieve timebound targets.
Think of Induction as a Journey: Thinking about induction process as a journey rather than
a one-off event is essential requirement of the induction programme. It may be useful to
consider the induction journey in terms of either first 3 days or first 3 weeks or first 3
months. This approach might include a mini induction during the first 3 days with an
immediate supervisor, covering essentials such as security, housekeeping, organization charts,
initial objectives and introductions to key personnel. A more comprehensive induction
training session may follow during the first 3 weeks and then a review meeting after 3
months to check that everything is on track. Giving due consideration to post-programme
follow up is also important. This may include additional training, quick reference guides,
key contact lists or personal support which could be provided by mentors.
Clear learning objectives for Training Sessions: While designing content for induction training,
it is important to identify the desired outcomes of the training. This must be ensured that
training sessions and induction materials takes account of different learning preferences
and also include a variety of delivery styles.
Recognising the induction needs of different audiences: Whilst the fundamentals of the
induction process may remain the same, ensuring that the content of induction training
sessions is appropriately tailored and relevant to the needs of different audiences is vital in
engaging employees for long-time.
Ensure a quality experience: Developing carefully tailored content and choosing competent
trainers who motivate and engage their audiences are key ingredients in delivering a high
quality induction.
Up to date Induction Material: It happens too often that organizations make significant
investment in designing a new induction process and then fail to keep the key contents up
to date. E-based induction materials can ensure easy and timely up gradation of the contents.
Evaluation: Similar to other training and development programmes, it is important to
continuously evaluate the success of the induction process and make appropriate changes as
required.

RESEARCH OBJECTIVES
 To explore empirically the extent to which the various induction needs are carried out
in the banks, i.e. Jammu and Kashmir Bank Ltd (JKB), Industrial Credit and
Investments Corporation of India (ICICI) and State Bank of India (SBI).
 To carry out a comparative analysis regarding methods of induction trainings in the
selected banks.
 Need for Induction Training for Employees in Indian Service Organizations  35

 To suggest effective recommendations, based on the research findings, to the banks

for policy implications.

METHODOLOGY ADOPTED
The present study is based on the primary data collected with the help of questionnaire
and personal contacts. A comparative analysis is made between three-banks comprising of
all the three sub sectors of Indian Banking Industry, i.e. Public sector (State Bank of India
), Private sector (Jammu and Kashmir Bank Ltd ) and an Indian Multinational Bank
(Industrial Credit and Investment Corporation of India). The scope of the study include all
the districts of the state of Jammu and Kashmir and four metropolitan cities of India. The
sample was divided into (managerial and non managerial) and also on the basis age and
educational qualifications of the respondents. Since the size of the banks varies with regard
to workforce, the quota sampling technique was used.

PATTERN FOR SCORING AND DATA ANALYSIS

For assessing the induction practices adopted by the sample banks across cadres, age and
educational qualification, the data is collected through primary as well as secondary sources.
A well formatted questionnaire, based on five point likert scale, was administered to 510
respondents across sample banks out of which only 481 responded. The data is statistically
tabulated, analyzed and interpreted using various statistical tools such as mean deviation,
standard deviation, percentage mean score, standard error, analysis of variance (ANOVA)
and students t-test, etc. All the calculations including within and comparative analysis
between banks were made with the help of “Minitab 13.2 version” and “SPSS 12.0 version”.
As number of respondents in each bank is more than 30 and number of sample organizations
are more than 2 so it was imperative to administer ANOVA so as to know the significance
level of the various variables.
1. The perceptions of the respondents were measured for six factors which include much
importance is given to induction given by the management (Induction).
2. Inductions are well planned by the management (Well planned).
3. Induction trainings are of sufficient duration (Sufficient Duration).
4. Induction trainings provides excellent opportunity for new recruits to learn about
organization (Excellent Opportunity).
5. Norms and values are clearly explained during induction (Norms and Values).
6. Senior officers take much interest and spend some time in developing their juniors
(MIST).

SUMMARY OF OBSERVATIONS
Table 1 explains the perception of employees with respect to Induction Trainings (IT).
Across banks, ICICI demonstrates highest mean across both cadres with (Managers M=3.72,
Non Managers M= 3.46) succeeded by SBI (Managers M =3.59, Non Managers M =3.69)
36  Strategic Service Management

and lastly by JKB (Managers M =3.19, Non managers M =2.95). In general, it is observed
that all the cadres of employees expressed their satisfaction with regard to Induction Trainings
(IT) apart from non managers of JKB who do not agree with the existing practice of Induction
Trainings in their banks and have expressed their desire that Induction Trainings should be
given a serious thought by the management and such trainings should be implemented in
its true sense and philosophy rather than mere formality.
Regarding well planned & excellent opportunity, all the employees of each bank have
shown above average satisfaction which means that employees strongly perceive and
acknowledge that induction trainings are well planned and as such induction courses provide
sufficient opportunity for new recruits to learn much about the organizations. However,
with respect to factors like Induction, Sufficient Duration, Norms and Values and MIST,
all the employees except for non managers of JKB are quite satisfied with the factors. The
non managers have demonstrated poor scores thus expressing their dissatisfaction with
almost all the above factors. Further, they perceive strongly that the management gives least
importance to induction trainings and such programmes, if at all conducted are of very less
duration, norms and values are not explained to new recruits and senior officers pay no
attention to the new recruits. The values of ANOVA indicate significant difference in
perception of employees across banks as value of p is less than 0.01. However, the insignificant
difference is recorded across cadres within each bank.
Table 2 presents the impact of various dimensions of Training and Development system on
different age groups across banks. The age factor is divided into 3 major groups. Age group
1 (20-30 yrs) comprising of 135 employees, age group 2 (31-40 yrs) 170 employees and
age group 3 (41 yrs and above) 176 employees respectively. Regarding Induction Trainings
(IT), the highest scores are depicted by age group III employees of ICICI with (M=3.9)
followed by age group 3 employees of SBI with (M=3.7) and lowest by age group I employees
of JKB (M=2.9). It clearly indicates that young employees of JKB are the most dissatisfied
lot among all the groups and have expressed their disappointment with the practice of
induction trainings and strongly perceive that IT facility of the bank is not up to the
standard and system needs lot of improvement on part of management. Significant difference
in perceptions within all age groups across banks is recorded as (p<0.01). But, within
banks across age group the difference in perceptions is insignificant (p>0.01).
The table also presents the perceptions of employees regarding Training and Development
system across educational qualifications. On the basis educational backgrounds, employees
are divided into 3 groups. Education group 1 (PG and above) comprising of 215 employees,
education group II (graduates) of 212 employees and education group III (10th -12th) of
54 employees. About Induction Trainings (IT), the highest scores are depicted by education
group III employees of SBI with (M=3.9) and lowest by education group II employees of
JKB (M=3.0). It is therefore obvious that graduates from JKB are less satisfied than rest of
the groups as far as induction trainings is concerned. Significant difference in perceptions
within education group I & II across banks is recorded as p was less than 0.01. But, with
respect to education group III the difference in perceptions is also insignificant (p>0.01).
 Need for Induction Training for Employees in Indian Service Organizations  37

MAJOR FINDINGS
1. Significant difference in perceptions is noticed across the banks and have demonstrated
above average score. Amongst the three banks, JKB has shown comparatively lower
scores. Moreover, it has also been seen that JKB employees are not at all satisfied
regarding sufficient duration and MIST factor.
2. Across designations, managers of all the three banks are by and large satisfied with the
practice of Induction trainings. But here also non managerial staff of JKB is generally
found dissatisfied with the way induction trainings are being carried out in their
banks. Besides, they strongly feel that the trainings are not at all well conceived and
planned by the management. They suggested that trainings should be of adequate
duration, norms and values be clearly explained and senior employees should help
new recruits while at work.
3. While recognizing the importance of Induction trainings, non managers of JKB have
observed that lot of improvement needs to be done on part of management to bring it
on track and to introduce some professional and result oriented interventions into it.
However, significant perceptional difference among cadres across banks is recorded.
Generally employees across banks are contended with IT even though the satisfaction
of little less degree is revealed by employees of JKB particularly non managers.
4. Employees of age group I, particularly JKB have expressed low satisfaction with the
induction training. On the contrary, rest of the age groups seem to be satisfied with
the induction training. Moreover, significant difference in perception is recorded within
age groups across banks and insignificant difference within banks across age groups.
5. Regarding induction trainings SBI and ICICI employees of education group I are less
satisfied. However, in JKB it is observed that the employees of education group II are
comparatively less satisfied than others. Graduates of JKB mostly being freshers and
in non managerial category perceive strongly that JKB has no formal system of orienting
new hires and trainings are conducted just for formality sake.
6. The difference in perception level of employees within education groups I & II is
significant but insignificant among employes of education group III, across banks.
Moreover, across education groups within banks, the difference is again found to be
insignificant.

RECOMMENDATIONS AND CONCLUSION

Induction stage is the critical phase in the employment process and needs lot of planning
and preparations on part of management in order to attract, develop credibility among new
recruits about the organization. The induction programs should be implemented in a
structured manner and applied uniformly across the organization. The study suggests the
following measures for effective induction programe:
Induction training objectives should be specific, addressed to future assignments and involve
some objectivity.
38  Strategic Service Management

 Employees with professional and technical qualifications should be put at such positions
where their skills get more advanced and later be utilized for the same. This needs to
be done at the induction stage only.
 Majority of employees in banks particularly of JKB are not exposed to proper induction
training, resulting in knowledge gap which can be covered through e-learning. Further,
there should be no restriction on knowledge acquisition and an employee who is
interested in learning various aspects of banking which may not be otherwise related
to his or her current assignment should be encouraged to do so through e-learning.
 Trainings and development activity has a correlation with career growth of an employee
and therefore it must be seriously taken by both employee and the employer.
 Induction trainings should be imparted on professional lines so that new entrants
understand certain basic information about their jobs and work culture. A well panned
induction course can help in decreasing rate of attrition thus helping new starters
settle quickly with their jobs and reach an efficient standard of performance as soon as
possible.
 Induction program including various aspects of the organization viz, emergency
procedures, facilities, safety issues, rights of the employee, compensation, equal
opportunity with no harassment, effective grievance procedures, empowering employees
with responsibilities, timely accomplishment of tasks as per standards, functions of
different departments, etc. the, how the employee will be managed, what the
performance management process will involve, and his/her role in that process, are
the concern areas during an Induction program.
 Induction should be conducted on the first day of the new recruit. For induction only
higher management or Head of HR or Senior should address the new entrant along
with employees of the new entrant department and encourage employees to interact.
 An effective induction helps a new employee feel assured and comfortable in the new
environment, which is critical for early uptake in the new role.
 It should also provide an opportunity to the new entrant to engrain the original
values and ethics as well as the style of functioning.
 Escorting a new entrant will be one of the best and most impactful induction steps. It
should always be interesting and must hold the attention of the new employee.

References
 Mufeed S A (2008), PAS Practices – An Instrument for developing superior performance – An
empirical study published in the proceedings of the 1st International Congress on pervasive computing
in Managemen by Sydney college of Management Australia (isbn978-9805956-0-4).pp 23-37.
 Mufeed S A (2009), “An Easier Look on Training need assessment system (TNA) in the banking sector
– An empirical study published in the IHRD Conference proceedings by Institute of International
Human resource development, National Taiwan Normal University.(ISSN#2070-926X) pp 18-25.
 Need for Induction Training for Employees in Indian Service Organizations  39

 Priyadarshini R Rani Geetha and Venkatapathy R.,(2003-04), “Impact of HRD on Organization

Effectiveness in the Banking Industry”, Prajnan, Vol XXXII, No.2, pp 156-172.
 Saiyaddain Mirza S. (2001), “Managing The Organizations of Tomorrow -HRD Approach”, Abhigyan,
vol XVIII, No .5. XIX no.1 Jan-June (2001), pp 189-197.
Many software based companies have designed induction modules for companies of various types out
of which renowned software company Blue Apple offers software that automates the entire induction
training process; the interface is user-friendly and intuitive, putting the user at ease immediately. With
this software in place, induction training can be conducted for individuals or groups on demand and
online; eliminating the need for managers to disrupt their daily routine and conduct induction personally.
Conversely it also adds to the comfort of the new employee, by providing information on demand and
as often as required.
40  Strategic Service Management

TABLE 1: CADRE WISE PERCEPTIONS OF EMPLOYEES TOWARDS INDUCTION TRAINING

ACROSS AND WITHIN BANKS
Factors Cadres SBI JKB ICICI Total ANOVA
M %M M %M M %M M %M
S S S S
Induction m 3.47 61.8 3.33 58.3 3.58 64.5 3.42 60.5 0.419
nm 3.64 66.0 2.96 48.9 3.41 60.3 3.42 60.4 0.002*
p-value 0.293 0.048 0.456 0.993
t-test
m 3.64 66.0 3.18 54.4 3.87 71.7 3.45 61.2 0.000*
Well nm 3.81 70.4 3.00 50.0 3.53 63.2 3.54 63.6 0.000*
Planned
p-value 0.231 0.322 0.121 0.322
t-test.
m 3.57 64.3 3.02 50.6 3.71 67.8 3.32 58.1 0.000*
Sufficient nm 3.65 66.2 2.80 45.1 3.33 58.3 3.36 59.0 0.000*
Duration
p-value 0.633 0.265 0.057 0.710
t-test
Excellent m 3.89 72.2 3.40 60.1 3.84 71.1 3.64 66.0 0.002*
Opportunity
nm 3.72 68.0 3.17 54.3 3.45 61.2 3.51 62.7 0.014*
p-value 0.268 0.226 0.066 0.180
t-test
m 3.65 66.3 3.21 55.2 3.76 69.1 3.45 61.3 0.002*
Norms and nm 3.82 70.6 2.85 46.2 3.72 68.1 3.59 64.8 0.000*
Values
p-value 0.271 0.055 0.852 0.167
t-test
m 3.33 58.1 3.01 50.2 3.55 63.8 3.20 55.1 0.027
MIST nm 3.47 61.9 2.91 47.8 3.33 58.3 3.31 57.7 0.029
p-value 0.385 0.667 0.313 0.338
t-test
m 3.59 64.8 3.19 54.8 3.72 68.0 3.41 60.3 0.000*
IT nm 3.69 67.2 2.95 48.7 3.46 61.6 3.46 61.4 0.000*
p-value 0.410 0.117 0.099 0.598
t-test
 Need for Induction Training for Employees in Indian Service Organizations  41

TABLE 2: AGE AND EDUCATION WISE PERCEPTIONS OF EMPLOYEES TOWARDS INDUCTION

TRAINING ACROSS AND WITHIN BANKS
Demogra- Groups SBI JKB ICICI Total ANOVA
phic
M %MS M %M M %M M %M
Variables
S S S
Age 25 to 3.4 60.8 2.9 46.7 3.5 62.5 3.4 59.5 0.002*
30
31 to 3.5 62.5 3.1 52.3 3.6 65.0 3.3 57.4 0.004*
40
Above 3.7 68.4 3.3 57.4 3.9 71.7 3.6 65.2 0.005*
41
a 0.735 0.281 0.538 0.385 0.985
b 0.079 0.057 0.320 0.020
c 0.090 0.190 0.490 0.001
Edu Qual PGs 3.5 62.3 3.2 54.7 3.6 64.0 3.4 60.1 0.017*
and
above
Gradu- 3.7 68.1 3.0 51.0 3.5 63.4 3.4 60.3 0.000*
ate
10+2 3.9 71.7 3.5 63.1 3.5 62.7 3.6 66.0 0.412
a 0.055 0.066 0.293 0.282 0.895 0.966 0.92 0.183 0.158
b 0.060 0.344 0.796 0.07
c 0.467 0.171 0.901 0.08
42  Strategic Service Management

Effect of Job Satisfaction on Turnover/Attrition

Turnover/Attrition
among Non-teaching Employees

Dr. Jeevan Jyoti Gupta*

Pooja Gupta**

Employee attrition/turnover is a universal problem among the organizations. Employee attrition/

turnover implies movement, shifting or migration of employees from one organization to another
in order to get better job which has higher status. Job satisfaction plays a magnificent role in
attracting and retaining employees. The primary objective of this paper is to examine the
relationship between the job satisfaction and attrition/ turnover. Data were collected from 300
non-teaching employees working in University of Jammu. The attitude of employees was
analyzed with the help of job satisfaction scale and intention to leave scale. The statistical tools
were applied to analyze the data viz. mean, factor analysis, correlation, and regression. This
study has taken into account all the six dimensions of job satisfaction in order to find their
impact on attrition/turnover. The results indicated that employees working in University of
Jammu have low intention to leave.
Keywords: Job Satisfaction, Job Turnover, Intension to Leave

INTRODUCTION
In today’s taxing business environment, managing company’s competent and skilled human
capital is vital for the success of the organization (Nair & Gavane, 2007). As such organizations
invest major chunk of their resources in employing human capital. Despite such efforts,
departure of employees is often unexpected and which forces administrators to spend
additional valuable time and efforts in recruiting, selecting and training replacements (Buck
and Watson, 2002) and which impacts the attrition level. The level of attrition may vary
from country to country and city to city. Employee attrition is considered as costly dilemma
for all organizations since profitability, the cost of sales, the cost of recruitment and training,
etc. are always affected by attrition. (Doshi 2000).
* Asst. Professor, Department of Commerce, University of Jammu, Jammu
** Research Scholar, Department of Commerce, University of Jammu, Jammu
 Effect of Job Satisfaction on Turnover/Attrition among Non-teaching Employees  43

Although some degree of attrition may be necessary for the organization, as it brings new
ideas and removes the rust that sets in with staying for a long time in the same job function.
It also helps the organization to cope better with the changing environment but the situation
becomes alarming when the intensity of attrition extends to higher limit (Kulshreshtha &
Kumar, 2005).

REVIEW OF LITERATURE
No organization in today’s competitive world can perform at peak level unless each employee
is satisfied and committed to the organization’s objectives and work as an efficient team
member. Researchers over the year have established job satisfaction as a predictor of employee
turnover/attrition (Nicholson et al, 1977) which is negatively related to turnover/attrition
(Poon, 203, 2004; Camp, 1993, and Samad, 2006). Job satisfaction and turnover/attrition
effect employee performance and work productivity. Satisfied employees tend to be more
loyal to the organization and perform more willingly and happily, which increases the
productivity as well as its quality. The behaviour of an employee is improved when he is
satisfied with his job. On the other hand, dissatisfied employee prefers the exit channel or
neutral productivity (Nicholson et al, 1977). They do not like to work hard or demonstrate
their capacities and continued work as an uninterested persons. If they are pressurized to
resort to unhealthy and disinterested jobs, they prefer to leave the job (Mishra, 2002).
Higher job satisfaction is associated with lower turnover/attrition. The more satisfied
employees are, less likely they will think about quitting the job (Ellickson and Logsdon,
2001). Similarly those employees, who have lower satisfaction, usually have higher rates of
turnover (Greenberg and Baron, 1991). Employees may lack self-fulfillment, receive little
recognition on the job or experience continual conflicts with supervisor or peer due to
whom they are more likely to seek green pasture elsewhere and leave their organization
(Newstrom & Davis, 2004).
Singh and Kumar (2005) indicated that there is a moderate relationship between satisfaction
and turnover/attrition. When there is little unemployment in the economy, there may be
an increase in turnover/attrition because employees will begin looking for better opportunities
with other organizations even if they are satisfied. On the other hand, if jobs are tough to
get and downsizing is occurring dissatisfied employees will stay where they are. Okpara et
al, (2005) remarked that organizations with excellent working environment, good supervisors,
unbiased promotion policies, excellent co-workers, and better salary level and externally
competitive are more likely to have employees satisfied with their jobs. Such organizations
will also be attract and retain high quality employees.

HYPOTHESES
The study of core literature helped in the formulation of following hypothese which are
discussed as under:
Rad and Yarmohammadian (2006) found that employees are moderately satisfied with
their job. They remarked that highest level of dissatisfaction is present with respect to
salary, benefits and working conditions. In this context Syptak et al, (1999) remarked that
44  Strategic Service Management

employees will be more motivated to do their jobs well if they have ownership of their
work. Besides, literature revealed a significant relation between job related information and
job satisfaction. Job-relevant information had an intervening effect on the relationship
between participation and job satisfaction (Lau and Sharon, 2003). This has led to the
formation of the first hypothesis:
Hyp 1: Employees are moderately satisfied with their job.
Job satisfaction is a predictor of employee turnover. A satisfied employee tends to be more
loyal to the organization, perform more willingly and happily and also induces to remain in
the organisation. According to Poon, ( 2004 & 2005) and Camp, (1993), when employees’
perceived performance ratings were manipulated as a result of raters’ personal bias and
intent to punish subordinates, reduced job satisfaction and greater intention to quit was
observed amongst employees. Thus the next hypothesis is:
Hyp 2: There is inverse relationship between job satisfaction and intention to leave.
Economic reasons such as low wages and lack of incentives are primarily considered responsible
for high employee turnover (Spector, 1996, Barky 1996 and Mano et al. 2004). On the
other hand, Griffeth et al. (2000) indicated that pay and pay related variables have moderate
effect on turnover. They remarked that insufficient rewards to the high performers induce
them to quit the organisation whereas attractive financial incentives induce employees to
remain with the organisation. On the contrary, Hewitt (2006) revealed that salary was not
only the sole motivating factor for an employee to leave an organisation, but inequity-in
compensation followed by limited career opportunities and role stagnation also influence
employee turnover. Besides, other factors such as leadership, lack of understanding with
colleagues, poor hiring practices, managerial style, poor supervision, lack of recognition,
lack of competitive compensation system in the organisation and toxic workplace
environment also contribute to the employee turnover (Abassi & Hollman, 2000 and
Chakraverty, 2006). This has led to the development of the following hypothesis:
Hyp 3: All the dimensions of job satisfaction viz; job characteristics, colleagues, superior,
salary and benefits, career advancement opportunities & recognition and physical
environment affect intention to leave.

RESEARCH DESIGN AND METHODOLOGY

The present research is evaluative and exploratory in nature as it tries to find out the
relationship between job satisfaction and intention to leave and impact of different factors
that influence this relationship. The methodology included the following steps to make the
study more effective and accurate:

Generation of Scale Items

The self designed schedule comprising two different scales i.e. Job Satisfaction Scale (JSS)
and Intention to Leave Scale (I LS) were finalized after reviewing the existing literature and
extensive discussion with the experts.
 Effect of Job Satisfaction on Turnover/Attrition among Non-teaching Employees  45

The first section comprised of 66 statements related to job satisfaction. The job satisfaction
of non-teaching employees was measured with the help of a job satisfaction scale based on
extension and modification of Job Descriptive Index (JDI) (Smith et al., 1969). The Job
Descriptive Index is one of the most popular measures of job satisfaction and has been
found to produce highly reliable results and its validity is well established in the literature
(Angelo et al., 2002). The JDI measures satisfaction from five facets namely, work, pay,
promotional opportunities, supervision and co-workers. The Job Satisfaction Scale used for
this study comprised of six dimensions with sixty six statements. These dimensions include
job characteristics (12 statements), co-workers (10 statements), superior/supervisor (12
statements), salary and financial benefits (14 statements), career advancement/promotion
& recognition (11 statements), and physical environment (11 statements). The quitting
behaviour of non-teaching employees was measured with the help of an Intention to Leave
Scale based on questionnaire developed by previous researchers viz. Callister (2006), Camp
(1993) and Burke (2001). The schedule comprised of eight statements related to intention
to leave.

Sample and Response Rate

The population for the study comprised of 848 non-teaching employees of University of
Jammu. To determine the sample size, a pilot survey of fifty respondents selected conveniently
was conducted to work out the mean and standard deviation in the population with the
help of following formula (Mukhopadhya, 1998, p.21-32)
1.96√S.D √N-n/n*N = 0.05* mean
Where S.D = Standard Deviation, N = Total population, n = Sample population, Mean =
sample mean.
After determining the mean and standard deviation in the population (N 848), the sample
size was worked out at 263, which represents the minimum of respondents that need to be
contacted. However, in order to make the sample more representative, simple in calculation
and better in interpretability, the sample size was increased to 300. Hence, from 848
employees 300 employees were selected as sample. The selection of employees was done on
the basis proportionate stratified sampling using following formula:
n/N* Sample size (Malhotra, 2002, p.266-291)
Finally the chit method was used to select the employees. The respondents were personally
contacted and they were explained the reason for the research. All the respondents responded
properly. Hence, the response rate came 100 percent.

Statistical Tools Applied

The statistical tools used in this research include mean, standard deviation frequency
distribution, multiple correlation, multiple regression, ANOVA, and ‘t’-test. Convergent
validity is worked out through correlation between statements of different dimensions. The
reliability and the internal consistency of the data collected have been judged through tests
like the split half and Cronbach’s alpha.
46  Strategic Service Management

Data Purification
The multivariate data reduction technique of factor analysis has been used for the study.
Factor analysis was carried out to simplify and reduce the data through SPSS (15 version),
The principal component analysis method along with orthogonal rotation procedure of
varimax for summarizing the original information with minimum factors and optimal coverage
was used. The statements with factor loading less than 0.5 and Eigen value less than 1.0
were ignored for the subsequent analysis (Hair et al., 1995).
The Job Satisfaction data was subjected to factor analysis twice. Initially it was carried with
all the statements from six dimensions of Job Satisfaction. Job Satisfaction being a multi-
dimension phenomenon, statements that got clubbed under fifteen factors belonged to
different dimensions of job satisfaction and it became logically very difficult to explain
them. Hence, factor analysis was performed dimension wise (Sharma and Jyoti, 2006) that
resulted into thirteen factors with 53 statements (Table 1) of job satisfaction.
Intention to leave scale consisted of seven statements that got compressed under one factor
(F16) after one round with positive factor loading values. High KMO value (0.887) and
Bartlett’s test of sphericity (chi square value 958.906) revealed the sampling adequacy for
factor analysis. The total variance explained has arrived at about 59 % (Table 2).

Reliability and Validity

To check the internal consistency of the data collected, the reliability tests viz. Cronbach
Alpha and split half value were worked out. The split-half reliability of the data was examined
by dividing the respondents in to two equal halves. Cronbach’s alpha values, for both
overall sample and split sample proved reliable (Table 3).
The content/face validity of the JSS, and ILS was duly assessed through thorough review of
literature and deliberations with the subject experts for the selection of items in the scales.
The high Kaiser–Meyer–Olkin Measure of Sampling Adequacy values, Bartlett’s Test of
Sphericity and Variance explained (Table 1) represent the construct validity.

Measurement of Job Satisfaction

The Overall degree of job satisfaction is not very high. The average satisfaction score has
arrived at 3.46 at 5 point Likert scale. However, it can be concluded that the employees
tend to be fairly satisfied with their job as revealed by the mean score. To test the level of
satisfaction among non-teaching employees, one Sample ‘t’ test was used at 0.05 level of
significance. With sample mean as 3.46 and test value as 3.00 (Table 4). The result revealed
significant difference between observed and test values (t =19.059, sig. <0.05) (Table 4).
Hence, the hypothesis that employees are moderately satisfied stands rejected (Hyp. 1).
Job satisfaction, being a multi-dimensional phenomenon, was calculated after calculating
satisfaction scored from various dimensions. The detailed analysis of each dimension is as
under:
 Effect of Job Satisfaction on Turnover/Attrition among Non-teaching Employees  47

Attitude towards Job Characteristics

The factorial mean satisfaction derived from different factors of job characteristics came to
be 3.50. Most of the non-teaching employees (82%) were satisfied with their job as they
find their job interesting (M=4.06) and much better than others (M=4.00), which make
them proud of their job (M=4.04). Moreover, they find themselves fortunate enough in
getting this job (M=4.03). Hence positive attributes of job (F1) enhance the job satisfaction
of non-teaching employees (R 2=0.382, b=0.620, sig. <0.01). It has been further found
that there are elements of flexibility (M=3.30) and autonomy (M=3.71) in their jobs.
Elements of flexibility and freedom also play a vital role to increase the level of job satisfaction
as the correlation between the two has arrived at 0.337 (sig. <0.01). On the other hand,
too much workload (M=2.64), complexities and hardships (M=2.74) at the workplace add
to dissatisfaction, due to which employees feel stressful (M=3.00). Thorough analysis of
the dimension revealed that positive attributes of job (F1) increase the employees satisfaction
whereas overloaded and complicated nature of job decrease their level of satisfaction. The
coefficient of correlation (r) and the coefficient of determination (r 2) between job
characteristics and job satisfaction have arrived at 0.515 and 0.265 respectively (sig. <
0.01) indicating the significant association between the two.

Attitude towards Co-workers

The nature of the workgroup also affects job satisfaction. Friendly and cooperative co-
workers are positive indicators of job satisfaction. The factorial mean for this dimension has
arrived at 4.01. Most of the non-teaching employees are satisfied with the qualities of their
colleagues (M=4.20 & 88%)) and their attitude (M=4.25 & 92%). Majority of them
(89%) find them cooperative (M=4.25), friendly (M=4.20) and eager to help each other
(M=4.14). About eighty three percent employees reported that there is the element of
trust amongst the colleagues (M=4.08) and tendency to get united at the time of crisis
(M=4.14). It can be inferred from the results that the good, cooperative and the friendly
colleagues help in enhancing the job satisfaction of employees. Although several studies
have reported presence of the element of groupism amongst the co-workers (Sharma and
Jyoti, 2006) but the same does not hold good in the present study as sixty three percent of
the respondents revealed that there is no groupism amongst them (M=3.64) and they feel
positively challenged by their colleagues (M=3.20). The correlation between attitude of
co-workers (F5) and job satisfaction is figured out at 0.163 (sig. <0.01). The overall results
showed that eighty percent employees were highly satisfied with their colleagues and their
relations with their co-workers were satisfactory. The coefficient of correlation(r) between
co-workers and job satisfaction was figured out at 0.432 (sig. < 0.01) while the coefficient
of determination (r2) has arrived at 0.187.

Attitude towards Supervisor/Superior

The factorial mean satisfaction derived from this dimensions has arrived at 3.99, which is
maximum as compared to satisfaction drawn from other dimensions of job satisfaction
(Table 1). The analysis revealed that most of the non-teaching employees (88%) are satisfied
with their supervisors/superiors and find them efficient administrators (M=4.17), and most
48  Strategic Service Management

likeable persons (M= 4.07) who give them good suggestions (M= 3.91) and job related
advice whenever needed (M=3.98). Moreover, they also appreciate their subordinates for
their better performance (M=3.94). It implies that employees are satisfied with their
supervisors due to their good behaviour and guiding approach. They further reported that
supervisors are cooperative (M=3.96) and exhibit convincing nature (M=4.01) as they
maintains good relations with every one (M=3.94). Further eighty percent respondents
reported that their supervisors/superiors are impartial (M=3.87) who give fair treatment
and respect to their subordinates (M=4.02). It indicates that positive attributes of superiors
(F6) help to enhance job satisfaction level of employees (Table 5). Despite all these positive
features, there were nearly half of the respondents who pointed out that supervisors/superiors
like to get work done on their own will (M=2.85), which is a source of dissatisfaction
among subordinates. After thorough analysis of this dimension it is concluded that positive
attributes and behaviour of the supervisors/superiors add to the satisfaction of their
subordinates. The coefficient of correlation (r) and the coefficient of determination (r2)
between supervisor/superior and job satisfaction have arrived at 0.469 (sig. < 0.01) and
0.220 respectively, indicating a significant relationship between the two.

Attitude towards Salary and Benefits

The factorial mean derived from this dimension of job satisfaction has arrived at 3.23,
which is minimum as compared to satisfaction drawn from other dimensions of job satisfaction
(Table 1). Majority of the respondents (92%) reported that they were satisfied with the
regularity of increments (M=4.18), pay (M=4.28) and retirement benefit schemes (M=3.67).
Nearly half of the respondents reported that they are satisfied with housing (M=3.19) and
dearness allowances (M=3.23) whereas thirty-nine percent employees were not satisfied
with the medical (M=2.90) and traveling allowances (M=2.89). It indicates that medical
and traveling allowances provided to employees were not adequate. Majority of the
respondents (88%) reported that there is no bonus payment system in University of Jammu
(M=1.38) but they reported that reward system is adequate (M=3.20) and salary they
(56%) receive is equivalentto their work. It implies that all aspects of pay are adequate
except bonus. The coefficient of correlation (r) and the coefficient of determination (r2) for
this dimension of job satisfaction have arrived at 0.387 (sig. < 0.01) and 0.150 respectively
indicating a low but significant association between the two.

Attitude towards Career Advancement/Promotion and Recognition

The factorial mean satisfaction derived from this dimension has arrived at 3.24. Half of the
employees reported that career advancement (M=3.30) and forty one percent employees
revealed that promotion is done on merit basis (M=3.03) and there are more chances of
advancement in the University of Jammu (M=3.14). About forty percent employees revealed
that there is lack of proper training facilities (M=2.92). Employees further expressed that
recognition does not come in the form of monetary rewards (M=2.32), but it comes in the
form of appreciation and praise (M=3.43) and they also got appropriate recognition for
their work (M=3.41). Overall analysis revealed that employees are satisfied with all aspects
of promotion and recognition except non-availability of financial rewards/incentives for
good work. The coefficient of correlation (r) and the coefficient of determination (r2) for
 Effect of Job Satisfaction on Turnover/Attrition among Non-teaching Employees  49

this dimension of job satisfaction have arrived at 0.355 and 0.123 (sig. < 0.01) respectively
indicating a weak but significant association between the two.

Attitude towards Infrastructure Physical Environment

The factorial mean satisfaction for this dimension was figured out at 3.58. Majority of the
respondents (65%) are satisfied with the infrastructure of their department (M=3.67) and
have enjoy properly illuminated and ventilated rooms (M=3.65). Moreover, the furniture
is also adequate and comfortable for them (M=3.52). They further reported that facilities
like drinking water, sanitary condition and cleanliness of bathrooms are adequate. Hence, it
can be concluded that availability of adequate infrastructure contributes to job satisfaction
of employees (Table 5). About fifty nine percent employees are also found to be satisfied
with the health services (M=3.55) and (64%) the housing facility (M=3.60). The coefficient
of correlation (r) and the coefficient of determination (r2) for this dimension of job satisfaction
have arrived at 0.294 and 0.086 (sig. < 0.01) respectively.
To check the influence of various dimensions on job satisfaction, regression analysis was
applied by keeping the master statement as dependent and different dimensions as
independent variables. The multiple regression revealed value of R at 0.624 and adjusted
R2 at 0.377. The equation (Table 6) is as below:
Job satisfaction = –1.087 + 0.331 (job characteristics) + 0.195 (colleagues) + 0.147 (superiors)
+ 0.082 (salary) + 0.099 (career advancement/promotion & recognition) – 0.004 (Physical
environment).
The overall analysis of job satisfaction revealed that all dimensions of job satisfaction are
not equally affecting the phenomenon of job satisfaction of non-teaching employees. Job
characteristics viz. autonomy, flexibility, enjoyable, interested job, sense of pride, etc. have
greater and significant impact on job satisfaction followed by co-workers and superiors. On
the other hand, salary & benefits, career advancement, promotion & recognition and physical
environment are not significantly affecting job satisfaction. These findings are in line with
previous studies conducted by Sharma and Jyoti (2006).

Attitude towards Intention to Leave

The mean score of intention to leave has arrived at 2.47 which shows that employees have
low intention to leave the organisation. Majority of the non-teaching employees (74%)
have no intention of leaving the University of Jammu. They (71%) indicated that environment
of university is not very conducive and there is adequate promotional avenues and
advancement opportunities. On the other hand, about fifty-eight percent employees reported
that they do not have the opportunity (M=2.41) and other options (M=2.33) to shift to
better jobs. It implies that not only better environment and advancement opportunities
but absence of options and opportunities to get a better job elsewhere also helps to reduce
their intention to leave among employees. The coefficient of correlation (r) and the coefficient
of determination (r2) between intention to leave and job satisfaction have arrived at -0.319
and 0.159 (sig. < 0.01) (Table 6) respectively indicating the negative significance of association
between the two. The result revealed that there is negative and significant relationship
50  Strategic Service Management

between job satisfaction and intention to leave. Hence, the hypothesis stands accepted that
job satisfaction is inversely related to intention to leave.

Impact of Various Dimensions of Job Satisfaction on Intention to Leave

The results of regression analysis revealed value of R at 0.364 and adjusted R2 at 0.115
indicating that the model explains 12 percent variation in intention to leave of employees.
The equation arrived at is given as under:
Intention to Leave = 4.457 – 0.139 (job characteristics) – 0.22 (colleagues) – 0.039 (superior)
+ 0.055(salary and benefits) – 0.037(career advancement, promotion and recognition) –
0.11 (physical environment)
The above equation reveals that all dimensions of job satisfaction do not have a significant
impact on intention to leave of non-teaching employees. Among all the dimensions of job
satisfaction, colleagues (b= 0.22, t= -3.25, p<0.05) followed by job characteristics (b=
0.139, t= -2.192, p<0.05) (Table 7) affect intention to leave of employees. Whereas other
dimensions do not account for significant contribution in the intention to leave of employees.
Hence the hypothesis is rejected that all the dimensions of job satisfaction contribute to
intention to leave of employees (Hyp. 3).

DISCUSSION AND CONCLUSION

The purpose of the current study was to determine the job satisfaction and impact of job
satisfaction on intention to leave among non-teaching employees working in University of
Jammu. The result obtained revealed that though non-teaching employees are moderately
satisfied but have low intention to leave the organisation. Non-teaching employees are
satisfied with the nature of their job, as their job is interesting and enjoyable one. This is
consistent with the findings of Rad and Yarmohammadian, (2006) and Oshagbemi, (2003).
Moreover, autonomy and flexibility at work place also play a vital role to boost up their
satisfaction level but complexities and overloaded job reduce it. Among all the dimensions
of job satisfaction, job characteristics affect job satisfaction the most. The result is consistent
with the study conducted by Sharma and Jyoti, (2005).
Non-teaching employees are highly satisfied with their colleagues. The findings are in line
with previous studies conducted by Ellickson and Logsdon (2001); Rad and
Yarmohammadian (2006); Oshagbemi (2003) and differ with research findings of
Chimanikire et al., (2007). Further absence of groupism is also inconsistent with Sharma
and Jyoti, (2005).
Employees are also highly satisfied with the positive attributes and good behaviour of their
superiors and dissatisfied with the dictatorial nature of their superiors (Sharma and Jyoti,
2006). It has been found that superiors’ behaviour also contribute to satisfaction level of
non-teaching employees. The result is supported by Ellickson and Logsdon (2001); Rad
and Yarmohammadian (2006) while it is inconsistent with Chimanikire et al., (2007).
Findings also indicate that non-teaching employees have low intention to leave the University
of Jammu. Further the job satisfaction and intention to leave are inversely related which is
inline with the previous study conducted by Poon, (2003 & 2004) and Callister, (2006).
 Effect of Job Satisfaction on Turnover/Attrition among Non-teaching Employees  51

Strategic Implications
Thorough analysis and interpretation of data collected has lead to following strategic
implications to improve the level of job satisfaction and decrease intention to leave the job
by non-teaching employees.
 Job Characteristics: Employees are moderately satisfied with their job characteristics.
In order to make employees fully satisfied more and more initiatives should be given
to them to enhance their satisfaction level and to minimize their intention to leave.
University should enrich their job by providing them more autonomy at the work place.
 Simplification of job for reducing complexities: To make the job less complex employees
should have the role clarity about the job assigned to them.
 Reduction of workload: The work allotment should be according to employee’s
capabilities to reduce their stress and increase their overall work performance which
will subsequently enhance their satisfaction level and lessen the intention to quit the
job.
 Filling of vacant posts: Advance planning should be done to fill the posts which are at
present vacant or to be vacated in the near future without wasting anytime so that the
work load is shared among all equally as per their capability which results in increasing
the efficiency and performance of employees.
 Role of superior: Superiors ought to change their authoritative nature towards their
subordinates and must adopt participative and guiding style of leadership.
 Salary: The present inflation index has made it very difficult to make both ends meet.
Two way action is recommended:
 Increase in salary: A proper salary that satisfies the wants of an employee is the
foremost requirement for ensuring job satisfaction and reducing employee
turnover.
 Increase in tax exemption limit: with the increase in tax rates, there must be
increase in the tax exemption limit too, i.e. from Rs 150000 to Rs 300000, if
the tax exemption limit is not increased then most of their income goes to the
government exchequer and it would not be possible for them to maintain their
standard of living in present inflationary conditions.
 Allowances: Appropriate measures ought to be undertaken in order to provide
allowances to employees to enhance their satisfaction level and to reduce employee
turnover.
 Bonus: Besides salary package bonus also plays a significant role in attracting and
stimulating employees to work. So besides enhancing the pay package, the timely
bonus should also be provided to employees for their good work so that they are
motivated to perform better.
 Career advancement: The atmosphere at work place shall be such that it continuously
works towards employees’ progression and advancement, in skills and responsibilities,
52  Strategic Service Management

by using the full range of employee knowledge and skills. Opportunities shall be
provided for challenging assignments, considering reassignments.
 Proper training facilities: In University, only ‘on the job training’, i.e. induction training
is given to employees and no further training is provided to employees due to which
they have no knowledge for performing the jobs perfectly after promotion. Whenever
there are internal promotions employees should be first mentally and physically
prepared for that job by providing job training. Hence proper training courses should
be offered to enhance the skill of employees which further enhance their satisfaction
level.
 Promotion policy: Most of the employees responded that the present promotion policy
is not genuine as it is based on seniority and not on merit basis and this fact adds to
their frustration. Highly qualified employees are least satisfied with this criterion
because highly qualified employees have lower ranks than less qualified employees.
So, to make the employees fully satisfied merit along with seniority should also be
considered while promoting employees.
 Recognition for hard work: University should also decide to make use of a reward
system to recognize those employees who perform their job well. Rewards can be of
different forms such as monetary rewards and non-monetary rewards in the form of
introduction of merit certificate, etc.
Physical environment: Better working conditions such as adequate furniture and more clean
bathrooms should be provided to the workers in order to generate an amicable atmosphere
in the University. Besides these the various other strategies on how to minimize employee
turnover, confronted with problems of employee turnover, management has several policy
options viz. changing (or improving existing) policies towards recruitment, selection,
induction, training, job design and wage payment.
Organisational commitment is an affective response to the whole organisation and the
degree of attachment or loyalty that employees feel towards the organisation (Brooke et al.,
1988). The degree of commitment and loyalty can be achieved if management enrich the
jobs, empower and compensate employees properly.
Empowerment of employees could help to enhance the continuity of employees in
organisations. (Malone, 1997). For instance, superiors are empower their subordinates by
delegating responsibilities to them (Keller and Dansereau, 1995), which can make employees
committed to the organization and minimize their chances of quitting the organization.
All this will not only enhance the level of job satisfaction of the employee but will also
improve their degree of organizational commitment and reduce their intention to leave.

LIMITATION AND FUTURE RESEARCH

All feasible efforts were made to maintain objectivity, reliability and validity of the study,
yet certain limitations could not be ignored and are required to be kept in mind whenever
its findings are considered for implementation. These limitations include:
 Effect of Job Satisfaction on Turnover/Attrition among Non-teaching Employees  53

1. The study has measured employees’ job satisfaction and intention to leave on the
basis of the employees’ responses who might have been guided by their likes and
dislikes.
2. The scope of the study was limited to University of Jammu only.
3. The data was collected only from the non-teaching employees.
4. Non-availability of sufficient literature on intention to leave might have led to exclusion
of some important statements and thus only limited domain of the research problem
was taken up.
To certain extent the aforesaid limitations have affected the findings of the study. In spite of
these unmanageable lacunae at individual level, an effort has been made to maintain the
validity and reliability of the research work, and as such research in future ought to be
initiated carefully in the light of the aforesaid limitation.
The present study provides a scope for additional research using multivariate models SEM
to predict and explain variation in job satisfaction and intention to leave among employees.
Interrelationship among all the three variables viz. job satisfaction organizational
commitment and intention to leave is required to be measured. Further comparative study
between different organizations vis-à-vis public versus private, public versuss public and
private versus private can be undertaken.

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56  Strategic Service Management

TABLE 1: SUMMARY OF RESULTS FROM SCALE PURIFICATION OF JOB SATISFACTION DATA:

FACTOR LOADINGS, VARIANCE EXPLAINED, MEAN, S.D., KMO VALUES, EIGEN VALUES, AND
COMMUNALITIES
Dimensions Factors Mean S.D F.L Com. V.E KMO E.V
F1 Positive attributes of
4.04 0.39
job
Job is interesting 4.06 0.91 0.819 0.693
32.48 2.92
Job is better than others 4.00 0.85 0.821 0.700
Proud of job 4.04 0.83 0.888 0.827
Feel lucky 4.03 0.86 0.811 0.678 0.736

F2 Negative attributes of
Job 2.79 0.55
job
characteristics
Workload in job 2.64 1.05 0.789 0.632 20.82 1.87
Difficult and complex job 2.74 1.08 0.791 0.629
Job is stressful 3.00 1.02 0.775 0.610
F3 Autonomy 3.50 0.69
Freedom in doing work 3.71 0.99 0.76 0.696 16.10 1.45
Flexible working hours 3.30 1.20 0.876 0.782
Total 3.44 0.54 69.40
F4 Qualities of Co-
4.18 0.37
workers
Good qualities 4.20 0.77 0.791 0.632
Good attitude 4.25 0.72 0.824 0.678
Cooperative 4.25 0.75 0.847 0.718 54.58 4.91
Friendly nature 4.20 0.78 0.849 0.731
Co-workers
0.89
Help each other 4.14 0.84 0.874 0.771
Unite in the time of crisis 4.14 0.79 0.772 0.597
Trusted 4.08 0.87 0.825 0.685
F5 Attitude 3.42 0.89
Feel positively challenged 3.20 1.25 -0.841 0.740 13.64 1.23
Groupism 3.64 1.27 0.701 0.588
Total 3.80 0.63 68.22
F6 Attributes of
3.99 0.36
supervisor
Good administrator 4.17 0.87 0.835 0.697
Likeable person 4.07 0.83 0.876 0.767
Convince co-workers 4.01 0.89 0.815 0.663
Job related advice 3.98 0.96 0.843 0.710
70.11 0.93 7.01
Good suggestions 3.91 0.90 0.859 0.738
Supervisor Maintain good relation 3.94 0.88 0.882 0.778
Fair treatment and respect 4.02 0.88 0.731 0.535
Impartial person 3.87 0.90 0.831 0.690

Contd...
 Effect of Job Satisfaction on Turnover/Attrition among Non-teaching Employees  57

Praises for perform better 3.94 0.86 0.805 0.694

Cooperative 3.96 0.86 0.885 0.783
Total 3.99 0.36 70.11
F7 Allowances 3.11 0.55
Medical allowance 2.90 1.19 0.847 0.748
24.60 2.46
Housing allowance 3.19 1.16 0.92 0.893
Dearness allowance 3.23 1.11 0.833 0.777
F8 Receipt of Pay &
4.23 0.47
Increments
16.71 1.67
Regular increments 4.18 0.67 0.811 0.695
Get pay on fixed day 4.28 0.84 0.826 0.706
Salary & F9 Economic Benefits 3.31 0.60
0.76
Benefits
salary is equal to work 3.36 1.20 0.675 0.622
Retirement benefit 16.61 1.66
3.67 0.95 0.704 0.643
scheme
Traveling allowance 2.89 1.17 0.749 0.582
F10 Rewards 2.29 0.86
Inadequate reward 12.61 1.26
3.20 1.10 -0.793 0.704
system
Regular bonus payment 1.38 0.82 0.78 0.682
Total 3.23 0.62 70.53
F11 Facilities for Adv.
3.10 0.53
&Training
Career advancement is on
3.30 1.15 0.812 0.687
merit
36.28 2.54
Chance of advancement 3.14 1.06 0.75 0.674
Facilities for training 2.92 1.05 0.743 0.607
Promotion is merit -based 3.03 1.21 0.776 0.623
Advancement 0.82
F12 Recognition 3.42 0.51
Receive appropriate
3.41 1.01 0.791 0.703
recognition for work
Informal praise and 33.84 2.37
3.43 1.07 0.855 0.789
appreciation for work
Recognition in the form of
3.44 1.02 0.894 0.826
appreciation
Total 3.26 0.52 70.11
F13 PHYSICAL
3.58 0.42
ENVIRONMENT
Infrastructure of dept. 3.67 1.07 0.775 0.600
Lighting &ventilation 3.65 1.05 0.761 0.578
Good health services 3.55 1.00 0.763 0.582
62.03 0.90 4.96
Sanitary condition 3.58 0.98 0.868 0.754
Environment Bathrooms are clean 3.45 1.10 0.827 0.683

Contd...
58  Strategic Service Management

Filtered drinking water 3.62 1.09 0.838 0.702

Housing facility 3.60 1.04 0.744 0.554
Adequate furniture 3.52 1.09 0.744 0.509
Total 3.58 0.42 62.03

Grand Mean 3.46

TABLE 2: SUMMARY OF RESULTS FROM SCALE PURIFICATION OF INTENTION TO LEAVE DATA:

FACTOR LOADINGS, VARIANCE EXPLAINED, MEAN, S.D., KMO VALUES, EIGEN VALUES, AND
COMMUNALITIES
Dimensions Factors Mean S.D F.L Com. V.E KMO E.V
Intention to Leave 2.47 0.67
Join some other 1.93 1.08 0.790 0.624
profession on same
pay
Looking different job 1.94 1.09 0.774 0.600
in different org.
Opportunity to get a 2.41 1.30 0.815 0.664
better job
INTENTION Env. is not good in 2.04 1.10 0.731 0.535 58.79 0.89 4.12
TO LEAVE org.
No opportunity for 2.36 1.18 0.766 0.587
advancement in the
org
Other options 2.34 1.16 0.741 0.549
available
Doing job under 2.13 1.15 0.746 0.557
tension
Total 2.47 0.67 58.79

TABLE 3: RELIABILITY STATISTICS OF JOB SATISFACTION SCALE AND

INTENTION TO LEAVE SCALE
JSS ITL

Mean Part1 3.59 3.73

Part2 3.62 3.95

Cronbach’s Alpha 0.932 0.882

TABLE 4: ONE-SAMPLE STATISTICS

Test Value = 3.00

95% Confidence Interval of the
Mean Difference
t df Sig. (2-tailed) Difference Lower Upper
Job
19.059 299 0.000 0.45807 0.4108 0.5054
Satisfaction
 TABLE 5: MODEL SUMMARY OF REGRESSION SHOWING INFLUENCE OF DIFFERENT DIMENSIONS AND FACTORS ON
OVERALL JOB SATISFACTION

Dependent Independent R Adj. R2 b t Sig. f Sig. Tolerance VIF CI

Job Characteristics 0.515 0.262 0.515 10.36 0 107.30 0 1 1 13.61

F1 0.582 11.67 0 0.825 1.21
F2 0.627 0.387 0.022 0.48 0.63 63.85 0 0.994 1.01 16.95
F3 0.097 1..95 0.05 0.829 1.21
Colleagues 0.432 0.184 0.432 8.26 0 58.35 0 1 1 13.67
F4 0.439 7.97 0 0.892 1.12
0.445 0.198 35.72 0 15.70
F5 0.019 0.35 0.73 0.892 1.12
Superior/F6 0.469 0.22 0.469 9.18 0 84.24 0 1 1 10.92
Job Satisfaction Salary& Benefits 0.387 0.147 0.387 7.24 0 52.46 0 1 1 12.06
(JS)
F7 0.164 2.68 0.00 0.755 1.33
F8 0.084 1.45 0.15 0.842 1.19
0.410 0.168 14.88 0 23.44
F9 0.26 4.21 0 0.737 1.36
F10 -0.029 -0.54 0.59 0.958 1.04
Career adv. /pro. 0.355 0.123 0.355 6.56 0 43.03 0 1 1 8.38
F11 0.177 2.81 0 0.741 1.35
0.359 0.123 22.04 0 9.50
F12 0.236 3.75 0.00 0.741 1.35
Physical environment/
0.294 0.08 0.294 5.31 0 28.21 0 1 1 8.79
F13
Key: VIF- Variance Inflation Factor, CI- Condition Index, Sig.- Significance level, b- beta value, Adj.- Adjusted
Effect of Job Satisfaction on Turnover/Attrition among Non-teaching Employees  59
60  Strategic Service Management

TABLE 6: REGRESSION COEFFICIENTS SHOWING THE EFFECT OF DIFFERENT DIMENSIONS ON

JOB SATISFACTION
Unstandardised Standardised t Sig.
Coefficient Coefficients
Model b Std. Error Beta
(Constant) -1.087 0.384 -2.83 0.005
Job characteristics 0.611 0.098 0.331 6.249 0.00
Coworkers 0.314 0.092 0.195 3.425 0.001
Superior 0.191 0.08 0.147 2.384 0.018
Salary & benefits 0.145 0.101 0.082 1.431 0.154
Career advancement/
promotion 0.12 0.067 0.099 1.791 0.074
Physical environment -0.005 0.064 -0.004 -0.08 0.936
*Dependent Variable: Job Satisfaction

TABLE 7: REGRESSION COEFFICIENTS SHOWING THE EFFECT OF DIFFERENT DIMENSIONS OF

JOB SATISFACTION ON INTENTION TO LEAVE

Unstandardised Standardised t Sig.

Coefficient Coefficients
Model b Std. Error Beta
(Constant) 4.457 0.323 13.793 0
Job characteristics -0.18 0.082 -0.139 -2.192 0.029
Coworkers -0.251 0.077 -0.22 -3.25 0.001
Superior -0.036 0.067 -0.039 -0.53 0.597
Salary & benefits 0.069 0.085 0.055 0.81 0.419
Career advancement/
promotion -0.032 0.056 -0.037 -0.57 0.569
Physical environment -0.091 0.054 -0.111 -1.688 0.092
*Dependent Variable: Intention to leave
 Strategies for Entrepreneurship Development in Jammu Province  61

Strategies for Entrepreneurship Development in

Jammu Pr ovince
Province

Dr Neetu Chopra*

The state of Jammu & Kashmir has been bestowed with ample entrepreneurship talent and
skills. Both central and state governments have been pursuing policies for promoting small-scale
industries. The small-scale industries play a pivotal role in raising the economic status of people
and removing economic and industrial backwardness. The industrial set up in J&K state is
very much disturbed due to militancy and some other constraints such as the geographical
conditions, inadequate communication facilities and restrictions on the capital investment for
tapping its natural resources, etc., restricting it from achieving the objective of industrial
development. New industrial policy aiming at the development of nation has been introduced
by Department of Industries (DICs) to enhance economic development of all the regions of the
state but still in the state, out of 48,224 SSI units registered up to March 2007, only 21,1140
SSI units are functional both in rural and urban areas. Out of these total units, 3,204 units are
sick (RBI Report, 2007) with an amount outstanding of Rs 4072.7 lakh (Economic Survey of
J&K State, 2006-07).
Keywords: Enterpreneurship, Personality Traits, Motivating Factors and Subsidy

INTRODUCTION
Before the establishment of DIC (District Industrial Centre) in 1978 in each district of
J&K state, industrial activities, were encouraged in a planned and organised way (Economic
survey, 2006-07). Thereafter, the state witnessed a comparatively better & improved
performance in the growth of SSIs. Jammu province has ten districts viz; Jammu, Udhampur,
Kathua, Doda, Rajouri, Poonch, Samba, Reasi, Ramban and Kishtwar (RBI 2007).

*
62  Strategic Service Management

The concentration and development of entrepreneurship has been studied in terms of

entrepreneurial profile on the basis of information gathered from purposively selected two
districts viz., Jammu and Udhampur being hilly and plain districts of Jammu province
respectively.
Though there were 1,373 SSI units registered with DIC & SICOP in the Digiana 113,
Gangyal 250, Thanda Paddar 20, Battal Ballian 250 and Chenani block 337 of Jammu
province but only 193 units from Gangyal, 79 units from Digiana, 13 units from
Thandapaddar, 20 units from Battal Ballian and 20 units from Chennai were found
functional. All these functional units were approached personally for collecting information
through a self developed questionnaire. All functional units were approached for the required
data but only 90 units from Gangyal, 60 units from Digiana, 13 units from Thanda Paddar,
20 units from Battal Ballian and 20 units from Chenani provided needful information. The
present study continued with the following objectives & hypotheses:
Obj 1: There is positive impact of incentives on the industrialisation process in both hilly
and plain areas, particularly in Jammu province of J&K state.
Hyp 1: To find out the impact of different kinds of financial incentives on entrepreneurship
development in Jammu Province for working out the most suitable package of the same for
better and fast process of industrialisation in the state.
Hyp 2: Personal factors influence entrepreneurship skill and business performance of
entrepreneurs/industrialists.
Obj 2: To examine the importance of personal factors in developing entrepreneurial skill
among industrialists of Jammu province.
Hyp 3: The present status of small-scale industries in Jammu province shows gradual
improvement in the process of industrialisation.
Obj 3: To examine the status of small-scale industries in Jammu province so that appropriate
efforts are identified for improvement.
Differences between the different industrial areas of Jammu province regarding various
entrepreneurial factors will be found out through one way analysis of variance. Again,
impact of subsidies on growth of small-scale industries in Jammu province was found out
through regression equation (Mushtaq, 2004). The status of small-scale industries in Jammu
province is summarised on the basis of information gathered from 203 respondents from
different blocks of Jammu and Udhampur districts.
Majority of the units surveyed (31.5%) in the area selected were set up by entrepreneurs
during their age of 40-50 years, showing high inclination of maturity and confidence
towards setting up units. Again 23.6% of the units were set up by the people during 20-30
years of age, showing interest by young persons also for setting up units. It shows that
people of early and middle age having more attention towards entrepreneurship than people
belonging to age groups of 50 years & above (Table 1).
Majority of the units have been set up by the entrepreneurs having college level education
(31.5%), followed by higher secondary education (16%), privacy level education (14%)
 Strategies for Entrepreneurship Development in Jammu Province  63

and university level education (11%) respectively. Again people having B.E degree (9%),
followed by B Pharma qualification (8%), CA (5%) and MBA degree holders (4%) are not
much interested or setting up industries in Jammu Province. Again, majority of the units
have been set up by the male members (77%), showing negative attitudes of women for
setting SSI units. Out of total respondents, 72% were from business background. In addition
to this, majority of responding units are in the form of proprietorship business (50%) and
are in the hands of Brahamin and Bania/Gupta communities (19%) each followed by Sikh
(18%) and Jain (16%) respectively.
Maximum number of units surveyed in the province were set up during 1980-2000 (51%)
and with the initial investment falling in Rs. 1-10 lakh, followed by Rs. 10-20 lakhs,
Rs. 20-30 lakhs, Rs. 30-40 lakhs and above Rs. 40 lakhs. About 9% units have been set up
with initial investment below Rs. 1 lakh. Majority the unitholders had working experience
in the same line of business.
The SSI units in both the districts cover products of different kinds. About 36% of the
units are in iron, steel & aluminum followed by wooden (14%), food products (13%),
rubber, plastic and leather materials (12%) and gun materials (11%), cement (2.4%).
Very few units are in candle making (0.98%), paper work (0.98%) and other skill based
industries (0.49%) (Table1).

FACTORS INFLUENCING ENTREPRENEURSHIP

1. Role of Personality Traits of Entrepreneurs: The grand mean score of unit holders of
Jammu province also shows just average degree of importance regarding personality
traits that too with same deviation (1.07) in setting up industrial units.
2. Role of Motivating Factors: Comparison between the overall mean values of unit holders
of Jammu and Udhampur districts show that industrialists from district Jammu have
more satisfaction regarding importance of motivational factors with high variability
i.e. (3.85 & 1.03) against the unitholders of Udhampur district (3.3 & 1.09) (Table 2).
3. Available Minimum Industrial Infrastructure: The overall mean values of such
dimensions of unitholders of Jammu district seem tobe more (3.69 & 1.04) than
those of Udhampur district (3.29 & 1.19). The grand mean score of both districts
reach at 3.49 moderate value with the variability of 1.12.
4. Impact of EDPS: The grand mean score of Jammu province reached 3.18 with variability
(1.16) in their response, showing entrepreneurs not much satisfied regarding adequacy
of EDP programmes in the province (Table 2).
The study goes a step further to find out the difference in the perception of entrepreneurs
from Diagiana, Gangyal, Battal Ballian, Thanda Paddar and Chenani blocks regarding role
of personality factors, motivational factors, availability of package of incentives and regarding
effectiveness of EDPs Anova test conducted on various entrepreneurial factors viz; role of
personality factors, motivational factors, availability of land/factory sheds, impact of
EDPS(Mittal and Batra, 2004) (Table 2) showed insignificant differences in the ratings of
overall personality factors (f=0.20, P<.01 & P<0.05), motivational factors (F=0.3, P<0.1
64  Strategic Service Management

& P<.05), availability of land/factory sheds (f=0.18, %P<0.5) and impact of EDPs (F=0.14,
P<0.1 & P<0.5). The factors also showed insignificant differences in the perception of
entrepreneurs from Diagiana, Gangyal, Thanda Paddar,, Battal Ballian and Chenani blocks
regarding various entrepreneurial dimensions viz. personality factors, motivational factors,
availability of land and effectiveness of EDPs.

Impact of Subsidy
Various incentives in the form of subsides including capital investment subsidy, interest
subsidy, subsidy on purchase of DG sets, testing equipment subsidy, toll tax reimbursed,
CSIP, subsidy an allotment of land and subsidy for transportation of raw materials and
finished goods, etc., are available to SSI entrepreneurs from Jammu province (J&K Window
2005). In Jammu province, three subsidies, viz. subsidy on purchase of DG sets, capital
investment subsidy and 5% interest rebate subsidy remained significant during last eight
years, i.e. (1998-2006) (Table 3). To find out the impact of these subsidies on the growth
of industries a regression equation obtained is as under:
Y = 21710.35 + 45.857X1 + 8.113X2 + 5.373X3
The regression equation indicates that growth of industries in Jammu district is positively
and negatively associated with three incentives viz. 100% subsidy (8.11) is the most
important followed by 5% interest rebate subsidy (5.373) whereas 100% subsidy on purchase
of DG sets (+45.85) appears to be least correlated with growth of industries (r=0.571),
The co-efficient of determination (R2) figured out as 0.326.

Strategic Action
The study exhibits major strengths and weaknesses of the ongoing programmes of
entrepreneurship development. The process of entrepreneurship development in Jammu
province can be strengthened with its regular monitoring regarding problems among
entrepreneurs like availability of subsides, incentives, infrastructure and raw material support,
etc. It is in this context, the strategies for entrepreneurship development in Jammu province
have been presented:
1. Entrepreneurship as self-employment career at young age: At the advance age of 50
yrs, only 21% of the respondents took it as first choice of their career. The promoting
agencies need to encourage and train the people at young age to set up the units.
2. Upliftment of weaker sections: Despite extensive loans extended by the concerned
agencies for upliftment of weaker sections of the society viz. SC, ST, Labourers, etc.,
the entrepreneurship among them is very low. The secondary information from 3rd All
India census shows that only 15% of the total functional SSI units in Jammu province
are managed by SC, ST, OBC class people (Census 2001-02). Immediate remedial
measures if not taken, the very process of reducing poverty among weaker sections will
not gain any results.
3. Availability of Efficient labour: Non-availability of labour in the province indicates
the necessity for immediate efforts for over coming this problem. Even unskilled labour
 Strategies for Entrepreneurship Development in Jammu Province  65

in the district demands higher wages. A well coordinated approach needs to be adopted
both at the level of unitholders and agencies involved for the recruitment of labour
accordingly to their skills.
4. Liberal financial policy: Majority of the respondents surveyed from different districts
of Jammu province complain about non-availability of adequate financial support. If
available, there are many cumbersome loan formalities. Thus, loans policy has to be
time bound and liberal in procedure (Khurshid 2004).

References
1. Butt, K Khurshid (2004), “Industrial Development in J&K State: An Analysis of visible and Invisibles”,
The Business Review, Vol. II, No. 1 (Sept.), pp. 20.30
2. Govindappa, G T (1999), “Rural Women Entrepreneurship Constraints and Strategies, Kurukshetra
(Nov.), pp. 11-14.
3. J&K Window (2005), “Industrial Policy 2004”, YOJANA, A Development Monthly, Vol. 49, (Spt.),
pp. 61-65.
4. Mital, R K and Batra (2004), “Factors Affecting the Growth of Entrepreneurship in Small Scale
Industries in Punjab and Haryana”, The Business Review II, No. 1 (Sept.), pp. 98-104.
5. Nath, V (2000), “Entrepreneurship by Regions and Castes: A Survey”, Economic and Political Weekly,
Vol. (No. 25) pp. 4217-4221.
6. Panda, Tapan K (2002), “Entrepreneurship success and risk perception among small scale Entrepreneurs
of Eastern India”, The Journal of Entrepreneurship, Vol. II, No. 2 (July-Dec), pp. 173-189.
7. Rao, N K A (1996), “Entrepreneurship Development (2001), SEDME (Small Entrepreneurs
Development and Extension)”, Journal Vol. XXIII, March pp. 1-4.
8. Economic Survey (2006-07), Govt. of Jammu & Kashmir, Directorate of Economics & Statistics, J&K
Govt. pp. 72-96.
9. RBI (2007), “RBI Bulletin, Vol. LXI, No. 3 (April), pp. 6-12.
 TABLE 1: ENTREPRENEURIAL PROFILE OF SAMPLED AREA OF JAMMU PROVINCE

S. Entrepreneur Group wise No. of Respondents

No. ial Details
1. No. of Units Total No. of
Functional Responding
Units: 1373 Units: 203
2. Age of Below 20 20-30 Yrs 30-40 Yrs: 40-50 50 Yrs &
entrepreneurs Years Yrs: above
in years at the
time of 10 (4.9) 48 (23.6) 45 (22.16) 36 (17.7)
establishing 54 (31.5)
the unit
66  Strategic Service Management

3. Professional B.E.: B Pharma: MBA: CA: -

qualification 19 (9.35) 16(7.88) 8(3.94) 11(5.41)
4. Educational Primary Hr.Sec./ Matric College: University -
Qualification 29(14.28) 33(16.25) 64(37.5) : 23(11.3)
5. Gender Male: Female: - - -
157(77.3) 46(22.6)
6. Family Business: Service: - - -
Background 147(72.4) 56(27.5)
7. Period of 1960-80: 1980-2000: 2000 and
Establishment onward:
65(32.01) 104(51.2) 34(16.7) - -
8. Type of Proprietorship: Partnership: Private
Ownership Company:
102(50.2) 72(35.4) 29(14.2) - -
9. W ho set up Self Parent Purchased - -
enterprise 87(42.8) 91(44.8) 25(12.3)
10. Social Kashmiri Brahmins: Jains: Baniya/ Sikhs: Muslims:
Classification Pandits: Guptas:
19(9.3) 39(19.2) 33(16.2) 39(19.2) 36(17.7) 7(3.4)
11. Initial Below I Lakh 1 to 10 Lakh: 10 to 20 20 to 30 30 to 40 40 Lakh
Investment Lakh: Lakh: Lakh: & Above:
19(9.3) 77(37.9) 51(25.12) 25(12.3) 18(8.8) 13 (6.0)
Contd...
12. Previous Yes: No: - - -
Work 130(64.03) 73(35.9)
Experience
13. Product Gun and Gun Plastics, Food Wooden Cement: Iron, Steel Medicines & Skill Based
Category Material: Leather, Products: Products 5(2.4) & Chemical Products:
Rubber & & Paints: Aluminum: Products: 1(0.49)
23(11.3) Paper: 27 (13.3) 30(14.7) 73(35.9) 17(8.3)
27(13.3)
14. Location Within Within state Out of - -
from where Concerned But not in State:
raw District: concerned
Material is Districts:
available 40(19.7) 74(36.4) 89(43.8)
15. Sources of Dealers Large Scale - -
raw Units:
materials: 109(53.6) 43(21.18)
16. Medium of Roads: Railways & Air - -
Transport
For Raw
Material 156(76.8) 47(23.15)
Strategies for Entrepreneurship Development in Jammu Province  67
TABLE 2: TABLE SHOWING OVERALL MEAN VALUES OF VARIOUS ENTREPRENEURIAL FACTORS OF DIFFERENT INDUSTRIAL AREAS/ESTATES

S. Factors Digiana Gangyal Thanda Padda Battal Ballian Chenani F- 5% 1%

No. Industrial Industrial Industrial Industrial Block/Area Value
Estate Estate Estate Estate
Mean S.D. Mean S.D. Mean S. D. Mean S.D Mea S.D
n
1. Personality 4.04 1.08 3.78 1.12 3.37 0.99 3.58 1.03 3.38 1.04 0.20 Insig. Insig.
Factors
2. Motivational 3.85 0.86 3.56 1.09 3.31 1.07 3.46 1.01 3.19 1.21 0.32 Insig. Insig.
Factors
3. Availability of 3.74 1.09 3.61 1.05 3.23 1.08 3.34 1.22 3.30 1.26 0.18 Insig. Insig.
68  Strategic Service Management

Land/Factory
Sheds
4. Impact of 3.37 1.09 3.39 3.39 3.00 1.00 3.11 1.21 3.06 1.32 0.14 Insig. Insig.
EDPs
Total 3.75 1.01 3.59 1.11 3.31 1.04 3.37 1.12 3.23 1.21 0.19 Insig. Insig.

TABLE 3: TABLE SHOWING SUBSIDIES AND INCENTIVES PAID TO INDUSTRIAL UNITS IN JAMMU PROVINCE DURING TEST EIGHT YEARS

Year Year wise 100% Subsidy on DG 30% capital Investment 5-3% Interest Rebate
additional units sets Subsidy Subsidy
No. of unit Amount No. of unit Amount No. of Unit Amount
1998-99 19,665+(660) 39 140.33 35 159.42 285 202.34
1999-2000 20,325+(427) 48 114-.65 78 445.49 187 155.34
2000-01 20,752+(355) 69 153.85 44 176.40 368 361.14
2001-02 21,107+(443) 56 115.27 134 419.00 251 180.46
2002-03 21,550+(327) 61 154.80 81 468.98 420 454.02
2003-04 21,877+(375) 47 137.50 107 500.59 381 412.19
2004-05 22,252+(577) 35 106.05 56 281.15 323 326.19
2005-06 22,829 39 103.05 51 214.94 233 222.53
{(+) indicates number of additional units)}
Source: J&K Government (2004-05), Digest of Statistics, Directorate of Planning & Statistics, pp 55-60.
 Entrepreneurial Motivation of Women Entrepreneurs of Jammu  69

Entrepreneurial Motivation of Women

Women
Entrepreneurs of Jammu

Dr Aruna Dubey*
Dr Seema Bhasin**

The present study is an empirical attempt to study and assess the entrepreneurial motivation of
women entrepreneurs. The sample consisted of 60 Women Entrepreneurs selected through purposive
sampling technique. The rating scale of Khanka (2006) and a specially designed interview
schedule were used to gather the required information. The finding of the study indicates women
being interested in starting the enterprise to generate income for families and thus improving
the standard of family in today's competitive world. The characteristics such as goal setting
targets, problem solving skills, independent and innovative attitudes were identified as the key
features for their success as entrepreneurs.
Keywords: Women Enterpreneur, Enterpreneurial Motivation, Enterpreneurial Satisfaction

INTRODUCTION
The creation of sustainable livelihood has become an important factor in this era of
globalization to understand the progress of a nation, especially in developing countries and
among disadvantaged population. Sustaining the progress calls for explicit considerations
of future generations. Youth inherit many of the environmental, economic and social problems
created over the past decades and incorporate their opinions and concerns into policies at
all levels, making country’s progress critical. Unemployment among youth is an acute problem
in many nations. This is primarily because of unequal economic and formal job growth
there is mismatch between skills demanded by employers and those acquired in school.
Further globalization also stands as a major cause for inequitable distribution of resources.

* Lecturer, P G Dept. of Community Resource Management and Extension, Govt College for Women, Parade
Jammu
** Assistant Professor in Home Science, Directorate of Distance Education, University of Jammu, Jammu
70  Strategic Service Management

More “enlightened” societies in developing countries are aware of the problems but become
frustrated in their individual attempts to solve these problems.
The essentials for generating sustainable livelihood are “adaptability” and “dynamic livelihood
capability”. And these can be met through self employment, entrepreneurship, and to
work out programs as youth themselves should be empowered to generate the solutions to
youth unemployment. In 2003, 88 million young people worldwide were without work,
making up almost half of the worlds’ unemployed.
Women and children are the major sufferers and are the most economically disadvantaged
of all groups. Women comprise 70% of the world’s 1.5 billion people living in absolute
poverty. And with the changing role that women accepted eversince the mid-eighties, the
role of entrepreneurship amongst them has gained a considerable importance. Women
owned business are becoming increasingly important in the economies of all countries,
which is regarded as an essential ingredient of economic development. (Sindhu, et. al. 2003).
In India, women’s entry into business is not a new phenomenon. This entrepreneurship is
traced out as an extension of their kitchen activities, which were earlier confined to 3Ps
(pickles, powder and papad), Over the period women have started shifting from 3ps to
3 modern Es, that is engineering, electronics and energy, inwhich they have excelled. The
examples such as manufacturing of solar cookers in Gujarat, running small foundries in
Maharastra and producing T.V capacitors in Orissa, have proved beyond doubt that given
the opportunities, women can compete with their male counterparts. Smt. Sumati Morarji
(Shipping Corporation), Smt. Shahnaz Hussain (Beauty Clinic), Smt. Yamutai Kirlaskar
(Mahila Udyog Limited), and Smt. Neena Malhotra (Exports) are exemplary names of
successful and accomplished women entrepreneurs in our country. Even though the indicators
for social development of women are remarkable, the same degree of achievement is not
recorded in the economic front (Koshy and Joseph 2000). Moitra’s(2001) revealed that
women entrepreneurship is still in its infancy as their work is not easily accepted inthe
society. Besides, women entrepreneurs have to face many challenges of different dimensions
and magnitudes, owing to social and cultural reasons. The gender discrimination,
psychological, social, economic and educational factors act as impediments to women
entrepreneurs growth. Another important challenges before women entrepreneurs is the
dual responsibility of work and family. To overcome these challenges, motivational factors
viz, internal factors such as such as desire to do something new, educational background
and occupational background or experience and external factors such as government assistance
and support, availability of labour and raw material, encouragement from big business
houses and promising demand for the product to come out with new ideas. Keeping in
view the significance of motivational factors to overcome the challenges, present study was
conducted to examine the level of satisfaction and assess the entrepreneurial motivation
level amongst women entrepreneurs, living in sub-urban areas of Jammu.

SIGNIFICANCE OF THE STUDY

Women Entrepreneur is regarded as a person who accepts a challenging role to quench her
personality needs and to become economically independent by making suitable adjustment
in both family and social life. They are constantly on the lookout for new and innovative
 Entrepreneurial Motivation of Women Entrepreneurs of Jammu  71

ways which lead to strong economic participation. Their adeptness, skills and knowledge,
their acumen in business and a pushing desire to do something positive are amongst the
reasons for women to establish and manage organized industries and take up challenging
ventures. Hence it becomes imperative to empower them technically so as to cope with the
changing times and productively use their idle time and existing skills for setting and
sustaining enterprise. The results of a study by Ganesan et.al (2002) shows that women
entrepreneurs perceived education and training as the most important parameter for their
entry into the entrepreneurial world.

METHODOLOGY
The paper assessed the entrepreneurial motivation of women entrepreneurs in sub urban
areas of Jammu. The locale of study includes four different areas from the municipal units
of Jammu. The criteria for sample selection was women who were running small scale
enterprises for at least 5 years and falling in the age group of 25 years to 45 years.

Tools used for Data Collection

Interview schedule comprised of two sections: The first section included the background
Information pertaining to age, marital status, education level, occupation etc., andprofile
of the entrepreneurs pertaining to year of establishment, type of enterprises, etc. The section
two comprised of information to be used to assess the entrepreneurial motivation. A rating
scale consisting of 25 statements across five dimensions namely goal setting, problem solving,
uncertainty bearing, independence and innovation. was adopted from Khanka (2006) scale
to determine the latent qualities of an entrepreneur.

FINDINGS

Demographic Profile
More than half (56.6%) of the sample belonged to the age group +30 to 35 year and least
of them (11.6%) were in the +40 to 45 years age group. 90% of them were married
belonging to business background from nuclear families. The education status of 73.3%
women was matriculation. Most of the the women entrepreneurs were involved in skill
oriented enterprises such asboutiques, beauty parlours, garments shops or cosmetic shops.
Further monthly family income of 41.6% respondents was in the range of Rs. 10,001.
15,000. The women belonging to this family income were not satisfied with their financial
status since the family needs were not being fulfilled. That was the reason they started their
own enterprise for generating additional income. Only 11.6% of them had monthly income
above Rs. 20,000. Women from this category were running their business smoothly thereby
providing better standard of living for themselves and their family in the too.

Level of Motivation and Satisfaction

This research has brought forward a very prominent finding that 50% of the respondents
were themselves interested in starting an enterprise. The reasons that contributed to raise
72  Strategic Service Management

the motivation level for starting the enterprise were firstly, to improve the standard of living
secondly, to add an extra source of income for the family, so as to lead a happy and peaceful
life. Development of the society is directly related with the income generation capacity of
its members. Entrepreneurship on small scale is the only solution to the problems of
unemployment and proper utilization of both human and non-human resources and
improving the living conditions of the poor masses (Sidhu & Kaur, 2006). Majority of the
married women were motivated and supported by their husbands in terms of financial and
emotional support. Still 97% of the respondents face one or the other financial problems,
family problems and worker problems in starting and running of the enterprise. Gundry
et. al. (2002) also is of the opinion that women entrepreneurs, when facing the prospects of
starting a new business find that “lack of access to capital has been a primary obstacle for
women entrepreneur. The primary source of funding for women entrepreneurship has been
through family loans, personal savings and home equity loans. It has been found that 73%
of women entrepreneur in the study were financed by their husbands as compared to other
family members (13.3%) at the initial phase of the enterprise.

Motivating Factors for Starting an Enterprise

Data depicts that all the respondents were motivated to start business to be financially
independent and for the sake of utilizing their skills. Only 80% wanted to effectively
utilize their time. Finally, to gain self satisfaction which is very important for any business
establishment to be a success, only 75% were working to enhance their skills and were
earning profits in their enterprises.
Satisfaction Level from Enterprise Itself: The present study reveals that all the respondents
had a feeling of satisfaction from their enterprise. The satisfaction thus derived is in terms of
psychological needs, safety, security, self-confidence, self-esteem, achievement and decision
making and time management skills. Thus we can also relate our observations to the Maslow’s
needs hierarchy theory which is particularity relevant to entrepreneurship aspect.
Satisfaction is the byproduct of motivation and this is an ongoing process because human
needs/goals are never completely satisfied. It has been observed that the around 75% of
women entrepreneur achieve “psychological satisfaction” out of their work. They feel self-
confident, once when their enterprise is running smoothly and it also caters to their needs
of self-esteem/self-respect.
It is believed by the women entrepreneur respondents that after running the enterprise,
their social status had changed. They were now respected and accepted by others and
family members. They thought it takes a lot of courage to step out of house and to change
the age old image of “Abla” women. They reported that they had become more independent
in terms of economic factors, decision making powers and proper management of their
resources. Feeling of security is also attached to it in the form of where the respondents (at
unconscious level) believe that they can handle any kind of situation at the time of crisis.
When faced with unknowing situations, they also learn proper utilization of time. Overall,
it has been assessed that the women entrepreneurs had grown as complete individuals.
They were performing dual roles. i.e, doing the household work and being women
entrepreneurs, thus, making themselves confident and independent with improved image..
 Entrepreneurial Motivation of Women Entrepreneurs of Jammu  73

Assessment of Entrepreneurial Motivation

The following sections analysis motivation level of women entrepreneurs through below
mentioned factors:

Goal Setting
As depicted from the results, it has been ascertained that to start any enterprise, one needs
to set goals (Table 1). 83% percent women entrepreneurs had set business oriented goals
which was very important for any successful enterprise. The goals can be long range plans
which 66% of the respondents did make and further they stated that goals changed according
to the needs of the environment. It was assessed that all respondents prepared or set goals
for their projects and 60 % were likely to have entrepreneurial motivation.

Problem Solving
Problems are not always easy to perceive, one usually has a rather diffused, even confused
notion of the problem( table 2). The primary task of the entrepreneur is to get people to
contribute to the activities that help to achieve the mission and goals of the enterprise. To
guide people’s activities in the desired direction requires knowing to the best of any manager’s
ability which leads to do things, in a positive manner. It has been observed in the present
study, that all respondents were capable of solving their problems. 83% of respondents
problems were like challenges; whereas ,around 75% were weak in decision making and
took time to reach at difficult decisions and solve problems, while 83% of the respondents
were to able to tackle several problems at a time.

Uncertainty - Bearing
The weaknesses of these women at taking decisions lead them to face unknown consequences
(Table 3). In uncertain situations, 83% of the respondents adopted new ways to tackle to
these situations and kept money into consideration, 18% and 11%of the respondents
respectively had an alternative source of income and were scared of losing the job. The
spiritual support to build self-confidence was looked for when they were frightened of
losing their jobs thereby threatening to their self-confidence, which had been a major
outcome of the results.

Independence
Table 4 shows Independence is an essential strength for becoming a successful entrepreneur.
It has been observed that entrepreneurs were good at handling crisis situation. All the
respondents were found to be quite independent and did not work under the supervision of
others, so they wanted to be their own boss. In the process they had developed strengths
like being social, and working with other women entrepreneurs.

Innovation
The table no. 5 reveals that to overcome their major problems in running the enterprise,
women entrepreneurs were trying to find their own solution to the problems after reviewing
74  Strategic Service Management

the work plan. Majority of them (66%) when reviewed their plans were resourceful to
overcome the problems. 83% of respondents did not get stuck with any problem which
was possible because they were capable of goal setting, had skills in problem solving,
independent and were innovative in their enterprise.
Overall results revealed that 49% of the respondents had the “likelihood” to become a
successful entrepreneur as they followed to set goals and were innovative in their
establishments. Only 6% were “most likely” to be successful entrepreneurs, while 5% had
“less likely” the likelihood to become successful in their venture.

SUGGESTIONS
Based on the study findings, certain suggestions are recommended to improve the status of
women entrepreneurs. Firstly, educational institutions like schools, women colleges and
universities, need to start impart training regarding entrepreneurship and should be made
a regular feature in their academic activities. Secondly, government needs to provide more
financial assistance to the women entrepreneurs. Thirdly, women should get moral support
from all the family members and lastly women should be given opportunity tp gain work
experience which would help to generate income for their family in any kind of problem
situation.

CONCLUSION
Empowering women is a great challenge to developing economy. Entrepreneurship is the only
solution to to generate employment for number of people within their own social system.
This is more beneficial for women as it enables them to add to the family income while
taking care of home and home-centered tasks. But to be a successful entrepreneur, women
should posses certain fundamental qualities besides the support of the family and government
organizations (Sidhu and Kaur 2006). Establishment of womwn enterprises helps to meet
these challenges. They not only enhance national productivity, generate employment but
also help to develop economic independence, personal and social capabilities among women.
And some of the personal and social capabilities that are developed among entrepreneurial
women are - economic empowerment, improved standard of living, self-confidence, enhanced
awareness, improved decision making status, sense of achievement, increased social
interaction, improvement in leadership quality.
 Entrepreneurial Motivation of Women Entrepreneurs of Jammu  75

References
1. Ganesan.R., Dilbagh Kaur, R.C.Mahaeshwari and Sujata Satapathy, (2002)”Women Entrepreneurs in
Food Processing Enterprises Technology”.Vol 28 (1-2),pp 81-88.
2. Gundry, L.K., Y.M.Ben and M. Posig (2002): “Contemporary Perspectives on Women
Entrepreneurship.”Journal of Enterprising Culture.Vol.10, No.1, pp 67-86.
3. Khanka,S.S.(2006):”Entrepreneurial Development” S.Chand and Company Ltd.,New Delhi.
4. Koshy, M.P.and Joseph, M.T.(2000): “Women Entrepreneurship in Small-scale Industrial units.”:A
Study of Kerala. South Economics.41 (7), pp 19-21.
5. Moitra,B.(2001): “Women and Entrepreneurship: Sunderbans Women Show the Way.”Kurukshetra,
49 (3), pp. 28-30.
6. Sindhu N and P.S.Gethakutty (2003): “Level of Entrepreneurial Success among Women Entrepreneur
in Agribusiness.”Journal of Tropical Agriculture. Vol. 41-44.
7. Sidhu, k.and Kaur Sukhjeet.(2006) “Development of Entrepreneurship Among Rural Women”. Journal
of Social Sciences.Vol. 13 (2), 147-149.
76  Strategic Service Management

TABLE 1: ENTREPRENEURRIAL ASSESSMENT OF WOMEN THROUGH GOAL SETTING

S. No. Statements Responses
Yes No
N % N %
1. Develop Long Range Plans. 40 66 20 33.3
2. Revise Business goals in view of changing 50 83.3 10 16.6
business Environment.
3. Derive Satisfaction after, facing a challenge. 20 33.3 40 66
4. Begin a day with a list of things to be done. 60 100 -- --
5. Prepare a plan before working on a project. 60 100 -- --

TABLE 2: ENTREPRENEURRIAL ASSESSMENT OF WOMEN THROUGH PROBLEM SOLVING

S. No. Statements Responses
Yes No
N % N %
1. Take problem as challenge. 50 83.3 10 16.6
2. Continuous problem make decision making 40 66 20 33.3
weak.
3. Thrive on facing a problem. 50 83.3 10 16.6
4. Good at tackling several problems at time 50 83.3 10 16.6
5. Solve problem adopting new ways and 60 100 -- --
means.

TABLE 3: ENTREPRENEURRIAL ASSESSMENT OF WOMEN WITH REGARD TO

UNCERTAINTY - BEARING
S. No. Statements Responses
Yes No
N % N %
1. Take decisions even if not sure of the 30 50 30 50
outcome.
2. Make adaptation according to new situation. 50 83.3 10 16.6
3. Keep income into consideration. 50 83.3 10 16.6
4. Also keep some alternative source of 11 18 49 81
income.
5. Job loss frightens me. 7 11 53 88
 Entrepreneurial Motivation of Women Entrepreneurs of Jammu  77

TABLE 4: ENTREPRENEURRIAL ASSESSMENT OF WOMEN WITH REGARD TO INDEPENDENCE

S. No. Statements Responses
Yes No
N % N %
1. Strong desire for Social interaction. -- -- 60 100
2. Do not depend on others for directions -- -- 60 100
(independent).
3. Like to work with others. -- -- 60 100
4. Like to be own Boss. 60 100 -- --
5. Do not feel completely comfortable with -- -- 60 100
myself at all times.

TABLE 5: ENTREPRENEURRIAL ASSESSMENT OF WOMEN WITH REGARD TO INNOVATING

S. No. Statements Responses
Yes No
N % N %
1. Find a new solution to overcome it. 60 100 -- --
2. Stick to the approach even when doing 20 33 40 0.66
something for first time.
3. While dealing with a problem tend to get 10 16 50 83
stuck.
4. Regular review of work plan. 40 66 20 33
5. Quite resourceful to tide over tight 40 66 20 33
situations.
Part II: Marketing
 8

Clustering Consumers to Investigate Quality of

Public He alth Care Ser vices
Health

Dr Hardeep Chahal*
Neetu Kumari**

During last two decades, service quality concept has received significant attention in private
health care organizations, particularly in big hospitals. However, the scenario is different in
government health care units, which are lagging behind in recognizing the role of service
quality in improving organizational performance. Per se, there is a need to critically examine
the level of service quality to suggest measures for its improvement. As such the present study made
an attempt to evaluate service quality from interaction and physical environment aspects and
with focus on dimensions, such as ambience, tangibles, social factor, attitude and behavior,
expertise and with reference to District Hospital, Udhampur. The study has applied two step
cluster analysis on dissatisfied patients to identify core dissatisfiers and dissatisfiers and to
suggest strategies to improve service quality of public hospitals. The limitations and future
research implications of the study are also highlighted.
Keywords: Service Quality, Physical Environment Quality, Interaction Quality

INTRODUCTION
Quality of healthcare is one of the most important topics in the service sector today. With
pressures to increase access to healthcare services while reducing and controlling costs,
competitive healthcare organizations strive hard to achieve the goal of patient satisfaction
Camilleri & Callaghan, (1998) and Donabedian (1996) remark that healthcare organizations
should satisfy the needs, interests and demands of three principal groups namely those who
provide the services (i.e., the healthcare professionals), those who manage it (i.e. management)
and those who use it (i.e. patients) to ensure delivery of good healthcare quality and achieve

* Associate Professor, Department of Commerce, University of Jammu, Jammu

** Research Scholar, Department of Commerce, University of Jammu, Jammu
82  Strategic Service Management

competitive advantage. Positive patient perceptions of service quality result in patient

satisfaction and loyalty. And further the positive relationship between patient loyalty and
frequency of visits of patients (Choi, et.al. 2004) leads to hospital profitability as it propels
patients to choose the same hospital again (Ruyter, Wetzels & Bloemer, 1998 and Sardana,
2003). However, sometimes there may exist a situation where the patient is forced to get
treated at a specific hospital by healthcare staff even when he is not satisfied. Such dissatisfied
consumers (i.e. spurious loyal) may remain attached with the hospital primarily because of
higher switching costs or other barriers.
Service quality is evaluated in healthcare sector using various dimensions. Lehtinen &
Lehtinen (1982) focuses on three quality dimensions namely physical quality, corporate
quality and interaction quality. Newman & Pyne (1996) redefined service quality dimensions
as clinical audit, accessibility of treatment, explaining treatment to patient, good technical
expertise and patient satisfaction. Camilleri & Callaghan (1998) consider broadened
dimensions of healthcare quality which include hospital environment, professional and
technical quality, patient amenities, service personalization and accessibility as significant
features of service quality. Sharma & Chahal in 1995 consider both non-technical and
technical characteristics of the service encounters, drawn from four basic components namely,
behavior of doctors, behavior of medical assistants, quality of administration and quality of
atmospherics as significant in assessing healthcare service quality. Choi, Lee, Kim & Lee
(2004) conceptualize healthcare service quality dimensions in terms of physician concerns,
staff concern, convenience of care process, tangibles, and patient satisfaction. More recently
Raftapoulous (2005) uses food, nursing care, medical care, room characteristic and treatment
contributing to service quality. Among the various conceptualizations available in the
literature, hierarchical model of Brady & Cronin (2001) seems to be quite comprehensive.
The model comprises of three primary dimensions namely interaction quality, physical
environment quality and outcome quality each having three secondary sub dimensions, viz.
attitude, behavior and expertise (interaction quality), ambient condition, design and social
factors (physical environment quality), waiting time, tangibles and valence (outcome quality)
and three tertiary sub-dimensions under each secondary dimension namely reliability,
responsiveness and empathy.

STUDY DESIGN AND METHODS

The study applies an extensive research process to gain an in depth understanding of
consumers’ perceptions of service quality and their respective sources of satisfaction/
dissatisfaction. The research objectives of the study include:
(i) To examine the key factors hindering and contributing to service quality of healthcare
units,
(ii) To examine the perceptions of core dissatisfier and dissatisfiers, based on the intensity
of patients response towards service quality measures,
(iii) Lastly, to design strategies (both long-term and short-term) and managerial implications
on the basis of patients’ recommendations for improving service quality of public
healthcare sector.
 Clustering Consumers to Investigate Quality of Public Health Care Services  83

GENERATION OF SCALE ITEMS/MEASURES

Primary goal of our research was to measure healthcare service quality using a scale relevant
for the healthcare service sector in Indian setting. The study used two primary dimensions,
i.e. physical environment quality and interaction quality given by Brady & Cronin (2001)
to assess healthcare quality. The first dimension physical environment quality relates to
environment quality which is considered to be the function of ambient condition, tangibles
and social factor in the present study. Ambient condition comprised items obtained from
the scales of Bitner (1992), Brady & Cronin (2001), and Chahal & Sharma (2004). Similarly
items from the scales of Conway & Willcocks (1997), Chahal & Sharma (2004), Kang &
Jeffrey (2004) and Choi, Lee, Kim, Lee (2005) were used for measuring tangibles. Social
factor was measured with the help of items derived from the scales of Bitner (1992) and
Sardana (2003). The second dimension of service quality is interaction quality, that reflects
the relationship developed between a service provider and a user (Gronroos 1984, Rust &
Oliver, 1994 and Brady & Cronin, 2001). The relevant items for examining attitude and
behavior of the staff were extracted from the literature of Chahal, Sharma & Gupta, (2005);
Chahal & Sharma, (2004) and Brady & Cronin, (2001) whereas expertise items were
extracted from the studies namely Brady & Cronin, (2001) and Kang & Jeffrey, (2004)
and process quality items were taken out from Sardana (2003).

SAMPLE AND DATA COLLECTION

Scale Pretesting
The schedule, prepared after reviewing literature on service quality was pre-tested with 35
indoor patients (consumers) from seven departments namely general medicine, pediatrics,
general surgery, gynecology, casualty, ENT and orthopedics during March-April 2007
period. The number of patients from each department was selected on the basis of bed
strength. The result of pre-testing data was used to determine sample size for final data
collection and modifying the schedule.

Sample Design
The study on service quality is based on primary data collected from 400 indoor patients
admitted during May 2007 to August 2007 for more than 4-5 days. The use of proportionate
stratified random sampling resulted in selection of 74 patients from general medicine, 74
from pediatrics, 88 from general surgery, 74 patients from gynecology, 30 patients from
ENT, 60 from orthopedics department.

DEMOGRAPHIC CHARACTERISTICS
The sample of indoor patients of Government District Hospital Udhampur consisted of
66.5 percent females (266 females) and 33.5 percent males (134 males). The number of
patients were also examined across four income and four education groups. The income
group-wise information identified 32% respondents with income below Rs 5000 per month
(INC I), 66.8% respondents with income ranging between Rs 5000-Rs 10000 per month
(INC II), 1% respondents with income ranging between Rs 10000-Rs 15000 (INC III)
84  Strategic Service Management

and finally 10.30% respondents with income above Rs 15000 (INC IV). With respect to
education 10.00% respondent were illiterate (EDU I), 77.00% respondents had below
higher secondary education (EDU II), 10.80% were graduates (EDU III), and rest 2.30%
were post graduates (EDU IV). The respondents were also classified on the basis of their
age. Accordingly AGE I (Below 20 years), AGE II (Between 20-40) years, AGE III (Between
40-60 years), and AGE IV (above 60 years) groups had .50%, 67.30%, 26.50%, and
4.80% respondents respectively. In addition, Business Class (BC), Service Class (SC),
Professionals (PR) and Dependents (DE) respondents were found to be 9.50%, 23.00%,
2.50% and 65.00% in the four respective groups.

DATA PURIFICATION
Exploratory factor analysis was conducted on sample size of 400 for reducing items from
the initial battery of items based on statistical and theoretical grounds. Before initiating
exploratory factor analysis, response scores for negative items were changed and all items
were checked for normal distribution. The items were found to be quite normal. Later,
from a statistical standpoint, the item to total correlation was considered, and values that
were well below .03 were targeted for deletion. This also checked the significance of inter-
correlation among items as required for effective factor structure identification. It is also
verified deletion of these items would not change or harm the intended meaning of the
constructs of which they were a part. Further Bartlett test of Sphericity is used to identify
overall significance of correlation coefficient among the variables. The study used principal
component analysis with varimax rotation for factor analysis, being the best rotation procedure
as it maximizes the number of items with high loadings on one factor, thereby enhancing
the interpretability of the factors (Malhotra 2003, p.595). The eigen value equal to or
more than 1 criterion is used to determine number of components to be extracted and
Kaiser – Meyer – Olkin (KMO) values equal to and greater than 0.50 is used to find out
relevancy of data reduction and grouping for factor analysis (Hair. et. al. 2003).

RELIABILITY AND VALIDITY

The internal consistency reliability was used to assess the reliability of both reduced and
unreduced scale (Malhotra 2003, and Tull & Hawkin 2005). The reliability of the sample
was checked by examining the coefficient alpha values for overall and two equally split sub-
samples. The overall Cronbach alpha value for the scale is found to be 0.960 for unreduced
scale and 0.951 for reduced scale. Further the Cronbach alpha values for physical
environment quality and interaction quality are arrived at 0.885 and 0.917 for unreduced
scale respectively and 0.883 and 0.922 respectively for reduced scale indicating the internal
consistency and reliability of the sample. By splitting the respondents cronbach value arrive
at above 0.881 for overall, physical environment quality and interaction quality indicating
that the scale produces consistent results of measurement repeatedly.
The face, content, construct and convergent validity of the instrument were also assessed.
Discussions with the subject experts, doctors and patients were done to check the content
and face validity of the instrument. After the systematic evaluation of the content, KMO
measure of sampling adequacy values, Bartlett’s test of Sphericity and variance explained
 Clustering Consumers to Investigate Quality of Public Health Care Services  85

were examined through factor analysis which indicated the construct validity (Hair et. al.,
2003). Degree of correlation coefficient values among selected items of physical environment
quality and interaction quality ranged between 0.786 to 0.863 indicating high degree of
convergent validity.

DATA ANALYSIS AND FINDINGS

The components of service quality i.e. physical environment quality and interaction quality
are analysed to know the level of satisfaction of the public healthcare consumers. The
respondents are categorized into satisfiers and dissatisfiers on the basis of average mean
value (Table 4). The attitude of both satisfiers and dissatisfiers are discussed as under:

Satisfiers

Physical Environment Quality

(a) Ambient Condition: The dimensions contributing to average level of satisfaction for
ambient condition include well maintained internal atmosphere (3.36), overall
cleanliness of hospital (3.40), natural light is found in hospital (3.59) (Chahal &
Sharma, 2004) and wards are peaceful (3.35). Good outer appearance of hospital is
the only item that show above average mean score, i.e. 4.30. However the overall
average level of satisfaction score of 3.34 reveals that the ambient condition of hospital
is average.
(b) Tangibles: The patients reveal somewhat average to high level of satisfaction for items
such as well equipped operation theatre (M.S. = 3.49), good technical services (3.35)
and above average satisfaction for electricity services (4.27), bed sheets are changed
daily (4.19), supportive facilities are good (4.26), oxygen services (4.22), water services
(4.00), well planned operations schedule (4.05) and emergency services (4.03). Items
such as waiting room, X ray facility, dustbin, well equipped medicine store scored
below average. But at the same time patients are found to be satisfied with the overall
tangibility of hospital (3.51).
(c) Social Factor: Lastly, Hospital fulfills societal commitment effectively (3.01), promotes
hygienic life style (3.35), wastages are properly disposed (3.46), provide services to
people belonging to all strata of society (3.61), good services at reasonable cost (3.37)
and ‘caters needs of affluent class (3.30) indicators reflect need for hospital to improve
its social image.
Overall ambient condition, tangible and social factor secured above average satisfaction
score revealed physical environment quality of the hospital is good.

Interaction Quality
(a) Attitude & Behaviour: The dimensions regarding doctors namely polite
communication, answer queries satisfactory, helpful & supportive, honest to their
profession, communicate with staff well and patient participation in treatment with
average mean scores of 3..57, 3.21, 3.61, 3.31, 3.67 and 3.44 respectively indicate
86  Strategic Service Management

patients are averagely satisfied with respect to attitude & behavior of doctors. However,
patients showed satisfaction only with a single item of nursing i.e. nurses treat friends
and relatives nicely (3.16). On contrary, the mean scores of statements regarding
nurses came out to be in the range of 2.76 to 2.96 that showed dissatisfaction among
respondents towards attitude and behavior of nurses. Further, the mean scores of
‘technical staff ’ and ‘supportive staff ’ came out to be 3.47 and 3.68 that revealed
average level of satisfaction among respondents. Though overall findings indicate average
level of satisfaction with respect to attitude and behavior of doctors and supportive
staff but the patients are not satisfied from nursing behavior.
(b) Expertise: Expertise of staff is average in the hospital as exhibited by respondents
toward items related to competency of physicians, such as logical explanation, sufficient
knowledge, correct diagnosis and for expertise of technical supporting staff, and nursing
and technical staff with mean satisfaction score arrived at 3.37, 3.12, 3.65, 3.70,
3.84, 3.87, 3.65 and 3.77 respectively. The overall mean scores showed that doctors,
nurses and supportive staff have required expertise.
(c) Process Quality: Although overall mean score value for process quality came out to
2.92 but items such as suitable working timings (3.88), conductive interaction with
frontline staff (3.28), good housekeeping services (3.44), supportive staff listen to you
(3.34) and overall process quality (3.35) revealed average satisfaction of patients towards
process quality
Overall attitude and behavior and expertise secured average level of satisfaction but
respondents are dissatisfied with regard to process quality.

Dissatifiers
The items with below average (i.e. three) mean score indicate low degree of patient satisfaction
and such patients are considered as dissatisfiers. The application of hierarchical and two
step cluster approach on dissatisfied public health care consumers resulted in two clustering
groups, christened as core dissatisfiers and dissatisfiers. The cluster 1 namely core dissatisfiers
comprised 248 respondents who showed pessimistic response whereas cluster 2 named as
dissatisfiers comprised 141 patients who gave given mixed responses towards service quality.
The specific items contributing to dissatisfaction level of core dissatisfiers and dissatisfiers
under two service quality dimensions viz, physical environment quality and interaction
quality are discussed as under:

Physical Environment Quality

(a) Ambient Condition: The below average mean score of fresh air (2.61), proper spacing
between beds (2.03), clean toilets (2.63) and spacious wards (2.77) indicate patient
dissatisfaction. The core dissatisfiers are highly dissatisfied from improper spacing
between beds (N = 215, % = 64.8) which is found to be primarily because of congested
wards (N = 175, % = 73.2). They also complained about the suffocated environment
in the wards because of improper placement of ventilation and windows (N = 163,
% = 63.9) and about unhygienic toilets (N = 151, % = 60.2). On the other side,
 Clustering Consumers to Investigate Quality of Public Health Care Services  87

dissatisfiers showed more dissatisfaction for improper spacing between beds (N = 117,
% = 35.2), in comparison to unhygienic toilets (N = 100, % = 39.8) and other items
such as improper ventilation (N = 92, % = 36.1) and congested wards (N = 64,
% = *26.8).
(b) Tangibles: With respect to tangibles overall respondents are dissatisfied from waiting
room (2.36), X-ray facilities (2.95), dustbin & spittoons (2.97) and well equipped
medical room (2.20). However core dissatisfiers showed dissatisfaction towards
unavailability of majority of required medicines in medical store (N = 218, % = 74.1).
Core dissatisfiers also complained about absence of waiting room (N = 200, % = 69.7),
absence of spittoon & dustbin (N = 169, % = 80.9), and inadequate X-ray facilities
( N= 116 , % = 65.7). Though dissatisfiers also showed more dissatisfaction for
absence of well established waiting rooms (N = 87, % = 30.3) followed by different
dissatisfaction items such as inadequate medicine in medical store (N = 76, % = 25.9),
inadequate X – ray facilities (N = 58, % =34.3) and absence of dustbin & spittoons
(N = 40, % = 19.1) but percentage of respective dissatisfied items were quite less.
(c) Social Factor: Overall, the items namely satisfaction from staff (2.70), transparency &
ethic in medical practice (2.89), integrity & honesty (2.82) and social responsibility
(2.57) are the main factors contributing to patient dissatisfaction. Rating wise, majority
of core dissatisfiers showed their dissatisfaction for behaviour of staff (N = 184,
% = 73.3), followed by lack of integrity & honesty (N = 159, % = 71.3), lack of
transparency & ethical medical practice in employees (N = 144, % = 70.6) and social
responsibility (N = 182, % = 68.7). On the other hand majority of dissatisfiers rate
social responsibility (N = 83, % = 31.3) as the major dissatisfying item followed by
behaviour of staff (N = 67, % 26.7), lack of integrity & honesty in medical practice
employees (N = 64, % = 28.7) and lack of transparency & ethical medical practices
among employees (N = 60, % = 29.4).

Interaction Quality
(a) Attitude & Behavior: Overall result (2.56) reveals that patients are dissatisfied with
hospital staff in general and with respect to nurses in particular. They found nurses to
be unsupportive (2.96), inconsiderate (2.76), unable to satisfy their queries (2.80)
and unavailable at the time of need (2.91). Specifically core dissatisfiers showed high
dissatisfaction for nurses with percentage ranging between 97.9% ( unconcerned
attitude ) to 93.5% (their unavailability during duty timings). On the other hand,
dissatisfiers are mostly dissatisfied from attitude & behavior of hospital staff (N = 116,
% = 42.5) followed by unavailability of staff (N = 14, % = 6.5), unhelpful and
unsupportive nature of nurses (N = 11, % 5.6), rude reply of queries (N = 7, % = 3.0),
overall attitude & behavior of nurses (N = 05, % = 2.5) and inconsideration of nurses
to patients problems and needs (N = 05, % = 21).
(b) Process Quality: Among the various services delivered to patients, administrative
function (2.65), laboratory (2.48), blood bank services (2.36) and grievances handling
system (2.92) are found to be dissatisfying items. 72.9% of respondents of core
dissatisfiers complained about unavailability of proper blood bank services (N = 217),
88  Strategic Service Management

inadequate administrative functioning (N = 204, % = 79.4), inadequate provision for

medical tests (N = 188, % = 69.4) and absence of grievances handling system (N=131,
% = 63.0). On the flip side, majority of dissatisfiers complained about inadequate
laboratory services management, X-ray, oxygen, glucose, ECG, etc. In addition 37.0%
complained about grievances handling system (N = 77), 20.8% about complained
about blood bank services (N = 57) and 20.6% complained about inefficient function
of administration (N = 53).

STRATEGIC ACTION
Despite increasing pressures from patients, literature throughout from last three decades
indicate that public health care sector, do not give adequate attention to patients’ satisfaction
(Chahal & Sharma, 2004). The results of the study, measured in terms of service quality,
also manifest the same. On the basis of clustering it is found that majority of respondents
fall under core dissatisfier group. Per se, for improving the healthcare service quality, hospital
should focus on making core dissatisfiers satisfied. Based on the problems identified, specific
strategies for the core dissatisfier group are discussed (Table 5). The implementation of the
strategies is sufficient to make the dissatisfiers satisfied. The strategies to improve service
quality from perspective of core dissatisfier are briefly discussed as under:

Physical Environment Quality

(a) Ambient condition: Overall respondents are pessimistic with regard to improper spacing
between beds, congested wards, unavailability of fresh air in the hospital and unhygienic
toilets. Further with respect to spacious wards majority of the core dissatisfiers (64.8%)
remarked inadequate spacing between beds is their major concern as it leads to spreading
of germs. Taking into consideration limited space availability in the wards, it is
suggested that temporary partitions can be made between beds to avoid spreading of
contagious diseases and this can also provide patients with privacy, which is suggested
by majority of patients of gynecology and general surgery wards. Further, core
dissatisfiers (N = 175, % =73.2) also complained about overcrowding of patients in
the wards. Patients remarked that since intake capacity of the wards is less in comparison
to the need of the people, sometimes single bed is allotted to two patients which
rather than giving relief to them aggravates their health problems. Though in short-
term it is not possible, nevertheless it is suggested that the proposal of 200 beds
which is on paper till today should be implemented as soon as possible. The results
also reveal that hospital management should make proper arrangement for ventilation
in the wards (N = 163, % = 63.2). As the physical design and layout of the wards
cannot be improved immediately, focus should be more on keeping the atmospheric
spick and span (Chahal & Sharma, 2004). This can further be improved by growing
more trees and maintaining gardens around the hospital premises. To resolve problems
of core dissatisfiers with regard to unclean bathrooms and toilets (60.2 %), nursing or
physician in charge of wards, in addition to regular check ups by sanitary personnel,
should monitor the cleanliness of toilets, wards, corridors, etc. and make ensure that
cleanliness condition is maintained throughout day and night. Since cleanliness of
bathrooms and toilets depend on both sanitary personnel and patients, some sort of
 Clustering Consumers to Investigate Quality of Public Health Care Services  89

punishment or fine should be kept for both patients and sanitary staff who are found
to be guilty.
(b) Tangibles: Majority of core dissatisfiers showed negative response for inadequate
provisions of medicines, waiting room, dustbin & spittoons and X-ray facilities. They
categorically remarked about the shortage of medicines in the medical store room
(74.1%). The patients stated that even the normally used medicines are not available
in the store. Thus, regular meetings of the concerned staff should be held to decide
about the number and type of medicine to be available in the medical store. Besides,
special privilege quota should be fixed for patients who are below poverty line and this
will also add to hospital’s social responsibility factor. Further, core dissatisfiers (69.7%)
also stated that neither sitting facility nor separate waiting room facility is available in
the hospital. It was observed that patients and their visitors use to sit on the benches
of corridors and even on floor during peak hours. The management should see that
there should be furnished waiting room along with adequate sitting facility in the
wards to make the visitors relaxed. For the time being till separate arrangement is not
made more furniture should be placed on the sides of corridor. To avoid congestion in
the corridors, ornamental plants are required to be placed in the corridor. Further, to
resolve X-ray related problems, it is suggested that adequate number X-ray films
should be provided to machine operators to avoid any shortages and further timely
and regular measures are required to keep all the machines operative. It was indicated
by the patients that patients are rushing to private clinics for getting their X-ray
done. Lastly, 65.7% core dissatisfiers remarked unavailability of dustbins & spittoons
and as such it is advised that hospital management such things should be made
available to patient and also properly cleaned as and when required.
(c) Social factor: The core dissatisfier showed negative perception about overall hospital
services (2.70) particularly with regard to staff attitude (73.3%). Despite the fact
that the public health care units are set up to meet demands of the society, the type
and quality of services so provided in the units to patients totally go against the social
responsibility of the hospital (68.7%). To enhance positive impression, staff should
try to understand the psychological needs of the patients to deliver customized
qualitative services. Further, the core disstisfiers felt negatively about the quality of
integrity and honesty of medical practice (70.6%) and thus efforts should be made to
organize specialized lectures and discourses to inculcate compassionate behavior. Further
discourses on relevant topics should be organized regularly, at least thrice a year. In
addition special inspection committee comprising senior doctors, senior nurses and
external bodies, can be set up to have a regular check on the operational conduct of
staff. These all efforts ultimately help in raising a sense of responsibility among
employees which is often not seen in employees of public hospitals (Bhat &
Malik, 2007).

Interaction Quality
(a) Attitude & Behavior: Majority of core dissatisfiers are dissatisfied with regard to nursing
attitude & behavior and that too particularly with regard to their inconsiderate attitude,
90  Strategic Service Management

unsatisfied reply to queries, unavailability at the time of need, rude behaviour and
unhelpful and unsupportive nature. Patients expect nurses to be polite, friendly,
sympathetic and courteous under all circumstances (Sharma & Chahal, 2003). Thus,
it is suggested that nurses should be given spiritual training along with technical
training to understand patients well. Further, adequate guidelines should be made to
monitor nurses to ensure that they perform their duties and responsibility like assisting
the patients and their relatives in case of any problem, bed making, feeding of patients,
distribution of milk and diets, etc. in an effective and competent manner. In addition
nursing staff should also enhance technical nursing care quality by focusing on timely
administration of medicines, injection, preparing for injection, clearing up and rounds
with doctors, etc. Besides, love and affection of nurses can help the patients in recovering
from their diseases quickly (Chahal & Sharma, 2004). The problems in the hospital
also aggravates because of shortage of nurses which become more severe during night
shifts. Thus, there is a need to fill up all the vacant posts of about seventeen nursing
staff, may be contractual immediately, to reduce their level of satisfaction. Further,
core dissatisfiers also complained their dissatisfion with hospital staff in general. To
make overall the staff caring, sympathetic and courteous, appreciation awards in the
form of best doctor, nurses and supportive staff be given to set up example for the
other staff. Besides, an additional specialized staff should be appointed who can take
feedback from patients about staff.
(b) Process quality: Among the various services delivered to patients, blood bank services
administrative function, laboratory and grievances handling system were found to be
below average level. Thus, appropriate efforts to aware masses about their social
responsibility and benefit of blood donation through various advertising media, such
as newspapers, local channels, website, plays, posters, banners, etc. should be made to
enhance process quality. Further blood donation camp can be organized monthly to
root out blood shortage problems. In addition life time membership of regular donors
with the hospital along with some public responsibility reward is suggested to cover
up the blood donation related problems. To add, providing qualitative service is not
possible until organization follows good administration. The results also suggested
improvement in the administrative functioning of health care unit. The public hospitals
are managed by superintendent with the help of senior doctors. For efficient and
effective health system and sound management it is essential to have specialized
management departments, like personnel, material, finance, sanitary inspection, etc.
Further specialists should be recruited in each department for efficient and proper
administration of hospital and efforts should be made to have adequate supply of
proper life saving facilities, such as X-rays, oxygen, glucose, ECG, etc. Lastly, it is also
suggested that grievances handling redressal cell should be established so that the
patients can get quick relief in case of any grievances. Thus all the problems of patients
and their relatives should be taken into consideration and suggestions suggested be
implemented if hospital wants to create and maintain healthy participative
environment.
 Clustering Consumers to Investigate Quality of Public Health Care Services  91

MANAGERIAL IMPLICATION
To enhance, service quality vis-a-viz patient satisfaction hospital management should focus
on creation of friendly environment, maintenance of cleanliness in the toilets, well planned
bed layout arrangement, well furnished waiting rooms, availability of diagnostic facilities
(X-ray, etc), placement of dustbin & spittoons in corridors, wards, toilets, well equipped
medical store, effective grievances handling mechanism, etc. The short-term and long-term
managerial implications are discussed as under:

Short Run Implications

(i) Ambience: The focus of hospital on appropriate strategies relating to maintenance of
green lustrous gardens, properly arranged parking space for staff and visitors in the
empty land available the back of the hospital and placement of ornamental plants in
the corridors, etc. provide a path to improve the physical environment quality.
(ii) Relationship Quality: Organisation of training programmes on patient relationship
management at least once a year along with spiritual discourses, introduction of
appreciation awards for varied staff groups, healthy coordinal relationship between
patients and staff, particularly nurses, better administrative functioning, effective
laboratory services, blood bank services and grievances handling system can help the
public hospital in building positive and concerned attitude of staff towards patients,
which can subsequently, strengthen the staff—patient relationship. Further, effective
delegation of authority and accountability to staff vis-a-vis effective planning system
for patient management and creation of grievances handling cell and placement of
suggestion boxes in the wards and corridor can help the hospital staff in understanding
the patients’ problems and delivering customize services.

Long Run Implications

(i) Infrastructure: The long run strategies related to infrastructure include adequate
furnishing (both technical as well as non-technical) of the hospital building for indoor
services and employment of medical and paramedical staff. Further new departments
such as dermatology, psychiatry, physiotherapy, separate ICU for Neonates, burn
ward should be introduced to offer services within the proximity of the area and to
avoid the emergency patients to visit other health care units at far off places. In addition,
arrangement for big investment on equipments such as CT scan through Public Private
Partnership should be invited.
(ii) Managerial Efficiency: Though, there is separate material, purchasing, finance,
sanitation, and personnel department in each public hospital but there is intense
need to reorganize them and specialists should be recruited to improve managerial
quality. Special departments like social marketing department for fulfilling their social
responsibility, organise open house meet of staff with patients and conducting regular
consumer survey to analyze patients problems, etc. need to be established. Further,
record management department with focus on computerized database of patients and
human resource department for improving the attitude & behavior of staff including
92  Strategic Service Management

doctors, nurses, paramedical and supportive staff can help in increasing their service
quality.
(iii) Operational Efficiency: Introduction of smart health cards to understand in detail the
medical history of the patients, number of times patients visited the hospital, type of
problems, demographic profile, name of ailment, blood group any type of allergy, etc,
particularly in case of emergency for quick medical perceptions can provide sound
platform for the hospital to enhance operational efficiency of the hospitals. Further,
striving for ISO – certification and Right to Information Act can help in incorporating
transparency in the hospital functioning. Better physical environment quality and
interaction quality so developed can lead to better service quality and good image of
public health care units.

LIMITATION & DIRECTION FOR FUTURE RESEARCH

The study examined service quality in public health care sector. All feasible efforts are made
to maintain objectivity, reliability and validity of the data. However, some of its major
limitations are discussed as under:
(i) The study has measured hospital service quality from patients’ perspective. The
information obtained about healthcare unit from patients, is not fully free from
subjectivity. Being contacted hospitalized patients, the respondents might not have
given true information about the service quality dimensions and their response might
be different if they were asked independently outside the hospital. Further both indoor
patients as well as outdoor patients can be considered in future research to garner
comprehensive views about health care service quality.
(ii) Respondents were selected only from one unit, i.e. Government District Hospital
Udhampur. Patient samples from different hospitals, both public and private can be
used for future research to suggest common strategies for public hospitals.
(iii) Being consumer based research, perceptions of physicians, medical assistant, nurses,
technicians, laboratory assistants and menial staff are not considered. In future research
employees perspectives along with patients is necessary to measure service quality
from dyad perspective.
(iv) In the study only two dimensions namely physical environment quality and interaction
quality are considered that affect service quality of public health care service in the
future research its impact on service performance can also be measured.

References
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Employee Responses”, Journal of Marketing, 54 (2), 69-81.
3. Brady, Michael K., and J.Joseph Cronin Jr. 2001, “Some New Thoughts on Conceptualizing Perceived
Service Quality: A Hierarchical Approach,” Journal of Marketing, 65 (July), 34-49.
 Clustering Consumers to Investigate Quality of Public Health Care Services  93

4. Camilleri, David, Mark o’ Callaghan 1998, “Comparing Public and Private Hospital Care Service
Quality”, Journal of Marketing, 11 (4), 127-133.
5. Chahal, Hardeep, R.D. Sharma 2004, “Managing Health Care Service Quality in a Primary Health
Care Centre”, Metamorphosis, 3 (2), 112-131.
6. Choi, Kui – Son, Hanjoon Lee, Chankon Kim, Sunhee Lee 2005, “The Service Quality Dimensions
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(3), 131-140.
9. Donabedian A (1996), “The Effectiveness of Quality Assurance”, International Journal for Quality in
Health Care, 8 (4), 401-7.
10. Gronroos, C. 1984, “A Service Quality Model and Its Marketing Implications,” European Journal of
Marketing, 18(4), 36-44.
11. Hair, J.F., Anderson, R.E., Tatham, R.L., Black, W.C. 2003, Multivariate Data Analysis, Pearson Education
(Singapore) Private Limited, Delhi.
12. Kang, Gi – Du, James Jeffrey 2004, “Service Quality Dimensions: An Examination of Gronroos
Service Quality Model”, Managing Service Quality, 14 (4), 266-277.
13. Lehtinen, Uolevi and Jarma R. Lehtinen (1982), “Service Quality: A Study of Quality Dimensions”,
Helsinki: Service Management Institute, Finland OY.
14. Malhotra, Naresh K. 2003, “Marketing Research – An Applied Orientation Delhi : Pearson Education
(Singapore).
15. Newman, Karin, Tanya Pyne 1996, “Quality Matters: Junior Doctors’ Perceptions” Journal of
Management in Medicine, 10 (4), 12-23.
16. Parasuraman, A., Valarie A. Zeithami, Leonard L. Berry 1985, “A Conceptual Model of Service Quality
and its Implication for Future Research”, Journal of Marketing, 49, 41-50.
17. Rust, Roland T., Richard L. Oliver 1994, “Service Quality: Insights and Managerial Implications from
the Frontlines, in Service Quality: New Directions in theory and Practice”, Sage Publications, 1-19.
18. Raftopoulous, V. 2005, “A Grounded Theory for Patients’ Satisfaction with Quality of Hospital Care”,
ICUS NURS WEB J, 22, 1-15.
19. Ruyter, Kode, Martin Wetzels, Josee Bloemer 1998, “On the Relationship Between Perceived Service
Quality, Service Loyalty and Switching Costs”, International Journal of Service Industry Management,
9(5), 436-453.
20. Sardana, G.D. 2003, “Performance Grading of Hospitals: A Conceptual Framework”, Productivity, 44
(3), 450-465.
21. Sharma , R.D., Hardeep Chahal 1995, “Patient Satisfaction in Public Health Care System – A Case
Study”, The Indian Journal of Social Work, LVI, 4, 444-454.
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Edition, Printing Hall of India, New Delhi.
94  Strategic Service Management

TABLE 1: DEMOGRAPHIC PROFILE OF THE RESPONDENTS

No. of Respondents Percentage
1. Gender
Female 266 66.50
Male 134 33.50
Overall 400 100.00
2. Income
INC I Below Rs 5000 128 32.00
INC II Rs 5000 – Rs 10000 267 66.80
INC III Rs 10000 – Rs15000 4 1.00
INC IV Above Rs 15000 1 0.30
Overall 400 100.00
3. Education
EDU I Below Hr. Secondary 308 77.00
EDU II Graduation 43 10.80
EDU III Post Graduation 9 2.30
EDU IV Uneducated 40 10.00
Overall 400 100.00
4. Age
AGE I Below 20 years 6 1.50
AGE II 20 Years – 40 Years 269 67.30
AGE III 40 Years – 60 Years 106 26.50
AGE IV Above 60 Years 19 4.80
Overall 400 100.00
5. Profession
BC Businessman 38 9.50
SC Serviceman 92 23.00
PR Professionals 10 2.50
DE Dependents 260 65.00
Overall 400 100.00
 Clustering Consumers to Investigate Quality of Public Health Care Services  95

TABLE 2: SAMPLE AND SUB-SAMPLES-WISE CRONBACH ALPHA VALUES FOR UNREDUCED

AND REDUCED SCALES
Unreduced Scale Reduced Scale
Overall PEQ IQ Overall PEQ IQ
Sub Sample I
(1 – 200) .962 .888 .922 .954 .888 .928
Sub Sample II
(201 – 400) .959 .881 .911 .949 .878 .916
Overall
(400) .960 .885 .917 .951 .883 .922

TABLE 3: DIMENSION-WISE CONVERGENT VALIDITY OF THE SERVICE QUALITY SCALE

Dimensions Correlation Significance
PEQ - 0.000
AC 0.863
TAN 0.860
SF 0.786
IQ - 0.000
AB 0.851
E 0.832
PQ 0.854
Note: PEQ = Physical Environment Quality, AC = Ambient Condition, TAN = Tangibles, SF = Social
Factor, IQ = Interaction Quality, AB = Attitude & Behaviour, E = Expertise, PQ = Process Quality

TABLE 4: ITEM-WISE AND DIMENSION-WISE MEAN SCORE VALUES OF SATISFIERS FOR

SERVICE QUALITY SCALE
PHYSICAL ENVIRONMENT QUALITY
Ambient Condition
S. No. Statements Mean
1 Outer appearance 4.30
2 Natural light 3.59
3 Overall cleanliness 3.40
4 Internal atmosphere 3.36
5 Peaceful wards 3.35
Overall 3.60
Tangibles
1 Electricity services 4.27
2 Supportive facilities 4.26
3 Oxygen services 4.22
4 Bed sheets are changed daily 4.19
5 Emergency services 4.03
6 Water services 4.00
7 Well equipped operation theatre 3.49
8 Good technical facilities 3.35
Contd...
96  Strategic Service Management

Overall 3.97
Social Factor
1 Equal services 3.61
2 Wastages are properly disposed 3.46
3 Good services at reasonable cost 3.37
4 Promotes hygienic life style 3.35
5 Caters need of affluent class 3.30
6 Fulfills societal commitment 3.01
Overall 3.35
INYERACTION QUALITY
Attitude & Behaviour
1 Supportive staff 3.68
2 Doctor communicate with staff well 3.67
3 Doctors are helpful & supportive 3.61
4 Doctors are polite 3.57
5 Technical staff 3.47
6 Patient participation in Medical treatment 3.44
7 Doctors are honest to their profession 3.31
8 Doctors answer queries satisfactory 3.21
9 Nurses treat friends and relatives nicely 3.16
Overall 3.45
Expertise
1 Physician expertise 3.87
2 Technical staff are expertise 3.77
3 Physician diagnosis correctly 3.70
4 Physician have sufficient knowledge 3.65
5 Nurses expertise 3.65
6 Staff competence 3.37
7 Physician explain logically 3.12
Overall 3.59
Process Quality
1 Suitable working time 3.88
2 Good housekeeping services 3.44
3 Overall process quality 3.35
4 Supportive staff listen to you 3.34
5 Conductive interaction with frontline staff 3.28
Overall 3.45
 Clustering Consumers to Investigate Quality of Public Health Care Services  97

TABLE 5: SERVICE QUALITY DIMENSIONS AND CLUSTER-WISE NUMBER AND PERCENTAGE OF

RESPONDENTS FALLING IN TWO CATEGORIES OF CORE DISSATISFIERS AND DISSATISFIERS
Service Quality Core Dissatisfiers Dissatisfiers
Dimensions Sub - Statements N % Statements N %
Dimensions
Improper 215 64.8 Improper 117 35.2
Spacing Spacing
between beds between beds
Ambient Congested 175 73.2 Unhygienic 100 39.8
Condition Wards toilets
Improper 163 63.9 Improper 92 36.1
ventilation in ventilation in
wards wards
Unhygienic 151 60.2 Congested 64 26.8
toilets Wards
Physical Medical Store 218 74.1 Waiting rooms 87 30.3
Environment Waiting rooms 200 69.7 Medical Store 76 25.9
Quality Tangibles Dustbin and 169 80.9 X- ray facilities 58 34.3
Spittoons
X-ray facilities 116 65.7 Dustbin and 40 19.1
Spittoons
Staff 184 73.3 Public 83 31.3
Satisfaction Responsibility
Public 182 68.7 Staff 67 26.7
Social Responsibility Satisfaction
Factor Integrity and 159 71.3 Integrity and 64 28.7
Honesty in Honesty in
Medical medical
Practice practice
Transparency 144 70.6 Transparency 60 29.4
and ethical and ethical
medical medical
practice practice
Inconsiderate 231 97.9 Rude attitude 116 42.5
to their and Behaviour
problems of hospital
Staff
Rude reply to 225 97.0 Unavailability 14 6.5
queries of staff
Attitude and Unavailability 200 93.5 Unhelpful and 11 5.6
Behaviour of staff unsupportive
nurses
Attitude and 197 97.5 Rude reply to 07 3.0
Interaction behavior of queries
Quality nurses
Unhelpful and 187 94.4 Attitude and 05 2.5
unsupportive behavior of
nurses nurses

Contd...
98  Strategic Service Management

Unavailability 157 57.5 Inconsiderate 05 2.1

of staff to their
problem
Blood bank 217 79.2 Laboratory 83 30.6
services
Process Administrative 204 79.4 Grievances 77 37.0
Quality function handling
system
Laboratory 188 69.4 Blood bank 57 20.8
services
Grievances 131 63.0 Administrative 53 20.6
handling function
system
 9

Customers Consideration for Making Choice of Pu bl

Publ ic
blic
and Private Sector Banks and their Views Regar ding
Regarding
Ser vice Quality and Relationship

Dr. Atul Dhyani*

Dr Ashok Pokhriyal*
Dr Jaskaran S Dhillon**

In today's competitive world, achieving total customer satisfaction is the key element in setting
the business goals and objectives of the corporate. Improving performance in service delivery and
responsiveness to the customer has become a source of competitive advantage in many industries
including service sector. Customer relationship management is increasingly being used to identify,
attract and retain most valuable customers that help the business to sustain profitable growth.
Successful companies are achieving long term gains in customer relationship management
which helps them to design service offerings that matches or exceeds the customers' expectation
thereby building customers' trust and gain their loyalty. All the researches show service quality,
relationship building and overall service satisfaction improving business relations with customers
Keeping in view the present scenario, this paper deals with customers' criteria for making choice
between public and private sector banks and their views towards service quality relationship.
The study, based on 600 customers belonging to different demographic profile, reveals that
money safety is the major consideration for public sector banks whereas service quality is the
prime concern for private sector banks in the selection of banks.
Keywords: Service Quality, Public Banks, Private Banks, Relationship

INTRODUCTION
Retaining and managing customer is quite crucial in the present day banking scenario. The
revolutionary changes in banks due to technology implementation has raised the customers

* Reader in Commerce, HNB Garhwal University, Srinager Garhwal, Uttrakhand

** Faculty, Mata Gujri College, Fategarh Shaib (Punjab)
100  Strategic Service Management

expectations and the competition level too. During the past decade, the financial service
sector has undergone drastic market changes characterized by intense competition, little
growth in primary demand and increased deregulation. In such a new market place, the
occurrence of committed and often inherited relationships between customer and his/her
bank are becoming scarce (Levesque and McDougall 1996). Several strategies have been
adopted to retain customers. In order to increase customer loyalty many banks have
introduced innovative products and services (Median, 1996). Nowadays, technology driven
banks are at the top on the priority list of the customers. The intensification of competition
in the Indian banking brought the relevance of customer services in the banks to the forefront.
Banks have realised that a business goes to those companies who seek clients, service them
satisfactorily and strive hard to retain them. When the market bristles with a more aggressive
player, the customers become increasingly aware of the wider choice of institutions,
instruments and services and facilities available to them and quickly learn to use choice of
these benefits. Such new awakening practices, compel the public sector banks to make
improvement in the customer’s services to retain them and to vis-a-vis to compete with
private sector banks. The present study attempts to identify and analyse customers’ criteria
of making choice between public and private sector banks.

SERVICE QUALITY
Early writings (Gronroos 1982) have suggested that the service quality stems from a
comparison between customer’s expectations and actual service performance. Service quality
as a function of the expectation–performance gap was reinforced by Parasuraman, Ziethaml
and Berry 1985. Several authors have proposed that customers use criteria such as process
service delivery; level of material facilities and personnel in evaluating the service quality
(Sasser, Olsen and Wyckoff 1978). Gronroos (1982) proposed two types of service quality:
technical quality which involves what customers actually receive from the service (i.e. outcome
of the service) and functional quality, which involves the manner in which customer receives
the service (i.e. the process of the service delivery). Lehtinen and Lehtinen (1982) discussed
three kinds of quality: physical quality, involving physical aspects associated with the services
such as equipment or building; corporate quality involving a service firm’s image or
reputation; and interactive quality involving interaction between service personnel and
customers. Parasuraman, Ziethaml and Berry (1988, 1991) developed and refined
SERVQUAL with five dimensions:
Reliability: Ability to perform the promised service dependably and accurately;
Responsiveness: Willingness to help customer and provide prompt service;
Assurance: Knowledge and courtesy of employees and their ability to inspire trust and
confidence;
Empathy: Caring, individualised attention the firm provides to its customers;
Tangibles: Appearance of physical facilities, equipment, personnel and communication
material. Thompson et. al. (1985) remarked that delivering high service quality produces
measurable benefits in the form of profits, cost savings and market share.
 Customers Consideration for Making Choice of Public and Private Sector Banks  101

OBJECTIVES OF THE STUDY

1. To determine the customers’ criteria of choosing a public (Pb) and private (Pr) bank,
2. To ascertain the relative importance of the criteria,
3. To determine the customers’ view points regarding service quality and relationship
with the bank, and
4. To bring out few suggestions for service improvement in the banks.

METHODOLOGY
The questionnaire and scaling method is used to measure the attitude of customers based
on 5 point verbal unbalanced scales (Very Good, Good, Poor, Very Poor and Can’t Say) and
(Most Important, Important, Less Important, Not Important and Can’t Say). The primary
data has been collected through distribution of questionnaires among the respondents.
Samples have been chosen through non probability sampling method, i.e. Judgment and
Convenience sampling methods. The universe of the study consists of the customers of two
public sector and two private sector banks operating in industrially rich cities which include
three cities of Punjab namelyAmritsar, (PBSB 41 and PVTSB 52), Ludhiana, (PBSB 54
and PVTSB 71), Jallandhar (PBSB 58 and PVTSB 69); one Union territory i.e. Chandigarh,
(PBSB 74 and PVTSB 74) and one city from Uttarakhand, i.e. Dehradun, (PBSB 48 and
PVTSB 59). In total 275 filled questionnaires have been received from the respondents of
Public sector banks and 375 from Private sector banks. Weighted average (Wt. Ave ) score
has used to study the customers’ preferences and views expressed in terms of ranks of
preference.

Findings
Choice of Bank (PBSB) and (PVTSB): The respondents give various reasons for choosing a
particular bank. The various factors (19), which respondents consider while preferring a
bank, are shown in the Table 1 (PBSB).
These factors are rated as Most important, Important, Less important, Not important and
Can’t say by the respondents. The analysis of the table shows that the “Bank Safety” has
been given rank one (Wt. Ave, 68.66); rank two is given to “Bank Location” (Wt. Ave.
62.79); rank three is given to “Follow Government Policy” (Wt. Ave. 55.73); rank four is
given to “Number of Bank Branches” (Wt. Ave. 55.33). Similarly at the last, rank 17 is
assigned to “Ability of Computerisation” (Wt. Ave. 48.93); rank 18 to “Active at New
Place” (Wt. Ave. 48.26); and rank 19 to “Staff Professional Knowledge” (Wt. Ave. 47.59).
It is clear from the table that the general expectation from the PBSB is very low that is why
important factors like “Staff Politeness and Kindness” (Rank 15.5) (Wt. Ave. 49.53); “Believes
in Individual Marketing” (Rank 15.5) (Wt. Ave. 49.53), “Ability of computerization” (Rank
17) (Wt. Ave. 48.93), “Staff Professional Knowledge” (Rank 19) (Wt. Ave. 47.59) have
taken into back seat. Table 2 (PVTSB) exhibits that rank 1 is allotted to “Ability of
Computerization” (Wt. Ave. 80.13); rank 2 is given to “Staff Politeness and Kindness” (Wt.
Ave. 79.86); rank 3 is given to “Bank Reputation and Image” (Wt. Ave. 78.86); rank 4 is
102  Strategic Service Management

allotted to “Believes in Individual Marketing” (Wt. Ave. 77.93). “Active at New place”
(Rank 17) (Wt. Ave. 68.73); “Follow Government Policy” (Rank 18) (Wt. Ave. 62.59) and
“Bank Safety” (Rank 19) (Wt. Ave. 54.33) are few factors which are considered at low
priority by the respondents. “Speed of Customer Handling” (Rank 11) (Wt. Ave. 73.01),
“Develop New Schemes” (Rank 12) (Wt. Ave. 72.80), “Management Ability of the Manager”
(Rank 13) (Wt. Ave. 71.53) are the other factors which have an important place in the
customers’ minds. At a glance one can observe that respondents give emphasis to service
quality in PVTSB as compared to PBSB.
Relative Usefulness of Factors in PBSB and PVTSB: Table 3 and 4 signify the relative
importance of the factors For this purpose the range method of variation has been used on
the weighted average scores.
Bank safety is considered as most important; bank location as important; followed by
government policy as less important; soundness of bank system and number of bank branches
as not important factors in PBSB (Table 3). Other 14 items fall in cannot say category as
the respondents are neither satisfied nor dissatisfied with the factor statements. On the
other hand, seven most important factors in PVTSB (Table 4) include bank reputation and
image, staff politeness and kindness, ability of computerization, bank location, quantity
and contents of service items, realise the activities of other banks, believe in individual
marketing areas, eight factors are in the important category, which include managerial
ability of bank manager, long-term relations with customers, speed of customer handling
etc. Soundness of bank system and active at a new place fall in the less important zone. One
factor each falls in the not important and can’t say categories. The relative usefulness of
factors in PBSB is different from relative usefulness of factors in PVTSB.
Service Quality and Relationship Dimensions: Respondents rate service quality as an
important factor for developing positive and long-term relationship with the banks. In
Table 5 (PBSB), 36 items are exhibited and categorised as very good, good, poor, very poor
and cannot say. The respondents assigned rank one to “conveniently located”, (Wt. Ave.
68.53), rank two to “money and valuable is safe” (Wt. Ave. 66.40), and rank three to “bank
is trustworthy” (Wt. Ave. 65.73). The important factors receiving least ranks include “work
completed timely and accurately” (Rank 34) (Wt. Ave. 47.40), “satisfied for the first time”
(Rank 35) (Wt. Ave. 47.33) and “employees are polite towards customer” (Rank 38) (Wt.
Ave. 46.06). Although PBSB have huge work force and highest number of bank branches,
yet they have not given quality-banking services to the respondents.
In Table 6 (PVTSB), respondents have given rank one to “display latest technology” Wt.
Ave. 85.06), rank 2 given to “employees are friendly” (Wt. Ave. 84.00), rank three is given
to two factors viz. “24 hours service” (Wt. Ave. 81.93) and “neat/clean and spacious
surroundings” (Wt. Ave. 81.93). “It is easily approachable when need arises” (Rank 34)
(Wt. Ave. 73.26), “assures confidentiality” (Rank 35) and “money/valuables is safec (Rank
36) (Wt. Ave. 72.67), and (Wt. Ave. 69.19) received last three ranks from the respondents.
Respondents are attracted towards PVTSB as the employee therein are kind and friendly
and give better quality services to the customers and satisfy them at the first time. Such
factors help in developing long-term relationship with the bank.
 Customers Consideration for Making Choice of Public and Private Sector Banks  103

Relative Usefulness of factors in Service Quality-Relationship: Tables 5 and 6 signify the

relative importance of the factors as shown by the respondents yet it will be in the fitness of
things to categorise these factors as very good, good, poor, very poor and can’t say. For this
purpose the range method of variation has been used on the weighted average scores. Table
5 relates to relative usefulness of factors in PBSB. It exhibits three factors in very good
category and these include “bank is trustworthy”, “money/valuable is safe” and “conveniently
located”. One factor is depicted in Good category; two factors are in Poor category (“clears
doubt when needed”, and “it is easily approachable when need arises”); 10 factors are in
very poor category. These are basic factors of service quality. Other 20 items fall in can’t say
category as the respondents are neither very satisfied nor very dissatisfied with the factor
statements. Table 6 exhibits relative usefulness of statements in PVTSB. There are 5 items
in very good category and 5 items in good category. These include “conveniently located”,
“24 hrs services”, “gives consistent service every time”, and “deliver what it promises”, etc.
All these statements are very important in service quality of a bank and respondents have
placed these statements in very good and good categories. There are 12 and 13 statements
in poor and very poor categories, which comprises “bank is trustworthy”, “help in difficult
situation”, etc. and “assures confidentiality”, “it guides/counsels/advises to unforeseen risk”,
etc. and in can’t say category there is only one statement i.e. “money/valuable is safe. This
implies that respondents in PVTSB are clearer about the vision than respondents of PBSB,
however, they lack trust in the bank.

SUGGESTIONS
Gaining and keeping customer loyalty through customer satisfaction starts with the
organization’s internal chain of events which helps in improving external satisfaction through
developing internal customer service relationship. Based on the results of the study
development of service attitude, customised products and services, effective customer
complaint handling procedure, creative marketing practices and customer’s counselling
and development of customer relationship programmes are considered to be important for
better working and building excellent customer relationship in banking sector.

CONCLUSION
The analysis of the various factors that customers generally keep in mind reveals that
customers choose private banks because efficient and speedy service, customer value, longer
working hours and innovative services offered by them. However, public sector banks are
especially chosen because of convenience and safety of money. For customers’ easier access
to banking facilities is more important than quality of services. Service quality is most
important parameter of building sound relationship among the customers. Public sector
banks and private sector banks are competing with each other to woo the customers on the
basis of service quality as they realized that customer satisfaction is a key component of
competitive strategies and keeping customers happy is critical for long-term business success.
104  Strategic Service Management

REFERENCES
1. Gronroos, C. (1982), Strategic Management and Marketing in Service Sector, Swedish School of
Economics and Business Administration, Helsinki, Finland.
2. Lehtinen, U. and J.R. Lehitnen, (1982), “Service Quality: A study of Quality Dimensions”,
Unpublished Research Report, Service Management Group, OY, Finland.
3. Levesque, T. and G.H.G. McDougall, (1996), “Determinants of Customer Satisfaction in R e t a i l
Banking”, International Journal of Bank Marketing, Vol. 14, No.7, pp.12-20.
4. Median, A. (1996), Marketing Financial Services, Mcmilan Press, Houndmills.
5. Parasuraman A, V.A., Ziethaml, and L.L. Berry, (1985), “A Conceptual Model of Service Quality and
its Implication for Future Research”, Journal of Marketing, Vol. 49, Fall, pp. 41-50.
6. Parasuraman, A, V.A., Ziethaml, and L.L Berry,., (1988), “SERVQUAL: A Multiple-Item Scale for
Measuring Consumer Perception of Service Quality”, Journal of Retailing, Vol. 64, Spring, pp. 12-40.
7. Parasuraman, A, V.A., Ziethaml, and L.L., Berry, (1991), “Refinement and Reassessment of the
SERVQUAL Scales”, Journal of Retailing, Vol. 67, Winter pp. 420-450.
8. Sasser, W.E., Olsen, P.R. and D.D. Wyckoff, (1978), Management of Service Operation: Text and
Cases, Allyn and Bacon, Boston.
9. Thompson, Philip., Glenn. DeSouza, and Bradley T. Gale, (1985), The Strategic Management of
Service Quality, Cambridge, MA.
 Customers Consideration for Making Choice of Public and Private Sector Banks  105

TABLE 1: FACTORS FOR THE SELECTION OF A PUBLIC SECTOR BANK (PBSB)

No. Elements Preferences WT Rank
MI I LI NI CS AVE

1. Bank reputation & Image 38 46 67 73 51 51.46 7

2. Staff politeness & kindness 26 52 64 80 53 49.53 15.5
3. Management ability of bank 24 56 68 70 57 49.66 13.5
manager
4. Long term relations with 47 36 64 65 63 50.93 6
customers
5. Speed of customer handing 31 52 62 68 62 49.79 11
6. Ability of computerisation 33 45 60 72 65 48.93 17
7. Bank Location 93 51 55 32 44 62.79 2
8. Staff professional knowledge 31 37 62 80 65 47.59 19
9. Soundness of bank system 44 47 69 74 41 53.59 5
10. Develop new schemes 33 49 60 71 62 49.66 13.5
11. Quantity and contents of service 39 48 57 70 61 50.59 9
items
12. Bank safety 121 50 42 37 25 68.66 1
13. Active at a new place 26 49 61 76 63 48.26 18
14. Follow Government policy 60 53 59 44 59 55.73 3
15. Realise activities of other bank 36 42 63 77 57 49.86 10
16. Interest rates and fees 42 45 64 55 69 50.73 8
17. Number of bank branches 63 40 57 69 46 55.33 4
18. Believes in individual marketing 33 41 67 79 55 49.53 15.5
19. Proper sales promotion Activities 33 42 67 78 55 49.67 12

* MI=MOST IMPORTANT, I=IMPORATANT, LI = LESS IMPORTANT, NI=NOT IMPORTANT AND

CS= CAN'T SAY
** WEIGHTS EQUAL TO 5,4,3,2,1, HAVE BEEN ASSIGNED TO MI=MOST IMPORTANT,
I=IMPORTANT, LI=LESS IMPORTANT NI=NOT IMPORTANT, CS=CANT SAY
PREFERENCES RESPECTIVELY TO CALCULAT THE WEIGHTED AVERAGE SCORE.
*** WEIGHTED AVERAGE SCORES HAVE BEEN ASSIGNED IN DESCENDING ORDER.
S.D. = 5.304: C.V. = 10.15%
106  Strategic Service Management

TABLE 2: FACTORS FOR SELECTION OF A PRIVATE SECTOR BANK (PVTSB)

No. Elements Preferences WT
MI I LI NI CS AVE Rank
1. Bank reputation & image 119 65 49 29 63 78.86 3
2. Staff politeness & kindness 142 67 41 22 53 79.86 2
3. Management ability of bank 92 87 51 17 78 71.53 13
manager
4. Long term relations with customers 86 86 55 25 73 70.8 15
5. Speed of customer handling 103 78 49 26 69 73.01 11
6. Ability of computerisation 143 67 38 28 49 80.13 1
7. Bank location 122 81 35 24 63 76.67 8
8. Staff professional knowledge 105 79 48 24 69 73.46 10
9. Soundness of bank System 91 73 49 31 81 69.13 16
10. Develop new schemes 106 71 51 28 69 72.8 12
11. Quantity and contents of service 126 75 40 78 62 77.06 6
items
12. Bank Safety 25 52 78 37 92 54.33 19
13. Active at a new place 88 69 55 72 76 68.73 17
14. Follow Government policy 55 66 62 21 70 62.59 18
15. Realize activities of other bank 122 84 37 26 61 77.33 5
16. Interest Rates and Fees 112 78 44 26 65 74.73 9
17. Number of bank branches 92 79 54 33 67 71.93 14
18. Believes in individual marketing 135 63 52 31 54 77.93 4
19. Proper sales promotion activities 127 70 41 28 59 76.86 7
* MI=MOST IMPORTANT, I=IMPORATANT, LI = LESS IMPORTANT, NI=NOT IMPORTANT AND
CS= CAN'T SAY
** WEIGHTS EQUAL TO 5,4,3,2,1, HAVE BEEN ASSIGNED TO MI=MOST IMPORTANT,
I=IMPORTANT, LI=LESS IMPORTANT NI=NOT IMPORTANT, CS=CANT SAY
PREFERENCES RESPECTIVELY TO CALCULAT THE WEIGHTED AVERAGE SCORE.
*** WEIGHTED AVERAGE SCORES HAVE BEEN ASSIGNED IN DESCENDING ORDER.
S.D. = 6.338; C.V. = 8.68%

TABLE 3: RELATIVE USEFULNESS OF STATEMENTS IN BANKING SERVICE IN PUBLIC SECTOR

BANKS (PBSB)
Most Important Less Not Important Can’t Say
Important Important
Bank Bank location Follow Soundness of *Bank reputation & image
safety (62.69) government bank system (51.46)
(68.66) policy (55.73) (53.59) *Staff politeness &
kindness (49.53)

Contd...
 Customers Consideration for Making Choice of Public and Private Sector Banks  107

Number of *Management ability of

bank branches bank manager (49.66)
(55.33) *Long term relations with
customs (50.93)
*Speed of customer
handing (49.76)
*Ability of computerization
(48.93)
*Staff professional
knowledge (47.59)
*Develop new schemes
(49.66)
*Quantity and contents of
service Items (50.59)
*Active at a New place
(48.26)
*Realize activities of other
Banks (49.26)
*Interest rates and fees
(50.73)
*Believes in individual
marketing (49.73)
*Proper sales (49.67)
Promotions activities

TABLE 4: RELATIVE USEFULNESS OF DIMENSIONS IN BANKING SERVICES IN PRIVAT SECTOR

BANKS (PVTSB)

Most Important Important Less Not Can’t Say

Important Important
*Bank reputation and *Management *Soundness of *Proper sales *Bank
image (78.76) ability of bank bank system promotion safely
*Staff politeness and manager (71.53) (69.13) activities (54.33)
kindness (79.86) *Long term *Active at a (76.86)
*Ability of relations with new place
computerization customers (70.80) (68.73)
(80.13) *Speed of customer
*Bank location (76.67) handling (73.01)
*Quantity and contents *Staff professional
Service items (77.06) knowledge (73.46)
*Realize activities of *Develop new
other banks (77.33) schemes
*Believe in individual *Follow
government policy
marketing (76.86) (62.59)
*Interest rates and
Fees (74.73)
*Number of bank
branches (71.40)
108  Strategic Service Management

TABLE 5: SERVICE QUALITY-RELATIONSHIP DIMENSIONS OF BANKING SERVICES IN PUBLIC

SECTOR BANKS (PBSB)
No. Elements Preferences WT
VG G P VP CS AVE Rank
1 Bank is trustworthy 104 64 39 25 43 65.73 3
2 Gives consistent services 31 43 60 79 62 48.46 31
every time
3 Deliver its promises 25 46 74 69 61 48.66 29
4 Help in difficult situation 39 44 70 62 60 51 12
5 Money/valuable is safe 118 55 35 14 53 66.4 2
6 Assure confidentiality 30 46 73 67 59 49.73 20
7 Clears doubt when needed 56 56 50 64 59 56.06 6
8 It guides / counsels / advices 40 46 62 71 56 51.2 9
of unforeseen risk
9 Conveniently located 120 66 30 15 44 68.53 1
10 It is easily approachable when 54 55 67 54 45 56.26 5
need arises
11 Staff helps when need arises 37 56 61 64 57 51.79 7
12 24 hour service 30 47 64 74 60 49.2 24.5
13 Manager listen the complaint 35 45 68 62 65 49.86 18.5
14 Use technical language in 86 48 47 49 45 60.4 4
communication
15 Appraise about new schemes 37 44 65 63 66 49.86 18.5
16 Disseminate information for 33 50 68 60 64 50.2 17
customer services
17 Understand the liking/disliking 37 45 74 56 63 50.79 13
18 Accommodate your schedule 33 44 69 68 61 49.66 22
while delivering services
19 Listen to your advise 33 49 67 71 55 50.59 15.5
20 Encourage customer 25 49 72 65 64 48.73 28
participation in service
delivery
21 Displays latest technology 31 47 67 65 65 49.26 23
22 Has neat/clean & spacious 38 38 66 73 60 49.73 21
surroundings
23 Employees wear formal dress 28 44 68 71 64 48.4 32
24 Has signage, stationery, v. 28 41 74 71 61 48.59 30
cards, name plates etc
25 You are satisfied the first time 23 44 70 71 67 47.33 35
26 Work completed timely & 24 41 69 79 62 47.4 34
accurately

Contd...
 Customers Consideration for Making Choice of Public and Private Sector Banks  109

27 Resolves problem 41 47 68 60 59 51.73 8

immediately
28 Employees willing to listen to 34 38 69 71 63 48.93 26
you
29 Staff gives solution to the 31 39 68 71 66 48.2 33
problem promptly
30 Staff is knowledgeable 40 44 66 68 57 51.13 10.5
31 Employee solves the problem 36 51 61 65 62 50.59 15.5
without fumbling around
32 Gives you timely & accurate 37 50 61 65 62 50.67 14
information when needed
33 Employees are polite towards 23 36 70 76 70 46.06 36
customers
34 Staff respect customers who 37 50 69 56 63 51.13 10.5
walks in the bank
35 Staff show helpful attitude 29 48 68 67 63 49.2 24.5
towards customers
36 Employees are friendly 31 42 65 77 60 48.79 27
VG = VERY GOOD, G = GOOD, = POOR AND CS = CAN'T SAY
WEIGHTS EQUAL TO 5,4,3,2,1, HAVE BEEN ASSIGNED TO VG = VERY GOOD, G = GOOD ,
P = POOR, VP = VERY POOR AND CS = CAN'T SAY PREFRERENCES RESPECTIVELY TO
CALCULATE THE WEIGHTED AVERAGE SCORE
WEIGHTED AVERAGE SCORES HAVE BEEN ASSIGNED IN DESCENDING ORDER.
S.D. = 5.355. C.V. = 10.36%

TABLE 6: SERVICE QUALITY-RELATIONSHIP DIMENSIONS IN BANKING SERVICES IN PRIVATE

BANKS (PVTSB)
No. Elements of study Preferences WT
VG G P VP CS AVE Rank
1 Bank is trustworthy 121 75 41 27 61 76.19 17
2 Gives consistent services 144 77 33 16 55 80.93 7
every time
3 Deliver its promises 132 87 32 18 56 79.73 9
4 Help in difficult situation with 118 81 35 24 67 75.59 20.5
letter & spirit
5 Money /valuable is safe 82 87 46 32 78 69.19 36
6 Assure confidentiality 105 75 46 28 71 72.67 35
7 Clears doubt when needed 127 73 37 23 65 76.56 15
8 At guides / counsels / advices 112 90 29 25 69 75.06 25
if unforeseen risk
9 Conveniently located 147 74 34 19 51 81.46 6
10 It is easily approachable when 105 79 45 27 69 73.26 34
need arises
11 Staff helps when need arises 117 73 43 35 57 75.53 22
Contd...
110  Strategic Service Management

12 24 hour service 151 74 31 16 53 81.93 3.5

13 Manager listen the complaint 118 88 38 18 63 77 13.5
14 Use techno cal language in 98 86 72 38 31 77.13 12
communication
15 Appraise about new schemes 110 86 41 26 62 75.4 24
16 Disseminate information for 102 82 52 22 67 73.67 32
customer services
17 Understand the liking/disliking 115 75 44 34 57 75.46 23
18 Accommodate yr schedule 117 85 42 23 58 77 13.5
while delivering services
19 Listen to your advise 129 81 38 13 64 78.19 11
20 Encourage customer 112 81 36 29 67 74.46 28
participation in service delivery
21 Displays latest technology 169 70 25 15 46 75.06 1
22 Has neat/clean & spacious 151 78 26 14 56 81.93 3.5
surroundings
23 Employees wear formal dress 140 87 23 18 57 80.67 8
24 Has signage, stationery, v. 137 80 23 27 58 79.06 10
cards, name plates etc
25 You are satisfied the first time 117 83 37 22 66 75.86 19
26 Work completed timely & 143 79 37 15 51 81.53 5
accurately
27 Resolves problem immediately 108 76 46 31 64 73.86 30
28 Employees willing to listen to 117 92 28 23 65 76.53 16
you
29 Staff gives solution to the 110 84 34 29 68 75.59 20.5
problem promptly
30 Staff is knowledgeable 109 81 47 21 67 74.59 26.5
31 Employee solves the problem 111 81 43 21 69 74.59 26.5
without fumbling around
32 Gives you timely & accurate 106 86 37 23 73 73.59 33
information when needed
33 Employees are polite towards 116 87 31 27 64 75.93 18
customers
34 Staff respect customers who 112 79 34 29 71 73.8 31
walks in the bank
35 Staff show helpful attitude 109 80 44 23 69 74.14 29
towards customers
36 Employees are friendly 163 74 23 15 50 84 2
VG=VERY GOOD, G=GOOD, =POOR AND CS=CAN'T SAY
WEIGHTS EQUAL TO 5,4,3,2,1, HAVE BEEN ASSIGNED TO VG=VERY GOOD, G=GOOD ,
P=POOR, VP=VERY POOR AND CS=CAN'T SAY PREFRERENCES RESPECTIVELY TO
CALCULATE THE WEIGHTED AVERAGE SCORE
WEIGHTED AVERAGE SCORES HAVE BEEN ASSIGNED IN DESCENDING ORDER.
S.D. = 3.486 C.V. = 4.53%
 Customers Consideration for Making Choice of Public and Private Sector Banks  111

TABLE 7: RELATIVE USEFULNESS OF SERVICE QUALITY – RELATIONSHIP DIMENSIONS IN

BANKING IN PUBLIC SECTOR BANKS (PBSB)
Very Good Good Poor Very Poor Can’t Say
*Bank is *Use technical *Clears doubt *Help in difficult *Gives consistent
trustworthy language in when needed situation (51.00) service every time
(65.73) communication (56.06) *It guides/ (48.46)
*Money/valuable (60.40) *It is easily ounsels/ advises *Deliver its promises
is safe (66.40) approachable of unforeseen (48.66)
*Conveniently when need risk (51.20) *Assure confidentially
located (68.53) arises (56.26) *Staff helps (49.73)
when need * 24 hour service
arises (51.79) (49.20)
*Understand the *Manager listen the
liking/ isliking complaint (49.86)
(50.79) *Appraise about new
*Listen to your schemes (49.86)
advise (50.59) Disseminate
*Resolves information for
problem customer service
immediately (50.20)
(51.73) *Accommodate you
*Staff is schedule while deliv.
knowledge Service (49.66)
(51.13) *Encourage customer
*Employee participation in
solves the service delivery
problem without (48.73)
fumbling around *Displays latest
(50.59) Technology (49.26)
*Gives you *Neat/Clear spacious
timely & surroundings (49.73)
accurate
information *Employees wear
when needed formal dress (48.40)
(50.67) *Has signage,
*Staff respect stationery, v.cards,
customers who name plates etc.
walks in the (48.59)
bank (51.13) *You are satisfied the
first time (47.33)
*Work completed
timely and accurately
(47.40)
*Employees willing to
listen to you (48.20)
*Staff gives solution
to the problem
promptly (48.40)
*Employees are polite
to customers (46.06)
*Staff show helpful
attitude towards
customers (49.20)
*Employee friendly
(48.79)
112  Strategic Service Management

TABLE 8: RELATIVE USEFULNESS OF QUALITY-RELATIONSHIP DIMENSIONS IN BANKING IN

PUBLIC SECTOR BANKS (PBSB)
Very Good Good Poor Very Poor Can’t Say
*Conveniently *Gives *Bank is *Assure *Money/Valuable
located (81.46) consistent trustworthy confidentiality is safe (69.19)
*24 hour service every (76.19) (72.67)
service (81.93) time (80.93) *Help in difficult *it guides/councel/
*Display latest *Deliver its situation (75.59) advises to
technology promises *Clears doubt unforeseen risk
(85.06) (79.93) when needed (75.06)
*Has neat/clean *Employees (76.59) *It is easily
& spacious wear formal *Staff helps approachable
surroundings dress (80.67) when need when need arises
(81.93) *Has signage, arises (75.53) (73.26)
*Employees are stationery *Manager listen Appraise about
friendly (84.00) v.cards, name the complaints new schemes
plates etc. (77.00) (75.40)
(79.06) *Use technical *Disseminate
*Work language in information for
completed communication customer service
timely and (77.13) 73.67)
accurately *Accommodate *Understand the
(81.53) your schedule liking/disliking
while delivering (75.46)
services (77.00) *Encourage
*Listen to your customer
advise (78.19) participation in
*You are services delivery
satisfied the first (74.46)
time (75.86) *Resolves
*Employees problem
willing to listen to immediately
you (76.56) (73.86)
*Staff gives *Staff is
solution to the knowledgeable
problem (74.59)
promptly (75.59) Employee solves
*Employees are problem without
polite towards fumbling around
customers (74.59)
(75.93) *Gives you timely
& accurate
information when
needed (73.59)
*Staff respect
customer who
walks in the bank
(73.80)
*Staff show
helpful attitude
towards
customers (74.13)
 10

Impact of Ser vice Quality on Student Satisfaction of

Jammu University

Jeevan Jyoti*
Jyoti Sharma**

This study attempts to examine the impact of service quality (tangibility, responsiveness, reliability,
assurance and empathy) on student satisfaction. On the basis of data collected from 324 Regular
Post Graduate students of Jammu University, it is revealed that service quality has a significant
relationship with student satisfaction in general and with in particular.
Keywords: Higher Education Institutions, Satisfaction and Service Quality

INTRODUCTION
Educational service quality emphasizing student satisfaction is a significant field of concern
in the education sector (Sander et. al., 2000). Key aspects of educational quality, such as
academic standards, curriculum content and suitability of teaching and learning methods
have always been the subject of much debate (Long, Tricker and Rangecroft, 1999). It is
commonly noted as a critical prerequisite for establishing and sustaining satisfying relationship
with valued customers which can be determined through performance and expectation
gap. An expectation that cannot be fulfilled in the institutions is the key factor for student’s
withdrawal (Alridge and Rowley, 2001). In general, perceived service quality is an antecedent
to satisfaction (Spreng and Mckoy, 1996). A proper understanding of the antecedents and
determinants of students’ satisfaction and their application can be seen to have an
extraordinarily high value for service organisation in a competitive environment. Earlier
researchers on service quality in higher education have emphasised more on administration
than academics – i.e. effective course delivery mechanisms and the quality of courses and
teaching (Atheeyaman, 1997 and Cheng and Tam, 1997).

* Assistant Professor, Dept. of Commerce, University of Jammu, Jammu

** Research Scholar ( JRF), Dept. of Commerce, University of Jammu, Jammu
114  Strategic Service Management

SERVICE QUALITY AND STUDENTS’ SATISFACTION

Parasuraman, Zeithaml and Berry (1985) listed ten determinants of service quality that can
be generalized to any type of service. The ten dimensions include tangibility, reliability,
responsiveness, competence, access, courtesy, communication, credibility, security and
understanding. These ten dimensions also stand re-grouped under the well-known five
dimensions in the SERVQUAL model (Parasuraman et. al., 1990) which include:
(i) Reliability: the ability to deliver promised services in a dependable and accurate manner;
(ii) Responsiveness: the willingness to help customers and provide prompt service.;
(iii) Empathy: the degree to which customers are treated as individuals;
(iv) Assurance: the ability to inspire trust and confidence; and
(v) Tangibles: physical elements of the service such as facilities and equipment. In context
to education sector, Moliner and Sanchez (2003) have confirmed that all the aforesaid
dimensions contribute to positive relationship between perception of service quality
and student satisfaction. As such SERVQUAL is applicable to higher education services
as well. Numerous studies such as Rigotti and Pitt, (1992), Cuthbert, (1996); Soutar
and McNeil (1996) and Wong, (2000). Other researcher found that the five
dimensional service quality model did not hold up under all service experiences. New
studies have demonstrated that the specific number of service dimensions associated
with service quality varies depending on the services provided and the circumstances
under which they are rendered (Mele, 1997 and Cronin 1992). Keeping in view all
these aspects seven dimensions of the service quality namely: Reliability, Empathy,
Responsiveness, Tangibility, Assurance, Courtesy and Access have been undertaken
for the present study.

PURPOSE OF THE STUDY

Successful educational institutions share three basic attributes namely, needs of their
students; quality of the educational experience, and customized strategies to shape their
future directions. Student satisfaction studies measure how effectively campuses deliver
what students expect, need, and want. These self-examinations enable institutions to measure
their students’ satisfaction with a wide range of college experiences. By studying student
satisfaction, institutions are able to pinpoint their strengths as well as weaknesses.
Traditionally, colleges and universities measured one dimension of student satisfaction only
i.e., institutional performance. However, for greatest impact and accuracy, satisfaction should
be viewed within the context of student expectation from service quality of the institutions. For
example, the availability of parking and the quality of food service repeatedly surface as
areas of high dissatisfaction to students across the country. It can be used in quality
improvement programmes to help educators in recognizing opportunities to improve services
and establish positive students’ perceptions. Service quality assessments can also identify
gaps between student perceptions and that of educators. As such, the purpose of this study
is to determine the relationship between service quality and student satisfaction.
 Impact of Service Quality on Student Satisfaction of Jammu University  115

Factors namely tangibility, assurance, reliability, responsiveness, empathy, access and courtesy
are analyzed in the present study. Besides, the study attempts to examine the critical factors
in service quality that contributes to student satisfaction.

HYPOTHESES
Kara and Wideshields (2004) investigated the relationship between student satisfaction
and their intention to stay in a college or university. One of the implications of the study
was that those educational institutions that understand consumer-oriented principles have
a better chance of satisfying the wants and needs of their students more effectively. King
and Nair (2003) suggested that quality assurance has been normalized in the university
experience. Students were conscious about quality and continuous improvements in staff
and department. Hence the first hypothesis is
Hyp 1: Service Quality has positive impact on student satisfaction.
Mahiah, et.al. (2006) suggested that increase in sophistication of reliability, empathy,
tangibility; responsiveness and assurance can increase customer satisfaction. Further,
Cuthbert (1996) suggested that tangibility is not the major contributor towards satisfaction
of the students. Thus, the second hypothesized that:
Hyp 2: All variables of service quality do not effect student satisfaction equally.
Ericson and Ellett (2002) identified the critical factors of student satisfaction. The study
revealed that although efforts are being made to achieve student satisfaction yet the level of
satisfaction was low due to lack of student interaction with the education system. Further,
due to poor marketing strategies, students cannot get desired level of satisfaction (Shoemaker,
1998). This led to formulation of third hypothesis and objective:
Hyp 3: The level of satisfaction is low among the students.

RESEARCH DESIGN AND METHODOLOGY

The present research is evaluative and exploratory in nature as it tries to find out the impact
of service quality on the satisfaction of regular post graduate students of University of Jammu.
The research design and methodology include the following:

Research Instrument
The questionnaire used for data collection has three sections, consisting demographic factor,
measurement of service quality in Higher Education and measurement of student satisfaction.
Instrument used in this research is adapted from Parasuraman et. al. (1990) with some of
the items extracted from Leslie and Nguyen (1997) using the five dimensions in service
quality (tangibility, assurance, reliability, responsiveness and empathy) using 5 Likert scale.

Sample Size
All the Post Graduate departments (32) of Jammu University were contacted and information
regarding student strength was gathered from office of each department individually. The
116  Strategic Service Management

total population arrived at 2842. Out of which 324 were selected as a sample by using the
following formula:
1.96*S.D “ N-n/n*N = 0.05* mean (Mukhopadhya, 1998-) where S.D = Standard Deviation,
N = Total population, n = Sample population, Mean = Sample Mean.
After distributing questionnaire to total sample of 324 respondents, only 306 questionnaires
were found to be complete, giving a 94 % response rate.

Statistical Tools Applied

The various statistical tools used in this research are mean, standard deviation, frequency
distribution, multiple correlation, multiple regression and ANOVA, t-test. Convergent
validity has been worked out through positive correlation between statements of different
dimensions. The reliability and the internal consistency of the data collected have been
judged through Cronbach’s Alpha. The internal consistency using split half method was
used to assess the reliability of both scales (Malhotra, 2002; Hair et. al., 1995 and Tull and
Hawkins, 1988). The overall mean values of both halves are above average i.e. 3.268 and
3.486 (Table 4), indicating the internal consistency and reliability of the data.
The content/face validity of the scales has been duly assessed through intensive review of
literature and deliberations with the subject experts for the selection of scale items.

Data Purification
The multivariate data reduction technique of factor analysis has been used for examining
inter-relationship among variables and reduction of large number of variables into few
manageable and meaningful sets. Factor analysis was carried out through the statistical
Package for Social Sciences (SPSS, 15th version) to simplify and reduce the data. It was
carried with principal component analysis along with orthogonal rotation procedure of
varimax for summarizing the original information with minimum factors and optimal
coverage. The statements with factor loading less than 0.5 and eigen value less than 1.0
were ignored for the subsequent analysis (Sharma and Jyoti, 2004). The data reduction was
performed in three steps. Firstly, the items with values less than 0.5 on the diagonal axis of
the anti-image correlation matrix were deleted. In the second step, the extracted
communalities were checked (amount of variance in each variable) and items with values
less than 0.5 were ignored for the subsequent analysis. In the third step, multiple loadings
and values less than 0.5 in rotated component matrices were ignored.

FINDINGS

Profile of the Respondents

The demographic information of the respondents including gender, age, semester of the
courses and ethnicity is summarized in Table 1 in the form of frequency distributions and
percentages. Out of 306 respondents, 136 (44.4%) are male and 170 (55.6%) are female.
Most of the respondents are in the second semester of their study (48%), followed by
 Impact of Service Quality on Student Satisfaction of Jammu University  117

fourth semester (47%), fifth semester (3%) and third semester (2%). Majority of the
respondents are from science block (40.8 %) followed by Arts (34 %), social science (11%),
Business School (5.2%) and other blocks contributing about 8.8%.

Measurement of Service Quality

The level of student satisfaction is directly linked with service quality without which effective
learning cannot be possible in educational institutions. The overall mean of service quality
was 3.20 on five point scale. This aspect comprised 27 statements got converged under
seven factors namely responsiveness (F1), reliability (F2), assurance (F3), tangibility (F4),
empathy (F5), courtesy (F6) and access (F7) with positive factor loading. The detailed
analysis of each factor is as under:
Responsiveness (F1): Responsiveness is the ability to deliver the promised services in a
dependable and accurate manner. The mean satisfaction score from responsiveness has come
to 2.93 which is below average score. About 41% students revealed delay in grievance
redressal process and 44% disliked the colour scheme used in the class rooms. About 45%
students revealed adequacy of placement services (3.10) for them.
Reliability (F2): The overall factorial mean has arrived at 3.51 which are little above average
score. About 60% respondents reported ongoing teaching methods as good (3.57) leading
to affective teaching quality (3.56, r = 0.527 sig. at 0.01). Further about 56% students
remarked that their teachers take interest in teaching (3.43) and have problem solving
approach towards them (3.47).
Assurance (F3): The mean satisfaction scored from assurance is 3.43. The most satisfactory
aspect of assurance is effective teaching as 58% students are satisfied with teaching services
(3.55, t = 0.035 at 0.97 sig. level) and 53% revealed availability of needed reference material
in the libraries (3.43). All this helps in meeting their expectations properly (3.45) but use
of modern means of communication by teachers in class-room is little less satisfying.
Tangibility (F4): The level of student satisfaction is directly linked with tangibility of services
provided because effective learning cannot be achieved without good quality of services.
The satisfaction secured from this aspect has arrived at 3.07. Most of the students are
moderately satisfied with the departmental building (3.33) and 52 percent emphasized
that sitting capacity in the library is according to the strength of students (3.18). On the
contrary, 44 percent students are dissatisfied with regard to free access to computers as well
as internet (2.78) and 39 percent students reflected their dissatisfaction with canteen facility
on the campus (2.99).
Empathy (F5): The mean satisfaction obtained from this dimension is 3.10. About 42
percent students reported that their institutions do not arrange extra classes for difficult
courses (2.91). They also revealed that (36%) the curriculum has no provision for practical
knowledge (3.05) but they are moderately satisfied with the quality of services provided by
the institutions (3.35).
118  Strategic Service Management

MEASUREMENT OF STUDENT SATISFACTION

Student satisfaction is the state when all expectations of students are properly fulfilled by
the institution. It has been explored from various aspects like teacher student relationship,
subject matter, methods of instructions and infrastructure. The factorial mean of student
satisfaction has arrived at 3.28 (Table 2). Factor analysis reduced 61 statements into 22
statements under eight factors. The detailed analysis is as under:
Students’ Growth (Factor 1): Students are always concerned about the quality and delivery
of service provided to them. Growth is becoming an increasingly common component for
elementary, secondary and higher education. The mean satisfaction scored from student
growth was 3.24 (Table 2). About forty percent feel inadequate use of modern means of
communication by teachers (M=3.262). Further, the career counseling service is moderate
(M=3.04).
Social set-up (Factor 2): The development of all sectors of the society depends upon the
social set up. Social set-up indicates things that we do when we interact with people. These
are specific abilities that allow a student to perform competently at particular social task.
The degree of satisfaction secured from social set-up is 3.96 (Table 2). Majority of the
respondents (78 percent) emphasized that education does not only play the role in social
development (M=4.00) but also in removing social evils like dowry (M= 4.00). About 74
percent students further disclosed that education helps in making them law abiding citizens
(M=3.87). The results reveal the importance of value oriented education to students to
make them lawful citizens of the state.
Institutional services (Factor 3): Institution is a place where student expectations are fulfilled.
So, educational institutions focus more on student satisfaction. The degree of satisfaction
secured from Institutional factor came to be 3.14 (Table 2). About 67 percent respondents
felt proud of their institution (M=3.34). The mean score from the institutional commitment
towards students was below average (M=2.997) and 32 percent students observed that
institution was not committed towards them. The feeling of pride for their institution
amongst the students, as such, needs to be increased by infusing more institutional services.
Co-student attitude (Factor 4): Campus community of students helps to meet educational,
personal and professional aspirations through co-operation, and interaction. The students
are enjoying high level of satisfaction (M=3.98) from this factor. About 79 percent students
are satisfied with the behavior of their co-students (M=4.11) and seventy three percent
find them helpful at the time of need (M= 3.94). They are also eager to interact with fellow
students (M= 3.88). The result reveals students as highly satisfied with the positive attitude,
helpful nature and interactions with the co-students.
Curriculum (Factor 5): University brings together many areas of learning. Yet it is more
than just a collection of specialised disciplines. It integrates the knowledge through study
of facts, issues and ideas. In combination with major, minor and elective courses, the
curriculum helps students in attaining those attributes which are found in an educated
person. Curriculum is a tool designed to measure the competency of the students, the
factorial mean of which factor has come to 3.18 (Table 2). About 53 percent students are
 Impact of Service Quality on Student Satisfaction of Jammu University  119

satisfied with regard to ‘effective content and coverage’ (M= 3.38, t=0.013 at .98 sig.
level). The grim feature of this factor is lack of job oriented approach in curriculum
(M=2.78). Results reflect an immediate needs of vocation oriented and technical education
for the students so that unemployment and wastage of resources gets minimized. Besides,
students were moderately satisfied with the introduction of new courses which requires re-
organization of courses keeping in view the needs of the society. There is an urgent need to
introduce flexible and innovative education.
Administration (Factor 6): University Administration provides services strengthening
institutional learning mission. It is not concerned with teaching, research or outreach, but
it plays a significant role in making these areas better. The ever changing goals of
administration include student satisfaction, faster/better operations, and high employee
commitment. The goal of studying this dimension was to obtain information from students
to establish benchmark that can be helpful in decision making for improving their
satisfaction. The factorial mean of this factor has come to 3.42 (Table 2) which is moderate.
About sixty three percent respondents are highly satisfied with the admission procedure
(M= 3.60) and forty nine percent respondents revealed presence of systematic planning
and controlling operations (M= 3.24).
Economic effect (Factor 7): Education and economic benefits are closely related terms.
Education acts as a major contributor to the socio-economic progress of the country.
Education trains our youth for the jobs of tomorrow. It helps students to meet new job
opportunities and challenges. The factorial mean from this factor came to 2.48 (Table 2)
which is least amongst all factors. About fifty nine percent students opined that education
is responsible for increasing unemployment among educated youth (M= 2.51). Further
fifty eight percent feel that scarcity of resources to meet educational expenditure (M=
2.44). The result shows that students are experiencing lowest satisfaction with this factor.
The reason behind this is increase in unemployment and scarcity of resources. In order to
raise student satisfaction, more job opportunities should be created for educated youth and
provision of scholarship should be introduced on income basis so that poor students can
continue their studies without any financial constraints.
Information Technology (Factor 8): Modern educational institutions always try to provide
their students advanced-technical facilities in order to increase their capabilities by giving
them global horizons and enhancing their vision. The mean satisfaction from this factor
came to be average at 3.03. About sixty two percent students are satisfied from declaration
of results on internet (M=3.25) while fifty four percent were dissatisfied with the non-
availability of forms on internet (M= 2.80). Results reflect that students are dissatisfied
with the availability of admission forms on internet. In order to increase their satisfaction
level, arrangement should be made for online availability of different types of forms.
A thorough analysis of the student satisfaction factors shows that students are moderately
satisfied (3.38). Application of one sample ‘t’ test revealed a significant difference in test
value and observed value (t .165, Sig. > .05, Table). Hence, the third hypothesis, i.e., the
level of satisfaction is low among the students stands rejected.
120  Strategic Service Management

RELATIONSHIP BETWEEN SERVICE QUALITY AND

STUDENT SATISFACTION
The impact of various dimensions of service quality on student satisfaction as analyzed with
the help of linear multiple regression analysis, indicated multiple correlation (R) at 0.822
and adjusted R square(R2) at 0.675, showing service quality accounting for about 68 per
cent variation in students satisfaction. It also reflected that all dimensions of service quality
are not significant and equal predictor of student satisfaction. Empathy (Beta=0.281, t=7.09,
sig. < 0.01) is the strongest predictor of student satisfaction followed by reliability, courtesy,
responsiveness and access (Table 3). On the other hand, contribution of tangibility and
assurance are insignificant. Hence, our first and second hypotheses are accepted.

CONCLUSION
The research reveals a significant and high relationship between overall service quality and
students satisfaction (r= 0.822, sig. <.001). Results reflect empathy plays crucial and an
influential role towards satisfaction. The service quality dimensions (tangibility, assurance,
responsiveness, reliability and empathy) have significant relationship with student satisfaction
being in line with earlier research by Mahiah. S. et al. (2006). Thus, it confirms that by
improving service quality, it may potentially improve the student satisfaction, which is the
priority of the higher education institutions. Further, two dimensions of service quality viz.
empathy and assurance are the most critical factors in explaining student satisfaction. Hence,
steps should be taken to enhance the elements of empathy and assurance in service quality
to make students more satisfied.

LIMITATIONS AND FUTURE RESEARCH

All possible efforts were made to maintain objectivity, reliability and validity of the study,
yet certain limitations could not be ignored and are required to be kept in mind whenever
its findings are considered for implementation. These are as under:
 The study has measured service quality on the basis of the experience of the students.
As they might have been guided by their likes and dislikes.
 The scope of the study was limited only to the University of Jammu.
 The domain of the research problem remains limited
Future research is required to make a comparative study to investigate whether there are
any differences in service quality and student satisfaction between public and private higher
education institutions.

References
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Assurance in Education, Vol. 5(1), pp.22-31.
 Impact of Service Quality on Student Satisfaction of Jammu University  121

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Quality and Satisfaction, Journal of Retailing, Vol. 72(2), pp. 52-64.
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122  Strategic Service Management

TABLE 1: SUMMARY OF RESULT FROM SCALE PURIFICATION FOR SERVICE QUALITY, FACTOR
LOADINGS, TOTAL MEAN, S.D, EIGEN VALUE, KMO VALUE AND VARIANCE EXPLAINED
Service Quality Factor Mean S.D Eigen KMO VE
Loading Value
F1 (Responsiveness)
Placement Services 0.589 3.10 1.73
Directional signs 0.608 3.17 1.14
Attractive colors 0.810 2.74 1.25
4.485 14.017
Usage of Modern Services 0.705 2.85 1.27
Grievance Redressal 0.675 2.90 1.17
Professional coaching 0.697 2.84 1.30
Total 2.93 1.31
F2 (Reliability)
Good Teaching Method 0.711 3.57 1.24
Interest in Teaching 0.610 3.43 1.29
3.177 9.928
Problem Solving 0.663 3.47 1.29
Effective Teaching Quality 0.615 3.57 1.17
Total 3.51 1.24
F3 (Assurance)
Expectations Fulfilled 0.505 3.45 1.11
0.899
Communications 0.562 3.26 1.26
2.537 7.927
Material in Library 0.586 3.43 1.10
Effective Teaching Services 0.577 3.55 1.11
Total 3.42 1.14
F4 (Tangibility)
Departmental Building 0.660 3.33 1.40
Sitting capacity in Library 0.813 3.18 1.41
2.504 7.826
Canteen Facility 0.555 2.99 1.39
Access to Computer 0.729 2.78 1.47
Total 3.07 1.14
F5 (Empathy)
Practical Knowledge 0.737 3.05 1.26
Extra Classes 0.612 2.91 1.45
2.131
Quality services 0.504 3.35 1.05
Total 3.10 1.25
Total Mean of Service Quality 3.20 6.658
 Impact of Service Quality on Student Satisfaction of Jammu University  123

TABLE 2: SUMMARY OF RESULTS FROM SCALE PURIFICATION FOR STUDENT SATISFACTION

TOTAL MEAN, FACTOR LOADINGS, VARIANCE EXPLAINED, KMO VALUE AND EIGEN VALUES

Statements Mean Factor V.E KMO Eigen

loading value

F1 student growth

Provide career counseling

services 3.039 0.782 11.459 0.82 2.636

Use of modern means of

communication 3.262 0.755

Availability of needed reading

material 3.439 0.736

Total Mean of F1 3.247

F2 Social set up

Education make student

lawful citizen 3.879 0.825 10.052 2.312

Helpful in social development 4.007 0.826

Helpful in removing social

evils 4.003 0.781

Total mean of F2 3.963

F3 Institutional services

Proud on institution 3.341 0.672 9.652 2.22

My Institution is better than

other 3.197 0.732

Institution is committed to
students 2.997 0.676

Providing quality service 3.013 0.717

Total mean of F3 3.137

F4 Co-student attitude

Students behave properly 4.111 0.725 9.456 2.175

Helpful at the time of need 3.944 0.874

Take interest in interaction

with fellow students. 3.882 0.818

Total mean of F4 3.979

F5 Curriculum

Introduction of new courses 3.21 0.715 8.743 2.011

Contd...
124  Strategic Service Management

Effective content and

coverage 3.387 0.659
Job oriented approach 2.777 0.776
Total mean of F5 3.125
F6 Administration
Systematic planning and
controlling 3.239 0.708 7.014 1.613
Proper admission
procedure 3.603 0.831
Total Mean of F6 3.421
F7Economic effect
Increase unemployment 2.515 0.827 6.79 1.521
Scarcity of resources 2.443 0.802
Total mean of F8 2.479
F8 Information
technology
Availability of forms on
internet 2.8 0.819 6.333 1.457
Declaration of results on
internet 3.249 0.77
Total mean of F9 3.025
Total V. explained by
student satisfaction 69.499
Total mean of Dimension
student sat 3.279

TABLE 3: MODEL SUMMARY OF REGRESSION ANALYSIS

Dependent Independent R Adjusted Std. Std.Coff t Sig. F Sig.
Variable Variable R2 error Beta

Student Service
Satisfaction Quality 0.822 0.675 0.369 0.822 25.18 0.000 634.13 0.000
Student Responsive-
Satisfaction ness 0.154 3.597 0.000
Reliability 0.272 7.097 0.000
0.839 0.696 0.356 100.93 0.000
Assurance 0.114 2.501 0.000
Tangibility 0.101 2.689 0.013
Empathy 0.281 7.097 0.008
 Impact of Service Quality on Student Satisfaction of Jammu University  125

TABLE 4: RELIABILITY AND VALIDITY VALUES

Cronbach’s Alpha Value Validity
Component
Split half reliability Construct
Sample I Sample II KMO

Service Quality 0.934 0.916 0.858 0.830

Student Satisfaction 0.924 0.909 0.833 0.789

126  Strategic Service Management

11

Online Customers Attitude Customers’ Attitude

tow ar
towar ds Ser
ards vice Quality of FFull
Service ull Ser vice Airlines
Service

Dr Hardeep Chahal*
Mamta Sharma**

Online service quality is one of the key determinants of the success of online retailers. Because of
the amount of data and multimedia content available, searching the web is monumental task.
Online commercial sites are growing and travel is the fastest growing segment of online commerce,
with no sign of slowing down. Proliferation and rapid adoption of the internet within the
airline industry along with online ticket purchasing and electronic ticketing are the important
key drivers of e-business in the airline sector. The internet and its growing technologies allowed
airlines to alter their distribution channels and interact directly with customers, by passing
traditional brick and mortar agents and eliminating hefty commission fee. The present study is
an effort in this regard to measure online customers' attitude towards service quality of full
service airlines. The data has collected from 226 customers using internet booking facilities
through personal contacts and e-mail methods. The relationship among the measures of online
service quality is analysed using relevant statistical tools to draw inferences. The paper concludes
with focus on limitations and directions for future research.

INTRODUCTION
The adoption of Information Technology (IT) is no longer a mean for sustaining competitive
advantage but an essential weapon for survival of the present day organizations. The IT-
applications are increasingly important for organizations in their varied business affairs as
they provide them with new ways of exchanging information and transacting business
(Kohli, 2007). In fact, the use of IT-applications as a vehicle for online business has become
standard operating practice in many corporations today. Online business, in general,

* Associate Professor, Department of Commerce, University of Jammu, Jammu

** Assistant Lecturer, GDC, Parade, Jammu
 Online Customers Attitude  127

encompasses buying and selling of products/services, use of technologies to exchange

information and the development of electronic business processes to complete order
fulfillment cycle (Liu & Luo, 2003). Many large and medium scale service industries are
operating at enriched stage inside across the country. Specifically, both full service and low
cost airlines, have adopted e-activities in their business operations for executing variety of
operational, tactical and strategic processes (Lewis et. al., 2003).
The application of internet has strong impact on both business organizations as well as on
customers as the users of the service. Online services are one of the success avenues that
companies have begun to use to generate additional sales. Online services such as easy
search of products and services, provision of product specifications that reduce communication
costs, secure electronic payment system to complete transactions, updated product delivery
information and quick response to customer queries are important to win online customers
and to make them keep coming back to the site for further purchases (Turban et. al.,
2000). The literature authenticates that among online industries, online travel industry
has been booming and gaining significant attention since 1995 particularly for online
ticket reservation. Although, online travel represents the single largest sector with estimated
spending of $68 billion till 2006, however, estimated percentage increase in travel sector
(14.7%) is less than non-travel sector (24.6%) (Comscore, 2006). The online reservation
system has now been also extended along with airlines to other traveling sectors such as
trains and buses in growing economies like India. The selling of tickets for air travel has
been one of the growing success stories of the industry. The different airline companies
such as Kingfisher, Jet, Air India, Spicejet, Go Air, and other online travel companies such
as Ticketmaster, Travelocity, Orbitz, Yatra, Expedia, flights etc. have capitalised on the
internet as retail channels. The increasing trend in online airline ticket is mainly because of
potential benefits associated with automating the ticketing functions of an organization
which include reduced labour costs, increased accuracy of ticket inventory, processing speed
and increased customer service (Porter & Boyer, 2001).
Besides contributing to the success of travel companies, internet has also revolutionised the
thinking of customers who have become more awared and tech savvy. The business of
online travel services basically depends on awareness of customers on one hand and web
service quality on other hand. Awareness of customers and purchasing power of customers
in addition with web content quality and e-service quality are important dimensions
contributing to the success of airline sector. Today, consumers are able to browse schedules
for available flights, cruise, trains not only purchasing air tickets but other methods of
travel from the comfort of their personal computer, presumably saving them the time and
hassle of dealing through a traditional agent. Online customers expect fast, friendly, choice,
convenience and responsive quality service with a personal touch (Zhao & Gutierrez, 2001).

ONLINE SERVICE QUALITY

With the increase in growth of online/ e-services on the web, the companies have become
more proactive to offer customised information and benefits to the customers. Zeithaml et.
al. (2000) provided a comprehensive concept of online service quality based on pre and
post service aspects. Santos (2003) defined e-service quality as overall customer evaluations
128  Strategic Service Management

and judgements of excellence e-service delivery in the virtual market place. He identified
major dimensions of online service quality that include website design, website usability,
information quality, service reliability, assurance and personalisation.
Drawing upon the traditional service quality scale, Zeithmal et. al. (2000) have developed
dimensions for measuring e-service quality through series of focus group interviews. Access,
ease of navigation, efficiency, flexibility, reliability, personalisation, security/privacy,
responsiveness, trust/assurance, site aesthetics and price knowledge are found to be significant
indicators of online service quality. Further, they remarked efficiency, fulfillment, reliability
and privacy are common indicators for assessing offline and online service quality. Lociacono,
Watson and Goodhue (2000) established a scale called WEBQUAL with twelve dimensions
viz; informational fit to task, interaction, trust, response time, design, intuitiveness, visual
appeal, innovativeness, flow, integrated communication, business process and substitutability.
Later, Yang, Peterson and Huang in 2001 expressed online service quality to be the function
of six elements namely eases of use, content, accuracy of content, timeliness of response,
aesthetics and privacy. On the basis of extensive literature review, Madu & Madu (2002)
provided comprehensive overview of online service quality. They classified online service
quality characteristics into fifteen dimensions related with performance, features, structure,
aesthetics, reliability, storage capacity, serviceability, security and system integrity, trust,
responsiveness, product/service differentiations and customization, web store policies,
reputation, assurance and empathy. In the same year, Wolfinbarger and Gilly (2002) have
established four dimensions namely website design, reliability, privacy/security and customer
service and found that reliability and fulfillment are the strongest predictors of customer
satisfaction. Despite lot of efforts undertaken by different researchers to define online service
quality domain, the literature still lacks standardised dimensions to conceptualize online
service quality.

GENERALISATION OF SCALE ITEMS

The varied indicators affecting online service quality, identified on the basis of literature
review, have been categorised into five dimensions namely content (information about the
company, its product, offers, help/search, facility, etc.), functionality (site’s search functions,
its download speed, overall design, navigation, efficiency, customers’ ease of use, etc.),
merchandise (product quality, selection of the products, guarantee/offerings, pricing, etc.),
privacy (protection of personal information, web shopping behaviour, credit card and digital
cash information) and customer service (answering questions, providing information, easy
to contact the service provider and easy to return the goods, etc.)

METHODOLOGY
Since the population of online customers is not well defined, so an effort was made initially
to identify various channels of sources such as personally known business and service
employees, e-mail ids, university teachers and students and tourists to identify online
customers. Personal contact and distribution approaches were used to contact and collect
data from the respondents. The convenient sampling was used for final data collection.
 Online Customers Attitude  129

Respondent’s Profile
The demographic profile of full service airline respondents is identified according to gender,
age, occupation, monthly income and qualification criteria (Table 1). The sample of
respondents (226) using online services consisted of 60% males (136 respondents) & 40%
females (90 respondents). 61% & 39% respondents found to be married and unmarried
respectively. Further, 11% respondents fall in income groups –I (IG-I) with monthly income
below Rs 10,000; 35% respondents belong to IG-II with monthly income between Rs
10,000- Rs 20,000, 34% respondents fall in category (IG-III) with monthly income between
Rs 20,000- Rs 30,000 and 20% respondents in the last group (IG-IV) with monthly
income above Rs 30,000. The respondents falling in four educational groups include 8%
respondents in group I (10+2), 28% respondents in group II (graduate), 37% in group III
(post graduate) and 27% respondents in group IV (others). The respondents are also
categorised according to their occupation viz; business class (36%), service class (46%) and
dependent (18%) respectively. Further, 34% respondents (77), 41% respondents (92),
20% respondents (45) and 5% respondents(12) are found to be falling under AG-I (21-30
years), AG-II (31-40), AG-III (41-50 years) & AG-IV (above 50 years) respectively. Lastly,
as per online service experience, respondent percentage using online services has been
estimated as 0-1 year (18%), 1-2 years (34%), 2-3 years (31%) and above 3 years (17%).

RELIABILITY AND VALIDITY

The values of reliability, based on split half consistency for online service quality, of 0.872
& 0.838 (item-wise) and 0.869 & 0.919 (respondent-wise) (Table-2) suggests the internal
consistency of the data used. The validity of the instrument was checked by using construct
and convergent validities. The majority of the values support the validity of the instrument.
The Cronbach alpha value for the online service quality (0.834) signifies the construct
validity of the instrument (Hair et. al. 2005).

DATA ANALYSIS
The data reduction technique of factor analysis has been used to reduce number of dimensions
into few manageable and meaningful dimensions that affects the components of service
quality and service performance and also to examine the interrelationship among variables.
The study used principal component analysis with varimax rotation. Varimax rotation being
the best rotation procedure as it minimises the number of items with high loading on one
factor, thereby enhancing the interpretability of the factors (Malhotra 2002, p.595). The
KMO values equal to and greater than 0.50 are used to find out relevance of data reduction
and grouping for factor analysis. Further, Bartlett test of Sphericity is used to identify
correlation coefficient among the variables and degree of correlation coefficient equal to or
greater than 0.30 is used as criterion for selection of items to check relationship among
items (Hair et. al., 1995). The online service quality of full service airlines, based on five
dimensions namely customer service, functionality, privacy, merchandise and offerings, is
discussed as under:
130  Strategic Service Management

Customer Service
The six out of twenty six statements, in the first factor relate to ‘online help/toll free number’
(FL=0.81, MSV=3.87), ‘provide proper solution’ (FL=0.74, MSV=3.53), ‘easy to get help’
(FL=0.71, MSV=3.82), ‘trust and confidence’ (FL=0.70, MSV=3.70), ‘availability of
customer service representatives (FL=0.67, MSV=3.48) and ‘handling of complaints’
(FL=0.57, MSV=3.35) respectively. The factor 1 clearly depicts that the customers have
average degree of satisfaction with customer service. The overall mean of items is valued at
3.63 and cumulative variance came out to be 14.63 percent from total variance of 62.22
percent explained by customer service (Table 3). The value of communalities for the six
items is found to be 0.70, 0.74, 0.61, 0.60, 0.58 and 0.51 respectively.

Functionality
The factor two comprises only six statements namely loading of pages, truthful about
offerings, pages do not freeze, quick transaction, easy to get anywhere on the site and site
does not crash which scored factor loading values of 0.75, 0.75, 0.72, 0.65, 0.61 & 0.55
and mean score values of 3.38, 3.40, 3.57, 3.41, 3.86 & 3.20 respectively. The results
showed that customers are satisfied with the dimensions relating to functionality of the
website. The overall mean score value depicts almost average degree of quality with respect
to functionality services. The factor demonstrates 14.07 percent of variance out of total
62.22 percent of variance.

Privacy
The ‘privacy’ factor recognises six statements i.e. secure credit card transaction, web-shopping
behaviour, information on privacy policy, feel safe, solution to the problem and personal
information not disclosed which have scored factor loading values of 0.78, 0.76, 0.71,
0.69, 0.64 & 0.61. The mean score of these statements ranged from 3 to 4. The factor
explained 12.89 percent of variance out of 62.22 percent. The values of communality for
the items in identified factors in order of contribution include 0.68, 0.66, 0.67, 0.64,
0.66 & 0.53 respectively.

Merchandise
Factor four evolved only four statements namely guarantee on online product, compensation
for loss, price comparison & product return facility with high and positive factor loading
values of 0.76, 0.75, 0.73 & 0.71 respectively. The mean score values came to be 3.11, 3.0,
3.63 & 3.10 which showed that customers have average degree of satisfaction. This also has
been found by Fullantelli & Allegra (2003), Sardana (2001), Joia (1999) and Thomson
(1999). The overall mean score came to be 3.21 which showed average responses with
regard to merchandise services. The factor demonstrates 10.76 percent of variance explained.
These statements also showed good values for communalities and MSA which are also
found to be significant indicating the relative importance of the statements.
 Online Customers Attitude  131

Offerings
This factor has taken four statements viz; discount during festivals, internet tickets, discount
during off-season & seasonal discounts. The factor loadings of these statements were 0.79,
0.69, 0.69 & 0.68 and the mean score values came to be 3.13, 3.43, 3.60 & 3.41 which
reveal that online customers have average degree of satisfaction with regard to offerings
provided by airline organisations. The overall mean score value is 3.39 and the values of
communalities of these statements ranged from 0.5 to 0.7.

CONCLUSION
To assess the relationship between overall service performance and five dimensions of online
service quality namely customer service, functionality, privacy, merchandise and offerings,
multiple regression was used (Table 4). The beta value for customer service, privacy,
merchandise and offerings are found to be 0.337 (p= 0.000), 0.155 (p= 0.003), 0.085 (p=
0.043) and 0.003 (p= 0.958) respectively, indicating their positive impact on online service
quality. Similarly, the impact of functionality on online service quality depict negative
impact with beta value calculated as -0.37 (p= 0.481). The adjusted R2 of the model is
found to be 0.311.

LIMITATIONS AND FUTURE STUDY

The research is conducted amidst certain limitations. First, being consumer based study,
the elements of subjectivity cannot be avoided as the responses of customers were based on
their perception regarding online service quality items. But at the same time, an endeavour
was made using validity and reliability analysis to check the objectivity and rationality of
the responses. Secondly, online service quality is conceptualised in terms of customer service,
functionality, privacy, merchandise and offerings and the perceived risk (social risk, time
risk and technological risk, etc.) affecting online service quality is not assessed in the present
study and can be undertaken in the future research. In addition, the online service quality
with service performance needs to be assessed in the future study. Further, the study results
need to be further examined using largest sample base for the national as well as international
airline services for low cost airlines as well as full service airlines. Lastly, the generalisation of
the study results needs to be examined in other service sectors such as railways, banks,
hotels, education sector, etc.

References
Comscore (2006), “Online Consumer Spending”, available at: www.comscore.com/press/release.asp?press=959,
Last visited on 12th February, 2009.
Fulantelli, Glovanni and Mario allegro (2003), “Small Company attitude towards ICT Based Solutions: some
Key-Elements to improve it” International Small Business Journal, Vol.20 (3), pp 253-270
Joia, Luiz Antonio (1999), “ Information Technology as a Strategic tool for Worker’s Retraining in Brazil”
Productivity, Vol.39(4), pp 589-594.
132  Strategic Service Management

Kohli, Ruchi (2007), “Impact of IT- Applications on the Performance of Small-Scale Industries: A comparative
Study of Jammu & Kashmir and Punjab States”, pp 1-367
Liu, Sandra S. and Xueming Luo (2003), “Exploratory Research on Integrated Web-Based Knowledge
Management in a Customer Contact Context” Academy of Marketing Science Annual Conference,
www.cfs.purdue.edu/csr/E-Enterprise%20Research.Pdf, viewed on May 16, 2004.
Loiacono, E., R.T. Watson and Goodhue, (2000), “WEBQUAL: A Website Quality Instrument”, Working
Paper, Worcester Polytechnic Institute.
Madu, C.N., A.A. Madu, (2002), “Dimensions of E-quality”, International Journal of Quality & Reliability
Management, Vol. 19(3), pp 246-258.
Porter, M.E. (2001), “Strategy and the Internet”, Harvard Business Review, Vol. 79(3), pp 63-78.
Santos, J.E. (2003), “E-Service Quality: A Model of Virtual Service Quality Dimensions”, Managing Service
Quality, Vol.13 (3), pp 233-246.
Thomson, S. H. Teo (1999), “Impact of Information Technology on Management Control Systems”
Productivity, Vol.39 (4), pp 566-575.
Turban E., Lee; D. King and H.M Chung (2000), “Electronic Commerce: A Managerial Perspective, Prentice-
Hall International INC., Englewood Cliifs, NJ.
Yang, Z., R.T., Peterson, and L. Huang (2001), “Taking the Pulse of Internet Pharmacies”, Marketing Health
Services, (Summer), pp 5-10.
Zeithaml, V.A, A. Parasuraman and A. Malhotra (2000), “A Conceptual Framework for Understanding E-
Service Quality: Implications for Future Research and Managerial Practice”, Working paper, Report No. 00-
115, Marketing Science Institute, Cambridge, MA
Zhao, Z. and J.Gutierrez (2001), “The Fundamental Perspectives in E-Commerce”, in Singh, M., Teo, T.
(Eds), E-Commerce Diffusion: Strategies and Challenges, Heidelberg Press, Melbourne, pp 3-20.
 Online Customers Attitude  133

TABLE 1: DEMOGRAPHIC PROFILE OF FULL SERVICE AIRLINE USERS

Demographic Groups Number Percentage
Characteristics
Gender Male 136 60
Female 90 40

Marital Married 139 61

Status
Single 87 39
Monthly Income Below Rs 10,000 25 11
Rs 10,000-Rs 20,000 79 35
Rs 20,000-Rs 30,000 77 34
Above Rs 30,000 45 20

Qualification 10+2 17 8
Graduate 63 28
Post-Graduate 85 37

Others 61 27
Occupation Businessmen 82 36
Service class 103 46
Dependent 41 18

Age 21-30 years 77 34

31-40 years 92 41
41-50 years 45 20
Above 50 years 12 5

Purchase 0-1 year 40 18

1-2 years 76 34
2-3 years 71 31
Above 3 years 39 17
Full Cost Airlines Indian Airlines 56 25
Jet Airways 96 42
Kingfisher 74 33
Total 226
134  Strategic Service Management

TABLE 2: CRONBACH ALPHA VALUE OF ONLINE SERVICE QUALITY SCALE FOR

FULL SERVICE AIRLINES
Reliability Cronbach alpha 0.904
Statistics Split half alpha
Item-wise Respondent-wise
0.872 0.838 0.869 0.919

TABLE 3: FACTOR-WISE MEAN, FACTOR LOADING, KMO, MSA, % OF VARIANCE AND COMMU-
NALITIES FOR ONLINE SERVICE QUALITY FOR FULL SERVICE AIRLINES
Factors Mean Factor MSA % of Communalities
Loading Variance
F1-Customer Service 14.63
Online help/toll free no 3.87 0.81 0.85 0.70
Easy to get help 3.82 0.71 0.91 0.61
Trust and confidence 3.70 0.70 0.84 0.60
Provide proper solution 3.53 0.74 0.84 0.74
Availability of customer 3.48 0.67 0.91 0.58
service representative
Handling of complaints 3.35 0.57 0.87 0.51
Mean 3.63
F2- Functionality 14.07
Easy to get anywhere on 3.86 0.61 0.88 0.53
the site
Pages do not freeze 3.57 0.72 0.76 0.55
Quick transaction 3.41 0.65 0.86 0.54
Truthful about offerings 3.40 0.75 0.84 0.60
Loading of pages 3.38 0.75 0.82 0.64
Site does not crash 3.20 0.55 0.86 0.51
Mean 3.47
F3- Privacy 12.89
Personal inf. not disclosed 3.93 0.61 0.82 0.53
Web shopping behavior 3.79 0.76 0.86 0.66
Inf. on privacy policy 3.77 0.71 0.86 0.67
Feel safe 3.53 0.69 0.75 0.64
Credit card transactions 3.89 0.78 0.79 0.68
Solution to the problem 3.31 0.64 0.85 0.66
Mean 3.62
F4- Merchandise 10.76
Price comparison 3.63 0.73 0.68 0.61
Guarantee on online 3.11 0.76 0.83 0.73
product
Product return facility 3.20 0.71 0.82 0.65
Compensation for loss 2.30 0.75 0.83 0.71

Contd...
 Online Customers Attitude  135

Mean 3.21
F5- Offerings 9.87
Discount during off-season 3.60 0.69 0.79 0.64
Internet ticket 3.43 0.69 0.79 0.57
Seasonal discounts 3.41 0.68 0.81 0.68
Discount during festivals 3.13 0.79 0.80 0.67
Mean 3.39
Grand Mean 3.45
Iterations 7
% of total cumulative 62.22
explained
KMO 0.834

TABLE 4: MULTIPLE REGRESSION VALUES OF ONLINE SERVICE QUALITY DIMENSIONS FOR

FULL SERVICE AIRLINES
Online Service Unstandardized Standardized Coefficients
Quality Dimensions Coefficients
B Std. Beta t-values Significant
Error
Customer service 0.337 0.059 0.400 5.728 0.000
Functionality -0.037 0.053 -0.047 -0.705 0.481
Privacy 0.155 0.052 0.195 2.983 0.003
Merchandise 0.085 0.042 0.134 2.033 0.043
Offerings 0.003 0.052 0.003 0.053 0.958
Dependent variable: Service Performance
Independent variable: Online Service Quality Dimensions
2 2
R = 0.571, R = 0.326, Adjusted R = 0.311
136  Strategic Service Management

12

Logistics Management in Retailing

Concerns and Solutions

Amit Manglani*
Dr H K Singh**

Effective and timely service is the prime requisite for customer retention and customer satisfaction
for any concern. Once a customer enters a store with his list of purchases, he thinks of getting it
with ease. And, to fulfill this aspiration of every customer with their different and volatile
demands is the prime motive of any retailer. This is also necessary for customer retention and
brand management as well. The management works behind the procurement of raw materials
and then to convert it into finished products and after that to make it available to retailers
comes in the area of 'Logistics Management'. Logistics Management is one of the crucial points
in retail management and all of the big names in global retail sector like, Wal-Mart, Carrefour,
Metro and Subhiksha, Big Bazar, and Trent in Indian context are efficiently serving its
customers' demands because of this logistics handling.
Thus, logistics management is getting more and more importance in not only fulfilling customer
needs but also making the whole retail business cost and time effective. It also helps in less
spoilage, pilferage and damaging of products. Proper use of logistics management also helps
organisations to efficiently use their funds in more diverse functions rather than engaging a
greater amount of money in storage of products. Retailing, being the last step of distribution
channel, interacts with customers directly which have different views and demands for products
and services. So, the logistics management in retailing is more challenging than any other
business. This paper thus deals with the concerns and possible solutions in the logistics management
in retailing business.
Keywords: Electronic Point of Sale (EPOS), Retail chain integration, Radio Frequency
Identification (RFID), Logistics Management, Quick Response (QR)

* UGC-JRF, Research Scholar, Faculty of Commerce, Banaras Hindu University, Varanasi

** Professor, Faculty of Commerce, Banaras Hindu University, Varanasi
 Logistics Management in Retailing  137

INTRODUCTION
In early days, the place of production of goods and its consumption were almost the same.
With the advancement in civilization, population sprung and people moved to diversified
places. It made distinction in place of habitation and place of production. This change in
places has developed the need of distribution of products and services from its place of
origin to place of ultimate use. With the increase of complexity in the nature and practice
of global business, distribution management has been divided in ‘Materials Management’
and ‘Physical Distribution Management’. Where Materials Management dealt with the
arrangement of raw materials and other inputs for manufacture of final product, physical
distribution management dealt with the distribution, upkeep and transportation of these
final products to the markets near to the consumers. In today’s global market, these two
managerial aspects have been merged to form ‘Logistics Management’ which takes care of
not only the procurement of materials to distribution of it, but to manage each and every
aspect of management coming in between. (Exhibit 1)
This logistics transformation derives from cost and service requirements as well as consumer
and retailer change. Elements of logistics are remarkably expensive, if not controlled
effectively. Holding stock or inventory in warehouses just in case it is needed is a highly
costly activity. The stock itself is expensive and might not sell or could become obsolete.
Normal activities in the distribution of products like, warehousing, transportation, insurance,
and packaging etc. are costly proposition nowadays and parking of funds in these activities
may cost dear to the organization. There is thus a cost imperative to make sure that logistics
is carried out effectively and efficiently through the most appropriate allocation of resources
along the supply chain. By appropriate integration of demand and supply, mainly through
the widespread use of information technology and systems, retailers can provide a better
service to consumers by, for example, having fresher, higher quality produce arriving to
meet consumer demand for such products. With good logistics practices, fresh and newly
manufactured products can be made available to the consumers because of timely supply
and hence, less holding at shelves. If operating properly, a good logistics system can therefore
both reduce costs and improve service, providing a competitive advantage for the retailer.

EXHIBIT 1: LOGISTICS MANAGEMENT

Materials Management Physical Distribution Management

Inventory C
Raw Materials O
Storage Facilities N
Parts S
Unitization U
Packaging Finished M
Product Transportation E
Materials R
Communication S

Logistics Management
138  Strategic Service Management

Simply put, Logistics is the total process of planning, implementing, and coordinating the
physical movement of merchandise from manufacturer (wholesaler) to retailer to customer
in the most timely, effective, and cost-efficient manner possible.1 In other way, goals of
logistics may be pointed out as:
1. Economy in movement of goods (external internal movement)
2. Accuracy in order management
3. Time management of deliveries
4. Management of shelf-life and replenishment of perishable goods
5. Coordination with suppliers and third-party service providers
6. Backup plans and return of goods
In order to make products available retailers have to manage their logistics in terms of
product movement and demand management. The logistics management task is therefore
initially concerned with managing the components of the ‘logistics mix’.2 In this mix,
following five components contribute:
1. Storage facilities
2. Inventory
3. Transportation
4. Unitization and packaging
5. Communications
All these components are linked to each other. An efficient use of these interlinked components
saves a lot for the retailers. For example, when ‘Just-in-time’ system of inventory follows, it
demands for perfect stock calculation, timely transportation and quick response at the
warehouse and distribution centers. It definitely requires a co-coordinated effort of all the
components to get the product placed at the right time, at right cost and in right units.
It should also be clear, however, that retailers are but one part of the supply system. Retailers
are involved in the selling of goods and services to the consumer. If a retailer is effective, but
its suppliers are not, errors and delays in supply from the manufacturer or logistics services
provider will impact the retailer and the retailer’s consumers, in terms of either higher
prices or stock-outs (i.e., no products available on the store shelves). If a retailer can integrate
effectively its logistics system with that of its suppliers, such problems may be minimized.
However, new retailers of the global market are not single shop owners, instead, they are
the organizations working in many countries and hence, there logistics management require
a great deal of use of information and advanced technology. Managing the logistics mix in
an integrated retail supply chain, while aiming to balance cost and service requirements, is

1
Charlu, A.N.; ‘Retail Management’, New Delhi.
2
Fernie, John and Sparks, Leigh; Retail logistics: changes and challenges, Logistics and retail management.
 Logistics Management in Retailing  139

the essential element of logistics management. In the past, retailers were only the last link
of getting the supply of products from manufacturers or wholesalers but now they are the
one of the prime part of information generation, and active designers and controllers of
product supply in reaction to known customer demand. Considering all the matter, retailers
have to make a balance between the cost and service level while deciding in which one(s)
and how much the components of logistics mix can be outsourced for effective channelisation
of finance, service and activities.
The grand retailers are transforming the retail logistics process for better control over the
products, services and their effective utilization for timely supply of products at their retail
chains world-over. In 1996, Alan McKinnon has identified six closely related and mutually
reinforcing trends in retail logistics transformation:
1. Increased control over secondary distribution: Retailers have increased their control
over secondary distribution (warehouse to shop) by channeling an increasing proportion
of their supplies through Distribution Centers (DCs). In food sector, this process has
made tremendous growth in the retail industry. One can get ‘farm-fresh’ grocery at
their door-step and other food items are also available with least time-lag from
production to ‘ready-for-sale’ point. Use of information technology in goods tracking
helps in peculiar calculation of stock availability at the retail outlets.
2. Restructured logistical systems: Retailers have reduced inventory and generally improved
efficiency through use of various tools and methods in inventory packaging and
transportation. For example, use of multi-compartment vehicles help them to supply
products which demand varying temperature for safe preservation, at the same time.
In the case of mixed retail businesses common stock rooms have been developed,
where stock is shared across a number of stores, with demand deciding to which store
it is allocated.
3. Adoption of Quick Response (QR): With the use of Electronic Data Interchange (EDI)
and Electronic Point of Sale (EPOS) techniques, ‘quick response’ is possible in inventory
handling and movement. In other words, as an item is sold and scanned in a shop, this
data is used to inform replenishment and reordering systems and thus react quickly to
demand. Sharing such data with suppliers further strengthens the supply chain.
4. Rationalization of primary distribution (factory to warehouse): With the efforts of
Quick Response (QR) and also because of intense competition, retailers have integrated
the process of products from distribution centres to suppliers-end. This has rationalized
the primary distribution area of the supply chain.
5. Increased return flow of packaged material and recycling process: Retailers have also
worked in the area of ‘reverse logistics’ operation. This trend has been reinforced by
the initiatives being taken for the environment and ecology. For sustained development,
an efficient and optimal use of resources is also the prime need for the society. By this
way, retailers do their best to make a reuse of material found defective in the process of
supply because of faulty packaging or handling.
140  Strategic Service Management

6. Introduction of Supply Chain Management (SCM) and Efficient Consumer Response

(ECR): Having improved the efficiency of their own logistics operations, many retailers
have begun to collaborate closely with suppliers to maximize the efficiency to the retail
supply chain as a whole. SCM (and within this, ECR) provides a management
framework within which retailers and suppliers can more effectively coordinate their
activities.
It is clear that many of these trends identified in McKinnon have been the focus for retailers
in the intervening years. Issues such as primary distribution and factory gate pricing, and
Collaborative Planning Forecasting and Replenishment (CPFR) have occupied much
attention.
Every stage in the production to supply, be it, manufacturing, branding, packaging, display
at the store or so on, adds costs to the product. The aim for retailers is to manage this chain
to create value for the customer at an acceptable cost. The managing of this so-called ‘pipeline’
has been a key challenge for logistics professionals, especially with the realization that the
reduction of time not only reduces costs, but also gave competitive advantage.

Supplier's In-bound Operations Branding Out-bound Customer's

Value Chain Logistics Logistics Value Chain

CONCLUSION
Logistics management holds a key role in retailing business. Most of the perishable products
like, grocery, milk products, etc. need special attention in timely supply and consumption.
There volatile consumption pattern shall have to be in the mind. Role of effective handling
and distribution of goods is increasing day by day and advent of information technology in
inventory tracking is helping the logistics management in some way or other. It is again
very true that sturdy logistics practices can only be applied by the robust businesses and
logistics management is also the part of work for big retailers.
In this century, logistics management is shaping its working from manual to computer-
based environment. Use of bar-coding, RFID tags and other similar utilities are more
common in retail stores. This has provided ample help to the management in timely
monitoring of goods but at the same time, it is costly and an adequate balance in between
use of such facility and possible benefits thereof shall be considered with great importance.
Bigger and universal retail businesses are paving their way into the Indian market, and to
compete with them, Indian retailers have to undergo a total change in their approach of
material handling and management of stock.
 Logistics Management in Retailing  141

References
1. Aldridge, D and Harrison, A (2000), Implementing agile methods in retail supply chains: a scenario for
the future, International Journal of Agile Manufacturing, 3 (2), pp 37-44.
2. Christopher, M (1998), Logistics and Supply Chain Management, Prentice Hall, London.
3. David, J. Bloosmbery and Stephens, Leomay (2002), Logistics, New Delhi, Prentice Hall of India
Pvt. Ltd.
4. Fernie, J (1990), Retail Distribution Management, Kogan Page, London.
5. Foresight Retail Logistics Task Force (2000), @ Your Service: Future models of retail logistics, DTI,
London.
6. McKinnon, A C (1996), The development of retail logistics in the UK: a position paper, Technology
Foresight: Retail and Distribution Panel, Heriot-Watt University, Edinburgh.
7. Prasad, Lallan and Banerjee, A M (1982), Operations Management, New Delhi, Sterling Publishers
Pvt. Ltd.
142  Strategic Service Management

13

Assuring Quality Ser vice in Distance Education

Dr Sandeep Tandon*
Puneet Kaur**

Over the years Distance Education has become an important mode of transferring knowledge to
the ever increasing number of aspirants in various fields of education. A major objective of the
distance education system is to broaden the outreach of higher education to a large section of
society and to reach the unreached. This may be achieved by increasing the number of learners
through diversified groups, such as in-service people, adult learners, especially women, part time
students, old people, handicapped, economically and socially disadvantaged sections. Keeping
in view the ground realities, it is imperative for the distance education practitioners to think
globally and design the courses locally by making a shift from quantity education to quality
education. The paper focuses on various strategies for assuring quality service in distance learning.
The guidelines, strengths and opportunities, limitations and strategies for assuring quality
service in distance learning are specifically discussed in the paper.

INTRODUCTION
There is an increasing pressure on the higher education system to equip students with not
only the expertise derived from ‘traditional’ academic programmes, but also to provide
them with sufficient range of transferable skills to enable them to play more rounded role
when they enter employment phase. Thus, the institutions of higher education need to
have a very clear understanding of what they are seeking to achieve through their academic
programmes. In addition, whatever they do, need to be of good quality. In the education
sector much of the discussion and debate, which was earlier focused on standards, is now
shifted towards quality.

* Associate Professor and Coordinator (M.Com), Directorate of Distance Education, University of Jammu, Jammu
** Assistant Professor in Education, Directorate of Distance Education, University of Jammu, Jammu
 Assuring Quality Service in Distance Education  143

Quality is most often defined as “fitness for purpose” related to the needs of the user.
Harvey and Green (1993) remarked that quality as a value judgment is perceived differently
by variety of ‘stakeholders’ in higher education (students, employers, teaching and non-
teaching staff, evaluators, parents, government and funding agencies, accreditors, validators,
auditors, etc.). They have identified five different approaches for viewing quality in higher
education. These include Fixing exceptionally higher standards; Maintenance of consistency
in the quality results (zero defects and getting it right the first time); Integration of the
individual and organisational goals; Value for money for the stakeholders; and Transformation
of ideas into actual practice.
A sum total of all these aspects defines quality as “the totality of features and characteristics
of product or service that bear on its ability to satisfy stated or implied needs.”

OBJECTIVES OF THE STUDY

The present paper seeks to identify the following objectives:
1. To know about the present scenario of quality service education through distance
mode.
2. To discuss the guidelines for assuring quality service.
3. To study about the strengths and opportunities in Distance Education.
4. To identify limitations in providing service quality in Distance Education.
5. To suggest various measures to improve service quality assurance in Distance Education.

PRESENT SCENARIO OF QUALITY IN EDUCATION THROUGH

DISTANCE EDUCATION MODE
The concept of quality in Distance Education System revolves around the interests and
aspiration of students who cannot avail education through formal system. The yardsticks
for judging the quality of Distance Education is the quality of the learning material and the
delivery of services to the learners. A variety of methods & systems used to deliver distance
education and the effectiveness and quality of these innovative means of delivery become
crucial while delivering quality services in distance education.
There is a need to consider holistically approach while making the judgment on the quality
aspects of working of Distance Education institutions in higher education sector (Harvey
and Green 1993), p. 27-28). At present distance learning is growing rapidly, not only as a
supplement to traditional institutions and programmes, but also as a replacement for those
institutions and programmes. It is also seen by many as a transformative vehicle for increasing
the pace of change and reforms in higher education. The analysis of assuring quality service
in creating customer value is of great significance which can be achieved by adopting the
policy of quality assurance through following practices:
1. Considering quality as excellence, quality as standard and quality as fitness for purpose
in the institution.
144  Strategic Service Management

2. Fixing, measuring, achieving and reviewing programmes and goals relating to academic
contents, pedagogy techniques, resources and support services.
3. Focusing on ensuring and providing confidence that quality requirements and objectives
are fulfilled.

Guidelines for Assuring Quality Service

The decision of an institution to initiate or to discontinue a particular distance education
programme should be based primarily on quality, academic requirements of the market.
The accomplishment of these goals requires to fulfill the following guidelines for assuring
quality service:
1. The offering of Distance Education programme should be consistent with an
institution’s mission and goals which may be revised to encompass distance education
initiatives. Considerations may include meeting the educational requirements of time
and place bound learners at state, national or international levels or at individual
level.
2. Before deciding to offer a Distance Education programme, an institution should
strategically plan to assure its quality service and viability based on following
considerations:
(a) The programme’s academic content and its academic, administrative and financial
impact on distance learners.
(b) Targetting varied learner requirements. (adult students, physically challenged,
not accessible to the formal system of education).
(c) Faculty interests, qualifications for particular type of instructions, availability of
the resource persons in Personal Contact Programmes (PCP) and their ongoing
commitment towards providing quality service to students in future.
(d) The availability of learning material, evaluation of assignments, feedeback of
response sheets, conduct of examination and declaration of result in time.
(e) The programme’s fiscal viability, including operating costs and tuition pricing.
3. Distance degree programmes should be offered only in areas where an institution
already has substantial academic strength and scholarly resources to support the
programme or has guaranteed that it can provide appropriate strength through
partnerships, or joint venture programmes.
4. Distance education programmes should be offered only when an institution has
sufficiently robust system and appropriately trained technical personnel to ensure
quality service and connectivity among faculty and students.
5. Programmes that are conducted in both on-campus and through distance delivery
mode should be equivalent in academic content and objectives too. Faculty and student
quality, evaluation standards and learning outcomes should be quality-oriented.
 Assuring Quality Service in Distance Education  145

Distance programmes that do not have formal counterpart should meet approved
norms of educational standards. This will result in good learning outcomes which will
be appropriate to the rigour and breadth of the degree or certificate awarded.
6. Proposals for initiating distance education programmes should be reviewed thoroughly
by the institution’s existing academic governance processes. As appropriate, they should
also be reviewed and approved by university system at state or regional level. These
programmes should get recognition from specialised accreditation organisations.
Quality evaluation standards should be equally rigid as those for review of on-campus
proposals. The content, format, pedagogical methods, learning resources and support
services should be reviewed in terms of their accomplishing specified goals and learning
outcomes.
7. For technologically-based distance programmes, the viability of the proposed delivery
mode and the availability of appropriate support personnel should be ascertained. In
addition to this, course multimedia should be reviewed to assure that they do not
violate copyright or intellectual property laws.
8. Both distance and on-campus programmes should be offered through existing academic
units or interdisciplinary programmes and should be overseen by qualified faculty
and governing bodies. It is desirable that a specific coordinator be identified for distance
programmes to act as a focal point for dealing with programme and delivery issues.
9. Whenever possible, distance programmes should be taught by regular, fulltime faculty,
preferably as part of their assigned teaching working load. If extra faculty is required,
their qualifications for teaching should be ascertained and they should receive
appropriate orientation about programme practices, and expectations.
10. All distance education course instructors must be qualified to teach in a distance
delivery mode and they should receive appropriate orientation, training and technical
support.
11. Established distance programmes should be reviewed with the same general procedures
and on the same schedule used for on-campus programmes
12. In distance education, technology can play a vital role in strengthening student support
services for Open and Distance Education programmes. A shift from print-based and
telephone-delivery to on-line delivery may be introduced.

STRENGTHS AND OPPORTUNITIES IN DISTANCE EDUCATION

Adaptations in many specific practices will probably need to be implemented for programmes
offered in a distance education mode. Some may be accomplished relatively easily – for
example, accommodating more electronic communications and data transfers which are
customary for on-campus programmes.
It is thus desirable for quality assurance to have instructions delivered by regular and research
active faculty. To encourage this participation, it is good practice to give faculty needed
time from teaching schedule for participating in distance education training programmes,
146  Strategic Service Management

to provide development grants for course preparation, to incorporate distance courses into
faculty member’s regular teaching loads and to recognise and reward teaching innovations
and demonstrating teaching effectiveness. As an incentive to other departments, it is also
good practice to share funds generated by distance programmes.
On-campus presentations by faculty members and visiting faculty expose the students to
new knowledge perspectives and offer opportunities to interact with diverse scholars. Distance
programmes can provide comparable learning opportunities as well as exposure to experts
around the world through CD-ROMs, video conferencing or computer conferencing on
the World Wide Web.
Universities thus need to work out the logistics of enabling distance students to have access
to physical or online bookstores, to acquire needed course materials and to access to physical
or online libraries, to complete assignments and do research. Course homepages can be
designed to direct students through CD-ROMs, Internet searches and electronic connections
to library and other data collections.
Providing distance applicants access to information sources through toll-free phone number
or e-mail is helpful practice. Universities that already have developed the system of submitting
online applications for registration, will find accommodating distance education students
relatively easy. Others might use phone, facsimile, e-mail or regular mail for registration
(Siddiqui 2004, p.50).
Use of Web Based Training (WBT) techniques in distance education systems makes the
communication more attractive, clear, lively, thought provoking and interesting. WBT
techniques can be adopted in distance system of education to encourage and promote
quality of distance education courses in the following ways:
1. Learners can have access to course materials, receive assignments, submit response
sheets and seek feedback online.
2. CD based video support programmes can be conducted to facilitate the teachers and
the learners, tutor support can be provided to facilitate the learners through internet.
3. Contact programmes may be organised at identified study centers to give support to
complicated content / subject.
4. Virtual Academy may be established to enhance interactivity through:
(a) Live satellite – based teleconferencing lectures,
(b) Recorded video lectures, CD practical Lab.
(c) Computer based training tutorials.
(d) Learning resources accessible through internet Browsing, and
(e) On-line interactive chat with peer group, faculty and external experts.
Changes in the type of technologies available for delivering distance education services,
changes in the capabilities of networking technologies and the rise of the internet, have
played an important role in the adoption of distance education by various institutions.
 Assuring Quality Service in Distance Education  147

The following are the common technologies available for the instructional delivery of distance
education courses:
1. Video technologies: 2-way video with 2-way audio, one-way video with 2-way audio,
one-way live video and one-way prerecorded video including pre-recorded videotapes
can be provided to students.
2. Audio technologies: 2-way audio transmission e.g. audio/phone conferencing, one-
way audio transmission including radio broadcast and pre-recorded audiotapes can
be provided to students.
3. Internet-based technologies: Internet courses using synchronous (i.e. simultaneous or
real time) computer-based instruction (i.e. interactive computer conferencing) and
internet courses using asynchronous (i.e. not simultaneous) computer based instruction
(e.g. e-mail and most world wide web based courses).
4. Other technologies: CD-ROM, mixed mode packages (i.e. a mix of technologies that
cannot be assigned to a primary mode), and an open-ended “other, specify” category.

LIMITATIONS IN PROVIDING SERVICE QUALITY IN

DISTANCE EDUCATION
Every nation has its educational objectives. To achieve those objectives, government, frames
education policies and allocates funds. It is unfortunate that the resource allocation for
education is drying whereas the intake pressure on the educational institutions is increasing
alarmingly. It has become difficult for the administrations to maintain balance between the
demand and supply in both the conventional as well as the non-conventional systems of
education. Keeping in view, the ground realities, it is imperative for the distance education
practitioners to think globally and design locally the courses by making a shift from quantity
education to quality education (Verma, 2003). Therefore, we need to make shift in designing
courses from general in nature to specialisation, broader specialisations to micro-specialization,
interdisciplinary to multi-disciplinary specialisations, encouraging global application of
knowledge, skills and immediate technologies in developing the quality of courses in different
paradigmmes. Apart from these, quality assurance is playing a significant role in improving
the teaching system in distance education (Dhulia 2002, p.89-96).

STRATEGIES TO IMPROVE QUALITY ASSURANCE SERVICE IN

DISTANCE EDUCATION
Assuring Quality Service in distance learning can be achieved by focusing on the following
strategies:
1. Faculty Credentials, Selection and Training: Distance learning institutions in order to
ensure quality service in their programmes, should focus on periodic and regular
review of faculty credentials, selection procedures for new faculty and faculty training.
New entrants are required to engage themselves in an intensive training programmes
that include conducting a mini lesson, interviewing with current faculty, and to work
148  Strategic Service Management

as a mentor. In addition, faculty is expected to understand the role of technology in a

learning environment.
2. Time on Task Measures: Quality service in distance learning is distinguished by a
strong emphasis on programme goals, and assessment of results or outcomes in the
context of these goals The institutions should plan out programmes for timely
accomplishment of tasks such as minimum time for course completion and monitoring
such courses.
3. Student Support Services: Focus on adequate student support services and their regular
reviews is an essential element of teaching and learning. As such timely information
about the conduct of admission, PCPs, assignment submission, feedback and
examination to the students are the most distinctive features of maintaining quality
control in distant learning environment.
4. Learner Centered Instruction: The institution should focus on three fundamental
qualities to reach the unaccessible. This can be accomplished through self directed
instructions to the students, focused and purposeful information and role of faculty
mediations.
5. Development of Knowledge Media: It describes the convergence of telecommunications,
computing and learning cognitive sciences (capturing, storing, imparting, sharing,
assessing and creation of knowledge). Knowledge media provides the opportunity to
change the emphasis from the class room teaching to the individual learning.
6. Assessing the Effectiveness of a Programme: The measurement of educational outcomes
is desired to maintain service quality. Effective assessment systems should be developed
so that one can find out the functioning of a programme and the improvement that it
requires. For example, Motorola University employs a process where students are
assessed once in three months after completion of a course to determine their retention
of the crucial knowledge and skills.
7. Mentoring: Mentoring involves role modelling, advice and council on a range of
academic and professional issues, and intensive constructive dialogue. In distance
education, video based programmes can be offered which will be useful in adding
visual cues to oral or written communication. The institutions need to work out the
strategies to measure thet extent of learning benefits of mentoring without actual face
to face interaction.
8. Open Discussion: Discussion on professional issues and topics beyond specific course
content can be conducted either one to one or with all course participants in a real
time ‘chat’ area or as a threadbare discussion through computer conference or electronic
bulletin board.
9. Student-Student Interaction: Student’s learning is enhanced by sharing their diverse
social and educational experiences in structured and informal settings, by collaborating
in course work and research, and by sharing in special scholarly events.
 Assuring Quality Service in Distance Education  149

The thrust to inculcate quality in Distance Education system redirects the attention to
work out the details, to develop thinking skills to inculcate Information Communication
Technology (ICT) skills among the learners. In order to enrich learning context, training
should be imparted to teachers to become an effective communicator. Innovative teaching
methodologies should be generated for creating learning friendly environment to further
improve – academic standards of Distance Education Courses, quality of educational inputs
in distance education, methodologies in teaching in distance education, techniques for
assessing performance of the distance learners, and application of action research in distance
education (Verma, 2003).
Apart from the above mentioned factors, there are certain other issues which if given attention
can help in achieving the goal of assuring quality in distance learning. These are:
1. Preparing an academic calendar highlighting all important dates regarding PCPs,
delivery of assessment questions, examinations, etc.
2. Regular meetings of the staff wherein the course completion status, review of action
plan for achieving the objectives, suggestion, grievances and other concerns of students,
teachers, etc. can be discussed.
3. Proper notice board/white board management for effective internal communication.
4. Taking initiatives for promoting the use of information and communication in
administration, teaching and dissemination of information among the students.
5. Suggestion box/complaint box to be placed in the institution so that the problems of
the students could be known and necessary action could be taken.
6. The institution should have a well established library, with sufficient reading hours
and relevant books.
7. Student feedback should be collected for every course at the end of every semester.
8. Regular changes/upgradation of syllabi should be done as per the UGC guidelines.

CONCLUSION
To conclude, improving the quality of education is crucial to sustain competitive advantage.
Quality improvement can be thought of as having two important dimensions: first, increase
the amount of learning in subjects covered by the existing curriculum, generally through
better pedagogy and changes in the learning process. Second, encouraging a variety of
educational outcomes that go beyond the traditional examination—driven emphasis on
the memorization of facts (Siddiqui 2004, p.172).
The efforts to improve quality service of distance education can bring fruits only when the
resource persons working in the conventional as well as the non-conventional system of
education reconcile that both are at equal level and their objective is the furtherance of
mankind living in our knowledge society.
150  Strategic Service Management

References
Dhulia, Usha (2002), New Communication Technologies and Distance Education, Communications- A
Research Journal Devoted to Distance and Non Formal Education, Vol.12 (1), pp.89-96.
Harvey,L., and D.Green (1993), Defining ‘Quality’, Assessment and Evaluation in Higher Education,
Vol.18(1), pp.9-34.
Rausaria, R. R., and Nalini A. Lele (2002), Self Assessment of Distance Education Institutions: Identification
of Parameters for Programme Assessment, Indian Journal of Open Learning, Vol.11(1),pp.147-157.
Siddiqui, Mujibul Hasan (2004), Distance Learning Technologies in Education, APH Publishing Corporation,
New Delhi.
Verma, Romesh (2003), New Technology for Quality Open/Distance Education, Journal of Distance Education,
Vol. 10(1), pp. 20-24.
 Services Provided by Merchant Bankers in India  151

14

Ser vices Pr
Services ovided by Mer
Provided chant Bank
Merchant ers in India
Bankers

Anand Singh*
Prof C P Mall**

The Government of India has adopted the new liberalized economic policy from July 1991 and
one of the main agendas of the new policy is banking reforms. In this process of reforms the
importance of Services provided by the Merchant Bankers should not be neglected. The whole
banking system in India and abroad is bound to change in the second millennium. Merchant
banking cannot be an exception.
During the last decade, there has been a broadening and deepening of financial markets.
Several new instruments and products have been introduced. Existing sectors have been opened
to new private players; this has given a strong impetus to the development and modernization
of the financial sector. Though Indian companies are going global and thereby creating an
International presence but are facing number of challenges ahead. One way Indian companies
can address the challenges is, by adopting International best practices and modern technologies
to offer a more sophisticated range of financial services to Indian corporate and retail customers.
Keywords: Privatization, Globalization, Financial Markets, Financial Services

INTRODUCTION
Today, perhaps, no country can have an isolated existence ignoring the global and
international situation. Privatization and Globalization have become watchwords today.
The Government of India has adopted the new liberalized economic policy from July 1991
and one of the main agendas of the new policy is banking reforms. During the last decade,
there has been a broadening and deepening of financial markets. Several new instruments
and products have been introduced. Existing sectors have been opened to new private
players; this has given a strong impetus to the development and modernization of the
financial sector. Exponential growth in the investor community, sharp rise in volume of
funds mobilized in the financial market, increased competition from private mutual funds

* Research Scholar, Faculty of Commerce, B.H.U.

** Professor, Faculty of Commerce, B.H.U, Varanasi
152  Strategic Service Management

and banks, emergence of mergers and acquisitions, etc. are some of such developments that
have shaped and reshaped the discipline of merchant bankers in the country. Since merchant
bankers possess the abilities to meet all these modern challenges of corporate sector and
investor community, the study of merchant bankers is the need of the hour. Today, a merchant
banker rides a high horse in the capital market.

RESEARCH METHODOLOGY

Nature of Data
The data required for the study falls broadly into following categories: (1) information
pertaining to the numbers of registered merchant bankers, (2) information pertaining to
the various types of activities performed by the merchant bankers, (3) Information related
to environmental conditions prevailing in the Indian Capital Market.

Collection of Data
All categories of data were of secondary nature and were therefore obtained from published
reports of SEBI, RBI, PRIME Directory and various other magazines and journals. Further
some data was collected from the published financial statements of merchant banks and
from web sites.

OBJECTIVES OF THE STUDY

The following are the main objectives of the study:
(a) To examine the role of merchant bankers under various heads of activities performed
in the capital market.
(b) To evaluate critically, the working of merchant bankers and to identify the hurdles in
their smooth functioning.
(c) To identify the practical problems faced by merchant bankers and suggest remedial
measures to overcome them.
(d) To examine the growth and future prospects of the merchant bankers in India.

FACTORS DETERMINING THE ROLE OF MERCHANT BANKERS IN

INDIAN CAPITAL MARKET

New Economic Policy 1991—A Boon for Merchant Bankers

The Indian Financial markets are heading towards globalization, which is defined as a
movement towards world wide financial decision making. The new-economic policy has
brought about a drastic change in the role of merchant bankers. There is a mushrooming
development in the field of merchant banking in a very short span of time. More than 1000
merchant bankers are operating today. It is the need of the hour to consider their excellence,
competence, quality of service and responsibility towards the investing public rather than
 Services Provided by Merchant Bankers in India  153

their numbers. The merchant bankers should not follow issue management only, but should
perform various other activities which provide them a tremendous scope (Aggarwal & Verma,
2001, p.38).
Merchant banker’s responsibilities under the stringent guidelines set by SEBI are much
more today than ever before. Moreover, the merchant bankers more and more involved in
fund based activities along with undertaking activities, such as project finance, project
appraisal, syndication of loan, mergers and acquisitions, capital restructuring, etc. After the
recommendations of Banking Commission 1972, all the Indian Banks got permission for
starting Merchant Banking services as part of their multiple services. Almost every industrial
house has a finance company today and merchant banking seems to be the first activity
they like to do. At present following Indian Banks have Merchant Banking Divisions: State
Bank of India, 1972, Bank of India, 1977, Syndicate Bank, 1977, Standard Chartered
Bank, 1978, Bank of Baroda, 1978, Union Bank of India, 1980, Punjab National Bank,
Indian Overseas Bank, United Commercial Bank, ICICI, IFCI & IDBI.

World Trade Organisation—New Vista for Indian Merchant Bankers

India has already signed the General Agreement on Trade and Tariffs (GATT) which came
into effect on January 1, 1995. Today, India bears a negligible part of international trade.
GATT provides vast scope for exporting products at comparatively low price since we have
advantage of cheap labour force and availability of skilled hands. In fact, there is a “hen and
egg” relationship between economic growth and foreign trade.
The policy of decentralizing, delicencing, deregulation, etc. has relieved the industry from
the age old bureaucratic control in India. The crux of this policy is that the Indian industry
is being prepared to stand on its own legs so as to be able to compete with. Merchant
bankers can help in many ways for reducing our imports and increasing exports. Expert
advisory and fund based services can be rendered by these banks to export oriented industries.
Merchant banks can assist them for acquiring them sound economic position by raising
resources at National and International markets at cheaper rates.
Due to keen competition in the open market for funds, the opportunities for merchant
bankers in India today make it necessary for them to offer clients a range of corporate
finance products over and above issue management.2 Today, corporate sector prefers to raise
resources from capital market instead of borrowing them from financial institutions. In
such situation Merchant Bankers services will be highly demanded in the years to come.
Table 1 shows the total volume of resources raised by corporate sector. It may be observed
from the table that the resources raised by the corporate sector are mainly from the Private
placements and Equity issues. The amount raised through Equity issues witnessed a steady
growth, while the amount raised through Private Placements led to tremendous growth
over the past years. Total resources mobilized by the corporate sector are growing constantly.
Among the various intermediaries in the process of raising resources from capital market,
Merchant Bankers sit on the driver’s seat.
154  Strategic Service Management

Globalization—An Opportunity for Indian Merchant Bankers

Raising resources in domestic markets will not meet the growing hunger for capital of
Indian corporate sector. Due to globalization, now Merchant Bankers can assist companies
to raise resources at International markets. This includes Euro-issues as well as issues in the
American market and encompasses issue of equity, bonds, convertibles, disinvestment through
secondary market offerings by public sector units. Euro-issues are acid test for Merchant
Bankers. The test today for merchant bankers is not the funds they can raise from the
domestic markets but their ability to cash in on their repute in markets abroad. By attracting
more FDIs in our country, Foreign Institutional Investors (FII’s) are playing significant role
in the economy of our country. Besides the Euro-issues, listed globally, are also floated for
the foreign investors in several countries. While the equity subscribed by the NRI’s in
Indian issues are quoted in domestic stock exchanges only, the papers floated to raise foreign
currency funds, by GDR or bonds are treated only on stock exchanges abroad, where they
are listed. According to the guidelines of SEBI 75% of the issue size is to be reserved for
Financial Institutions (FIs), mutual funds, FII’s and others. The new SEBI guidelines are
likely to trigger off a greater desire among Indian corporates to go in for private placements
with FII’s. The biggest attraction is the premium, as FII’s are ready to buy good and
potentially high value shares at market prices.

Inflow of Foreign Investment in India

The investment and production activities of Multinational Corporations (MNCs) have
increased rapidly due to liberalization of controls over International direct investment in
most of the industrialized countries (Kishore, 2005, p.67).
Table 2, shows the foreign investment inflow in India. The Indian financial market was
opened to the Foreign Institutional Investors in 1992 to widen and broaden the Indian
Capital Market. Table 2, clearly shows that, FII total investment in the last three years have
grown significantly. Several factors are responsible for increasing confidence of FII on Indian
Capital Market which include, inter alia, strong macro-economic fundamentals of the
economy, transparent regulatory system, abolition of long-term capital gains tax and
encouraging corporate results.
As far as the trend of FII’s investment in India is concerned, it could be seen from Table 3,
it is evident that, Net investments by FII’s in India have been positive every year except in
1998-99. During the last three years, there has been a phenomenal increase in the portfolio
investment by the FII’s in the Indian market. In the recent years MNCs have played a
major role in the export-led growth of countries like Brazil, South Korea, Taiwan, etc. To
cope with MNCs, Indian corporate sector has only two alternatives, one is to improve their
competitive ability and the second is to collaborate with them. Indian Merchant Bankers
can help by various ways for improving the competitiveness of the Indian corporate sector.
Merchant Bankers can raise adequate capital for the purpose of modernization, expansion
and diversification. The corporate sector would depend on the Merchant Bankers for advice
on choice of cost effective funding and efficient capital structure and use of innovative
financial products.
 Services Provided by Merchant Bankers in India  155

The list of registered market Intermediaries in SEBI after the liberalization process is portrayed
in Table 4. it is evident from the table that during 2005-06, there was a marginal rise in the
number of Intermediaries belonging to the group of bankers to an issue, corporate brokers
and derivatives brokers. The entry of certain new intermediaries in the market during 2005-
06 could be attributed to good business opportunities in the securities market and rise in
investors need for different types of services.

Role of Amalgamation, Mergers and Joint Ventures in Merchant Banking

Amalgamation and Mergers are assuming greater significance because of the present high
cost of money, long gestation period and other problems in setting up new projects further,
rebates in income tax granted to a healthy unit taking over a sick unit have made Acquisitions
more attractive (Khan, 2005, p.128). The much needed expertise on restructuring companies
or Acquisitions or Mergers can be provided by Merchant Bankers.
The policy of decentralization and encouragement of small and medium industries will
further increase the demand for technical and financial services which can be provided by
Merchant Bankers.

Institutional Investors
The other important catalyst in the changing role of the Merchant Bankers is the Institutional
Investors, who are investing in global capital markets (www.cmie.com).
Table 5, shows the number of FII’s being registered with SEBI. From the table, we can
conclude that, FII’s consider India as a preferred investment destination which is evident
from rapid increase in their number in the recent years.
As on march 31 st , 2006 SEBI has registered FIIs from 37 countries
(www.primedatabase.com). The highest number of FIIs was from USA (342), followed by
UK (148). About 90% FIIs come from the top 13 countries. There has been increase in the
no. of FII registrations from non-traditional countries like, Malaysia, Australia, Belgium,
Saudi Arabia, Trinidad, Canada, Sweden Ireland, etc. Following chart presents the country
wise FII registration with SEBI as on march 31st, 2006. The Merchant Banker has now to
satisfy the needs of a totally different class of investors, and this is a global phenomenon
(Balkrishna and Natra, 2002). Merchant Bankers have to acquire update knowledge of
international markets.

Role of Merchant Bankers in Primary Capital Market

Nature of competition in this industry is going to change the range of services offered by
the existing Merchant Bankers. Merchant Bankers cannot depend entirely on activities like
public issues, rights issues, underwriting, etc. as this is not going to provide enough business
to all Merchant Bankers. As a result of this role of Merchant Bankers in India is going to
change drastically and their new areas of activities would be project appraisal, advising on
corporate capital restructuring, corporate counseling, venture capital, etc. (ICFAI, Merchant
banking center, 2004). With the entry of multinationals in the country that are more
experienced in this field, Indian Merchant Bankers must improve on all aspects in order to
156  Strategic Service Management

compete with them.. New innovations in financial products are also going to see light with
sophistication ad institutionalization of markets.
Failure of primary capital market in raising funds through public and right issues again
proved the limitations of Indian Merchant Bankers depending upon certain activities for
their incomes. Depression in certain industries throughout the world, collapse of many
East-Asian country’s share markets, high premium charged by issuers in India, low returns
on investment in shares and other instruments, unethical role played by Indian Merchant
Bankers, etc. have badly affected the primary capital market and Merchant Banking business
in the country.
Table 6, shows the list of resources mobilized from the Primary Market (www.sebi.co.in). It
may be observed from the table that Public issues experienced huge increase (612%) during
2003-04. Rights issue and IPO experienced mixed growth rate. The abolition of CCI’s
office, and free pricing of public and rights issue led to tremendous growth of capital
market after 1991-92, however, Indian Primary Capital Market has miles to go to acquire
stability and International standards.

FINDINGS OF THE STUDY

Before liberalization, the Indian Economy was engulfed with retarded growth due to too
much regulations of the interest rates, price of securities, lack of enough financial instruments
in the required large scale, poor credit ratings, too much regulations of foreign exchange
market, lack of reliable information about financial sector development and finally poor
debt instruments. The establishment, growth and functioning of these banks depend upon
the Government policy to a large extent. For the overall development of these banks, sound
policy is the basic requirement.
Taking into consideration aforementioned factors, projections regarding number of Merchant
Bankers in India have been mentioned in the Table 7. The table discloses registration of
Merchant Bankers with SEBI up to 31st March, 2006. The keen observation of the data
reveals that the percentage of registered Merchant Bankers shows declining trend. This
may be on account of heavy amount of net-worth (Rs. 5 crore) for category I Merchant
Banks and lack of getting sizeable business to retain in the profession. It is also because of
guidelines issued by SEBI. According to these amendments Merchant Bankers were required
to segregate their fee-based Activities from Fund based Activities. Obviously, category II,
III and IV Merchant Banks will lose their existence.
The past few years have seen major changes in India’s economic policies making a new
phase in India’s development strategy. The reform’s aim at reducing the extent of Government
controls over various aspects of the domestic economy, increasing the role of the private
sector regarding scarce public sector, resources to areas where the private sector is unlikely
to enter and opening up the economy to trade and foreign investment. The objectives of
the current reforms are based on a much clear recognition of the need to integrate with the
global economy through trade, investment and technology flows and to create conditions
which will give healthy environment for entrepreneurs.
Our country has good infrastructure facilities base. It is expected that India would be a
leading lender in the 21st century. For setting up new companies, expansion of the existing
 Services Provided by Merchant Bankers in India  157

and modernization will require huge amount. The corporate sector will largely depend
upon primary capital market for raising the funds (Srivastava, 2005, p.53). Merchant Bankers
have to manage these issues; it will increase the number of Merchant Bankers in India.
Indian capital market is leading towards maturity. More investors are trying to invest their
funds in securities; it will provide increased business to Merchant Bankers in the country.
Many private Mutual Funds are likely to set up in near future; these mutual funds may
demand securities of corporate sector and Merchant Bankers will try to exploit the situation.
FII’s are increasing their stake in the investment in Indian securities; it will also provide a
good business opportunity to the Merchant Bankers.
Also the primary capital market of India is less volatile as compared to other countries
markets. Indian corporate sector will encash this opportunity, by the help of Merchant
Bankers. It will lead towards increase in number of Merchant Bankers. Today Merchant
Bankers are rendering their services in Metropolitan cities only. In the end of 21st century
these banks may be established in medium cities also to meet the needs of services of the
corporate sector. It will automatically increase the number of Merchant Bankers in the
country. It is thus, clear that Merchant Bankers have bright future in India. The demand
for Merchant Banking services will be ever expanding due to promotion of new companies,
expansion and renovation schemes of existing units, mergers and acquisitions, nursing of
sick units etc All these causes will definitely increase the number of Merchant Bankers, so
there is a bright future for the Merchant Bankers in the upcoming years.

LIMITATIONS OF THE STUDY

The present study is primarily based on secondary data collected from various sources and
as such the limitations of the secondary data essentially creeps in. However, an attempt is
made to substitute the analytical and descriptive approach with simple statistical tools in
place of sophisticated mathematical and statistical tools.

References
1. Aggarwal, R. K & Verma, M. M, “Indian Financial Institutions”, Kings Books, Educational Publishers.
2. Balkrishna and Natra, N.S, securities markets in India, Publication-Kanishka, New Delhi, P-182.
3. ICFAI “merchant banking and financial markets”, ICFAI, Merchant banking center, Hyderabad, P-
138.
4. M. Y Khan, “Financial Services”, Tata McGrew Hills.
5. Ravi M. Kishore, “Financial management” 2nd edition.
6. Srivastava, R. M, Indian Financial System-the changing scenario, Publication-Rishi, Varanasi, P-53.
7. www.bse.com
8. www.cmie.com
9. www.nse.com
10. www.primedatabase.com
11. www.rbi.com
12. www.sebigov.com
158  Strategic Service Management

TABLE 1: RESOURCES RAISED BY CORPORATE SECTOR

(Rs. Cr.)

Year Debt Issue Total Share (%) of Share (%) of

Resources Private Debt in Total
Mobilised Placements in Resource
(2+5) Mobilisation

Equity Public Private Total Total Total

issue* issue Place (3+4) Debt Res.
ment Mobili
** zation
1 2 3 4 5 6 7 8 7
1995-96 14830 5974 13361 19335 34165 69.1 39.1 56.6
1996-97 7979 6357 15066 21423 29402 70.3 51.2 72.9
1997-98 1892 2678 30099 32777 34669 91.8 86.8 94.5
1998-99 9358 4652 49679 54331 63689 91.4 78.00 85.3
1999-00 4566 3251 61259 64510 69076 95.00 88.7 93.4
2000-01 3368 2740 67836 70576 73944 96.1 91.7 95.4
2001-02 1278 6271 64876 71147 72425 91.2 89.6 98.2
2002-03 1257 2613 66948 69561 70818 96.2 94.5 98.2
2003-04 18948 4324 63901 68224 87172 93.7 73.3 78.3
2004-05 24388 3867 83405 87272 111660 95.6 74.7 78.2
2005-06 27382 0 96368 96368 123750 100 77.9 77.9
* includes CCPS and offer to sale ** includes negligible amount of equity
Source: RBI, SEBI

TABLE 2: FOREIGN INVESTMENT INFLOWS IN INDIA

(As on 31st march)

Year Direct Investment Portfolio Investment Total

(Rs. Cr.) (Rs. Cr.) (D.I + P.I)
(Rs. Cr.)
1997 10015 11758 21773
1998 13220 6696 19916
1999 10358 -257* 10101
2000 9338 13112 22450
2001 18406 12609 31015
2002 29235 9639 38874
2003 24367 4738 29105
2004 19860 52279 72139
2005 25395 41854 67249
2006 34316 55307 89623
Source: RBI
Note: *Negative sign indicates outflows , Data on FDI has been revised since 2000-01.
 Services Provided by Merchant Bankers in India  159

Foreign Investment Inflow In India

100000

90000

80000

70000

60000
(Rs.Cr.)

50000 D.I
P.I
40000
TOTAL

30000

20000

10000

0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
-10000
D.I - Direct Investment, P.I - Portfolio Investment, Total = (D.I+P.I)

FIGURE 1: FOREIGN INVESTMENT INFLOWS IN INDIA

TABLE 3: TRENDS OF FII’S INVESTMENT IN INDIA

(As on 31st march)

Year Gross Gross Sales Net Net Cumulative

Purchase (Rs.Cr.) Investment Investment Net
(Rs.Cr.) (Rs.Cr.) (U.S $ mn)* Investment
1997 15554 6979 8574 2432 7634
1998 18695 12737 5957 1650 9284
1999 16115 17699 -1584 -386 8898
2000 56856 46734 10122 2339 11237
2001 74051 64116 9934 2159 13396
2002 49920 41165 8755 1846 15242
2003 47061 44373 2689 562 15804
2004 144858 99094 45765 9950 25755
2005 216953 171072 45881 10172 35927
2006 346978 305512 41467 9332 45259
Source: RBI, Note: *Net Investment in U.S $ mn at monthly exchange rate
160  Strategic Service Management

400000

350000

300000

250000
( Rs. Cr. , US $ mn )

G.P
200000 G.S
N.I(Rs.Cr.)
150000 N.Inv(US$)
C.I
100000

50000

0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
-50000
G.P-gross purchase, G.S-gross sales, N.I-net investment(Rs. Cr. ), N.Inv-net investment(US$mn),
C.I-cumulative investment

FIGURE 2: TRENDS OF FLL’S INVESTMENT IN INDIA

TABLE 4: MARKET INTERMEDIARIES IN INDIA

(As on 31st march)

Market 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Intermediary
Brokers (cash seg.) 8867 9005 9069 9192 9782 9687 9519 9368 9128 9335
Corporate brokers 2360 2976 3173 3316 3808 3862 3835 3746 3733 3961
(cash seg.)
Sub-brokers (cash 1798 3760 4589 5675 9957 12208 13291 12815 13684 23479
segment)
Brokers (derivatives) ---- ---- ---- ---- 519 705 795 829 994 1120
Bankers to an Issue 80 72 66 68 69 68 67 55 59 60
Underwriters 38 43 17 42 57 54 43 47 59 57
Credit Rating ---- ---- ---- 4 4 4 4 4 4 4
Agencies
Venture Capital ---- ---- ---- ---- 35 34 43 45 50 80
Funds
Foreign Venture ---- ---- ---- ---- 1 2 6 9 14 39
Capital Investors
Registrar to an Issue 386 334 251 242 186 161 143 78 83 83
Portfolio Managers 16 16 18 23 39 47 54 60 84 132

Mutual Funds 37 38 41 38 39 38 38 37 39 38

Source: www.sebi.com
 Services Provided by Merchant Bankers in India  161

TABLE 5: FII’S REGISTERED WITH SEBI

(As on 31st march, 2006)

Year No. of FII’s

1997 439
1998 496
1999 450
2000 506
2001 527
2002 490
2003 502
2004 540
2005 685
2006 882
Source: RBI

USA UK

87 Luxemberg Singapore
17 11
19
22
23 342 Hong Kong Canada
23
23
Australia Ireland

26
30 Netherlands maurtius
47
84
148 Switzerland France

Denmark Others

FIGURE 3: COUNTRY WISE FII REGISTRATION WITH SEBI AS ON 31ST MARCH, 2006

TABLE 6: RESOURCES MOBILIZED FROM PRIMARY MARKET

(Amount in Rs.cr)

Year Public Issues Rights Issues IPO’s

number amount number amount number amount
1997 751 11557 131 2719 717 5959
1998 62 2862 49 1708 52 1048
1999 32 5019 26 568 18 404
2000 65 6257 28 1560 51 2719
2001 124 5378 27 729 114 2722
2002 20 6502 15 1041 7 1202
Contd...
162  Strategic Service Management

2003 14 3639 12 431 6 1039

2004 35 22265 22 1007 21 3434
2005 34 24640 26 3616 23 13749
2006 103 23294 36 4088 79 10936
Source: RBI, SEBI

TABLE 7: PROJECTION FOR MERCHANT BANKING IN INDIA BY 2010

st
YEAR (As on 31 march) Number of Registered Merchant Bankers in SEBI

1997 1163
1998 802
1999 415
2000 186
2001 233
2002 145
2003 124
2004 123
2005 128
2006 130
2007 152*
2008 165*
2009 174*
2010 195*
Note: *Represents the projected data
Source: www.sebi.com
 Study of Burnout among Face to Face and Distance Mode Male Teachers  163

15

Study of Burnout among Face to Face and

Distance Mode Male T eachers in Relation to
Teachers
their Job Satisfaction

Jaspal Singh*
Dr Khushvinder Kumar**

The study intends to find out the relationship between burnout and job satisfaction in education
sector. The sample of the study consists of 100 male teachers of colleges and / universities of North
India. The scale developed by Maslach and Jackson (1986) to measure burnout (Maslach
Burnout Inventory - Form Ed) and Job Satisfaction Scale (JSS) developed by Singh and
Sharma (1999) was used to collect data. The results of the study showed significant negative
relationship between job satisfaction and the two dimensions of burnout, i.e. emotional exhaustion
and depersonalization of teachers whereas positive but insignificant relationship exists between
job satisfaction and personal accomplishment (third dimension of burnout).

INTRODUCTION
The Report on National Policy on Education (1986) has remarked that status of the teacher
reflects the socio-cultural ethos of the society. An effective teacher stimulates motivates and
guides the learners to develop their potentialities, skill, attitude, knowledge and above all
put efforts to make them sensitive human beings. This consequently helps in maintaining
a harmonious relationship with the students and extends it beyond the realm of conventional
class room. Such types of teachers with positive outlook derive satisfaction from their jobs.
Besides, various job factors such as working environment, infrastructure, financial benefits,
etc. play key role in increasing their satisfaction level. The derived satisfaction is the outcome
of their expectations about job related factors and their actual experience in the job. The
second significant factor of the study burnout, is the deprivation of the job satisfiers.

* Assistant Professor in Education, DDE, University of Jammu, Jammu

** Principal, B.C.M. College of Education, Ludhiana
164  Strategic Service Management

The initial conception of burnout was focused on its clinical descriptions and later on the
emphasis was shifted to systematic research on burnout and its assessment. Throughout
these two phases there has been increasing theoretical development in which the concern
was to integrate the evolving notion of burnout with other conceptual frameworks.
Maslach and Jackson (1986) define burnout as syndrome of emotional exhaustion,
depersonalization and reduced personal accomplishment. It is a malaise of the spirit in
which employees’ morale goes down and ultimately leads to negative approach towards
organisation. Job burnout is also known as job depression. Though burnout is defined and
explained in many different ways but the Maslach’s model of burnout is the most popular
and immensely studied model. This model is based upon multi-dimensional theory, which
conceptualizes burnout in three dimensions namely emotional exhaustion, depersonalization
and personal accomplishment (Maslach and Jackson, 1986). The multi-dimensional theory
highlights that burnout is an individual stress experience embedded in a context of complex
social relationships, and it involves the person’s conception of both self and others. In other
words, it can be interpreted that burnout does not develop in isolation, it emerges out of
the intricate web of self-social-work situation and relationships surrounding the individual.
(i) Emotional Exhaustion: Emotional Exhaustion (EE) which is the basic individual stress
dimension (Maslach, Schaufeli and Leiter, 2001), refers to feelings of being emotionally
over extended and exhausted by one’s work. It signifies depletion of one’s emotional
resources and which makes them drained and used up without any source of
replenishment.
(ii) Depersonalization: Depersonalization refers to a negative cynical or excessively detached
response to other people services. It is an unfeeling and impersonal response, which
often includes loss of idealism and usually develops in response to overload of emotional
exhaustion. The depersonalization dimension represents the interpersonal dimension
of burnout.
(iii) Personal Accomplishment: It refers to a decline in feelings of competence and productivity
at work. Employees experience a growing sense of inadequacy about their ability to
help clients and this may result in a self-imposed verdict of failure. The personal
accomplishment dimension represents the self-evaluation dimension of burnout.

JOB SATISFACTION
Job satisfaction is an individual phenomenon and is measured by ascertaining certain attitudes.
Attitudes of an employee can be considered as readiness to act in one way or the other in
connection with specific factors related to job satisfaction. Godiyal and Srivastava (1995)
remark that job satisfaction is an attitudinal employee reaction to the job. Katzell (1980)
conceptualizes job satisfaction as an employee’s own evaluation of his job in terms of
supervision, co-workers, pay promotions and the work itself. Job satisfaction an important
attribute is generally measured by organizations in terms of intrinsic and extrinsic factors.
1. Intrinsic Factors: The concrete factors such as working conditions, rate of pay, work
responsibilities, variety of tasks, promotional opportunities the work itself and co-
 Study of Burnout among Face to Face and Distance Mode Male Teachers  165

workers, place of posting, excursions and abstract items such as cooperation, democratic
functioning, etc. play important role in contributing to the job satisfaction.
2. Extrinsic Factors: The extrinsic factors include psycho-social factors such as intelligence,
social activities, macro-economic factors and community factors, such as quality of life
which contribute to the job satisfaction level of the employees.

RELATIONSHIP BETWEEN JOB SATISFACTION AND BURNOUT

Riggar, Godley and Hafer (1984), Bacharach, Bamberger and Conley (1991); and Jackson-
Malik (2005) found that job burnout is inversely related to job satisfaction whereas Malhotra
(1989), Madan (2007) concluded that personal accomplishment is positively and
significantly related with job satisfaction where as the other two dimensions of job burnout
namely emotional exhaustion and depersonalization are negatively and significantly correlated
with job satisfaction.

OBJECTIVES AND HYPOTHESES

The study is primarily conducted to find out the relationship between job satisfaction and
burnout among male teachers in general and with respect to formal system of education
and distance education system in particular. Based on these objectives, the study hypothesized
that there exists significant relationship between job satisfaction and burnout among male
teachers. Specifically the study hypothesized that significant relationships exist between
job satisfaction and burnout among male teachers working in face to face mode and distance
mode.

SAMPLE
Multi-stage random sampling technique (three-stage) was used in the present study. At the
first stage 8 states (Jammu and Kashmir, Himachal Pradesh, Punjab, Haryana, Delhi,
Rajasthan, Uttar Pradesh & Uttrakhand) were selected from North India. In the second
stage state/central universities along with regional centers of IGNOU were selected. In the
laststage 100 male teachers each associated with regular and distance mode were selected.

MAP OF NORTHERN INDIAN STATES SELECTED FOR THE SAMPLE

166  Strategic Service Management

MEASUREMENT PROCEDURE
The present study used descriptive survey method of research for data collection. The
burnout was considered as dependent variable whereas job satisfaction, mode of teaching
and gender were considedered as independent variables. Maslach Burnout Inventory (Form
Ed) developed by Maslach and Jackson (1986), Job Satisfaction Scale (JSS) of Singh and
Sharma (1999)and personal data form used to collect data from the male teachers.

RESULTS
The correlation values between burnout and job satisfaction among overall male teachers
and face to face and distance mode male teachers are given in Table 1. The values of coefficient
of correlation between job satisfaction and dimensions of burnout that is, emotional
exhaustion, depersonalization and personal accomplishment of male teachers are reported
as -0.113, -0.071 and 0.122 respectively. The values of coefficient of correlation between
job satisfaction and dimensions of burnout, i.e. emotional exhaustion and depersonalization
are negative and insignificant. Whereas the values of coefficient of correlation between job
satisfaction and personal accomplishment dimension of burnout are positive but insignificant.
Thus, hypothesis 1 which states significant relationship between job satisfaction and burnout
among male teachers stands rejected. It is concluded that there is insignificant relationship
between job satisfaction and all the three dimensions of burnout.
The overall correlation values of coefficient of correlation between job satisfaction and two
dimensions of burnout - emotional exhaustion, depersonalization of male teachers working
in face to face mode are reported as -0.195, and -0.129 respectively reflecting negative and
insignificant. Whereas the values of coefficient of correlation between job satisfaction and
personal accomplishment dimension of burnout is positive but insignificant (r= 0.087).
Thus, hypothesis 2 which states significant relationship between job satisfaction and burnout
among male teachers working in face to face mode is also rejected. It can be concluded that
there is no relationship between job satisfaction and the three dimensions of burnout in
face to face mode.
The values of coefficient of correlation between job satisfaction and dimensions of burnout,
i.e. emotional exhaustion (-0.042) and depersonalization (-0.039) are negative and
insignificant. Whereas the value of coefficient of correlation between job satisfaction and
personal accomplishment (.0163), dimension of burnout is positive but insignificant. Thus,
hypothesis 3 is also not accepted. The results thus conclude that there is no significant
relationship between job satisfaction and all the three dimensions of burnout, i.e. emotional
exhaustion, depersonalization and personal accomplishment of male teachers working in
distance mode.
The study overall concludes insignificant relationship between job satisfaction and all the
three dimensions of burnout, i.e. emotional exhaustion, depersonalization and personal
accomplishment of male teachers. However, no relationship between job satisfaction and
the three dimensions of burnout, i.e. emotional exhaustion, depersonalization, personal
accomplishment of male teachers working in face to face mode and distance mode.
 Study of Burnout among Face to Face and Distance Mode Male Teachers  167

EDUCATIONAL IMPLICATION
The results of the study show that there is negative correlation between emotional exhaustion
and depersonalization dimensions of burnout with job satisfaction, but positive correlation
with personal accomplishment dimension of burnout. Thus, the control and prevention of
burnout is essential to tame its occurrence in becoming an epidemic. Before taking
preventative measures, there is also a need to assess the prevailing extent of burnout among
teachers. Cases of burnout may be identified on the basis of testing and non testing methods.
It is suggested that management of educational institutions should work for the development
of conducive working environment for the teachers . The organisational climate can be
improved through holding periodic meetings of the teachers with HOD’s/Principals to
discuss various problems of the teachers and find their solution. The recognition and approval
of best work done and healthy practices initiated by teachers may help in protecting their
well-being. This will lead to the reduction of the burnout and improve level of job satisfaction
and which ultimately results in organisational effectiveness.

References
1. Bacharach, S.B., Bamberger, P. and Conley, S. (1991), Work-home Conflict among Nurses and
Engineers. Mediating the impact of Role Stress on Burnout and Satisfaction of work, Journal of
Organizational Behavior, pp-12, 39-53.
2. Godiyal, S and Srivastav, R.K (1995), A study of Teachers work involvement, Job Involvement and
their Job Satisfaction, Experiments in Education Vol. XXIII No.2 (Page 39).
3. Greene, G. (1961), A Burn -out Case.Viking Press., New York.
4. Jackson- Malik, Pamela J. (2005), Organisational Climate and Hospital Nurses’ Job Satisfaction, Burnout
and Intent to Leave. Dissertation Abstracts International, 66(02), pp. 812-13.
5. Kocabýyýk, Z.O. (2008), Job Burn-out and Job Satisfaction in the Hospital Staff. Anadolu Journal of
Psychiatry (Anadolu Psikiyatri Dergisi), Vol. 9 (3). pp. 132-138.
6. Koul, Lokesh (2006), Methodology of Educational Research (Second Reprint Edition) Vikas Publishing
House Pvt. Ltd. New Delhi.
7. Malhotra, R. (1989), A Study of Burnout and Job Satisfaction Among Architects of Chandigarh.
M.Ed. Dissertation, Panjab University, Chandigarh.
8. Maslach, Christina and Jackson, Susan. E. (1981, 1986), Manual-Maslach Burnout Inventory, (Second
Edition). Palo Alto: Consulting Psychologists Press Inc.
9. Maslach, Christina; Schaufeli, Wilmer B. and Leiter, Michael P. (2001), Job Burnout. Annual Review
of Psychology, vol. 52, pp.397-422.
10. Riggar, T.F., Godley, S.H. and Hafer, M. (1984), Burnout and Job Satisfaction in Rehabilitation
Administrators and Direct Service Providers. Rehabilitation Counseling Bulletin, vol. 27(3), pp. 151-
160.
11. Singh, Amar and Sharma, T.R. (1999), Manual for Job Satisfaction Scale. National Psychological
Corporation, Agra.
12. Report of The National Policy on Education (1986), Government of India, Department of Education,
Ministry of Human Resources Development, New Delhi.
168  Strategic Service Management

TABLE 1: VALUES OF CORRELATION BETWEEN JOB SATISFACTION AND

BURNOUT AMONG MALE TEACHERS

Values of r Values of r for Values of r for

Variables for male male male
(Burnout and Job Satisfaction) teachers teachers (face teachers
N=100 to face) (distance mode)
N=50 N=50
Emotional -0.113 (NS) -0.195 (NS) -0.042 (NS)
Exhaustion
Dimensions
Depersonalization -0.071 (NS) -0.129 (NS) -0.039 (NS)
of Burnout
Personal 0.122 (NS) 0.087 (NS) 0.163 (NS)
Accomplishment
NS means Non significant

0.2

0.15

0.1

0.05 Male Teachers

correlation

0 Male Teachers Working in face

A B C to face mode
-0.05
Male Teachers Working in
-0.1 distance mode
-0.15

-0.2

-0.25

In Figure
A represents correlation between Emotional Exhaustion and Job Satisfaction.
B represents correlation between Depersonalization and Job Satisfaction.
C represents correlation between Personal Accomplishment and Job Satisfaction

FIGURE1: BAR GRAPH REPRESENTING VALUES OF R BETWEEN JOB SATISFACTION AND

BURNOUT AMONG MALE TEACHERS
 Justifying Warehouse Management Systems and the Supply Chain  169

16

Justif ying W
Justifying arehouse Management
Warehouse
Systems and the Supply Chain

Bhupinder Kaur*
Vipul Chalotra**

Warehousing is becoming more and more a critical activity in the supply chain to out perform
competitors on customer service, lead times, cost and building brands. If warehousing is to be a
source of competitive advantage, then the implementation of a Warehouse Management System
(WMS) is a necessary condition to establish the brand equity of warehousing operations efficiently
. This paper aims to help firms to assess the extent of the WMS benefits for warehouse operations
and their impact on competitiveness. The paper concludes that WMS is an integral part of
warehouse operations and supply chain process.
Keywords: Just-in-time, Total Quality Management and Warehouse Management Systems

INTRODUCTION
Companies world-wide are increasingly recognising the importance of Supply Chain
Management (SCM) in building brands, as a means to leverage their suppliers resources
and to achieve business excellence including “simultaneous measurement of customers’,
‘employers’ and ‘shareholders’ delight within an organization and externally between
companies (Cavinato 1991, Houlihan 1985, Jones and Riley 1985 and Towill, Nain and
Wikner 1992). Besides this, quality revolution (Mentzer et al. 2000), notions of materials
management and integrated logistics (Youngdahl, 2000), growing interest in industrial
markets and networks (Chopra and Meindle 2001), increased focus on material management
(London & London 2001), and influential industry-specific studies also play significant
role in building brand popularity of WMS (Craig, 1996).
WMS is an approach aimed at cooperatively managing and controlling distribution channel
relationships for the benefit of all parties involved, to maximize efficient use of resources in
* Lecturer, Department of Commerce, University of Jammu, Jammu
** Research Scholar, Department of Commerce, University of Jammu, Jammu
170  Strategic Service Management

achieving the supply chain’s brand equity. A typical SCM involves management of flows
among stages identified as customers, retailers, wholesalers/distributors, manufacturers,
component/raw material suppliers to maximize total supply chain brand equity. As the role
of warehouses continues to change with increasing demand for value-added services and
automated processing, Information Technology (IT) has become an integral part of
warehousing operations. Such technology includes a warehouse management system (WMS),
which has revolutionised the ways to schedule, plan and fulfill orders, track inventories and
ensure on-time delivery of the right products (Adam et al. 1996).

Warehousing
Warehousing in the 1990’s differ fundamentally from warehousing in the past, when
warehouses were seen as unavoidable cost centers that were considered as mere large stock-
keeping entities. As a result of global competition and supply chain concepts including a
focus on integral brand equity, warehousing has become a critical activity in the supply
chain to outperform competition with respect to customer services, lead times and costs
(De Koster, 1998). Warehouses are re-designed and automated for high speed, that is, high
throughput rate and high productivity, and further to reduce order processing costs.

Review of Literature
Gunasekaran, Marri, and Menci (1999) highlighted the problem areas in Goods Inwards
(GI) and provide solution to increase the performance of warehousing operations. A conceptual
framework has been developed to improve the effectiveness of warehousing operations. In
this regard a case study has been conducted with the help of the model to minimize the
through-put time in warehousing operations. Huq et al. (2006) aim to discuss a simulation
study for a multi-product, two-echelon inventory replenishment system. The purpose is to
demonstrate that under specific circumstances a two warehouse -retailer inventory
replenishment system provides better customer service without significant changes in the
cost. Rene et al. (2002) investigated the factors contributing to the decision of combining
versus separating inbound and outbound flows during the return handling process. The
aggravating factors and facilitating actions for return handling both are identified. Fung et
al. (2005) developed a Virtual Warehouse System (VWS) which is capable of refining
inventory planning so as to streamline product planning and control if there is an abrupt
change in the product demand. The results show that the inventory level across the supply
chain among different parties can be minimized and the manufacturer enterprise is more
predictable and acceptable to an abrupt change in product demand. Nynke (2002)
conducted an exploratory field study of warehouses with recently implemented WMS’s to
first understand the empirical reality and then build up a theory linking the constructs
warehouse complexity and warehouse planning and control structure.

WAREHOUSE MANAGEMENT SYSTEM

A warehouse management system provides the necessary information to manage and control
the flow of products in a warehouse, from receiving to shipping. Since a warehouse is a node
in the flow of products serving or steered by other business functions, like purchasing and
 Justifying Warehouse Management Systems and the Supply Chain  171

sales, a WMS must communicate with other management-information systems, about order
acceptance, procurement, production control, finance, transportation, etc. to control material
handling and moving within a facility. As the role of warehouse continues to change with
the increasing demand for value-added services and automated processing, information
technology has become an integral part of warehousing operations. Such technology includes
a Warehouse Management System (WMS), which has revolutionized the ways to schedule,
plan and fulfill orders, track inventories and ensure the on-time delivery of the right products.
In general, WMS is referred to as a “real time” inventory tracking, resource management
and communication system that links corporate-level production, purchasing, scheduling
and logistics activities through improved supply chain visibility. Adam et al. (1996) and
Alexander Communications Group (2003) deliberated upon conceptual foundation of WMS.
WMS updates the inventory level on a real-time basis and fills customers’ orders in the
distribution environment by enhancing the inventory visibility. Nearly all WMS’s in use
were tailor made. With the changing role of warehouses, more and more standard WMS’s
are becoming available in the USA (Randall, 1999). Furthermore, the number of
implementations of standard WMS’s and the offered functionality, while still limited, and
is growing fast; the number of implementations grew by 30% in 1998, and this growth
rate is expected to continue in the near future (Dohmen, 1998).

Objectives of WMS
The major objectives of WMS include the following:
 Eliminating order fulfillment errors by product identification and continuous cycle
counting.
 Sending and receiving critical customer/warehouse information with minimum lead
time through electronic transmission.
 Maximizing labour productivity by managing and prioritizing tasks.
 Maximizing space utilization by selecting a proper storage location.
 Reducing inventory and handling requirements through continuous flow of
information.

Benefits Gained from WMS Implementation

A WMS implementation plan should start with proper cost/benefits analysis supported by
authentic evidence and realistic performance measures. The most important benefits that
most frequently cited include increased order/inventory accuracy, increased throughout
turnaround time, reduced labour costs, improved work-load management, and reduced
paper work.
Since WMS helps warehouse employees to organize pick requirements in optimal sequence/
paths and then automatically directs them to the right pick/storage locations, therebyincreases
order/inventory accuracy. Alexander Communications Group, (2003) remarked that with
the improved inventory visibility resultant from using WMS, order cycle time can be reduced
from 10% to 50%.
172  Strategic Service Management

A Conceptual Model to Improve the Effectiveness of WMS

In order to present a framework for improving the effectiveness of warehousing operations,
a conceptual model has been developed as shown in Figure 2. The issues of improving
warehousing operations are discussed under two perspectives:
1. Just-in Time (JIT).
2. Total Quality Management (TQM).
1. JIT: The JIT application in warehousing operations is concerned with demand pull,
minimal economic quantity, reduce Work-in-Progress (WIP), supplier reliability,
preventive maintenance and eliminate buffers. JIT helps in scheduling the operations,
reduces lead time, inventory, throughput time and improves on-time delivery of the
goods to different destinations.
2. TQM: The issues related to TQM are a long-term commitment, Total Quality Control
(TQC) continuous training and ergonomics. TQM helps to improve the effectiveness
and quality control in warehousing operations.

CONCLUSION
The world of warehousing is changing rapidly under the increased pressure to improve
overall supply chain performance. As a result, it is recognized that a WMS plays a crucial
role in the planning and control structure to achieve the desired high warehouse performance.
An attempt has been made in this paper to study the effectiveness of warehousing operations,
its requirements and the benefits it may bring. A conceptual model has been developed to
improve the effectiveness of warehousing operations. Traditional inventory management is
inadequate to handle the impact of variability, non-linear relations, and other abrupt factors
on product demand. Nevertheless, the profitability of an enterprise depends highly on
effective inventory holding in which inventory management decisions rely on the know-
how, experience, quality of the planning staff.

References
Adam, N.D., Brown, T.W., Firth, R.V.D. and Misenheimer, L.R.(1996), Warehouse and Distribution
Automation Handbook 1996,McGraw-Hill: New York.
Alexander Communications Group, Warehouse Management and Control Systems, 2003 (Alexander
Communications Group: New York).
Cavinato, J.L. (1991), Identifying interfirm total cost advantages for supply chain competitiveness, International
Journal of Physical Distribution and Logistics Management, Vol. 27, 10-15.
Chopra, S. and Meindle, P. (2001), Supply Chain Management: Strategy Planning and Operation, Prentice
Hall, Inc., Upper Saddle River, NJ, 2001.1-24.
Cooper, M.C. & Ellram, L.M. (1993), Characteristics of supply chain management and the implications for
purchasing and logistics strategy, International Journal of Logistic Management, Vol. 4(2), 13-24.
Craig, T. (1996), Supply Chain Agility: Inducing World Class Performance for the 21st Century, International
Journal of Physical Distribution and Logistics Management, Vol. 34, 39-55.
 Justifying Warehouse Management Systems and the Supply Chain  173

De Koster (1998), Recent Developments in Warehousing, Working paper, Rotterdam school of Management,
Erasmus University, Rotterdam.
Dohmen, M. (1998), Sterke Groei WMS-Implementation niet echt Verrassenf, Transport and Opslag, Vol.22
(2), 46-57.
Faizul Huq, Kenneth Cutright, Vernon Jones, Douglas A. Hensler (2006), Simulation Study of a two-level
Warehouse Inventory Replenishment System, International Journal of Physical Distribution and Logistics
Management, Vol. 36, 51-65.
Fung, S. H., Cheung, C. F., Lee, W.B., Wang, C. and Kwok, S.K.(2005), A Knowledge-based Virtual
Inventory System for Inventory Management in Production Planning SCMIS’ 2004, in Proceedings of the
2nd SCMIS Workshop, , pp. 187-203.
Gunasekaran, A., Marri, H.B. and Menci, F., (1999), Improving the Effectiveness of Warehousing Operations,
Industrial Management and Data Systems, Vol. 99, 328-339.
Harmon, R.L. (1993), Reinventing the Warehouse, World-Class Distribution Logistics, The Free Press, New
York, NY.
Houlihan, J.B. (1985), International Supply Chain Management, International Journal of Physical Distribution
and Logistics Management, Vol.15, 22-38.
Huq et al. 2006.
Jones, T.C & Riley, D.W. (1985), Using Inventory for competitive advantage through supply chain
management, International Journal of Physical Distribution and Logistics Management, Vol.15, 16-26.
London, K.C. and London, J.P. (2001) Essentials of Management Information System: Organization and
Technology in the Networked Enterprise, Prentice-Hall, Upper Saddle River NJ., 80-94.
Mentzer, J.T., Foggin, J.H.and Golicic, S.L. (2000). “Collaboration”, Supply Chain Management Review,
(4.4), 52-60.
Nunke, R.H. (2002), Planning Multiple Location Inventories Journal of Business Logistics, 24(2), 65-89.
Randall, S. (1999), The Value of WMS, Modern Materials Handling, Vol. 54 (7), 50-62.
Rene, B.M., Koster, Marisa, Vendel, H.L (2002), Return Handling: An Exploratory Study with Nine Retailer
Warehouses, International Journal of Retail and Distribution Management, Vol. 30, 407-421.
Towill, D.R., Nain, M.M. & Wikner, J (1992), Industrial dynamics simulation models in the design of supply
chain, International Journal of Physical Distribution and Logistics Management, Vol. 22, 3-13.
Youngdahl, W.E. (2000), Global Supply Chain Management, John wiley and Sons, Inc., Toronto, Canada,
60-82.
174  Strategic Service Management

Tasks: Purchasing, sales,

Customer financial administration,
Ware- Order management system (general ledger, accounts
house payable, accounts receivable)
module inventory management,
management information
Warehouse management system
Administrative
Systems

Technical Control System

Technical systems Tasks: assignment of jobs to
vehicles, routing of vehicles,
AS/RS control, positioning,
data collection.
PLC-systems Radio
Frequency
Systems

Actuators
Sensors

FIGURE 1: WMS IN RELATION TO OTHER MANAGEMENT INFORMATION AND

TECHNICAL SYSTEMS

Reduction in
lead time,
JIT inventory, and TQM
through-put time

Demand Pull, Long-term

Improving
minimal economic commitment, war
Warehousing
quantity, reduce on waste,
Operations
WIP, Supplier continuous
reliability, preventive improvement,
maintenance, and TQC, continuous
eliminate buffers training,
On-time delivery, ergonomics
improved effectiveness
and improved quality

FIGURE 2: A CONCEPTUAL MODEL FOR IMPROVING THE EFFICIENCY OF

WAREHOUSING OPERATIONS
 Potential for Service Trade Liberalisation in SAARC  175

17

Potential for Ser vice Trade Liberalisation in SAARC

Trade
An Over view

Neelam Chowdhary*

This paper aims to analyze some aspects of trade in services and the degree to which we can
liberalize trade in services in SAARC. Trade in service refers to the sale and delivery of an
intangible product between the producer and the consumer. It is a heterogeneous term having a
wide coverage. The level of development of a country can be assessed by the contribution of services
to its GDP. Many steps have been taken both at the multilateral and regional levels to liberalize
trade in services. But due to the slow pace of progress at WTO, the initiatives at the level of
regional trading arrangements have got strengthened. SAARC is the largest regional grouping
in terms of population; it is home to 1.5 billion people i.e. 1/5th of the entire human community
with a middle class of about 450 million people. The performance of the services sector is vital for
the development of South Asia, as services account for more than 50% of the GDP of most of the
South Asian countries. There is ample empirical evidence to show that the comparative advantage
of SAARC in services trade is high. It needs to be tapped productively to address the problems of
poverty and inequality. It is expected to provide quality products to the consumers at reasonable
prices and also shall increase the global competitiveness of the domestic firms. Each country can
provide services in areas of interest to it. Most of the South Asian countries are labour abundant
countries. So proper policies should be designed in future so that more and more employment
friendly services are encouraged. This will pave the way for inclusive and equitable growth. In
the long run, the aim should be to have a WTO compatible policy in this regard.
Keywords: Services, Liberalisation, SAARC, SAPTA

INTRODUCTION
Trade in services refers to the sale and delivery of an intangible product called service between
a producer and a consumer. International transactions in services are defined in the IMF’s
Balance of Payments Manual (BPM5) (1993) as the economic output of intangible
commodities that may be produced, transferred and consumed at the same time. International

* Assistant Professor, Economics, DDE, University of Jammu

176  Strategic Service Management

trade in services takes place between producers and consumers based in different economies.
The term services cover a wide range of heterogeneous products and activities of industries
dominating the world economy in terms of generating output and employment. Being
intangible, their trade differs from that in goods. These are produced and consumed at the
same time unlike goods which can be stored.
Efficient services are crucial to an economy’s global competitiveness. The level of development
of a country can be directly related to the share of services sector to its GDP. Recent economic
trends show the growing importance of services for the growth and development, accounting
for more than 70% of GDP in developed countries and 50% in developing countries. Since
1990, world services trade has nearly tripled to $ 2.4 trillion. In 2000, the share of world
export of commercial services was 1/5th of the global export of goods and services. An evidence
shows that liberalization of services in developing countries could provide as much as $ 6
trillion additional income to the developing world by 2015 (World Bank, Global Economic
Prospects, 2001).

LITERATURE SURVEY
Since mid 1980s a substantial amount of research has been undertaken on trade in services.
There is increasing evidence that services liberalization is a major potential source of welfare
gain, and that the performance of service sectors, and thus services policies, may be an
important determinant of economy-wide growth.
Earlier services have not figured prominently in the economic growth and development
literature and have only now been considered in the trade literature. Traditional international
economics textbooks tend to assume that services are largely non tradable. Initially limited
to a few path-breaking studies such as those by Baumol (1967), and Fuchs (1968), but
later after1980s more attention began to be devoted to services. One reason for this was the
emergence of services on the international policy agenda, largely as the result of U.S. proposals
to negotiate multilateral rules on policies affecting trade in services.
Francois and Reinert (1996) document the role of services in economies at different levels
of development, using input-output tables to analyze the contribution of service activities
to user industries and final consumer. According to them the importance of services in
relative terms increases as countries become richer, and that this is also reflected in an
increasing variety of market services (product differentiation). They also observe that even if
services are not traded directly, they are embodied in the output of both tradable and non
tradeble activities, and thus are a determinant of overall employment and productivity. The
indirect export of services embodied in a country’s exports of goods can be quite large, with
services accounting for the majority of the foreign exchange that is earned.
Since services are often not storable, their exchange frequently requires the proximity of
supplier and consumer – providers must move to the location of the buyer/consumer of a
service, or vice versa. Some of the implications of the need for proximity between providers
and demanders for exchange to be feasible are explored by Bhagwati (1984). He describes
the processes through which services are “disembodied” or “splintered” from goods or people
as “carriers”. Starting in the 1980s technological changes were increasingly making such
 Potential for Service Trade Liberalisation in SAARC  177

processes more feasible. Trade in services may then expand as a result of the incentive to
“splinter” the production chain geographically, not just in terms of tangible inputs but also
services. Bhagwati observed that long-distance, cross-border exchange through
telecommunication networks implies that the same forces that drive trade in goods will also
apply to trade in those services where such splintering is possible.
A number of studies in the mid 1980s concluded that standard concepts of competitive
advantage and theories of the determinants of trade patterns could be applied to services
(Hindley and Smith 1984 and Deardorff, 1985). Markusen, Rutherford and Tarr (2005)
concluded that if barriers were initially high, liberalization of trade in services might have
resulted in the country from switching over to exporting the service intensive good.
Bhattarai and Whalley (2003) argued that the absolute (aggregate) benefits of network
liberalization (integration) are likely to be more evenly divided between large and small
countries than is the case for goods. As the larger per capita gain to small countries from
access to a larger market is offset by the size of the country. Thus, the analogy of a small
country benefiting disproportionately from liberalization may not hold good. In related
research, Francois and Wooton (2006) observed that services liberalization can boost trade
in goods. Other research has also illustrated the interdependence between the efficiency of
available domestic service sectors and trade in goods. Fink, Mattoo and Neagu (2005) show
that international communication costs are a determinant of export performance for higher
value, differentiated products, whereas they matter less for more homogenous, bulk type
commodity trade.
Beck (2002) found a positive association between economies with better developed financial
systems and export-oriented manufacturing industries, as the former allows financing of
large-scale, high-return investment projects. Freund and Weinhold (2004) found that access
to the Internet increases trade in goods, noting that this is consistent with a model where
there are market-specific fixed information/search costs that are lowered as a result of the
Internet.
Few empirical studies have investigated the linkages between services, services liberalization,
and economic growth. In a cross-section and cross-country regression analysis, Mattoo,
Rathindran and Subramanian (2006) found that controlling of other determinants of growth,
countries with open financial and telecommunications sectors grew, on average of about 1
percentage point faster than other countries. Fully liberalizing both the telecommunication
and the financial service sectors, provided an average growth rate of 1.5 percentage points
above that of other countries. Brown et al. (1996) have analyzed the potential effects of
liberalization of trade in services. They concluded that the world’s major trading nations
could gain from liberalization of trade in services, with gains increasing further when tariffs
on Industrial goods are reduced simultaneously.
Thus, services can be an engine of export growth for many countries, but more important
is that they are a key determinant of the competitiveness of all firms in open economies, no
matter what they produce. The services content of goods will keep rising with economic
growth.
178  Strategic Service Management

Objectives
The study is conducted to analyse whether or not the South Asian Economy is conducive
to trade in services. In addition the paper also focuses on understanding the feasibility of
reversing the low level of Intra- SAARC trade in goods by exploring the hidden potential for
services trade.

Findings
After going through related literature, the paper identifies significant findings which can
encourage the member countries to open more and more sectors to trade in services, as this
alone can enable SAARC to mature into a Free Trade Area.

Multilateral vs Regional Approach to Trade in Services

Until 1995, no multilateral agreement existed on rules for trade in services. During the
Uruguay round of GATT, the General Agreement on Trade in Services (GATS) was drafted.
Today, GATS is one of the basic pillars of the multilateral world trading regime under
WTO.
Article 1.2 of GATS classified trade into following four modes:
Mode 1 Cross Border Supply: Delivering of a service from the territory of one country into
that of another country.
Mode 2 Consumption abroad: It covers supply of a service of one country to the service
consumer of any other country.
Mode 3 Commercial presence: Services provided by a service supplier of one country in the
territory of another country. A service outlet is set up in the consumer’s country by the
service provider.
Mode 4 Presence of natural persons: It covers services provided by a service supplier of one
country through the presence of natural persons in the territory of any other country.
The core principle of GATS is Non-discrimination. Article XVII is based on national
treatment. Preamble to GATS article IV recognizes link between economic development
and an efficient services capacity. The member countries have a right to regulate their
services provided they do so in an impartial and objective manner. The developing countries
have been provided more flexibility in this regard. So the multilateral approach based on
non-discrimination advocates free trade. But because of the slow pace of progress at WTO,
the regional approach to many issues has got strengthened. GATS is still considered to be
a young agreement. Rules are incomplete with respect to emergency safeguards (Article X),
Govt. procurement (article 81), subsidies (article XV) etc. Many express doubt about its
being an effective instrument in promoting trade liberalization.
GATS article V allows RTAs (Regional Trading Arrangements) in services. Over half of the
world trade is conducted under RTAs. Though based on the principle of discrimination i.e.
the preferential treatment of the member nations only, RTAs have emerged as successful
forums in resolving many issues where multilateral approach has failed. Several RTAs contain
 Potential for Service Trade Liberalisation in SAARC  179

provisions not only on trade in goods but also in services, e.g. NAFTA, MERCOSUR etc.
As on 20 March 2007, of the 153 RTAs operational, about 43 were the agreements in
services notified under GATS article (V).
Generally, RTAs follow either a positive or a negative list approach to liberalization. The
positive list approach consists in listing those sectors and modes of supply to the liberalization
of which countries commit themselves. GATS advocates a positive list approach. In the
negative list, countries list those sectors and modes of supply that they wish to be excluded
from the general obligation of not restricting services imports and the remaining restrictions
may be subject to negotiated elimination. The negative list approach is adopted in NAFTA
type RTAs.
Regional agreements to liberalize international transactions in services became more
prominent in the late 1980s. Examples include the Canada-United States Free Trade
Agreement, the Australia-New Zealand Closer Economic Relations trade agreement (CER),
and the North American Free Trade Agreement (NAFTA). Of course, the deepest regional
effort to integrate services markets is the EU. Starting in the 1990s numerous additional
agreements were negotiated that include services. Fink and Mattoo (2004) in one of the
few papers focusing explicitly on services and RIAs, examine the implications of unilateral
policy choices in a particular services market and identify the circumstances in which a
country is more likely to benefit from cooperation in a regional rather than multilateral
forum.

Potential for Services Trade Liberalization in SAARC

There is great scope for trade in services in SAARC, as it is the largest regional group. South
Asia is home to 1.5 billion people, 1/5th of the entire human community and a middle class
of about 450 million people, bigger than the combined population of EU or North America.
South Asia has been grappling with the problems of poverty, unemployment and glaring
inequalities in income. The region houses about 600 million people earning less than one
dollar a day. Because of the complementarity between these nations and similar tastes of
the consumers, many initiatives can be taken in this regard so that welfare of the consumers
can be increased, the domestic firms can be enabled to be globally competitive and the slow
pace of regional economic integration in SAARC can be reversed. Since its inception in
1985, signing of the agreement on SAPTA in 1993 and the SAFTA in 2004, nothing
concrete had happened with regard to raising the level of Intra-regional trade in SAARC, so
that even after two decades of its coming into being, it is one of the least integrated regional
groups. Intra-regional trade accounts for less than 5 per cent, whereas trade within the
ASEAN region is around 63 per cent.
The South Asian region is blessed with exceptional diversities of natural and manmade
resources including:
(a) Land forms and climatic regimes ranging from sea level to the highest mountains, and
deep gorges; hottest plains to snow clad mountains; wettest to driest places; dissected
green valleys to coral islands;
180  Strategic Service Management

(b) thousands of rivers and immense hydroelectric potential;

(c) mineral resources such as coal, iron, natural gas, etc., and
(d) extensive diversities of forest resources including exclusive varieties of animals, herbs
and timber.
Unfortunately this vast stock of natural wealth of the region has not been optimally and
efficiently managed and utilized for the benefit of the people of this region. This requires
collective and collaborative strategies and joint-ventures by the countries of this region.
The South Asian region remains rather insignificant in the global trade market, accounting
for a little over one percent of total global trade. During the 11-year period of 1995 to
2005, South Asia’s share in world merchandise exports marginally increased from 0.9 percent
to 1.2 percent (from US$46.6bn to US$128.5bn).
However, in commercial services exports, the region emerged more competitive with its
share in total world exports increasing from 0.87 percent in 1995 to 2.5 percent in 2005
(from US$10.3bn to US$60.8bn). While South Asia’s share in total Asian merchandise
exports was only four percent in 2005, its share in Asian services exports was 11.6 percent
by value in the same year. So research shows that the competitive advantage of South Asia in
Services trade is more than in goods. The performance of services sector is vital for the
development of South Asia as it accounts for more than 50% of GDP in all the South Asian
countries except Nepal. In the Golden Age of India, Universities at Nalanda and Takshashila
were famous the world over and attracted students from different parts of the world. So
there is a need to see the potential hidden in each member country so that it can be tapped
and effectively utilised. Liberalization brings quality products to the consumers, thus
maximizing their level of satisfaction. According to the Reserve Bank of India Bulletin
(January 2004), during 2002-03, India’s earnings from software services were about $9.6
billion. With merchandise exports touching $52.51 billion, software services represented
18.3 per cent of total exports. This was a big achievement for the Indian IT industry as it
proved its competitive strength in the world.
It was not before 2006 that services were included in SAARC. The Ministerial meeting
held in Dhaka in April 2006 assigned the Committee of experts to examine the proposal of
including services trade in the agreement. Timely inclusion of more and more services in
trade would broaden the scope of SAFTA and boost competitiveness in key emerging sectors.
The potential sectors of cooperation include agri business, oil and gas sector, power generation,
tourism, Health care, Infrastructure, Textiles, pharmaceuticals, Gems and Jewellery, Fisheries,
etc.
The existence of informal trade in services in South Asia indicates that there is significant
trade potential in this sector. Moreover, liberalisation of service trade within the region will
immediately move much of the financial flows from informal channels to the formal channels.
Thus, the benefits would accrue not just to consumers in the region, but to the government
too. It is likely that India stands to gain most from liberal services trade in South Asia in
various sectors, like health, education, IT, professional, etc. India is the leading exporter of
commercial services in the region, accounting for 92 percent of South Asia’s total service
 Potential for Service Trade Liberalisation in SAARC  181

exports to the world, followed by Pakistan and Sri Lanka accounting for 3 and 2.5 percent
of the total South Asian service exports respectively. Regional cooperation and integration
could help South Asia develop as a services hub where the differential skill availability in
the different countries would allow for differential specialisation.
Public goods and services like energy, water management and conservation, and prevention
against pandemics are best provided on a regional basis. Managing these regional public
goods and services on an individual country basis, would imply much higher costs and
worsen the suboptimal exploitation of natural resources. The gains from regional integration
in the EU, ASEAN and NAFTA were amplified by cross-border cooperation in water, and
energy. In South Asia too, a regional ecosystem based approach to development in harvesting
water and natural resources will lead to resource efficiency gains, given the capacity and
availability of state-of-the-art technology.
The other main driver of economic integration in South Asia is the need for greater energy
security. All these countries are heavily dependent on energy imports and even more specifically
on hydrocarbon imports from West Asia. Energy trade in the region can also be seen as a
confidence-building measure and a lock-in mechanism for irreversible economic
interdependence (Pandian 2005). The imperative for energy security requires that SAARC
economies can offer a unified market for hydrocarbon imports from Central and West Asian
gas and oil fields by overland pipelines and that the regions hydrocarbon resources are
exploited on a regional basis.
A recent study estimated that if South Asia’s infrastructure capacity is increased even halfway
to East Asia’s level, then intra-regional trade can increase by 60 percent (Wilson and Ostuki
2005).

CONCLUSION
Considering the rapid expansion of the services sector, and its increasing share in the GDP
of the South Asian economies, any trade liberalisation would be incomplete without including
this sector. South Asian economies have scope to cooperatively signal a stable and conducive
business environment to attract more investment, i.e. an environment characterised by
stability, minimal conflicts, moving towards an integrated regional market and free flow of
factors across borders – conditions essential for the region to emerge as a global production
hub that can be best provided with greater regional cooperation.
Integrated resource management, especially of water, energy and land, will provide benefits
to all the South Asian countries, as the developmental challenges are similar for each. Some
of the developmental challenges faced by the region’s larger (Bangladesh, India, Pakistan,
Sri Lanka) and smaller economies (Afghanistan, Bhutan, Maldives, Nepal) are identical,
including alleviation of poverty, and provision of clean water and energy. India, with her
economic dominance in the region and central geographic position, can play a significant
strategic role in promoting regional cooperation in South Asia by unilaterally liberalising
its trade within the region.
Regional integration encompasses much more than trade in goods and services, and thus
gains from integration include not just trade expansion, but also enhanced competition,
182  Strategic Service Management

increased returns to scale with greater production in certain sectors, and increased resource
efficiency. Indeed, for a complete integration of the South Asian region it would be important
to liberalise labour, capital and services markets. Hence a successful implementation of
liberalization in services trade in SAARC alone can enable it grow from infancy and raise the
low level of economic integration within and outside the region. The full implementation
of SAFTA is likely to help all the members in committing to multilateral liberalisation.
Indeed, liberalising regional investment and services trade in an augmented SAFTA would
be a good implementation strategy before South Asia commits to liberalisation of investment
and services multilaterally. Proper policies should be designed in future so that more and
more employment friendly services are being encouraged. This will pave the way for inclusive
and equitable growth. In the long run, the aim should be to have a WTO compatible
policy in this regard.

References
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Beck, Thorsten. 2002, “Financial Development and International Trade: Is There a Link ?” Journal of
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World Economy, 7, 133-144.
Brockman, Jane Drake 2003, “Bilateral Approaches to Services Trade and Investment Liberalisation – WTO
Plus or Wto Minus?” Paper Delivered at the Conference of Economists, Canberra.
Deardorff, Alan. 1985, “Comparative Advantage and International Trade and Investment in Services,” in
Robert Stern (ed.), Trade and Investment in Services: Canada-U;S; Perspectives. Toronto: University of Toronto
Press.
Francois, Joseph and Ian Wooton. 2006, “Market Structure and Market Access,” Mimeo.
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International Economics 62:171-89.
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Hindley, Brian and Alasdair Smith. 1984, “Comparative Advantage and Trade in Services,” The WorldEconomy,
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Markusen, James, Thomas Rutherford and David Tarr. 2005. “Trade and Direct Investment in Producer
Services and the Domestic Market for Expertise,” Canadian Journal of Economics 38(3):758-77.
Mattoo, Aaditya and Randeep Rathindran. 2006, “Does Health Insurance Impede Trade in HealthCare
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Developing Economies”Ha Noi, Viet Nam 27 February-1 March 2006.
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Morita, Minako 2008 “Comparative analysis of scope and coverage of South-South RTAs in Asia”, in UNCTAD
XII Pre-Event Lessons learned from South-South Trade in Asia and Role of Regional Trade Agreements Trade
Analysis Branch DITC, UNCTA.
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(Washington DC: World Bank 2002), pp.234-5.
Part III: Business Performance
 18

Impact of IT
IT--Applications on the PPerformance
erformance of
Small-Scale Industries
A Comparative Study

Dr Ruchi Kohli*
Dr Hardeep Chahal**

The study examines the impact of IT applications on the overall performance in general and
with respect to product performance, recipient satisfaction and economic performance in particular
of SSIs of J&K and Punjab states. The data were collected 144 and 102 technology intensive
firms operating in high density cluster of the Jammu and Ludhiyana regions respectively. The
study found positive impact of IT on overall performance with respect to inventory purchase,
billings, accounts receivables and payables, increased business transactions, reduced business
cycle and better image in Ludhiyana SSIs. Whereas impact of IT on Jammu SSIs performance is
related with dimensions like increase sales, competitive advantage, technological changes and
reduced face-to-face contact among business partners.
Keywords: Information Technology, Business Performance, Technology Orientation, Product
Performance, Recipient Satisfaction and Economic Performance

INTRODUCTION
The adoption of Information Technology (IT) applications is no longer a means for sustaining
competitive advantage (Turban et al., 2005) but an essential weapon for survival of the
organisations. The IT applications are increasingly important for organisations in their
varied business affairs as they provide them with new ways of exchanging information and
transacting business (Kalakota & Whinston, 2005 and CSI, MCG & SCOPE, 2002). In
fact, the use of IT applications as a vehicle for electronic commerce (e-commerce) has
become standard operating practice in many corporations today. In general, e-commerce
encompasses buying and selling, use of technologies to exchange information and the
* Lecturer, A&M Institute of Management and Technology Institute, Pathankot
** Associate Professor, Department of Commerce, University of Jammu, Jammu
188  Strategic Service Management

development of electronic business processes to complete order fulfilment cycle (Liu &
Luo, 2003). It focuses on four perspectives viz; (i) communication perspective: delivery of
information, products/services, or payments over telephone lines, computer networks or
any other electronic means; (ii) business process perspective: application of technology towards
automation of business transactions and workflow; (iii) service perspective: tool that addresses
the desire of firms, consumers and management to reduce service costs while improving the
quality of goods and increasing the speed of service delivery and (iv) online perspective:
buying and selling products and information on the internet (Kalakota & Whinston, 2005
and Turban et al., 2005). From narrower perspective, e-commerce is considered just as one
of the aspects of e-business activities. From broader pespective, e-commerce is synonyms to
e-business and is used interchangeably. Per se, it is considered as fully integrated Information
and Communication Technologies (ICTs) which provides secure, flexible and integrated
platform to deliver differentiated business values by combining systems and processes with
simplicity using internet technology (Srinivasan, Lilien & Rangaswamy 2002).
The application of IT enabled services provide a platform for all types of industries—large,
medium and small-scale to compete effectively with other competitors (Riquelme & Lever,
2001) and using diversification, expansion and cost-reduction strategies. On the flip side,
the traditional small industries such as khadi and handloom, village industries, handicrafts,
sericulture etc. have least usage of IT applications whereas modern small-scale industries,
such as electronic, chemical, hoisery and textile, plastic, steel and food have somewhat
higher usage of IT applications. The IT-savvy SSIs are manufacturing a wide variety of
goods from simple to sophisticated items, such as television sets, electronic control system,
various engineering products, etc. similar to ancillaries of large industries. On the whole,
the pace of information communication technology in the small-scale industries is at infancy
stage, in both developed as well as developing countries (Roy & Sikdar, 2003). The IT
applications at infancy stage include investment in computers, computer hardware
components, softwares, internet, website (www), intranets, extranets, Computer Aided
Design (CAD) and Computer Aided Manufacturing (CAM) softwares, Computer Numeric
Centre (CNC), etc.

REVIEW OF LITERATURE
The existing literature reveals array of information on the status and usage echelon of IT
adoption and impact of IT applications on business sector. Gunasekaran and Ngai (2005),
Cashman et al. (2004), Kyobe (2004), CSI, MCG & SCOPE (2002), Quayle (2002),
Srinivasan, Lilien & Rangaswamy (2002), Ang (2000), Ahmed and Zink (1998) and Soh
et al. (1997) investigated the adoption level of e-commerce applications and factors inhibiting
such utilization in the Small and Medium Enterprises (SMEs). These studies analysed the
status of usage of hardware, softwares, internet, intranets and extranets connectivity, etc.
and few of them identified that lack of skill and knowledge as the main factor and some
emphasized on lack of security as the main factor inhibiting IT adoption in SMEs. Further,
Beheshti (2004), Teo & Ranganathan (2004) and Feher and Towell (1997) found that lack
of strategic vision and top management support were the serious problems inhibiting e-
commerce deployment in SMEs. In addition to ICT usage and adoption, JNN et al. (2002)
also determined the key indicators for the competitiveness of small and medium sized
 Impact of IT-Applications on the Performance of Small-Scale Industries  189

enterprises and remarked that a company to be competitive should have clear strategy on
ICT in the management and marketing of a company. The study also pointed that the
concerns should give attention to the modelling of business process comprising enterprise
resource planning, solutions, e-human resources management solutions and e-customer
relationship management solutions. Further, Drew (2003), Daniel, Wilson and Myers
(2002) and Riquelme (2002) intensively examined the Internet frequency of usage
particularly in small, medium sized and large businesses. Besides measuring Internet usage
in service and manufacturing concerns, Haynes, Becherer and Helms also (1998) identified
the impact of IT on relationship among small and medium sized businesses and the IT
impact on suppliers and buyers’ relationship in the corporate sector was also analysed by
studies such as Leek, Turnbull & Naude (2003) and Barton & Bear (1999).
In addition, the studies conducted by Quaddus & Achjari (2005) and Sarosa & Zowghi
(2003) identified certain key factors for the organizational performance which include
owners and managers, resources and employees as the internal drivers and barriers and
competitors, suppliers and customers, government, external consultants as the external
drivers and barrier to IT adoption in SMEs. From implementation perspective, Agrawal
and Haleem (2003) described business process reengineering attributes comprising culture
pressure (power distance, uncertainty avoidance, individualism and masculinity) and
environment pressure (frequency of changes in marketing practices, rate of product
obsolescence, prediction of competitors actions, prediction of consumer demand and
frequency of changes in mode of production/services of organisations) for the successful
implementation of IT operations in organisations. Besides aforesaid factors, technological,
managerial, human and user training, behavioural, project related factors and government
policy and support also affect the business process reengineering. The study reflected that
environmental pressures and cultural factors play important role in changing the mindset
of employees to facilitate the successful implementation of IT based operations in
organisations.

NEED OF THE STUDY

The new industrial policy (2003), envisaged that the implementation of technology
development programs would enhance the performance of small-scale industries and leading
to production of large variety of qualitative goods by stimulating faster growth of
entrepreneurial skills (Gupta & Singh, 1978; Iyengar, 1968 and Pattenshetti, 1968). In
general, it include subjective measures, such as customer satisfaction, overall image, employee
satisfaction, long-term relations and objective measures, such as profitability, return on
investment, return on assets, market share, etc. Specifically, the economic performance (P),
product quality (Q) and recipient satisfaction (R) are the major business performance measures
being affected as a result of IT implementation (Dalu & Deshmukh, 2001 and Sardana,
2001).
The literature reviewed, revealed IT adoption, inhibiting factors and IT impact on business
performance as the major research categories for evaluating and analysing SSIs’ performance
with respect to economic performance and other measures, such as product quality and
employees’ satisfaction. Further, majority of studies are found to be conducted on IT adoption
190  Strategic Service Management

with respect to items, such as number of computers, hardware, softwares, internet, intranets
and extranets, etc., which assessed the status of IT alongwith major barriers for the
implementation of IT in the business units. However, a very few number of studies on
adoption of information technology is found to be conducted in Indian scenario and that
too in small-scale units. Further, not even a single study is undertaken to assess information
technology usage and its impact on four primary measures, i.e. product performance,
recipient satisfaction, economic performance and overall performance. It is in this context,
the present study is undertaken to assess the degree of utilization of IT along with measuring
the managers and employees and its impact. Additionally, the study has also incorporated
comparative dimensions to understand the IT usage and its impact on two developed
industrial regions of Jammu & Kashmir and Punjab States. Literature is found to be scarce
on measuring the attitude of employees towards technology and its impact. Furthermore,
not even a single study is found to analyse the application of information technology from
bipartite perspective, i.e. managers and employees.

HYPOTHESES AND OBJECTIVES

The present study is an in-depth analysis of the status and impact of IT-applications on the
performance of small-scale industries of two states. The perusal of the relevant literature
(Fulantelli & Allegra, 2003; CSI, MCG & SCOPE, 2002; JNN et al., 2002; Sardana,
2001; Barton & Bear, 1999) led to the formulation of following hypotheses and objectives:
HYP 1: The degree of IT-applications and overall performance are positively and significantly
related.
HYP 2: The Ludhiana SSIs (LSSIs) are more tech-intensive than Jammu SSIs (JSSIs) in terms of
product performance, recipient satisfaction, economic performance & overall performance.
HYP 3: The Ludhiana SSIs employees’ awareness is more towards ICT than Jammu SSIs employees.
HYP 4: There exists significant difference in the technology orientation, product performance,
recipient satisfaction, economic performance and overall performance of the small-scale industries
operating in the two states.
OBJ 1: To find out the status and usage echelon of ICT in different operational activities of small-
scale enterprises of two states.
OBJ 2: To measure the attitude of managers’ towards technology orientation.
OBJ 3: To measure the degree of employees’ awareness towards information and communication
technology.
OBJ 4: To determine the impact of information and communication technology on the overall
performance of small-scale enterprises in the Jammu & Kashmir and Punjab States.
OBJ 5: To identify the problems and challenges faced by the small-scale companies in the
implementation of ICT in the two states.
OBJ 6: To design reactive and proactive strategic measures for awakening and motivating employees
about e-commerce activities for the effective implementation of developed technological tools.
 Impact of IT-Applications on the Performance of Small-Scale Industries  191

CONSTRUCTION OF DATA COLLECTION FORMS

The primary data was collected through framing three types of questionnaires to accomplish
the study objectives. The first questionnaire gauged the adoption level of IT. The questionnaire
contained information relating to company’s profile (10 statements), computer hardware
components (2 statements), software applications (3 statements), internet & website (4
statements), e-transactions (5 statements), impact of IT (3 statements), barriers to low
degree of IT-adoption (1 statement), security tools (2 statements) and future plan (3
statements) (Annexure 1). Specifically, the items are related to number of computers for
various operational areas, hardware components and its peripherals, number and brand,
system software, application software, Internet and networking, etc. are used to gauge the
adoption level of IT in the two states. Besides usage questionnaire/schedule, another two
questionnaires, one for owners/managers and one for employees/immediate assistants were
designed to measure the managers and employees perceptions towards technology orientation
on the SSIs’ performance. The questionnaire for managers/owners comprised general nature
seven queries and five specific variables (111 items) - related to technology orientation
(26), product performance (17), recipient satisfaction (21), economic performance (23)
and overall performance (24) (Annexure 2). The questionnaire for employees/immediate
assistants consisted of general nature seven queries along with five variables (80 items) viz;
technology orientation (16), product performance (18), recipient satisfaction (20), economic
performance (6) and overall performance (20) (Annexure 3). Apart from primary data,
secondary data was also used to strengthen the study. The secondary sources included
information accessed from journals like, Journal of Small Business and Enterprise Development,
International Small Business Journal, European Management Journal, E-Business Digest,
International Journal of Operations and Production Management, Information Management
and Computer Security, Global Journal of Flexible Systems Management, etc. and internet
resources.
The 7- point likert scale (7< —— >) was used to assess owners/managers and immediate
assistants perception towards impact of technology on business performance. A few items
were kept in negative form so as to have an internal cross-checking. The scale values of
negatively worded items were reversed before data processing.

SAMPLE DESIGN
The samples were selected from two high-density clusters areas of Jammu and Ludhiana
regions of Jammu & Kashmir and Punjab States respectively.

Jammu Region
The selection of SSIs of Jammu region was done in three stages. In the first stage, one
industrial estate each from four, two and three industrial estates falling under DIC, SICOP
and SIDCO respectively were selected on the basis of ‘high density of firms’ (DIC, 2000-
01). These industrial estates included Digiana, Gangyal and Bari-Brahmana from DIC,
SICOP & SIDCO respectively. The details of which are given in Table 1.
192  Strategic Service Management

In the second stage, lists of functional units operating in Digiana (56), Gangyal (184) and
Bari-Brahmana (174) were obtained from DIC, SICOP and SIDCO respectively. Later,
‘technology intensive firms’ out of 144 firms, i.e. 9 from Digiana, 14 from Gangyal and
121 from Bari Brahmana were identified with the help of officials of DIC, SICOP & SIDCO
respectively for the survey. In the final stage, owners/managers & employees/immediate
assistants each from selected firms were contacted on the basis of their availability to supply
the information. Out of total respondents, 10% entrepreneurs and 90% finance managers
under managerial category and 100% production managers’ assistants under employees
category were contacted.

Ludhiana Region
Similarly, in the first stage, three industrial estates namely Focal Point, Industrial Area-A
and Industrial Area-B controlled by DIC were selected on the basis of high density clusters
areas. In the second stage, list of SSIs operating in the three estates were identified using
Amarjit Trade Series (2004-05). All ‘technology intensive small industries’ (approximately
102) were selected on the basis of their e-mail and website addresses listed in an Amarjit
Trade Series (2004-05) [Table 2]. The demographic profile of SSIs operating in Jammu and
Ludhiana is given in Table 2. 28% entrepreneurs and 72% finance managers under managers
category and 50% each production managers’ and finance managers’ assistants under
employees category were contacted.

STATISTICAL AND RESEARCH TOOLS APPLICATIONS

To derive substantial results from the collected data, various tools were applied for data
purification, data analysis, data reliability validity and testing of hypotheses. The tools
used under data analysis, data reliability & validity and testing of hypotheses are given as
under:
1. Data Purification: The present study primarily used factor analysis with varimax
rotation for data purification purpose. The principle function of factor analysis is to
reduce large number of dimensions into few manageable and meaningful sets (Tull
and Hawkins, 1998 and Hair et al., 2003). The KMO value equal to and greater than
0.5 and degree of correlation coefficient equal to or greater than 0.3 were used as
criteria for the selection of items. The maximum numbers of factors were decided on
the basis of eigen value equal and greater than 1 (Hair et al., 2003).
2. Data Analysis: To assess the usage and status of IT in Jammu and Ludhiana regions’
firms, the study applied various tools, such as percentage, bar diagram and pie chart.
Further, to assess the responses collected from two groups of respondents, i.e. managers
and employees, the study applied the basic tools like mean, percentage and frequency.
3. Data Reliability and Validity: The internal consistency and split-half tools were used
to assess the reliability of the questionnaires (Hair et al., 2003). The reliability of the
sample was checked by examining the coefficient alpha values for the whole sample
 Impact of IT-Applications on the Performance of Small-Scale Industries  193

and sub-samples I & II. The face, content, construct and convergent validity of the
samples were also assessed. The value of Kaiser–Meyer–Olkin (KMO) measure of
sampling adequacy and variance explained criteria were used to check construct validity
of the scale (Hair et al., 2003). Further, correlation values were used to examine the
nature of association between average score responses to the five statements regarding
overall performance of the technology orientation, product performance, recipient
satisfaction, economic performance and overall performance.
4. Testing of Hypotheses: The present study applied multiple regression and z-test to test
various hypotheses. The multiple regression was used to measure the relationship of
technology orientation variable with product performance, recipient satisfaction,
economic performance and overall performance of businesses operating in two states.
Further, z-test was applied to measure the significance level of gap analysis of LSSIs
managers and JSSIs managers, LSSIs employees & JSSIs employees, LSSIs managers &
employees and JSSIs managers & employees.

MAJOR FINDINGS

IT-Usage in LSSIs and JSSIs

The comparative analysis of varied IT-applications in LSSIs and JSSIs indicate that the
overall IT-status is little bit high in LSSIs than JSSIs. Specifically, the internet position of
SSIs indicates that about 99% of LSSIs and 70% of JSSIs are using internet daily. Further,
the findings also reveal that majority of LSSIs (65%) and of JSSIs (59%) are using dial up
connection for accessing internet services followed by leased line (34% LSSIs & 33% JSSIs).
Though 80% LSSIs and 12% JSSIs have developed their websites but these are generally
considered as a marketing tool for promoting companies image. Furthermore, 70% LSSIs
and 12% JSSIs are regularly updating their websites to include latest information about
their companies’ offerings vis-a-vis to enhance product/service developments. About software
applications, the accounting softwares, such as Tally, Busywin, FA, ACE DOS based billing
software, Soft & Mummy are mostly in used in LSSIs whereas Tally & Busywin accounting
softwares are generally used in JSSIs. In other peripherals of IT, the LSSIs and JSSIs are
almost using similar accessories in terms of number and brand usage. The application of
local area network is used in 58% & 54% of LSSIs and JSSIs respectively. Overall, 80%
LSSIs fall under low usage IT-applications stage and 20% firms under average usage stage
whereas in JSSIs, 88% firms fall under low usage and 12% firms under average usage stage
of IT-applications. The barrier to usage of IT-applications in LSSIs include lack of strategy,
inadequate assistance from government, lack of IT culture, IT infrastructure & skill and
capability whereas JSSIs barriers include factors, such as lack of awareness (32 firms), lack of
qualified vendors (9% firms & 91% firms not given) and insecurity of transactions (5%
firms, 95% firms not given) alongwith the barrier mentioned for LSSIs. The percentage of
firms in above mentioned barriers is slightly high in LSSIs than JSSIs excluding skill and
capability (7% LSSIs & 24% JSSIs).
194  Strategic Service Management

LSSIs and JSSIs Managers - Gap Analysis

Technology Orientation
The statistically significant perceptual gap between Ludhiana and Jammu managers indicate
that Ludhiana managers have strong perception about electronic business relationship with
buyers and suppliers (via e-mail) (Fullantelli & Allegra, 2003), interested in investment in
computer based manufacturing techniques (Thomson, 1999) but found difficulty in
upgrading computer technology regularly (Roy and Sikdar, 2003). On the flip side, the
Jammu managers focus customer pressure motivation to implement e-activities, need more
investment for e-activities to competitive advantage and software solutions support traditional
commercial activities.

Product Performance
The result identified that Ludhiana managers follow product-based approach, which
considers quality as a competitive variable and also focus on technology competence for
designing needed product attributes, training programs for achieving operational goals
through operationalising customer and market orientations (Thomson, 1999 and Joia,
1999). In contrast to Ludhiana managers, the Jammu managers prefer workforce reduced
manufacturing time, increased market share and advance manufacturing systems, which
indicate that they are eager to learn and try new and innovative products that offer genuine
benefits over existing products (Chahal & Kohli, 2006; Chahal, Sharma & Kohli, 2005
and Fullantelli & Allegra, 2003).

Recipient Satisfaction
The statistical significant perceptual gap between Ludhiana and Jammu managers remark
systematic implementation of business plan, effective team working environment and
systematic monitoring of the internal as well as external operational activities (Sardana,
2001 and Thomson, 1999) by the Ludhiana managers. On the reverse side, the Jammu
managers consider systematic internal co-ordination, satisfactory monetary and non-monetary
benefits and enhancement of skill and capability of the employees to be the positive outcomes
of IT applications (Sardana, 2001).

Economic Performance
The Ludhiana managers showed more visibility in the relationship between capital targets
and operational activities, which means that IT, assisted operational activities are more
dynamic, responsive and leading to a more proactive management style (Bititci, Nadurupati
& Turner, 2002). On the flip side, the Jammu mangers denote managerial & organizational
co-ordination, integration and standardisation of processes (Caloghirou et al., 2004) as
more important in terms of proper utilisation of resources, control on fixed expenses and
control on inventories (Fullantelli & Allegra, 2003).
 Impact of IT-Applications on the Performance of Small-Scale Industries  195

Overall Performance
To summarise, Ludhiana managers believe in strategically responding to new techniques,
transactions, turnover, market share and firm performance (Lee & Grewal, 2004). On the
other hand, the Jammu managers indicated complete transparency and visibility in billing
and accounting information, effective improvement in production or service areas and
enhanced managerial ability and skill to be the significant impact of IT services (Bititci,
Nudurupati & Turner, 2002).

LSSIs and JSSIs Employees - Gap Analysis

Technology Orientation
The result depicts that electronic business transactions among Ludhiana firms (via e-mail)
and customer relationship management activities are very significant. Likewise, the Jammu
employees reveal that technology orientation has positive impact on overall performance of
firms.

Product Performance
The result indicate that Ludhiana employees focus on technology competence for designing
needed product attributes with customized preferences at reasonable price (Thomson, 1999)
through operationalising customer and market orientations and provide training, guidance,
advice and instructions to make variety of products as well as achieving operational goals
(Fullantelli & Allegra, 2003). These results are very much similar to perceptions of Ludhiana
managers, who scored above average mean values. On the flip side, the Jammu employees
perceive the impact of IT on product performance in terms of incorporating continuous
ongoing improvement management techniques, enhancing quality of existing products or
services and introducing new products or services to attain target profitability of the firms.

Recipient Satisfaction
The result revealed employees perception about the innovative viable strategy regarding
adoption of IT in operational functional areas of firms. The Ludhiana employees exhibit
impact of IT on recipient satisfaction in terms of changed attitude and performance, effective
team working environment, additional benefits, social benefits and systematic monitoring
of internal as well as external environment (Joia, 1999). On the reverse side, Jammu
employees perceive satisfactory IT environment, attractive salary, basic facility, leadership
and getting recognition of the firms to be significant in terms of technology impact.

Economic Performance
The result indicate that the Ludhiana employees are more eager in expanding their business
to have competitive advantage and as such are interested in assessing new avenues locally,
nationally and also internationally. The same type of study was undertaken by Wu, Mahajan
and Balasubramaniam (2003) and found that employees are interested in expanding
businesses activities. In contrast to Ludhiana employees, the Jammu employees depict
196  Strategic Service Management

economic performance to be the result of higher sales of products/services (Gupta, 1999)

better image and profitability of the firms, particularly in local and national markets.

Overall Performance
The findings portray the impact of IT on overall performance with respect to effective
procedures for inventory purchase, billings, accounts receivables and payables, increased
business transactions, timely achieved targets, supportive traditional commercial activities,
reduced operating cycles, satisfied IT culture and developed companies’ image (Fullantelli
& Allegra, 2003) as perceived by the Ludhiana employees. On the reverse side, the impact
of IT measures on overall performance is related by JSSIs, as a result of certain vital dimensions
like competitive advantage, increased companies’ sale, technological changes and reduced
face-to-face contacts among business partners (Fullantelli & Allegra, 2003 and Wu, Mahajan
& Balasubramaniam, 2003).

Problems and Strategic Insinuations

Problems Strategic Insinuations
Inadequate Communication Infrastructure Infrastructure Facility.
Facility.
Inadequate and Untimely Financial Assistance Adequate Financial Assistance from
from Government. Government.
Inadequate Technical Know-how. Reorientation of Industries and Commerce
Department.
Inadequate Financial and Non- Financial Orientation of Programs toward Technology
Incentives to Employees. Challenges to SSIs.
Lack of Dynamic Leadership and Training Research on Economically Viable Software
Programs to Employees. Packages.
Lacking of Promotional Activities. Effective Marketing Strategy.
Limited e-Business Communication via e-mail. Regular Competitor Analysis.
Lack of Expansion of New Avenues in the Creating World Wide Web.
Markets. Adequate Rewards and Compensation.
Dynamic Leadership.
Timely Performance Appraisal.
Regularly Innovate for Growth and Profit.

In addition to these, the other problems are related to legal and regulatory framework,
security issues, technological changes, etc. with Enterprise Resource Planning (ERP) software
and Electronic Transfer Fund (EFT) and Electronic Data Interchange (EDI).

IMPLICATIONS

Managerial
The small scale sector is found to beset with several difficulties related to infrastructural
facilities, funding, re-orientation programs, Research & Development (R&D), effective
 Impact of IT-Applications on the Performance of Small-Scale Industries  197

marketing strategy, etc. The strategies discussed previously in this regard have certain financial
and non-financial implications. To implement infrastructural facilities related strategies, there
is need to have proper funds management to develop appropriate infrastructure for the SSIs’
growth and developments. As such, governments, state as well as central, are required to take
appropriate measures to strengthen telecommunication network for internet services. To offer
seamless internet services, regular interactions between SSIs and internet service providers are
suggested to be held to finalise and formulate effective customised internet service packages
for the SSIs, different from middle and large scale organisations. To further, enhance the status
of IT services in different functional areas SSIs, concerned governments should also undertake
initiatives to establish IT parks with focus on development of customised or personalized
cost-effective software packages, particularly softwares for EDI between companies, ERP and
other related softwares alongwith other IT peripherals and industrial tech-equipments for
promoting business in terms of relationship among business partners, diversified business
opportunities, reduced operating cost, increased profitability, etc. Further, regular electricity
supply, roads maintenance and other infrastructural related facilities should also be looked
into by the concerned authorities to help SSIs in maintaining seamless operating environment
for continuous production by developing customised packages for financial resources and
technology upgradation, which are required for strengthening SSIs’ performance. In addition
to these, progressive approach for the development of human resources skill and capabilities is
also required to be focused to enhance the efficiency level of firms’ performance vis-à-vis
degree of creativity and innovation among managers and their employees. Appropriate and
regular training programs, particularly online on latest tech & IT-enabled applications for
employees demand proper attention not only of owners but also other concerned organisations
and governments for skill enhancement. The Technology Bureau for Small Enterprises (TBSE),
Small Industries Development Organisation (SIDO) can facilitate SSIs to access database and
information on advance and latest technologies to become more informative to achieve overall
success in the competitive market. Further, online training programs, most cost effective in
comparison to off-line training programs, can be offered for the upgradation of the skill of the
employees. This further demands attention on extension of varied language-based customized
online training software programs. The concerned organisations namely SISI, NSIC, DIC,
etc. can also assist entrepreneurs to participate in overseas trade fairs, workshops, exhibitions,
etc. to update their and employees’ skill with latest worldwide IT and IT-enabled services,
Computer-Numeric-Centre (CNC) machines, etc. To operationalise all this, and to enhance
IT applicability in different functions vis-à-vis overall performance, adequate funds are required
to be arranged by SSIs. It is suggested that commercial banks or other agencies such as SIDBI,
etc. should offer credit facility at lower rate of interest. The new schemes for raising funds for
upgradation of technology, applications of IT enabled services, R & D, organising training
programs, etc. should also be introduced by SSIs or government or SSIs related concerned
organisations. These actions can help SSIs in establishing their business practices more
productivity and competitively.

Research
The research implication of the study focuses on the development of appropriate model
based on antecedents to IT investment and technology orientation and its impact on business
198  Strategic Service Management

performance. The antecedents indicators, such as availability of funds, internet service

providers, awareness of entrepreneurs, demographic profile of owner, awareness of business
customers, etc. and objective indicators (market share, image, profitability) and subjective
indicators (product performance, recipient satisfaction, economic performance) are required
to be studied in detail. The direct and indirect intra effect on antecedents and outcomes
indicators would help in undertaking the positive or negative impact of the indicators on
business performance. The applications of advanced modeling techniques (Structured
Equation Modeling) could help in establishing these relationships in the SSIs.

LIMITATIONS AND DIRECTIONS FOR FUTURE RESEARCH

The research work to assess the status of IT enabled services and its impact on business
performance in two states of India, has been conducted amidst the presence of certain
unavoidable limitations. These limitations alongwith necessary future actions are discussed
as under:
1. The basic limitation of the research is related to the presence of subjectiveness of the
responses of the respondents with respect to varied variables such as Technology
Orientation (TO), Product Performance (PP), Recipient Satisfaction (RS), Economic
Performance (EP) and Overall Performance (OP). The appropriate efforts were taken
to control subjectiveness of the responses using various validity and reliability methods.
But at the same time caution has to be exercised in extending the results to other
districts of the states and developing countries.
2. Secondly, the study is based only on the perceptual performance of SSIs with regard
to TO, PP, RS, EP and OP. The objective information about the indicators such as
investment in IT and other assets, turnover, return on assets and profitability, etc. was
not disclosed by the firms. The introduction of accounting standard on SSIs alongwith
implementation of Right to Information (RTI) Act, for SSIs sector could help in
overcoming the limitation in the future.
3. Thirdly, the study based on perceptions of managerial staff and the assistants’ espoused
to IT enabled services has restricted the strategic formulative actions from narrow
perspective. To overcome this, it is suggested that viewpoints of different stakeholders
associated with the firms such as buyers, suppliers, IT service providers, concerned
organisations, etc. should also be taken into consideration to understand the problems
faced by SSIs in implementing IT and its enabled services vis-à-vis to have holistic
perspective to analyse its impact on business performance and also for designing effective
strategic actions.
4. Fourthly, the ‘line of activities’ factor is not taken into consideration while selecting
small scale industries in the Jammu and Ludhiana regions. Equal number of SSIs
operating in different ‘line of activities’ in the two regions could be taken in the future
research for better and effective comparison.
5. The scope of the study is limited to IT-intensive firms operating in geographical
regions namely Jammu and Ludhiana. Per se, the same work can be extended to other
similar developing regions. To further, enhance the research implications of the study,
 Impact of IT-Applications on the Performance of Small-Scale Industries  199

it is suggested that the SSIs operating in IT-savvy regions such as Gurgaon, Banglore
could be taken up to know the level of applicability of IT and its impact on business
performance vis-à-vis to design the IT based industrial policy and strategies for
improving the performance of non-IT savvy regions.

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202  Strategic Service Management

TABLE 1: INDUSTRIAL ESTATES WISE FUNCTIONAL

UNITS OPERATING UNDER DIC, SICOP & SIDCO OF JAMMU REGION

DIC SICOP SIDCO

Industrial Estates No. of Industrial No. of Industrial No. of
Units Estates Units Estates Units
Digiana 56 Gangyal 184 Bari Brahmana 174

Jammu Cantt. 32 Birpur 64 I.G.C. Samba -

Phase - 1
Akhnoor 10 - - EPIP Kartholi -
Samba 4 - - - -
Total 102 Total 248 Total 174

TABLE 2: NUMBER OF FUNCTIONAL UNITS OPERATING IN INDUSTRIAL AREA A, INDUSTRIAL

AREA B AND FOCAL POINT INDUSTRIAL ESTATES OF LUDHIANA REGION

Industrial Area A Industrial Area B Focal Point

No. of No. of No. of
Units Units Units
Approximately 5000 Approximately 8000 Approximately 12000
firms Firms firms
Amarjit Trade 237 Amarjit Trade 109 Amarjit Trade 283
Series Series Series
Technology 31 Technology 35 Technology 36
intensive intensive intensive
SSIs SSIs SSIs

TABLE 3: DEMOGRAPHIC PROFILE OF SSIS OPERATING IN JAMMU AND LUDHIANA REGIONS

No. Line of Activity No. of % Line of Activity No. of %

(Jammu) Firms (Ludhiana) Firms
1. Chemicals, 34 23.61 Hosiery & Textiles 39 38.25
Pharmaceuticals & Paints
2. Iron, Steel & Hardware 29 20.14 Automobiles & Auto 18 17.64
Parts
3. Food & Food Products 27 18.75 Cycle & Cycle Parts 15 14.71
4. Electrical & Electronic 15 10.42 Hand Tools 7 6.86
5. Plastic & Rubber 9 6.25 Machinery Parts & 7 6.86
Attachments
6. Wood Industries 6 4.17 Iron, Steel & Hardware 4 3.92
7. Agriculture 5 3.47 Agriculture Implements 3 2.94
8. Miscellaneous 5 3.47 Diesel Engine & 3 2.94
Generating Sets
Contd...
 Impact of IT-Applications on the Performance of Small-Scale Industries  203

9. Gun Factories 4 2.78 Fasteners, Nuts & Bolts 2 1.96

& Machinery
10. Hosiery & Textiles 4 2.78 Electrical & Electronic 1 0.98
11. Material Handling 3 2.08 Material Handling 1 0.98
Equipment Equipment
12. Printing & Stationery 2 1.39 Packaging Material & 1 0.98
Machinery
13. Sewing Machine & Parts 1 0.69 Sewing Machine & Parts 1 0.98
Total 144 100 Total 102 100
204  Strategic Service Management

19

Economic Impact of Tourism in an Era of Recession

Tourism

Amisha Gupta*
Jaya Bhasin*

Tourism plays an important role in the economies of all nations, particularly the developing
nations like India. Being a major source of revenue for countries worldwide, tourism is the
second largest industry in the world. The estimates from the World Travel and Tourism Council
(WTTC) suggest that it generates around 200 million jobs world-wide and accounts for 10%
of global GDP (WTTC 2003). Indeed, over the past decade, the growth in tourism receipts has
exceeded the growth rates observed in most other service sectors. The global economic turmoil,
however, has shaken financial markets worldwide, disrupted channels of credit between banks
and industry, and pushed some major economies into recession. Despite an adverse international
environment, tourism in India can possibly maintain high growth rates in the backdrop of
increasing oil prices and economic recession. The present study is an attempt to discuss the factors
that are of concern to the national and the state governments in terms of developing tourism.
While recognizing the variety of different impacts that tourism may have, this paper will focus
particular attention on the economic impact of tourism.
Keywords: Tourism, Recession, Growth Rates, Economic Impact.

INTRODUCTION
Tourism has always been a major social phenomenon of any society. It is motivated by the
natural urge of every human being for new experience, adventure, education, knowledge
and entertainment. In order to understand each other’s cultures and values as well as to
cater several other social, religious and business interests, it has resulted in development of
many tourists and infrastructure facilities. This along with the progress of proper
transportation network globally, especially of airways and waterways has encouraged people
to venture out to the foreign lands. It has facilitated the trade and commerce between the
different regions of a country and between the different countries. As a result, over the
years, it has acquired the status of a service industry.

* Assistant Professor, The Business School, University of Jammu, Jammu

 Economic Impact of Tourism in an Era of Recession  205

Tourism provides an economic incentive to conserve a community’s natural environment

and cultural heritage. Travel and tourism is an engine for sustainable growth that can
benefit all nations, both developed and emerging. Tourism is a continuing activity touching
every human being. It stimulates jobs across the economy, creates people to people contacts
and boosts cultural and environmental awareness. Job creating potential of tourism is
tremendous. IT provides jobs to only the technically qualified but tourism provides jobs to
illiterates also (Dhar 2005). Evidence of economic impact is so overwhelming that it is no
wonder that undeveloped countries seek it and developed countries wish to protect it. The
economic impact of tourism constitutes a gross increase in the wealth or income measured
in monetary terms of people located in an area over and above the levels that would prevail
in the absence of tourism activity.
Tourism, being one of the largest industries, plays a key role in achieving the socio-economic
goals of the development plans of a nation. It is an important service-oriented sector which
has made rapid strides globally in terms of gross revenue and foreign exchange earnings. It
is a composite of service providers, both public and private, which includes travel agents
and tour operators; air, rail and sea transportation operators; guides; owners of hotels, guest
houses and inns, restaurants and shops, etc. They are involved in meeting the diverse interests
and requirements of domestic and international tourists. The tourism industry provides
incentives to foster the quality of environment, generates more employment opportunities
(particularly in remote and backward areas) as well as develops necessary infrastructure
facilities like roads, telecom and medical services in the economy. Travel and tourism
contributes 10% (www.indianexpress.com) of the Global GDP and Global Tourism activity
is expected to increase by 5% in the next 10 years. According to the World Travel and
Tourism estimates the global travel and tourism activity is expected to increase by 4.7%
between 2007 and 2016 (Globaltraveltourism......).
Like other countries, tourism has a bright future in India too. Tourism is at present the
third largest foreign exchange earning sector in India after gems and jewellery and readymade
garments sector. Tourism promotes the traditional handicrafts sector and provides the tourists
with an insight into the rich and diverse cultural heritage of India (Bhasin 2008). The
tourism industry has a great potential of growth as the number of world travellers would go
up to 1,600 million by the year 2010. By 2014 the travel and tourism economy is expected
to generate US$90 billion of total demand and nearly 28 million jobs (WTTC 2005).
Foreign tourist arrival in India has increased from 4 million (approx) in 2006 to 4.98
million in 2007 which is an increase of 12 % (Economic Survey of India 2006-07).
In India, tourism industry holds special position as it not only has potential to grow at a
high rate, but also stimulates other economic sectors through its backward and forward
linkages and cross-sectional synergies with sectors like agriculture, horticulture, poultry,
handicrafts, transport, construction, etc. That is why it can provide impetus to other
industries in the country and generate enough wealth to pay off the international debt. It
is the third largest net earner of foreign exchange for the country. The travel and tourism
sector contributes to the national integration, preserves natural and cultural environments;
as well as enriches social and cultural lives of the people. It has the capacity to create
substantial job opportunities, particularly for unskilled and semi-skilled workers as well as
206  Strategic Service Management

to alleviate the poverty in the country, which is why it has been regarded as the core sectors
of the Indian economy. The rate of growth of tourism sector in India has been way above
the world average in the last few years and the prospects for growth of tourism in India are
bright (The Economic Survey 2007-08).

THE GLOBAL ECONOMIC RECESSION

The growth of tourism is closely related to the economic growth and also the political
development. However, the tourism industry has been suffering from the effects of a general
economic downturn that began to show itself early in 2001. In the last five years (2003-
2008), price hike of global commodities, especially those of oil, metal and food, took a toll
on South Asia (Asian Development Outlook 2007). Budget deficits widened and trade
balances worsened. With this, the growth softened and inflation reached double digits.
Before the region could recover from the adverse impact of high commodity prices, the
global financial crisis has come knocking. The cascading effects of these crises will present
daunting policy challenges to South Asia. The adverse impact has the potential to reverse
elements of impressive development gains that South Asia has achieved over the past decade
and impede its progress towards achieving the Millennium Development Goals (MDGs)
(www. un.org). The onset of the global financial crisis suggests a significant slowdown in
South Asia’s growth prospects for 2009-10 (Figure 1). The slowdown is particularly notable
for India and Pakistan. India’s prospects will be hurt by the reduction in capital flows and
possible slowdown in the growth of exports. Pakistan’s economy is already facing difficulties;
the financial crisis will aggravate it.

IMPACT OF RECESSION ON INDIAN ECONOMY

The largest economy- India is relatively more exposed to the contagion effects of global
financial markets through adverse effects on capital flows from portfolio and direct foreign
investments, and also through exposure of domestic financial institutions to troubled
international financial institutions and to contracts—including derivatives—that have
undergone large value changes. The evidence so far shows significant losses in the stock
market and a reduction in the flow of foreign capital. Yet these risks are countered by a
fundamentally strong macro economy including prudent foreign debt management, high
savings rate, solid financial sector health, and a pro-active monetary policy management
that will likely allow India to ride the crisis without destabilizing the financial sector. Thus,
despite an adverse international environment, India has the capacity to sustain a growth
rate of about eight per cent (Economic Survey of India 2007-08).
The main risk to growth comes from the likely adverse effects on investment of the combined
effects of a slowdown of foreign funding and a possible increase in non-performing assets of
domestic banks owing to lower profitability of firms producing for export markets. At the
same time, higher inflation requires tightening of monetary policy. All of these factors will
reduce the availability of domestic financing of private investment. Public investment is
already constrained by rising fiscal deficits. Overall there is likely to be a slowdown in the
rate of domestic investment. Improvements in saving rates in South Asian economies have
been an important cushion. But inadequate adjustment to the losses from terms of trade
 Economic Impact of Tourism in an Era of Recession  207

combine with a possible slowdown of exports earnings and foreign capital flows will almost
certainly reduce investment and growth.
The Central Bank has already responded by letting the exchange rate depreciate to stem
the outflow on the current account, by providing extra liquidity to the financial sector and
by raising the limit on private foreign borrowing. The nature and depth of the global
financial crisis is still evolving and there is a significant downside risk of further slowing
down of net capital flows and a hardening of terms. But these are countered by an overall
healthy banking sector with low non-performing loans and a comfortable capital base and
a pro-active monetary and exchange rate management. Foreign debt and debt service is low,
and reserve cover ($274 billion) is still substantial (RBI 2008). The high domestic saving
rate (34 percent of GDP) provides added cushion (RBI 2008). The main effects of the
global financial crisis will be to reduce the availability of funds leading to higher interest
rate and lower public and private investment that will hurt growth.
Despite the global economic slowdown, India is the second fastest growing economy in the
world and has recorded a sustained growth of over 9 percent for three consecutive years for
the first time (GOI). The gross domestic product (GDP) has increased by 7.5 percent, 9.5
percent, 9.7 percent and 9 percent, respectively, in the four fiscal years between 2004-05
and 2007-08. The fiscal deficit has come down from 4.5 percent in 2003-04 to 2.7 percent
in 2007-08 and revenue deficit from 3.6 percent to 1.1 percent in 2007-08 (Economic
Advisory Council 2008 -09).

Impact on Tourism
The growth of tourism is closely related to the economic growth and also the political
development. However, the tourism industry has been suffering from the effects of a general
economic downturn that began to show itself early in 2001. The general economic downturn
had already started to reduce the industry’s previously strong 4½ per cent annual growth
rate to well below 4 per cent (Belau 2003). According to estimates by the World Travel and
Tourism Council (WTTC), the ongoing crisis has caused more than six and a half million
jobs to be lost in the travel and tourism industry over the years 2001 and 2002 – some
6.9% of the total employed, as compared to a normal growth that could have been expected
in normal times without the impact of a crisis (WTTC 2003). This estimate does not
include those related sectors providing inputs to travel and tourism, where employment
may have suffered in similar proportions. Everyone is feeling the pinch of the global economic
slowdown. People have less disposable income that is affecting their spending habits.
According to Edward, British tourist, money, cost of food, fuel and the luxuries like holidays
will definitely be something that the people have to reconsider back home. A day’s stay in
an average five star hotel room in India costs around 200 dollars, which is out of reach for
many foreign travellers without any corporate or institutional support. Foreign tourists are
cutting down on up market hotel stay and opting for stays at budget hotels and shopping
on a shoestring budget. As far as tourism is concerned, particularly foreign tourists, not
only the numbers have decreased but their spending has decreased, said Rajeev Tiwari, the
President of the Federation of Travel Association, Agra.
208  Strategic Service Management

TOURISM AS AN ECONOMIC OPTION

The combined effects of major expenditures on investments in infrastructure and the
associated influx of visitors mean that tourism can have significant impacts, both positive
and negative, on an economy, on its culture, and on the environment (Brown 1998).
Economic benefits are probably the main reason why so many countries are interested in
the development of tourism and the contribution of tourism to the world economy is
considerable.

The Economic Benefits of Tourism

Arguably, tourism is the second largest industry in the world; estimates from the World
Travel and Tourism Council (WTTC) suggest that it generates around 200 million jobs
world-wide and accounts for 10% of global GDP (WTTC 2003). One of the significant
economic features of tourism is that income earned at places of residence or work is spent in
far off places of pleasure or places visited by these tourists. Consequently, tourism is
responsible for transfer of huge sums of money from the generating to receiving destinations.
This payment then generates additional funds for being spent on the local economy. Thus
tourism represents expenditure or income the same way as large merchandise export or
import. Globally, tourism constitutes a major item in world trade that has shown much
faster rate of growth in recent years than world trade in goods (UNDP 2003). The money
spent by tourists tends to percolate through many levels. The expenditure incurred by the
tourist stimulates flow of income in the local economy through several streams. It generates
additional income at each round of spending and this has a multiplier effect. It has been
estimated that the multiplier effect of tourism expenditure is one of the highest and therefore
the most sought after. It is therefore not surprising that a number of countries like to
promote tourism as a means of solving their economic problems. Having established the
general economic significance of tourism, let us move on to consider in more detail, its
economic benefits. The impact of major investment projects would normally rely on
conventional cost-benefit analysis, whereas assessing the impact of a regular and diverse
stream of tourist expenditure requires a rather different approach (Cooper et al. 1998). In
considering the aggregate impact of tourism expenditure, it is assumed that spare capacity
exists in an economy – i.e. that the economy has the capacity to expand employment and
output in response to demand from tourists. However, if this spare capacity is absent,
tourism expenditure will result in increased prices rather than increases in income and
employment (Sinclair and Stabler 1998).Tourism has tremendous employment potential.
The type of employment promoted by tourism varies from that of highly trained managers
of deluxe hotels to room boys and others. The activity also has a high potential for self
employment in a varieties such as horticulture, handicrafts, handlooms, guides, etc. As an
activity, tourism also upgrades human skills which are not very difficult to master. It is also
an effective instrument for promoting national and emotional integration. Tourism interacts
with several nation building activities and helps in breaking barriers of cast and creed. The
interface is virtually reinforcing. Several national objectives would be more speedily and
easily attained if tourism could be developed on healthy lines as positive forces stimulate
economic development, improve ecology, foster national integration and mutual
 Economic Impact of Tourism in an Era of Recession  209

understanding with people of other regions/ nations. Tourism has been rightly recognized
as the smokeless industry that provides all the benefits of manufacturing without in any
way adding to any of its negative impacts like pollution and environmental degradation.
Actually the benefits of tourism are so many and diverse that almost all countries of the
world are according a very high priority to its promotion. Postion of tourism in the economy
and its interaction with different sectors help in taking future decisions for development of
the economy. The direct and indirect impact of tourism on the economic development of
any economy cannot be undermined. Traditionally, the simple Keynesian Multipliers have
been identified but the model proposed by our study suggests a single figure that relates
tourism not only with the environment but also the output, income and employment.
These multipliers can be further calculated quantitatively and the impact of tourism on the
economy as a whole can be illustrated. Considering the diverse impact of tourism on the
economic development, a model (Model 1) is suggested to exploit the tourism resources to
the optimum potential.
Tourism Industry acts as a catalyst of growth for any economy. There have been many
attempts to evaluate the economic impact of tourism; one of the most comprehensive comes
from the work of the World Travel and Tourism Council which has simulated Tourism
Satellite Accounts for a range of countries in order to be able to evaluate the economic
contribution of tourism. Although the conventions used by WTTC do not correspond to
conventions used by WTO, which creates problems in relation to comparability, the WTTC
figures do provide a useful starting point in assessing tourism’s role. The following graphs
are based on WTTC figures and provide some estimates of both the direct and the indirect
contribution that tourism has made to Gross Domestic Product (GDP) and employment
in the UK, India and China. The studies show the direct impact of tourism industry on
GDP and employment. Tourism Industry can give a multiplier effect to the development of
the economy. The effect of tourism industry in UK, India and China on employment is
depicted in Figures 2 and 3. The study shows that the impact in India is much less as
compared to UK and China. India though rich in its culture and heritage, is not able to
create an impact on the direct and indirect GDP. India being a labour abundant country
has a huge potential of using tourism industry for the growth of the economy.

STRATEGIC OPTIONS FOR DEVELOPING TOURISM IN TIMES OF

FINANCIAL CRISIS
India is probably the only country that offers various categories of tourism. These include
History tourism, Adventure tourism, Medical Tourism—Ayurveda and other forms of Indian
Medications, Spiritual Tourism, Beach Tourism, etc. Indian Tourism industry is one of the
most important export industries of the country. Although the international tourist inflow
is relatively low. India has found tourism emerging as an important sector of the economy.
Model 2 is suggested for promoting tourism as a sustainable development option in the era
of financial crisis.
In line with the policies of the Central Government and the requirement of the tourism
industry, the policy-makers should immediately develop a comprehensive community based
210  Strategic Service Management

Tourism Development Strategy. The study suggests a number of aspects on which action
needs to be taken immediately. These include:
Public Private Partnership: PPP is required in the recessionary phase to overcome
infrastructure bottlenecks and to hasten infrastructure development. In such an alliance
the state government can provide the statutory/administrative backup to infrastructure
projects, while the private sector can provide finances and manage these projects. Thus the
synergies of PPP can be utilized to develop new destinations, provide/augment necessary
amenities, preserve heritage sites and promote and market destinations.
Aggressive Marketing of Tourist Destinations: For the sustainable development of tourism it
is pertinent to take immediate steps to create appropriate publicity and information material
based on document information to be used for tourism promotion. Effective marketing
should emphasize on improvement of the surroundings of the destinations which includes
activities like landscaping, development of parks, fencing, illumination of the tourist
destination, etc.
Infrastructure Development: Establish effective coordination with the departments involved
with infrastructure development and ensure priority in developing infrastructure in the
areas identified for tourism development.
Promoting Diverse Cultures: India has a wide range of tourism destinations, with its blessing
of diverse cultures, traditions and histories coupled with various landscapes and natural
resources. The nation has a strong appeal for both domestic and international tourist for
adventure, religious, health, holiday and spiritual tourism. Tourism industry therefore is of
great importance to India’s economy as one of the major foreign exchange earners.
Forex Earning Potential: There is a growing middle class with its increasing purchasing
power and a growing demand for various tourism products and services. Private consumption
has already played a much larger role in India’s growth than it has in that of other developing
countries. In 2005, private spending reached about 17 trillion Indian Rupees ($372 billion),
accounting for more than 60 percent of India’s GDP. The nation has a rich Handloom,
Handicrafts industry and the items from floriculture and pisciculture can be promoted for
forex earning by the promotion of tourism industry. It is pertinent to mention that Forex
earnings from tourism amounted to $11620 million in 2007(WTO 2007).
Alleviation and integrated development of Tourism Circuits: For the development of existing
Tourism circuits and promoting new ones, the state government should identify new tourist
circuits on an annual basis and develop them to international standards. Also adequate
infrastructural facilities required by the tourists need to be provided within the circuits.
The State governments should focus on the maintenance and management of the assets
created within these circuits. Thus, the State Governments should aim at the convergence
of resources and expertise through coordinated action with the Ministry of Tourism and the
private sector.
Capacity building in tourism industry: A large segment of people are involved directly or
indirectly in tourism industry. Professional expertise is required for specialized vocations in
this field. The need of the hour is that this large number of service providers are required to
 Economic Impact of Tourism in an Era of Recession  211

be given certain inputs which can improve their behaviours and service levels. Therefore,
schemes should be formulated wherein the segment of tourism service providers in the
unorganized sector are trained to upgrade their attitudes and service skills.

CONCLUSION
Indian tourism industry has been on a rising trajectory even through the recession and is
gaining popularity amongst travelers not only in India but from all over the world. It is an
engine of growth for Indian economy and helps to promote sustainable development of
infrastructure. Besides, improvement and expansion of existing and new tourism products
such as cultural and heritage tourism, rural tourism, adventure tourism, health and healing
tourism, etc., promotion of Incredible India campaigns as well as active participation of the
state governments therein establishes India’s competitive advantage in the sector. This has
enhanced the foreign exchange earnings of the country as well as improved its trade relations
with other nations. Tourism, thus, has emerged as the most promising sectors of the economy
leading to sustainable growth and development. The measures suggested in this paper
would help in furthering the process of promoting tourism as a catalyst in the economic
recovery of the nation.

References
Asian Development Outlook (2007), Oxford University Press, for the Asian Development Bank.
Belau, Dirk (2003), The impact of the 2001-2002 Crisis on the Hotel and Tourism Industry, International
Labour Organisation.
Bhasin, Jaya (2008), Tourism Potential in J&K, ASTI Journal of Training and Development, Vol. IX No 1, Jan-
June 2008, pp 64-65.
Brown, F (1998), Tourism Reassessed: Blight or Blessing, Butterworth Heineman, Oxford.
Dhar Avantika (2005) Public- Private Partnership for Promoting Tourism, Tourism Finance Corporation of
India Ltd (available at www.tfcil.com).
Reserve Bank of India (2008), Annual Report 2007-2008, www.rbi.org.in accessed on…….
Sinclair M.T. and M. Stabler (1998), The Economics of Tourism, Routledge, pp.124-155.
The Global Travel and Tourism Summit ( …….), www.globaltraveltourism.com, accessed on
UNDP (2003) United Nations Development Programme/World Tourism Organisation, Project of GOI,
IND/02/003.
WTTC (2003), Travel and Tourism: A World of Opportunity, http://www.wttc.org/measure/PDF/
Executive%20Summary.pdf, accessed on
www.Indianexpress.com/news/tourism-industry-for-regulatory-policy-framework/
World Tourism Organisation Report (2007), Annual Report available at www.wttc.org.
212  Strategic Service Management

ANNEXURE A: FIGURES

10
9
8.7 8.4
8
8 7.6
6.5
6.3 6.3

6
Growth Rate

0
2003 2004 2005 2006 2007 2008 2009 2010
Year
Source: DECPG, The World Bank

FIGURE 1: GDP GROWTH RATE IN SOUTH ASIA (2003-2010)

12

10

GDP(Direct)
6
GDP(Indirect)

0
U.K. China India

Source: WTTC

FIGURE 2: IMPACT ON GDP

Contd...
 Economic Impact of Tourism in an Era of Recession  213

10

7
Employment
6
(Direct)
5
Employment
4
Indirect)
3

0
U.K. China India

Source:Ennew 2003

FIGURE 3: IMPACT ON EMPLOYMENT

214  Strategic Service Management

ANNEXURE B: MODELS

Environment
Effect
Economy
Economic
Tourism
Ecotourism Ecology
Cultural Tourism Cultural
Wildlife and Adventure
Social
Leisure/ Nature
Educational/ Medical/ Herbal Political
Pilgrim/ Religious
Heritage

MODEL 1: PROPOSED MODEL OF IMPACT OF TOURISM ON THE ECONOMY

Funding from the Centre

and State and International NGO Private Investment
Agencies

Directorate of Tourism & Department of Tourism & Tourism

Development Corporation/ Special Purpose Vehicle

Tourism Circuits/ Destinations Development/

Training Institutes- IHM, FCI/ MTM / Travel
Agents

Community/ Block and Village level Committees for

Development

MODEL 2: PROPOSED MODEL SUGGESTING TOURISM AS A SUSTAINABLE DEVELOPMENT

OPTION IN THE ERA OF RECESSION
 20

Forensic A ccounting
Accounting
A Measure of PPerformance
erformance Measurement in Digital Age

Ankita Sharma*

Forensic accounting is the single burning topic & latest addition to the accountants business
portfolio. As a result of the numerous scandals the demand for forensic accounting within the
corporate world is continuously increasing. These financial frauds have significantly changed
accounting practices used in identifying the fraudulent activities. Attorneys, businesses, insurance
companies and even accountants have incorporated the services of forensic accounting. The
paper synthesized the various techniques discussed in literature for dealing with frauds,
embezzlement, forgery, etc. It emphasis on meaning of forensic accounting, thrust areas & fraud
detection technology. Specifically, the paper emphasises on the concept of forensic accounting,
present scenario, thrust areas and fraud detection technology.
Keywords: Forensic Accounting, Frauds, Fraud Detection Techniques.

INTRODUCTION
In the present era of information technology the corporate world has witnessed a sudden
increase in the number of computer crimes, security scams, thefts, forgery, embezzlement
and financial frauds (Bansal, 2009). Forensic Science is widely used to detect & control
these frauds. Forensic science may be defined as the application of the laws of nature to the
laws of man. Forensic scientists examine and interpret evidence and facts in legal cases and
offer expert opinions regarding their findings in the court of law. As, it is rightly quoted in
Crumbley (2006) article “What the use of finger prints was to the 19th century and DNA
analysis was to the 20th, forensic accounting will be to the 21st century”. Forensic accounting
often mistakenly assumed to be exclusively associated with negative applications, such as
bankruptcy, fraud, business disputes, or matrimonial divorce. However, it may also be
applied in positive assurance engagements such as due diligence reviews, business valuations,
audit committee advisory services and enterprise risk management. In general, forensic

* Research Scholar, Department of Commerce, University of Jammu, Jammu

216  Strategic Service Management

accounting covers two broad areas: litigation support and investigative accounting. It is a
science that deals with the relation and application of finance, accounting, tax & auditing
and knowledge to analyse, investigate, inquire, test and examine the mater in civil law,
criminal law in an attempt to obtain the truth to render an expert opinion (ICAI, 2009).
The Accountant’s Handbook on Fraud & Commercial Crime, defined forensic accounting
as the application of financial skills and an investigative mentality to unresolved issues
conducted within the context of the rules of evidence. Mehta (2007) considered it a mixture
of accounting, finance, law, computerisation, ethics and criminology which focuses on
prevention, detection of financial frauds & conduct of investigation. He further remarked
that forensic accountancy can be a high profile and fascinating blend of legal and numerical
problem solving skill to facilitate the accounting professionals to uncover frauds & make
economy transparent.

OBJECTIVES OF STUDY
As a result of recent highly publicized financial scandals, reported increases in occupational
fraud, heightened concerns over money laundering to support terrorism & racketeering,
legislative mandates and public expectations have heightened the necessity to define the
auditors and accountants responsibility for detecting fraud within the organizations. The
main objectives of this paper are enlisted below:
(a) To create awareness about the forensic accounting.
(b) To assess the nature of digital frauds & its impact on economy.
(c) To focus on technology for detecting digital frauds & cyber crimes.
(d) To focus on methods for detecting & controlling corporate scams, thefts, forgery,
embezzlement and financial frauds.

PRESENT SCENARIO
Considering the growing incidence of cyber crimes, frauds and corporate failures particularly
in areas such as insurance companies, banks, police, and government agencies forensic
accounting and fraud detection is becoming increasingly important. The Kautilya was the
first economist who openly recognized the need of the forensic accountants. Centuries ago
he mentioned forty ways of embezzlement. A form of forensic accounting can be traced
back to an 1817 court decision involving a bankrupt estate (Mehta, 2007). A young Scottish
accountant issued a circular advertising his expertise in arbitration support in 1824 and in
the late 1800’s and early 1900’s articles began to appear discussing expert witnessing,
evidence arbitration, and awards. Maurice E. Peloubet a partner in a New York City
accounting firm who coined the term Forensic Accountant in 1946 and pointed that the
preparation of financial statements has some but not all of the characteristics of forensic
accounting (Bansal, 2009 and Crumbley, 2001). According to ACFE (Association of Certified
Fraud Examiners) report 2006, U.S organizations lose approximately 5 percent of their
revenues to fraud, i.e. about $652 billion in annual fraud losses (Fletcher, 2008). In this
context Baird (2008) remarked that among the various frauds 91.5 percent related to asset
misappropriation, 30.8 percent with corruption and 10.6 percent with fraudulent statements
 Forensic Accounting  217

amounted to loss of $150,000, $538,000 and $2,000,000 respectively. A recent survey by

the ACEF shows that frauds are extremely costly as USA economy has lost about $994
billion dollars in such frauds in 2008 (Annie, 2009). In India Forensic Accounting is still
in nascent stage and the formation of Serious Fraud Investigation Office is the landmark
creation for the Forensic Accountants. Traditionally accounting and finance education focused
on transactions and how they were recorded and interpreted. It is now necessary to identify
the underlying characteristics of these transactions, including potentially unethical or
fraudulent behavior. According to India Fraud Survey Report (2008), 60% of the Indian
firms experienced frauds in past two years, both at the employee & management level
(Venkatesh, 2008). Frauds occurred in organizations because of weak internal controls such
as poor control environment, lack of morality, poor attitude towards management control ,
poor control procedures & lack of segregation of duties and independent checks (Ziegenfuss,
2000). Forensic accountants with their sound grounding in related disciplines, such as
accounting, auditing, law and other business relevant areas are the most appropriate
professionals to control such fraudulent activities and frauds.

THRUST AREAS FOR FORENSIC ACCOUNTANTS

Forensic Accountants are involved in a wide range of investigations & spanning in different
industries & their practical in-depth analysis helps to uncover trends and bring to light the
relevant issues. The duty of forensic accountant is not only to find financial discrepancies
but also to find out who, what, where, why, when and how the frauds are done. More
importantly, it will help his clientele to put together and implement systems to control &
prevent internal and external fraud from happening again. The major thrust areas of forensic
accounting as identified by ICAI 2009, Flecher 2008, Crumbley 2006 and Farrell 2000
are enlisted below:
(a) Criminal Investigation.
(b) Shareholders & Partnership.
(c) Personal injury, motor vehicle accident, damage compliance & other insurance claims.
(d) Business Employee Fraud Investigations.
(e) Matrimonial Disputes.
(f ) Arbitration.
(g) Fraud detection.
(h) Royalty Audits.
(i) Evidence retrieval.
(j) Business valuation.
(k) Money laundering, etc.
218  Strategic Service Management

TECHNOLOGY USED BY FORENSIC ACCOUNTANT

The accounting profession faces changing market pressures in the present heightened
technology based competitive market & to survive and thrive in this type of environment,
audit firms must continually seek ways to improve the efficiency & effectiveness of the
audit process by controlling digital crimes and frauds. To achieve these objectives, many
audit firms have incorporated technology and decision aids (Chan, 2008). Some techniques
used by forensic accountants are discussed below:

Forensic Techniques used to Detect Digital Crimes

There is sudden increase in the need for digital forensic expertise because of real increase in
electronic crimes on one hand & increased awareness of the role of computing devices as the
instrument or record keeper of all types of crimes on the other hand (Kessler, 2006). Various
devices in forensic accounting has been discussed to control digital crimes for instance
Roussev, (2006) highlighted hashing, multiple target correlation & object versioning
detection, whereas CAAT, data mining techniques, forensic accounting software & spy
softwares are discussed by Mehta, 2007 and Software based fraud detection expert system
by Rushinek (2000).
(i) Hashing: Hashing is a fundamental tool in digital forensic analysis used both to ensure
data integrity and to efficiently identify known data objects. Mainly cryptographic
hashes have been used by forensic accountants for analyzing the object equality or the
integrity of a working copy.
(ii) Multiple target correlation: It is the tool used to determine the similarity between
two targets particularly for visuals. It compares the target with previous/related cases
and determines the relationship among targets by stating the percentage of similarity
between them.
(iii) Object versioning detection: It is useful in dealing with composite file objects, executables
and office documents where the problem is not to discover that a target object is
different from a reference object but is to identify the version of an object.
(iv) Software based fraud detection Expert System (ES): This system runs on the Internet,
scans the audited company’s financial statements and analyzes the differences between
trends of the company’s annual reports (for about 10 years). It also identifies red flags
that substantially differ from the norms in the industry and points out the suspicious
accounts. Furthermore, it highlights the direction of the deviations, such as an over
statement rate and the corresponding offsetting accounts.
(v) Computer Assisted Auditing Tools (CAATs): These are computer programs that the
auditor uses as a part of the audit procedures to process data of audit significance
contained in a client’s information systems, without depending on him. CAAT helps
auditors to perform various auditing procedures including:
 Testing details of transactions and balances.
 Identifying inconsistencies or significant fluctuations.
 Forensic Accounting  219

 Testing general as well as application control of computer systems.

 Sampling programs to extract data for audit testing.
 Redoing calculations performed by accounting systems.
(vi) Data mining techniques: It automatically mines large volumes of data to detect new,
hidden & unexpected information. It is a set of advance statistical & computer-assisted
techniques used by security managers, law enforcement investigators, counter-
intelligence agents, fraud specialists, and information security analysts to examine the
complex evidence that involve structured objects, text, numeric and non-numeric
data types. The various data mining techniques includes intelligent agents, link analysis,
text mining, decision trees, self-organizing maps, machine learning, and neural networks
(Kovalerchuk, 2009). The data mining can be conducted in three ways:
 Discovery: It discovers the usual knowledge or patterns in data, without a predefined
idea or hypothesis about what the pattern may be, i.e. without any prior
knowledge of fraud. It explains various affinities, association, trends and variations
in the form of conditional logic.
 Predictive modeling: In predictive modeling, patterns discovered from the database
are used to predict the outcome and to guess data for new value items.
 Deviation & Link analysis: In deviation analysis the norm is found first and then
those items are detected that deviate from norms within a given threshold to
find anomalies. Link discovery is little bit more advance than deviation analysis.
It has emerged recently for detecting a suspicious pattern. It involves pattern
matching algorithm to extract any rare or suspicious cases. It mostly uses
deterministic graphical techniques & bayesian probabilistic casual networks.
(vii) Other softwares & techniques: Various other softwares used by forensic accountants to
detect frauds include the following (Bierstaker, 2006):
 Forensic accounting software: It includes data extraction software designed to
conduct spreadsheet analyses on all the company’s computer database records,
such as billings, accounts receivable, payments to vendors, payroll, and
purchasing, etc. and financial analysis software analysis either monthly, quarterly
or annually financial statements.
 Spy software: It is computer software that forensic accountants use to detect
frauds.
 Firewall, virus and password protection.

Forensic Techniques used to Detect other Crimes

Forensic accountant takes a more proactive and skeptical approach in examining the books
of accounts. Although they make no assumption about management integrity and show
less concerns for the arithmetical accuracy, accounting or assurance standards but are keen
in exposing any possibility of fraud. Different techniques, approaches & laws are used by
220  Strategic Service Management

forensic experts to detect crimes including fraud, theft, forgery, etc. Some of these techniques
are explained below:
(i) Red Flag Approach: It is the most effective ways to detect fraud. It involves identifying
indicators of fraud and following up on them to determine whether they represent
fraud or are the result of other factors. The red flag approach involves three elements
to detect fraud (Albrecht, 2001):
 Theft act: It involves taking away assets, such as cash, inventory, or even
information. Theft acts can occur manually, electronically or both.
 Concealment: It involves altering financial records, miscounting cash or other
assets, destroying evidence & the steps taken by the perpetrator to hide the
fraud from others.
 Conversion: It involves benefiting from the stolen goods including sale of stolen
assets for cash and then spending of this cash.
(ii) Benford’s law: It is a mathematical tool to determine whether variable under study is
a case of unintentional errors or frauds. On detecting any fraud, the variable under
study is subjected to a detailed scrutiny. The steps of Benford’s law are very simple.
Once the variable or field of financial importance is decided, the left most digit of
variable under study is extracted and summarised for entire population. The
summarisation is done by classifying the first digit field and calculating its observed
count percentage. Then Benford’s set is applied. A parametric Z-test is carried out to
measure the significance of variance between the two populations. The main advantage
of Benford’s Law is that it is not affected by scale invariance and used when there is no
supporting document to prove the authenticity of the transactions (Smith, 2009 &
Mehta, 2007).
(iii) Theory of Relative Size Factor (RSF): It highlights all anomalies & unusual fluctuations,
which may be resulted from fraud or genuine errors. RSF measures the ratio of the
largest number to the second largest number of the given set. In practice there exists
certain limits (e.g. financial) for each entity such as vendor, customer, employee, etc.
these limits may or may not be defined but can be analysed from the available data. In
this method the records that fall outside the prescribed range are suspected of errors
or frauds. These records need to relate to other variables in order to determine the
relationship & check their authenticity. (Mehta, 2007).
(iv) Ratio analysis: Another useful fraud detection technique is ratio analysis. It involves
the calculation of data analysis ratios for key numeric fields. Three commonly employed
ratios are:
(a) The ratio of the highest value to the lowest value.
(b) The ratio of the highest value to the second highest value.
(c) The ratio of the current year to the previous year. (Mehta, 2007).
(v) Business Measurement Process (BMP): This process is performed in conjunction with
regular audits which examines a client’s annual financial results (including inventories,
 Forensic Accounting  221

costs and revenue sources) to determine whether they fulfill accepted auditing
standards. It also checks internal controls for their impact on fraud/waste. This process
allows auditors to tell clients how they rate their industries, which are the best suppliers,
which distribution channels are the most effective, etc. through diligence interviews
and fieldwork.
(vi) Other Techniques:
 Valuation: It involves valuation of companies across industries. It includes
valuation of value per share, switch between companies etc.
 Forensic analysis: It is a process of running simple or complex scenarios against
the full database of financial information and analyzing the result.
 Anomaly detection: It is the process of identifying the anomalies for further
investigation and highlighting the issues.

CONCLUSION
Initially, forensic accountants were used by government agencies, to uncover and investigate
frauds. But in the current reporting environment, they are in great demand for their
accounting, auditing, legal, and investigative skills and are employed by management to
uncover fraudulent financial reporting and misappropriated assets. No doubt the paper
highlighted the various technologies that are used by forensic accountants to uncover frauds
to make the economy transparent technology, but the causes leading to emergence of frauds
& its remedial actions remain untouched.

References
Albrecht, Conan C, W. Steve Albrecht and J. Gregory Dunn (2001), Can Auditors Detect Fraud ? : Review
of the Research Evidence, Journal of Forensic Accounting, Vol.II, 1-12.
Apostolou, Barbara, John. M. Hassell and Sally A Webber (2000), Forensic Expert Classification of Management
Fraud Risk Factors, Journal of Forensic Accounting, Vol I, 181-192.
Baird, Jane E and Robert, C Zelin (2008), Understanding Employee Perceptions of Fraudulent Activities
and Their Propensity to Report Those Activities Using Anonymous Tip Lines: The Influence of Fraud Type,
Perpetrator Gender, and Observer Demographics, Southern Business Review, Winter, 1-14.
Bansal, Shikhar (2009), The Forensic Accounting, http:// iqchandigarh.com/ User Files /File/ Forensic _
Accounting .Pdf,
Bierstaker James L, Richard G Brody & Carl Pacini (2006), Accountant’s Perceptions Regarding Fraud
Detection & Prevention Methods, Managerial Auditing Journal, Volume 21, Issue 5,520-530.
Chan, Annie (2009), Forensic Accounting & Fraud Investigation,
Http:// www.hkicpa.org.hk/membership/cpd/activities/2008/S090902AS.Pdf.
Chan, Siew H, Lowe,D. Jordan and Lee J. Yao(2008), The Legal Implications of Auditors Using a Fraud
Decision Aid vs. Professional Judgment, Journal of Forensic Accounting, Vol. IX , 63-82.
Crumbley, D Larry (2006), Forensic Accounting Appearing in the Literature,
222  Strategic Service Management

Http:// [email protected].
Crumbley, D. Larry (2001), Forensic Accounting: Older Than You Think, Journal of Forensic Accounting, Vol
II, 181-202.
Farrell, Barbara R and Patricia Healy (2000), White Collar Crime: A profile of the Perperpetrator & an
Evaluation of the Responsibilities for its Prevention & Detection, Journal of Forensic Accounting 1524-5586,
Vol I, 17-34.
Fletcher, Leslie B ,Higgins, Leslee N, J. Lowell Mooney and Thomas A.Buckhoff (2008), Our School’s
Campaign for Distinction in Forensic Accounting, Southern Business Review, Winter,15-28.
Forensicaccounting (2009), What is forensic accounting?, http:// www.forensicaccounting.com.
ICAI (2009), Certificate Course on Forensic Accounting & Fraud Detection using IT & CAATs, Http://
www.icai.org.
Indiaforensic (2009), What is forensic accounting? , Http:// www.indiforensic.com.
Kessler ,Garry C and Michael E Schiring (2006),The design of an Undergraduate Degree Program in
Computer & Digital Forensics, Journal of Digital Forensics, Security & Law 1(3),37-50.
Kovalerchuk, Boris, Evgenii , Vityaev and Robert Holtfreter (2009), Correlation of Complex Evidence in
Forensic Accounting using Data Mining, http://www.cwu.edu/~holtfret/forensic%20accounting.pdf.
Mehta, G S & Tarun Mathur (2007), Preventing Financial Fraud Through Forensic Accounting, Journal of
Accounting – The Chartered Accountant, April, 1575-1580.
NAFA (2007), NAFA (National Association of Forensic Accountants) – A Network of Marketing & Learning
Organization, Http:// www.nafanet.com.
Ragan, Joseph M , Andrew J Hadley and Alexander P Raymond (2008),Star Electronics, Inc-An Excel Based
Case Using Financial Statement Analysis To Detect Fraud, Journal of Business Case Studies, March, Volume 4,
No. 3, 53-70.
Roussev, Vassil, Chen, Yixin, Timonthy Bourg & Golden G. Richard III (2006), Md5 Bloom: Forensic File
system Hashing Revisited, Science Direct- Digital Investigation, 3S 582-590.
Rushinek, Avi and Sara (2000), Internet Fraud Auditing: A Simulated Health Care Industry Case Study,
Journal of Forensic Accounting, Vol. I, 125-134.
Rushinek Avi and Sara F Rushinek (2000), The Role of the Forensic Accountant in Calculating Damages
Using the “But If” Analysis in a Case of Internet Day Trader & Online Broker Misconduct Litigation, Journal
of Forensic Accounting, Vol I, 241-250
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Fraud/Forensic Accounting Curriculum, Global Perspective on Accounting Education, Volume 6, 1-24.
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26mrv.html.
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Vol I, and 103-124.
 21

Cloud Commer ce
Commerce
A New Era of E- Commer
E-Commer ce
Commerce

Indu Gandotra*
Pavnesh Abrol**

The growth of Information Technology (IT) has rapidly changed the face of business over the past
decade. The use of latest technology has allowed companies to develop new and cheaper ways of
reaching new markets. This has offered customers the opportunity of buying goods and services at
reduced cost vis-à-vis improved level of customer service. In the IT sector, cloud computing is an
emerging paradigm for e-commerce shopping which has the potential to reduce customers’ need
for a huge amount of software and hardware to support e-commerce systems. In this paper, the
paradigm and impact of cloud computing on e-commerce is discussed. Accordingly, a conceptual
model showing relationship between customer, cloud and vendors is also presented.
Keywords: Cloud computing, SaaS, e- business, e-commerce.

INTRODUCTION
E-commerce is an enterprise with capability of exchanging values, goods, services, money
and knowledge digitally via computer networks. These networks use distributed information
technology, knowledge management and trust mechanisms to transform key business
processes and relationships with different stakeholders like customers, suppliers, employees,
business partners, regulatory parties and communities. Over past few years, awareness of
the potential importance of e-business has risen dramatically in various countries. In fact e-
business potentially impacts the products, business processes, strategies, and the interactions
with customers, suppliers, distributors and competitors. It also has the potential to blur
the boundaries between industries and create new industries and business sectors. It is no
longer the narrow concept of internet-based buying and selling. In this regard cloud
computing is considered as the next logical step in the evolution of the e-commerce as a

* MCA Department, MIET, Kot Bhalwal, Jammu

** Department of Computer Science & IT, University of Jammu, Jammu
224  Strategic Service Management

source of services. Cloud computing is an upcoming technology for the e-commerce

merchants. It enables the storage and processing of image and textual contents at a very low
cost without any internal infrastructure. The cloud computing environment is distinctively
different from the previous e-commerce because of its cost saving as per utilization model.

CLOUD COMPUTING
The cloud computing is not a very new concept. In fact, it has emerged from grid computing
which came into existence about thirteen years ago. There are different definitions for cloud
computing given by different authors. The well accepted definition is given by Zhang and
Zhou (2009) and Foster et al, (2008) who consider it as a large-scale distributed computing
paradigm achieved by economies of scale, in which a pool of abstracted, virtualised,
dynamically scalable, and managed computing power, storage, platforms, and services are
delivered on demand to external customers over the Internet. In other words, cloud
computing is pay as you use model (like electricity and water bills). Gartner defines cloud
computing as a style of computing where massively scalable IT-related capabilities are
provided “as a service” using Internet technologies to multiple external customers (Ambrust
et al, 2009).
There are many services that can be provided in cloud computing e-business environment.
Some of them are Software as a Service (SaaS), Data as a Service (DaaS), Platform as a Service
(PaaS), Infrastructure as a Service (IaaS), Identity and Policy Management (IP MaaS),
Network as a Service (NaaS). SaaS includes network-hosted application. The major providers
for SaaS are Amazon Web service EC2 and RackSpace, Gogrid. DaaS comprises of the
customer queries against provider’s database. PaaS consists of network-hosted software
development platforms. At present some of the major companies providing PaaS are Windows
Azure, Google App service, Force.com. IaaS provider hosts customer virtual machines or
provides network storage. The identity and/or access of control policy for customer is
implemented by IP MaaS providers. In contrast, the providers of NaaS offer virtualised
networks (e.g., VPNs). These innovative services will enable to obviate the enormous costs
of purchasing, maintaining, supporting and/or modernising infrastructures.

CLOUD COMPUTING AND E-COMMERCE

Business enterprises who see sales trends moving towards online commerce also understand
the importance of implementing an integrated system to improve visibility within current
organisational activities. This insight enables them to make faster and better-informed
decisions that will drive profitability while positioning their organisations for future growth.
Cloud computing offers some incredible benefits for business world like the availability of
an incredible array of software applications, access to lightening quick processing power
(hardware), unlimited storage, and the ability to easily share and process latest information.
Increased or improved use of cloud computing can help to expand business activities and
may result in the development of new services and/or products. Cloud computing when
integrated with e-commerce can lower the cost, improve the customer satisfaction with
24x7 service, process credit card payments, generate shopping cart, submission and sale
order, reduce administrative cost, etc.
 Cloud Commerce  225

Normally, companies purchase the latest software in hope that it will improve their sales.
However, sometimes, programmes do not meet the needs of a company. Some businesses
require a personalised touch that ordinary software cannot provide. Cloud computing gives
the user the opportunity to build custom applications on a user-friendly interface. In a
competitive world, the business needs to stand out from the rest. Customisation is the
solution for this problem.
A recent global survey of C-level executives and IT decision makers shows that most companies
are using Software as a Service (SaaS) for critical applications that they consider differentiators
for their businesses. Using SaaS, 65 percent say they have generated a reasonable return on
investment from their SaaS deployment. More than 62 percent of respondents report plans
to increase their SaaS use in the next year. (survey was conducted by Kelton Research, an
independent research firm, between August, 2009, and September 2009, on behalf of
Avanade)

CLOUD COMPUTING AND E-COMMERCE MODEL

Internet-based virtual product experience enables online electronic commerce websites to
present and promote their products more efficiently and is essential to the success of e-
commerce especially for those providing complex products websites (Xi, 2009). The evolution
of new cloud organisation and economic models are related to pay per use of resources. This
enables those organisations which do not have abundant resources to utilize.
The previous models divide the cloud computing system in 3-layers called infrastructure,
platform and application (Ji et al, 2009; Buyya et al, 2008 and Cai et al, 2009). The
proposed cloud service model centres around customer business environment. The proposed
cloud commerce model is depicted in Figure 1. Different vendors get registered with cloud
providers and SLA (Service Level Agreement) is signed by them. Once, the contract is
agreed a unique ID is provided to vendors along with a digital certificate to prove its
identity by the cloud providers. Vendors submit their product details which include features
of product, delivery time, price, etc. The cloud providers also assure that the product
details provided by the business vendors is accurate. The cloud providers whose main
responsibility is to aggregate the requirement of resources from registered customers, and as
per requirement negotiate the best. After deal is finalised by customer and e-payment is
done, further process of shipping of product will be intimated to the vendors. Cloud providers
also take a regular updates from vendors about their products and upload the latest. The
cloud providers also maintain the directory of products so that it can be crawled easily. The
architecture includes resource allocation management (virtual machine) and also capable of
balancing the load. It will also keep the track of resource utilization for automatic billing. It
also includes the provision for security of confidential data and protects data at the time of
any critical problem.

CLOUD COMMERCE BENEFITS

Cloud users (business enterprises) can be benefitted from reduced operating cost in
maintaining their own infrastructure, rapid service provision and expanded computing
provision (Sim, 2009). Cloud computing offers some incredible benefits for business world
226  Strategic Service Management

like the availability of an implausible array of software applications, access to lightning-

quick processing power (hardware), unlimited storage, and the ability to easily share and
process latest information. Cloud computing is cost effective and advantageous for variable
workloads as the infrastructure can scale with rapid increases (or decreases). Moreover, costs
are variable (Kondol et al, 2009). However, the total expenditure incurred shall generally
be less than the fixed costs. Cloud computing is effective for small to medium sized
applications. Table 1 shows the comparative usage cost given by different providers (Amazon,
2010). Cloud Commerce provides customers with best-in-class cloud computing solution
options to help lower overall cost of computing (Assunção et al, 2009). Cloud computing
services help reduce capital expenditures since one can pay for what one uses, release resources
when not needed, and thereby turn the organisation’s fixed cost into a variable cost.
Integration between all departments—sales, marketing, production, and even the
boardroom—is one of the major advantages of sales force automation through the cloud.
Comprehensive and customised applications can improve sales, productivity, streamline
processes, and provide access to key information, about any deal, to any manager or executive
who wants view it. Marketing and sales initiatives can be more responsive and up-to-date,
because sales people are able to update statistics and customer information immediately.
The information and data that is generated can be recorded, tracked, analysed, distributed
and compiled Disbursing it to the cloud allows for a wider range of access, as well as a
streamlined approach to doing business (Allthingsrcm, 2010).
Avanade, a business technology services provider, helps improve, performance, productivity
and sales for organisations in all industry. A recent study commissioned by Avanade shows
a 320 percent increase over the past nine months with respondents reporting that they are
testing or planning to implement cloud computing (Marketwire, 2010). SaaS adaptation
by the business increases the operational elasticity, faster time-to-market, reduces the market
IT cost and collaboration with customers, suppliers, etc.

CLOUD COMMERCE ISSUES AND CHALLENGES

In spite of large advantages, there are issues of privacy and security of information. Further,
reliability of the remote supercomputers, computing networks and industry standards,
vendor choice, and portability also need consideration. Several services, provided by cloud
computing, continue to emerge, creating opportunities for the business, This also brings
issues like adoption challenge, growth challenge, policy related challenges, security challenges
(Armbrust et al., 2009).
Cloud vendors will be able to convince that the cloud is the safe place to put corporate
data. It should resolve potential channel conflicts as more resellers, integrators and other
third-parties view for a share of the market. Global research firm Gartner recently reported
that 95 percent of companies that currently use SaaS applications plan to continue or
expand their use in 2010. The companies cite the widespread cost effectiveness of SaaS as
well as the constantly improving capability offered by vendors that specialise in cloud
computing (Edlconsulting, 2010).
 Cloud Commerce  227

There are several risks involved in cloud computing. If a company disappears: who will end
up with the company data. There are political risks because the data is moving across
international borders. There are many legal issues like international data transfers, consistent
treatment, lawful access issues, export control, data breach notification laws, data retention
laws, e-discovery, government regulation, jurisdiction and conflict of laws.
However, one of the biggest issues is the trust while doing the e-shopping. The consumer
will not trust the e-shop while reading information and getting self-service from the e-
shop. Moreover, there are a wide variety of viruses and false information in the network
(Chen et al, 2008). Therefore, good service quality assurance should be provided by the
cloud providers. To collect right information of product from business enterprises is also a
big challenge.

CONCLUSION AND FUTURE WORK

In this paper we have reviewed the benefits in terms of resource access and cost of cloud
computing technology in the field of online business. The efficiencies of cloud computing
can help companies to keep pace with ever growing resource requirements and energy costs.
From time-to-time, business visionaries had paradigm shift in the world of commerce to
gain competitive advantages. Cloud computing opens up the commerce to the whole of
new world. Cloud computing is perfect for making more connections. Making connections
grows business, whether that means connecting to other business, or to customers. Cloud
computing reduces upfront cost and also helps the company react quickly to market
conditions. Despite of widespread recognition of cloud computing there are still many
issues and challenges in adaptation of cloud in business world which are required to be
studied in depth in further research.

References
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Zaharia, (2009), “A Berkley View of cloud computing”, CSI Communication.
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Rabkin, I. Stoica, and M. Zaharia (2009), “Above the Clouds: A Berkeley View of Cloud Computing”,
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radlab.cs.berkeley.edu/
5. Assunção, M. D., Alexandre di Costanzo, and R. Buyya (2009), “Evaluating the Cost-Benefit of Using
Cloud Computing to Extend the Capacity of Clusters”, ACM, Munich, Germany, pp. 141-150.
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Systems (GRIDS)”, IEEE International Conference on High Performance Computing and
Communications.
228  Strategic Service Management

7. Cai, H., K. Zhang, M. Wang, J. Li, L. Sun, and X. Mao (2009), “Customer Centric Cloud Service
Model and a Case Study on Commerce as a Service”, IEEE International Conference on Cloud
Computing, pp. 57-64.
8. Chen, Xi (2009), “E-Business and Information System Security”, EBISS International Conference on
Digital Object Identifier: pp.1 – 5.
9. Chen, M., J. Zhou, and T. Li (2008), “The Impact of Service Quality and Relationship Quality on E-
shop Brand Image”, IEEE Intl conf. on Service Operations and Logistics, and Informatics, vol. 1, pp.-
89-91.
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11. Foster, I., Y. Zhao, L. Raicu, and S. Lu (2008), “Cloud Computing and Grid Computing 360-Degree
Compared”, IEEE Grid Computing Environments Workshop (GCE), pp.1-10.
12. Ji, W., J. Ma, and Xiaoyong Ji (2009), “A Reference Model of Cloud Operating and Open Source
Software implementation Mapping”, proc. IEEE International Workshops on Enabling Technologies:
Infrastructures for Collaborative Enterprises, pp.63-65.
13. Kondo, D., B. Javadi, P. Male-cot, F. Cappello, D. Anderson (2009), “Cost-Benefit Analysis of Cloud
Computing versus Desktop”, IEEE Intl. Symposium on Digital Object Identifier, pp. 1-12.
14. Marketwire (2010), http://www.marketwire.com/press-release/Global-Study- Recession- Has- Little-
Impact- on- Cloud-Computing -Adoption-C-Level-Executives- 1063037.htm, accessed on 05-05-
2010.
15. Sim, K. M. (2009), “Agent-based Cloud Commerce”, IEEE conf. on Industrial Engineering and
Engineering Management IEEM, pp. 717-721.
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 Cloud Commerce  229

FIGURE 1: CLOUD COMMERCE MODEL: RELATIONSHIP BETWEEN CUSTOMER,

CLOUD AND BUSINESS

TABLE 1: CLOUD PROVIDERS COMPARATIVE PRICE

Provider Pricing Bandwi Bandwi Base Base Price Price for 1.7 GB
dth IN dth Price Disk Space RAM (approx)
OUT RAM
Amazon $0.085/h $0.10 $0.17 1.7 GB 160 GB $0.10
EC2
Go Grid $0.095/h Free $0.50 512 MB 30 GB $0.19/h (2Gig)

Rack $0.015/h $0.08 $0.22 256 MB 10 GB $0.12/h (2Gig)

Space
(Mosso)
230  Strategic Service Management

22

Per ception of Agriculture

erception
Extension PPersonnel
ersonnel towar
towardd TOTP

Dr Sunita Raina*
Dr Hardeep Chahal**

The Agriculture Extension Personnel (AEP) play significant role in enhancing agricultural
productivity by offering advices about field problems, business opportunities and new production
technologies to farmers. Many government and non-government extension organisations are
established in India to bridge the research—farm practice gap through constant inflow of latest
farm technology to the farmers. But unfortunately, farmers are unable to harness full advantage,
that has resulted in wide transfer of technology divide. In this context, the study was undertaken
to measure the attitude of agriculture extension personnel towards farmers, Transfer of Technology
(TOT), Communication Tools (CT), Monthly Workshops (MW) and Job Satisfaction (JS). The
authors’ hypothesised that there exists significant loss of information from agriculture extension
personnel operating at various level of transfer of technology process (TOTP) to the farmers.
Keywords: Transfer of Technology Process (TOTP), Communication Tools (CT), Monthly
Workshops (MW), and Job Satisfaction (JS), New Technology (NT), Agriculture Extension
Personnel (AEP), Contact Farmers (CF), Non Contact Farmers (NCF),

INTRODUCTION
Agriculture in the twenty first century is no longer simply the farming practices carried out
in the field but involves a variety economic activities that affect wider range of stakeholders
and the society at large (Rao 2004). This sector contributes nearly 25% to gross domestic
product (Kunnumkal 2004) and accounts for about 18% share of the industrial sector
(Indian Server 2004). Despite development of numerous infrastructure facilities in the
agriculture sector in the form of subsidies to farmers, distribution of fertilizers, seeds, loan
facilities, etc., there is not much development in the agriculture sector. It is experienced

* Lecturer, Government Dergree College (Boys), Kathua

** Associate Professor, Department of Commerce, University of Jammu, Jammu
 Perception of Agriculture Extension Personnel Toward TOTP  231

that the reason for low agriculture development is not lack of New Technology (NT)
generation but the low diffusion rate of Transfer of Technology (TOT) from the point of
production to the point of its utilisation (Balasubramanium and Menon 1977). This is
perhaps because of the fact that target consumers are aware of only a part of technology
generated at various agriculture research stations and from this, only proportionate new
technology is accepted and utilised (Babu and Sinha 1979) by them in their fields. In
addition to this, Indian farmers are also under undue pressure to meet the food requirements
of continuously increasing population (Shekara 2001) on one side and to compete with
global agriculture market on the other. This necessitates the core providers of technology to
farmers to be abreast of latest technology developments (Singh et. al, 2003) so that they
must deliver the same using communication devices, selected on the basis of factors affecting
delivery of technical services such as type of latest technology, nature of target group,
geographical conditions, etc. to ensure effective technology transfer (Muhmammed 1999).
Realising the lackadaisical performance of agriculture in general, the government is making
efforts to improve agriculture productivity with adequate focus on service delivery system
by providing adequate inputs for distribution, developing water resources, roads,
supermarkets, increasing rural credit, and other basic input facilities. Taking this issue into
consideration the government has offered agriculture savvy budget in which Rs. 25 crore
have been allocated for irrigation projects, rural infrastructure development, promotion of
agriculture business to motivate the use of technology and has also made certain exemptions
for the poor farmers to help them in enhancing the agriculture yield. In addition government
has also given greater emphasis to the development of more purposeful farm technology at
various agriculture research stations (Gulati 2004). All this consequently will help the
farmers to reap full benefits, which subsequently will prove helpful in enhancing the
agriculture productivity and efficiency of farming practices.

J&K SCENARIO
The J&K State sprawls over the area of 222236 square kilometer and has population of
about people, 10069917, out of which 80% procure its livelihood from agriculture sector
(DESPD 2003). This makes it imperative that priority should be accorded to agriculture
to fulfill the needs of growing population. This, in turn, demands AEPs to aware and
motivate the farmers about scientific methodology of doing farming, which acts as an
instrument in bringing high yield and output. The government in this regard has recognised
number of organisations such as Training and Visit System, Charcha Mandal, Krishi Vigyan
Kendra (Sulaiman 2003 and Balasubramanium & Menon 1977) and other non government
organisations which deliver the latest know how techniques to farmers via AEP. AEP acts as
the linkage mechanism between agriculture research and farmers, as they acquire relevant
scientific information from researchers on one hand, and transfer the same along with and
farmer’s problems to the agriculture scientists on the flip side. Since long these practices
have been in use to exchange the production and productivity of agriculture necessary for
the overall development of farmers. Per se, research-extension-farmers are considered the
cardinal pillar for the implementation of participatory methodology at the field level (Kumar
& Sah 2002). Keeping in view the important role of extension agents in TOT from the
place of production of technology to its final destination, number of extension programmes,
232  Strategic Service Management

such as informational, motivational and instructional (Vashishtha 1987) are delivered

through different government organisations (Training and Visit System, Charcha Mandal,
Krishi Vigyan Kendra) and nongovernment organisations (Almi Khudai Khidmatgar
Association and J & K Paryavaran Sanstha) using communication methodologies viz;
personnel contact, mass media and print media.
But still the expected results are not achieved and there exists wide TOT chasm. The
various factors primarily contributing to the TOT chasm, include characteristics of
technologies such as costly technology and non-availability of basic inputs, socio-economic
characteristics of potential adopters, cultural characteristics of society, institutional constraints
of society and rigid attitude of old farmers, etc. (Kumar & Sah 2002). Keeping in view the
significance of Agriculture Extension Personnel (AEP) and consequences of different
communication devices for TOT, the present study was conducted in Jammu District to
find out the overall attitude of AEP towards farmers, TOT, Communication Tools (CT),
Monthly Workshops (MW) and Job Satisfaction (JS), in particular. The study has also
identified the significant factors accountable for bridging TOT chasm. In general, the
study hypothesised that there exists no significant loss of information at various levels in
TOTP.

GENERATION OF SCALE ITEMS

Technology generation and technology transfer are widely acknowledged for accelerating
production and farmers performance (Bhagat et. al. 2002). The overall effective TOT is
imperative for changing the farmers’ outlook to adopt scientific ways of doing farming. But
surprisingly, the full benefit of TOT has never been garnered. Existing literature such as
Kunnumkul (2004); Bhagat et. al. (2002) and Bihari & Mishra (2001) revealed that less
than 30% of total information generated at various research stations reaches the farmers
ultimately. Factors such as lack of proper participation and awareness of farmers (Kumar et.
al. 2002), top-down approach of dissemination of information (Das & Saha 2002), lack of
proper and timely promotional avenues for extension personnel, poor transport facilities for
extension personnel to reach the rural communities, lack of adequate information system to
keep extension agents up-to-date on new technologies (Muhmammed 1999), lack of financial
sources, ineffective communication methods, tools, irregular training programmes, etc.
hinder the quality and quantity of information to be delivered to the farmers.
Among various CT used, MW is considered to be widely used for TOT to AEP. Agricultural
researchers such as Kher and Patel (2000) and Hussain & Reddy (1989) have emphasised
this. The regular participation of AEP in the MW helps in broadening their knowledge
horizon with respect to latest developments in the agriculture sector. The same techniques
when applied in original form by the farmers would pave the way for better qualitative
yield. To be effective this demands full support of AEP to transmit the technology to
farmers ultimately and the full support and dedication of AEP is basically a direct function
of the JS. It is a well known fact that factors such as adequacy of salary, job security and
advancement, physical conditions at work, scope for professional growth, freedom of
expression, recognition and rewards, policies and administration (Ghosh & Vijayaragavan
2000; Reddy et. al. 1992 and Sandhu & Singh 1981) and full information resources
 Perception of Agriculture Extension Personnel Toward TOTP  233

centre and networking facilities help in contributing to AEP level of job satisfaction. Taking
into consideration the aforesaid factors and interaction and deliberation with the intellgensia,
five variables:
Farmers, Transfer of Technology, Communication Tools, Monthly Workshops and Job
Satisfaction were identified to understand and measure the attitude of AEP towards the
effectiveness of TOT.

DATA COLLECTION METHOD

The structured questionnaire was primarily used to collect primary information from the
AEP. The questionnaire was divided into two sections. The first section deals with the
demographic profile of agriculture extension personnel and the second section focuses on
the ground level extension personnel’s perspective, with respect to bridging TOT gap. This
section includes five variables viz; attitude of AEP towards farmers, transfer of technology,
communication tools, monthly workshops and job satisfaction comprising 13, 15, 15, 8
and 10 items respectively. To achieve the objectives of the present study, 50 respondents
were contacted, of which 30 were from government organisations namely Krishi Vigyan
Kendra, Charcha Mandal and Training and Visit System, and 20 from NGO’s namely,
Almi Khudai Khidmatgar Association and J & K Paryavaran Sanstha. The selection of
agriculture extension personnel in different agencies is described underneath.
1. Training and Visit System: Stratified random sampling method was adopted for the
selection of Junior Agriculture Assistants. At the outset, two blocks namely Samba
and Vijaypur, on census basis from command area and two blocks namely Marh and
R.S. Pura on the basis of comparable productivity as recommended by agriculture
experts, were selected from non-command area. In the second stage, lists of ground
level extension personnel from the selected blocks were procured from T&V. Six junior
agriculture assistants out of thirty eight from command area and twelve out of eighty
five from non-command area were randomly chosen for the data collection.
2. Krishi Vigyan Kendra and Charcha Mandal: Six extension personnel each, working in
Krishi Vigyan Kendra and Charcha Mandal, were contacted on census basis for the
collection of data.
3. Non Government Organisations: Two large NGOs namely, Almi Khudai Khidmatgar
Association and J & K Paryavaran Sanstha were purposely selected from the list of
NGO’s working in Jammu District. On the basis of recommendations made by the
top officials of the selected NGOs, 20 ground level personnel were selected on
convenience basis for data collection.

RELIABILITY AND VALIDITY

The internal consistency and split –half reliability methods have been used to measure the
reliability of the scale used (Malhotra 2002, Tull & Hawkins 1998 and Hair et. al. 1995).
The internal consistency of the scale was measured using Cronbach Alpha Values for the
variables used. The Cronbach Alpha Value is found to be highest 0.71 for the variable
‘attitude of AEP towards CT followed by attitude of AEP towards farmers, TOT, JS and
234  Strategic Service Management

MW (Table 1). The values suggest that the scale is quite reliable to be used for analysis. To
further support this, split half reliability was carried out by dividing the sample into two
equal halves. The alpha values for the variables of subsample one is found to be above .6 for
four variables namely JS 0.70 followed by MW 0.68, TOT 0.65 and farmers 0.63 and
attitude of AEP towards CT has scored 0.18. Similarly, values for second sub-sample were
found to be above 0.6 for variable farmers 0.69, TOT 0.68, CT 0.66, MW 0.69 and JS
0.61. Moderately high alpha values of the two sub-groups further support the reliability of
the scale.
The face, content and construct validity of scale were also assessed. Modification was made
in the questionnaire to make statements understandable to the respondents, which supported
the face validity. The content validity was checked after thorough and threadbare discussions
with AEP, farmers & subject experts and review of literature. After the systematic evaluation
of the content of the questionnaire, data reduction was carried out to find out the variance
explained by important factors responsible for effective TOT (Table 1) and which
consequently checked the construct validity. The majority of the statements have scored
high factor loading values, which also confirmed the construct validity of the test.

DATA ANALYSIS AND FINDINGS

The relative impact of the five variables on overall effectiveness of TOT is analysed using
factor analysis. The significant factors underlying the five selected variables are discussed as
under:

Variable 1: Attitude of Agriculture Extension Personnel Towards Farmers

The factor analysis with principal component method was used to identify the most relevant
items of the variable farmers. The Kaiser-Meyer-Olkin (KMO) value was found to be 0.58,
which specifies that the data is quite suitable for conducting factor analysis. The total
variance explained arrived at 63.34% after applying varimax with Kaiser Normalisation.
The factor analysis categorised the variable into four groups, named as Farmers’ Competence,
Problem Based Technology, Farmers type and Learning Orientation. All items show factor
loading values ranging form minimum 0.53 to maximum 0.86 (Table 2).

Factor 1: Farmers Competence

All the items show high to moderate factor loadings, i.e. 0.83, 0.78, 0.63 and 0.56 for the
statements viz, farmers trust more on you as compared to tv/radio/print, farmers discuss if
they gather NT from any other source, CF TOT to NCF and farmers inform about the
training they required respectively. The high factor loading value i.e., 0.83 for the item
suggests that farmers give top priority to village extension workers to get latest information.
The study conducted by Padheri et. al., (1989) and Punjabi (1989) support these findings.
Similarly, 0.78 factor loading for farmers discuss, if they gather new information from any
other source with mean score value 3.96 depicts that AEPs are averagely satisfied with the
behaviour of farmers with regard to adoption of NT.
 Perception of Agriculture Extension Personnel Toward TOTP  235

Factor 2: Problem Based Technology

The second factor has scored mean and factor loading values as 3.98 & 0.77, 4.04 & 0.76
and 3.78 & 0.77 for items “continuous feedback, contact farmer accepts new innovations
more and CT related to farmers problems” respectively, 0.76 factor loading and 4.04 mean
score values reflect that CFs are more oriented towards adoption of NT, matching with the
findings of Singh et. al. (1989). Thus, continuous interaction with farmers about their
needs and problems help AEPs in formulating, “Problem Based Technology”, which
subsequently strengthens TOTP.

Factor 3: Farmers’ Demographic Characteristics

This factor specifies that socio-economic background of the users influence their decision
to implement NT. The high factor loadings figured for two statements viz, “aged farmers do
not implement the technology (0.86) and marginal farmers are least interested in getting
& implementing new innovations (0.82). Same findings regarding age are also found in the
study conducted by Vijayaragavan & Subramanyan (1981). But contrasting results were
shown by Kher (1992), suggesting absence of relationship between age and NT adoption.
The mean score values of these two items, figured as 2.79 and 2.73, thus further supports
the same.

Factor 4: Learning Orientation

The last factor too scored high loadings viz, 0.85, 0.70, and 0.53 for the statements farmers
are eager about NT, farmers never hesitate to get your guidance and farmers adopt NT
respectively with high mean score values of 4.33 and 4.20 for first two statements and
moderate average mean score value, i.e. 3.84 for the third statement. All this indicates that
farmers do not adopt technology fully, despite possessing learning aptitude. Thus, it may
be accentuated that competence of farmers plays important role in bridging TOT gap,
provided the technology is offered according to their socio-economic conditions.

Variable 2: Attitude of Agriculture Extension Personnel towards

Transfer of Technology
The fifteen items under variable ‘transfer of technology’ were grouped under five factors.
The KMO was found to be 0.57 and total variance explained was 70.19. High factor
loadings were scored in the majority of the statements. The factors are christened as Quality
of Communication, TOT Gap, Information Resources, Training Needs and Direct
Transmutation of Technology (Table 2). These are described as:

Factor 1: Quality of Communication

High factor loading values i.e. 0.84, 0.82, 0.67, 0.65, 0.62 were scored for all the items
which include information about modify information according to CT used, perceive
technology as it is communicated by training officer, training increase efficiency in work,
and technology effectiveness and technology expensiveness respectively. In addition to the
high factor loading values 4.13, 3.76, 4.31 and 3.84 mean score values of the items
236  Strategic Service Management

acknowledged that the quality of communication is affected much by these factor items.
The statement minimum loss of message for lab to research station the form extension to
land, was excluded from the analysis as it scored 0.49, less than selected criteria of 0.50
values.

Factor 2: Information Exchange with Farmers

Second factor comprising two statements namely, information personalisation and no
communication gap shows the factor loading values viz; 0.89 and 0.79 and mean score
values viz; 4.06 and 3.27 respectively for the two items.

Factor 3: Information Resources

This factor too scored high factor loading for all the items that fall under it. The factor
loading and mean score values for the statements are found to be 0.77 & 3.17 for originality
of information, 0.70 & 3.39 for agriculture scientists as only information source for extension
agents and 0.68 & 3.62 for queries respectively indicate that the third factor plays significant
role in TOT.

Factor 4. Training Needs

Studies such as Meenambigal & Seetharaman (2003), Murthy & Somasundaram (1989)
and Jha & Jani (1981) recognised the training needs of extension personnel for improving
their professional competence for effective TOT to the farming community. Training Needs
is another factor comprising three statements. The factor loading values i.e. 0.85, 0.73, and
0.53 for the statements viz, skill enhancement, regular training programmes and effective
communication’ respectively. In addition to the high factor loading values, all the three
statements also scored high mean score values i.e., 4.37, 4.37 and 4.69 respectively which
suggest that for effective TOT, there is dire need to provide regular trainings to the extension
personnel which can help them to increase the communication efficiency.

Factor 5: Direct Transmutation of Technology

The last factor, contains only one statement ‘percolation may not be effective if agriculture
scientists directly exchange NT to farmers’, which scored 0.91 factor loading value and
2.94 mean score value.

Variable 3: Attitude of Agriculture Extension Personnel towards

Communication Tools
The communication tool is one of the important variables that aids AEP in TOT. The
KMO and variance explained value after varimax rotation was arrived at 0.63 and 70.04%
respectively. Factor analysis condensed 35 statements into 16 important statements under
6 factors named as Personnel Contact Programmes (PCP), Training Programmes (TP), NT,
Mass Media and Trust. The majority of the statements show high positive loading values
ranging between minimum of 0.61 to maximum of 0.90. The negative loading values for
three statements i.e., ‘TV and radio is regularly used for TOT-0.87’, ‘NT is not always
 Perception of Agriculture Extension Personnel Toward TOTP  237

expensive to implement-0.47’ and ‘top authorities also visit the farm field to know about
the progress of training programmes-0.58’, signify inverse relationship between the
statements and the CT variable. The six factors contributing to the explanation power of
‘Communication Tools Used’ are discussed as under:

Factor 1: Personal Contact Programmes

Factor first shows high factor loading values for farmers for the four statements viz; PCP
provides detailed information. 0.89, PCP is more effective 0.75, PCP is best CT to transfer
latest technology 0.69 and transfer of technology through PCP ensures implementation of
technology 0.68, which support the findings of the study conducted by Ambastha and
Singh (1979) about the importance of TOT. Further above 4.00 mean score values for all
the 4 items of this factor shown in Table 5 support the role of AEP in TOT through the
inter-personal contacts.

Factors 2 and 3: Training Programmes for Farmers

Training is the most appropriate method to aware and transfer new information about the
latest production technology to the farmers (Trivedi & Patel 1993 & 1994). The finding of
the present study also supports this. The second and third factors are named as TP for Farmers.
In factor 2, the factor loading values for statements i.e., training is given on new agriculture
developments 0.78 and training is organised regularly for farmers 0.64 show the importance
of agriculture extension agency in organising regular TP regarding new technology, which
subsequently enhance farmers productivity. Similarly, 0.73 and 0.61 factor loadings for the
statements viz; ‘farmers suggests about the best place for TP and training schedule is finalised
on the availability of farmers’ respectively ensure the proper participation of farmers as extension
personnel organises TP according to the convenience of their client.
The factor third comprises two statements with high factor loadings i.e. 0.88, and 0.71
relating with the problems associated with organisation of TP for farmers. Further the
items scored 3.20 and 2.90 mean score value respectively shown in Table 2. The third item
‘technology which is easy to implement, is transferred to the farmers’ has scored 0.39 factor
loading value, which was less than 0.50 was excluded from analysis. Thus, use of PCP
followed by TP play important role in the effective TOT.

Factor 4: New Technology

This factor contains only one statement with high factor loading 0.90 for the statement
i.e., ‘TPs are used to improve skills’, which states that organisation of training programmes
by AEP at the time when NT is developed, to farmers, plays signification role for the
effective transfusion of technology. The high mean score value (4.12) of the item supports
the result.

Factor 5: Mass media

The fifth factor, comprises only one negative statement i.e., ‘tv and radio are regularly used
to disseminate information about NT’ with factor loading value as -0.87 which support
238  Strategic Service Management

the findings of Singh et. al. (2003) which state that tv and radio are least used channel for
TOT.

Factor 6: Trust
The last component of variable three is named as trust and contains one positive and one
negative statement i.e., ‘farmers trust more on ground level extension workers, 0.76’ and
‘top authorities also visit the farm field scored, 0.58’. These results state the important role
of ground level extension workers in TOT to farmers. The study conducted by Patel &
Gaur (1993 & 1994), Sharma (1993 & 1994) and Padheria et. al. (1989) also found trust
as and an important element which helps in increasing the TOTP effectiveness. This is
again strengthened by the 4.37 and 3.71 mean score values.

Variable 4: Attitude of Agriculture Extension Personnel towards

Monthly Workshops
Monthly workshops and significant concomitant affect the TOT effectiveness. Monthly
workshops provide platform where all levels of extension personnel come together and
transfer new innovation generated in research labs to the field functionaries through subject
matter specialists on time to solve the problems of farmers. Keeping in view the importance
of MW, the studies conducted by Kher and Patel (2002) and Hussain & Reddy (1989)
have also evolved strategies for TOT, based on the quality of MW. The present study identifies
certain items such as deliberation, timely solutions of problems, different extension levels
(subject matters specialist—agriculture extension officers—ground level workers) and proper
infrastructure requirement of effective TOT contributing to the quality of monthly workshops
and consequently TOTP. Total eight statements of this variable are condensed into two
important factors named as ‘Customised MW’ and ‘A E P Participation’ after three iterations.
The KMO and variance explained value was found to be 0.68 and 56.40% respectively.

Factor 1: Customised Monthly Workshops

The first factor identifies four high factor loading values of the statements (1 to 4 ) in Table
2 . Two items namely ‘training needs identification 0.47 and infrastructure facilities 0.37’
show factor loading values less than 0.50 hence excluded for the analysis purposes. The
high mean values which range between 4.00 to 4.20 acknowledges that the quality of
communication is affected by these items.

Factor 2: Agriculture Extension Personnel Participation

The high factor loading values of the statements i.e., ‘participation of AEP in TOT 0.88’
and ‘participation for problem solution 0.82’ represent the importance of participation of
AEP for TOTP. For effective TOT, the results reveal that AEP should give more attention
towards the farmers to understand their problems properly so that appropriate and timely
solutions can be sorted out in the workshops.
 Perception of Agriculture Extension Personnel Toward TOTP  239

Variable 5: Attitude of Agriculture Extension Personnel towards Job Satisfaction

The KMO and total variance explained for the variable job satisfaction was found to be
0.52 and 59.06% respectively. The variable condensed total ten statements into three
important factors named as Overall Job Satisfaction, Staff Relationship and Working
Environment.

Factor 1: Overall Job Satisfaction

The factor overall satisfaction scored high factor loading values for all three statements i.e.,
0.87, 0.84 and 0.71 which confirmed the importance of these items for implementation of
future strategies purposes. But, the low mean score values for two important statements viz;
administrative setup 2.98 and non-financial benefits 2.15 show that AEPs are dissatisfied
toward the organisational setup and non-financial benefits given by the organisation, which
contribute to ineffective TOTP.

Factor 2: Staff Relationship

This factor identifies three statements out of which first two statements viz; harmonius
relationship with superiors and cordial relations with staff scored high positive factor loading
0.85 & 0.74 and negative factor loading (-0.53) for monetary benefits. The results state
that extension personnel are satisfied with the working environment of the organisation but
show moderate level of dissatisfaction towards the monetary benefits they received from the
organisation. The Ghosh & Vijayaragavan (2002) stated similar finding with regard to the
relationship with boss and subordinate.

Factor 3: Working Environment

Factor three items scored factor loading values as 0.82, 0.68, 0.52 for statements namely
seniority based promotions, conducive working conditions and sufficient facilities
respectively. The result states that AEPs get promotion on routine bases irrespective of
individual performance. Similar findings were reported by Reddy et. al. (1992) in their
study. Further, on the basis of the mean values of these three items (3.21, 3.40 and 3.22
respectively), it can be concluded that AEPs are averagely satisfied towards the promotion
prospects of the organisation, internal working conditions and the facilities provided by the
department to them.

DISCUSSION
AEP’s used both mass media and inter-personal contacts to disseminate the latest technology
to the farmers, but farmers rate PCP as the most significant tool for getting information
about latest technologies. Taking into consideration the significance of extension agents the
study stressed that agriculture department should provide regular updated information
and training programmes to enhance professional skills of the agriculture extension personnel
particularly the ground level extension workers. In addition to this, the extension system
should allow participation of field extension workers in technology development to ensure
customised solutions to farmers’ problems that will contribute in bridging TOT chasm.
240  Strategic Service Management

Further it is also suggested that the technology should be need based and developed by
considering the demographic profile of the target users. More importantly, agriculture
department should help the farmers in implementing new technology as and when it is
transferred to them. Furthermore, the findings suggest that modern and conducive working
atmosphere should be maintain throughout to deliver continuous quality services to the
farmers. The following important implications are evolved on the basis of the aforesaid
discussion:
 Agriculture department should organise regular training programmes to help the
extension personnel to enhance their professional skill.
 Regular participation of the extension workers in seminars, conferences, workshops,
etc. should be encouraged.
 The department should provide regular promotional avenues, timely incentives—
financial and non-financial—to the efficient extension workers to motivate them to
discharge their duty with more answerability.
 More involvement of agriculture extension personnel in the core problems of the
farmers.
 Certain portion of agriculture budget should be allocated to enhance infrastructure to
adopt new developments, to organise training programmes for farmers and extension
personnel, to provide regular supply of basic inputs and marketing facilities to farmers.

CONCLUSION
Though agriculture technologies have continuously been developing but proper results are
not up to the mark in terms of high farm productivity. As per the reviewed literature and
the survey so conducted in Jammu region, the primary cause for such results is the ineffective
diffusion of technology. To support this statement, the hypothesis regarding significant loss
of information occurs during TOTP was tested using t test. The “t” value was found to be
–16.145 (df=48 and p=. 000) at 95% confidence level suggesting that there exists significant
loss of information at various levels in the TOTP. The present study in this regard has
identified important factors highlighted with ( * ) in the Table 2, which if taken into
consideration may help in increasing the effectiveness of TOTP. This will subsequently
impact farmers’ overall production, productivity, income, employment and adoption level
of improved farm technology.

LIMITATION AND FUTURE RESEARCH

The present study being AEP oriented has ignored the farmer’s perspective in understanding
the TOT gap. Thus, dyad approach has to be followed to evolve out effective strategies for
bridging TOT chasm. Though the validity and reliability of the questionnaire was tested,
the presence of subjectivity could not be ruled out. Further the size of sample being small
and that too from Jammu District, so utmost care has to be taken in generalising the result.
 Perception of Agriculture Extension Personnel Toward TOTP  241

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 Perception of Agriculture Extension Personnel Toward TOTP  243

TABLE 1: VARIABLE WISE CRONBACH ALPHA VALUES AND VARIANCE EXPLAINED

S.No. Variable Cronbach Alpha Values Variance

Explained
Sample
Sample Sub-Sample
1 2
1. Farmers .67 .63 .69 63.34
2. Transfer of Technology .61 .65 . 68 70.19
3. Communication Tools .71 .18 . 66 74.04
4. Monthly Workshops. .67 .68 . 69 56.40
5. Job Satisfaction .54 .70 .61 59.06
Factor Loading Values = FLV, Mean = MSV & Grand Mean Values = GM for the Variables Attitude AEP towards Farmers, TOT, CT,
MW and JS

S Factor Statements FLV MSV GM

No =F
Variable 1 Farmers
1 F1 Trust 0.83* 3.77 3.80
2 F1 Information sharing 0.78* 3.96
3 F1 CF, TOT to NCF 0.63 3.90
4 F1 Expressed training needs 0.56 3.55
5 F2 Continuous feedback 0.77* 3.98 3.93
6 F2 NT implementation 0.76* 4.04
7 F2 CT related to farmers problem 0.71* 3.78
8 F3 Degree of implementation: Age 0.86* 2.79 2.76
9 F3 Degree of implementation: Marginal 0.82* 2.73
farmer
10 F4 Eagerness about NT 0.85* 4.33 4.12
11 F4 Readiness to seek guidance 0.70* 4.20
12 F4 Adoption of transferred technology 0.53 3.84
Variable 2 Transfer of Technology
1 F1 Communication tools 0.84* 4.13 3.86
2 F1 Perceived information 0.82* 3.76
3 F1 Efficiency in work 0.67 4.31
4 F1 TOT effectiveness 0.65 3.84
5 F1 Expensiveness 0.62 3.75
6 F2 Information personalization 0.89* 4.06 3.67
7 F2 No gap 0.79* 3.27
8 F3 Originality of information 0.77* 3.17 3.39
9 F3 Agriculture scientist 0.70* 3.39
10 F3 Queries 0.68 3.62
Contd...
244  Strategic Service Management

11 F4 Skill enhancement 0.85* 4.37 4.38

12 F4 Regular training programmes 0.73* 4.69
13 F4 Effective communicator 0.53 4.09
14 F5 Direct transmission of technology 0.91* 2.94 2.94
Variable 3 : Communication Tools
1 F1 Extensive information source 0.89* 4.55 4.12
2 F1 Significant tool 0.75* 4.43
3 F1 Latest technologies 0.69 4.45
4 F1 Effective implementation 0.68 4.24
5 F2 TP regarding new techniques 0.78* 4.00 3.51
6 F2 Place recommended 0.73* 3.18
7 F2 TP regularity 0.64 3.29
8 F2 Farmers availability 0.61 3.55
9 F3 Expensive TP 0.88* 3.20 3.42
10 F3 Time consuming TP 0.71* 2.90
11 F4 Improved skill by TP 0.90* 4.12 4.12
12 F5 Mass media -0.87 3.98 3.98
13 F6 Trust on FLW 0.76* 4.37 4.04
14 F6 Field visit 0.58 3.71
Variable 4 Monthly Workshops
1 F1 Research based solutions 0.80* 4.06 4.08
2 F1 Customized solutions 0.78* 4.04

3 F1 Timely solutions 0.67 4.00

4 F1 Periodic workshops 0.66 4.20
5 F2 Participation of AEP in TOT 0.88* 3.77 3.70
6 F2 Participation of AEP in problem 0.82* 3.62
solution
Variable 5 Job Satisfaction
1 F1 Administrative setup 0.87* 2.98 3.18
2 F1 Job contentment 0.84* 3.61
3 F1 Non financial benefits 0.71* 2.95
4 F2 Harmonious relationship with bosses 0.85* 3.88 3.81
5 F2 Cordial relationship with staff 0.74* 4.16
6 F2 Monetary benefits -0.53 3.21
7 F3 Seniority based promotions 0.82* 3.21 3.28
8 F3 Conducive working condition 0.68 3.40
9 F3 Sufficient facilities 0.52 3.22
 23

Effectiveness of Artificial Neural Networks in

Forecasting BSE Sense
Sensexx Inde
Indexx Values
Values

Dr Suparn Sharma*
Tarun Soni**

Since stock markets are volatile, dynamic and complicated, forecasting stock market return is
considered as a challenging task. Nevertheless, researchers have developed various methods such as
Auto Regression Integrated Moving Average, Functional Link Artificial Neural Network,
Artificial Neural Network, Fama & French model, Statistical Discriminant Analysis, etc. for
effective forecasting. Among these neural networks are most suitable for forecasting non linear
and chaotic relationships among variables. The current study attempts to forecast the future
returns of B.S.E, highly volatile index, with the help of conventional method i.e. ARIMA (Auto
Regression Integrated Moving Average) and Artificial Neural Network M.L.P (Multilayer
Perceptron). To examine the efficiency of the models, MAD (Mean Absolute Deviation) and
MSE (Mean Square Error) of the two models are compared. The study results revealed that neural
network is better for forecasting in comparison to ARIMA.
Keywords: ARIMA: Auto Regression Integrated Moving Average, M.L.P: Multilayer Perceptron
Model, NIKKIE 225: Japanese Stock Index, NASDAQ: American Stock Index, HANGSENG:
Honk Kong Stock Exchange Index, B.S.E: Bombay Sock Exchange Sensitive Index

INTRODUCTION
An Artificial Neural Network (ANN) model is an information-processing model developed
on the basis of biological nervous systems. ANN is composed of large number of highly
interconnected processing elements (neurones) working in unity to solve specific problems.
An ANN can be trained like human beings for solving specific problems, such as pattern
recognition or data classification etc. through a learning process (Anderson 2003). The
neural network simulation appeared to be of recent development; however, it was established
well before the advent of computers as the progress was quite sluggish because of expensive

** MBA(BE),Project Fellow Department of Commerce, University of Jammu

246  Strategic Service Management

technology. Its application got significant attention after the advent of computers. The first
artificial neuron was produced in 1943 by the neurophysiologist Warren McCulloch and
the logician Walter Pits. However, the technology available at that time did not allow them
to do too much.
ANN can be ‘trained’ to perform a specific task by adjusting the weights as shown in Figure
1. The weights are continually adjusted by comparing the output of the network with the
target. Many pairs of input and output are used to train the ANN and this mode of
adjustment is called ‘supervised’ learning. This process is continued, until the error function
measuring the difference between the target and the output is minimized. The methodology
of supervised learning is explained in Figure 1. Neural networks, have remarkable ability to
derive meaning from complicated or imprecise data. It can be used to extract patterns and
detect trends that are too complex to be noticed by either human beings or other computer
techniques. A trained neural network can be thought of as an “expert” for the information
to be analyzed. This expert can then be used to provide projections in given new situations
of interest and provide answer to “what if ” questions. Other advantages of neural network
include:
1. Adaptive learning: An ability to learn how to do tasks based on the data given for
training or initial experience.
2. Self-Organisation: An ANN can create its own organisation or representation of the
information it receives during learning time.
3. Real Time Operation: ANN computations may be carried out in parallel, and special
hardware devices are designed and manufactured which take advantage of this
capability.
4. Fault Tolerance via Redundant Information Coding: Partial destruction of a network
leads to the corresponding degradation of performance. However, some network
capabilities may be retained even with major network damage.

REVIEW OF LITERATURE
Gupta et al. (2008) have studied the basics of neural networks and reviewed work done in
applications of ANN in several business processes. The study report that neural networks in
finance is a promising field of research because of the ready availability of large mass of data
sets. He also reported the ability of neural networks to detect and assimilate relationships
between a large numbers of variables. Jha (2006) has studied the applications of neural
network in various fields in Indian context. He observed that neural networks provide
benefits when they are integrated with Artificial Intelligence, Fuzzy Logic and other related
techniques. Bansidhar et al. (2005) compared M.L.P (Multi Level Perceptron) model with
Functional Link Artificial Neural Network (FLANN) and found FLANN as more effective
as compared to MLP. Pendharkar (2005) discusses the application of ANNs for the
bankruptcy prediction problem. It is reported that ANNs perform better than the statistical
discriminant analysis both for training and hold-out samples. Cao (2005) provides a
comparison between the Fama & French model and the ANN model in the context of
prediction of the Chinese stock market. The study results reveal that ANNs out-perform
 Effectiveness of Artificial Neural Networks in Forecasting BSE Sensex Index Values  247

the linear models from financial forecasting literature in terms of its predictive power. Jasic
and Wood (2004) discuss the profitability of trading signals generated from the out-of-
sample short-term predictions for daily returns of S&P 500, DAX, TOPIX and FTSE stock
market indices and evaluated returns over the period of 1965–99 years. The out-of sample
prediction performance of neural networks is compared against a benchmark linear
autoregressive model. They find that the buy and sell signals derived from neural network
predictions are significantly different from unconditional one-day mean return and are
likely to provide significant net profits for reasonable decision rules and transaction cost
assumptions. Siekmann et al. (2001) implemented a network structure that contains the
adaptable fuzzy parameters in the weights of the connections between the first and second
hidden layers.

RESEARCH METHODOLOGY
The present paper is an attempt to measure the effectiveness of Neural Networks and to
check their remarkable ability to derive meaning from complicated or imprecise data. The
paper basically studies the effectiveness of Artificial Neural Network (ANNI) in modeling
the Bombay Stock Exchange (BSE) SENSEX daily closing values.
The study is based on the secondary data collected from 11th July 1997 till 27th Feburary
2009 of NIKKIE 225, NASDAQ, SENSEX & HANGSENG from yahoo finance historical
data and daily returns were calculated using that data. A sample of 2880 observations was
taken for the present study. After collecting 2880 observations 2550 common observations
were considered for the four markets. The 2550 observations on common working days for
four markets were selected to develop a network denoted as ANN1 using Neural Solutions
5.07 for the BSE. ANN1 takes the previous day returns of NIKKIE 225 (Japanese Stock
Index), NASDAQ (American Stock Index) & HANGSENG (Honk Kong Stock Exchange
index) as its inputs for creating a functional approximation model which can predict market
returns.
In the second model, Artifical Neural Network 2 (ANN2) is built. ANN2 uses 3 day and
7 day moving average of daily returns of BSE Sensex index values as inputs. Further, the
same time series data is used to predict the values using ARIMA using S.P.S.S 16.01 and
then results of both the models are compared. The Figure 2 shows the trend of the four
markets from July 1997 onwards.

Building ANN1
The following procedure was followed to build ANN1:
At the outset the daily returns of NIKKIE 225, NASDAQ, SENSEX & HANGSENG
markets are collected. The daily returns of NIKKIE 225, NASDAQ & HANGSENG are
set as inputs whereas one day lag of daily returns of SENSEX were set as desired output.
The data was than randomized using ‘randomize rows’ option in the software.Out of 2550
observations 60% observations are used for training, 25% for cross validation and rest 15%
for Testing. ‘Train n times’ function of the Neural Solutions is used and the network was
trained for 6 times with 1500 epochs where the third training reported the least errors and
248  Strategic Service Management

the weights were automatically assigned. The Figure 3 shows the model topology and
Figure 4 shows the sensex actual returns plotted with the actual values and table 1 shows
the performance of the model formulated.
In a second attempt to modify the network ‘vary a parameter function’ was used and number
of Processing Elements (P.E) were changed from 1 to 5 and the model with 1 processing
element was the best as it reduced the errors as indicated in Table 2 and Figure 5.
We observed that error reduced by changing the number of processing elementsand
accordinglyt weights were selected for final model. After doing all such iterations the model
was tested on real time data which was not used for training in the data i.e. from 1 st
February 2009 to April 16th 2009 and the results were obtained and compared with actual
market returns of Bombay stock exchange as shown in Table 3.

Fitting ARIMA Model on Time Series Data

In order to compare the results, traditional ARIMA model was prepared to see the
effectiveness of neural networks. The data was analysed with the help of corrlograms as
shown in Figures 6 and 7. After analyzing the corllograms, it was observed that the
autocorrelation function do not die out which shows data is non stationary. To make it
stationary we difference it with order one. While observing the spikes as shown in Figure 8
we see that after 1st Lag the autocorrelation coefficient die out but still there were various
spikes at various lags which were significant. As such it was decided to fit various models
using various iterations of (p, d, q, P, D, Q) . Later the selection of the model was made on
the basis of M.S values.
The Mean Square (MS) values of the iterations, i.e. Model (p=1, d=1, q=0) where p is the
order of the autoregression, d is the degree of differencing, and q is the order of the moving
average. Model (p=1, d=2, q=0), Model (p=1, d=2, q=0) and Model (P=1,D=2,Q=0) are
given below:
Model (p=1, d=1, q=0)
Differencing: 1 regular difference
Number of observations: Original series 2885, after differencing 2884
Residuals: SS = 71777461
MS = 24905 DF = 2882

Model (p=1, d=2, q=0)

Differencing: 2 regular differences
Number of observations: Original series 2885, after differencing 2883
Residuals: SS = 105522997 (back forecasts excluded)
MS = 36627 DF = 2881
Modified Box-Pierce (Ljung-Box) Chi-Square statistic
 Effectiveness of Artificial Neural Networks in Forecasting BSE Sensex Index Values  249

Model (p=1, d=2, q=0) (P=1,D=2,Q=0)02

Differencing: 2 regular, 2 seasonal of order 2
Number of observations: Original series 2885, after differencing 2879
Residuals: SS = 407351696 (back forecasts excluded)
MS = 141638 DF = 2876
After trying many such iterations it was found that the simplest model (1,1,0) gave the
least error and we selected the model for prediction. The results of the model are presented
with the help of Table 5. The results of the model were then compared with the actual
values and MAD (Mean Absolute Deviation) and MSE (Mean Square Error) were calculated
as in Table 6 getting MAD score of 4.1 and MSE of 21.93 shown in Table 7.

Building ANN2
To compare the effectiveness of neural network we build another network where inputs are
the previous 3 days and 7 days moving average market return of Sensex index and desired
output were the current day daily returns. The total number of observations were 2880,
where 60% observations were used as training set whereas 25% observations for testing and
rest 15% observations for cross validation. The records were randomized and the following
steps were followed to build the network.
‘Train n times’ function of the Neural Solutions is used and the network was trained for 5
times with 2000 epochs. The fourth training reported the least errors and the weights were
automatically assigned. The results are shown in Table 6 and Table 7 shows the best epochs
and best training where MSE(Mean Square Error) is minimum. The training was done for
six times but the 4th run was found to be the best as shown by the Table 7 where MSE was
minimum. The number of processing elements in the model was also changed from 1 to 5
but the error was minimum when one processing element was used. Thus the model was
finalized with the specified weights and results were calculated which are shown in the
Table 8.The experiment revealed that ANN2 was effective 40 times with hit ratio of 67.79
%. MAD and MSE for ANN2 are calculated as shown in Table 9.

CONCLUSION
Taking into consideration both ARIMA and Neural Networks, Neural networks
outperformed the other model as the results of MAD and MSE in case of ANN2 came out
to be 1.529 and 3.258 respectively whereas the scores for ARIMA model were 4.103 and
21.93 respectively. Thus, the results of ANN2 were better. Further it can be trained on real
time basis as an when new inputs arrive in future. On the other hand, iterations in ARIMA
are done manually which makes it tiresome and time consuming. Thus, neural networks
can be an efficient tool for functional approximation but at the same time, they have to be
build with care, i.e. inputs and the outputs should be decided carefully. Finally, it can
concluded that neural networks have a huge potential and they require greater attention
from researchers who prefer traditional tools rather the new ones.
250  Strategic Service Management

Refrences
1. Abhyankar, A., Copeland, L. S., & Wong, W. (1997), Uncovering nonlinear structure in real-time
stock-market indexes: The S&P 500, the DAX, the Nikkei 225, and the FTSE-100. Journal of Business
& Economic Statistics, 15, 1–14.
2. Anderson, J. A. (2003), An introduction to neural networks. Prentice Hall, 11-45.
3. Bhargava,Nikhil,.Manik, Gupta (2008), Application of Artificial Neural Networks in Business
Applications .www.nikhilbhargava.com/papers/lahore.pdf, 1-8.
4. Cao, Q., Leggio, K.B., and Schniederjans, M.J. (2005), A Comparison between Fama and French’s
Model and Artificial Neural Networks in Predicting the Chinese Stock Market. Journal of Computers &
Operations Research, 32, 10, 2499–2512.
5. Colin Fahey’s (2003), Colin Faheys Guide to Artificial Neural Networks http://www.colinfahey.com/
2003apr20_neuron/2003apr20_neuron.htm.
6. Jha, Girish, Kumar (2007), Artificial Neural Networks and its Applications www.iasri.res.in/ebook/
ebadat/5.../5-ann_gkjha_2007.pdf.
7. Jasic, T. and Wood, D. (2004), The profitability of daily stock market indices trades based on neural
network predictions: case study for the S&P 500, the DAX, the TOPIX and the FTSE in the period
1965-1999, Applied Financial Economics, 14, 285-297.
8. Pendharkar, P.c. (2005), A Threshold-varying Artificial Neural Network approach for classification and
its application to bankruptcy prediction problem. Journal of Computers and Operations Research, 32,
2561-2582.
9. Majhi, Bansidhar (2005), FLANN based forecasting of S&P 500 Index’. scialert.net/pdfs/itj/2005/
289-292.
10. Pantazopoulos, K. N.,Tsoukalas, L. H.,Bourbakis, N. G.,Brun, M. J., & Houstis, E.N. (1998). Financial
prediction and trading strategies using neurofuzzy approaches. IEEE Transactions on Systems, Man,
and Cybernetics-PartB: Cybernetics, 28, 520–530.
11. Siekmann, S.,Kruse, R., & Gebhardt, J. (2001), Information fusion in the context of stock index
prediction. International Journal of Intelligent Systems, 16, 1285–1298.
 Effectiveness of Artificial Neural Networks in Forecasting BSE Sensex Index Values  251

FIGURE 1: METHODOLOGY OF SUPERVISED LEARNING

35000.00

30000.00

25000.00

20000.00 NASDAQ
HANGSENG
NIKKIE 225
15000.00 BSESENSEX

10000.00

5000.00

0.00
1 227 453 679 905 1131 1357 1583 1809 2035 2261 2487 2713

FIGURE 2
252  Strategic Service Management

SENSEX

NIKKIE
OUTPUT

HANGSENG ANN1

NASDAQ

Adjust Weights

FIGURE 3: NETWORK TOPOLOGY OF ANN1

2
Output

0
SENSEX
1 64 127 190 253 316 379 442 505 568 631
SENSEX Output
-2

-4

-6

-8

-10
Exemplar

FIGURE 4: DESIRED OUTPUT AND ACTUAL NETWORK OUTPUT

Effectiveness of Artificial Neural Networks in Forecasting BSE Sensex Index Values  253

FIGURE 5: AUTOCORRELATION FUNCTION FOR C1

(WITH 5% SIGNIFICANCE LIMITS FOR THE AUTOCORRELATIONS)

FIGURE 6: PARTIAL AUTOCORRELATION FUNCTION FOR C1

(WITH 5% SIGNIFICANCE LIMITS FOR THE PARTIAL AUTOCORRELATIONS)
254  Strategic Service Management

FIGURE 7: AUTOCORRELATION FUNCTION FOR C7

(WITH 5% SIGNIFICANCE LIMITS FOR THE AUTOCORRELATIONS)

OUTPUT

ANN2

Adjust Weights

FIGURE 8: SENSEX DAILY RETURNS

 Effectiveness of Artificial Neural Networks in Forecasting BSE Sensex Index Values  255

TABLE 1

Performance SENSEX
MSE (Mean Square Error) 2.830
NMSE(Normalised Mean Square Error, MSE/VARIANCE) 1.004
MAE(Mean Absolute Error) 1.230
Min Abs Error 0.0016
Max Abs Error 6.680
R(correlation coefficient) 0.088

TABLE 2

Performance SENSEX
MSE(Mean Square Error) 2.782
NMSE(Normalized Mean Square Error, 0.987
MSE/VARIANCE)
MAE(Mean Absolute Error) 1.226
Min Abs Error 0.0036
Max Abs Error 6.873
R 0.112
256  Strategic Service Management

TABLE 3

Actual Predicted Effectiveness

-3.79 0.187719 N
0.91 -0.08121 N
0.57 0.073575 Y
-1.21 -0.01043 Y
2.31 0.065327 Y
3.04 -0.21612 N
0.66 0.188427 Y
-0.30 0.078162 N
-1.59 0.01506 N
1.78 0.308458 Y
-3.42 -0.03266 Y
-2.91 -0.09018 Y
-0.22 0.05565 N
0.30 -0.04275 N
-2.21 -0.23648 Y
-0.24 -0.01657 Y
0.91 -0.08557 N
0.59 -0.0459 N
-0.71 0.06535 N
-3.20 -0.27165 Y
-2.09 -0.22894 Y
0.23 0.39931 Y
-2.94 0.16065 N
1.56 -0.52164 N
-1.99 0.023134 N
2.25 -0.36837 N
4.95 0.001821 Y
2.13 0.101461 Y
-0.89 -0.22316 Y
1.27 -0.77969 Y
0.28 0.226611 Y
Contd...
 Effectiveness of Artificial Neural Networks in Forecasting BSE Sensex Index Values  257

-0.39 -0.15825 N
5.10 -0.08009 N
0.50 0.28934 Y
2.08 -0.28128 Y
3.47 -0.25219 N
0.45 -0.37064 N
-4.78 -0.28696 Y
1.47 -0.06294 N
1.99 0.180795 Y
4.51 0.189304 Y
1.80 -0.35257 N
1.97 0.14132 Y
0.57 0.094254 Y
1.51 0.274885 Y
2.90 0.163094 Y
-2.99 -0.03195 Y

TABLE 4: CALCULATION OF ERRORS

ACTUAL(Yt) PREDICTED Yt^ ERROR MOD ERROR ERROR 2

-3.79 0.19 -3.98 3.98 15.8404
0.91 -0.08 0.99 0.99 0.9801
0.57 0.07 0.5 0.50 0.25
-1.21 -0.01 -1.2 1.20 1.44
2.31 0.07 2.24 2.24 5.0176
3.04 -0.22 3.26 3.26 10.6276
0.66 0.19 0.47 0.47 0.2209
-0.3 0.08 -0.38 0.38 0.1444
-1.59 0.02 -1.61 1.61 2.5921
1.78 0.31 1.47 1.47 2.1609
-3.42 -0.03 -3.39 3.39 11.4921
-2.91 -0.09 -2.82 2.82 7.9524
-0.22 0.06 -0.28 0.28 0.0784
0.3 -0.04 0.34 0.34 0.1156
-2.21 -0.24 -1.97 1.97 3.8809
-0.24 -0.02 -0.22 0.22 0.0484
0.91 -0.09 1 1.00 1
Contd...
258  Strategic Service Management

0.59 -0.05 0.64 0.64 0.4096

-0.71 0.07 -0.78 0.78 0.6084
-3.2 -0.27 -2.93 2.93 8.5849
-2.09 -0.23 -1.86 1.86 3.4596
0.23 0.4 -0.17 0.17 0.0289
-2.94 0.16 -3.1 3.10 9.61
1.56 -0.52 2.08 2.08 4.3264
-1.99 0.02 -2.01 2.01 4.0401
2.25 -0.37 2.62 2.62 6.8644
4.95 0 4.95 4.95 24.5025
2.13 0.1 2.03 2.03 4.1209
-0.89 -0.22 -0.67 0.67 0.4489
1.27 -0.78 2.05 2.05 4.2025
0.28 0.23 0.05 0.05 0.0025
-0.39 -0.16 -0.23 0.23 0.0529
5.1 -0.08 5.18 5.18 26.8324
0.5 0.29 0.21 0.21 0.0441
2.08 -0.28 2.36 2.36 5.5696
3.47 -0.25 3.72 3.72 13.8384
0.45 -0.37 0.82 0.82 0.6724
-4.78 -0.29 -4.49 4.49 20.1601
1.47 -0.06 1.53 1.53 2.3409
1.99 0.18 1.81 1.81 3.2761
4.51 0.19 4.32 4.32 18.6624
1.8 -0.35 2.15 2.15 4.6225
1.97 0.14 1.83 1.83 3.3489
0.57 0.09 0.48 0.48 0.2304
1.51 0.27 1.24 1.24 1.5376
2.9 0.16 2.74 2.74 7.5076
-2.99 -0.03 -2.96 2.96 8.7616
88.13 252.5093
AD(MEAN ABSOLUTE DEVIATION) 1.875
MSE(MEAN SQUARE ERROR) 5.372

TABLE 5

Period Forecast Lower Upper Actual

2886 8200.3 7825.1 8575.5 8197.92
2887 7994.4 7302.2 8686.7 8325.82
Contd...
 Effectiveness of Artificial Neural Networks in Forecasting BSE Sensex Index Values  259

2888 7778.9 6671.8 8886.1 8160.40

2889 7567.6 5998.2 9137.1 8343.75
2890 7354.4 5267.1 9441.6 8756.61
2891 7141.8 4491.9 9791.8 8943.54
2892 6928.9 3672.5 10185.2 8863.82

TABLE 5.1: CALCULATING ERRORS

Actual Forecast et et 2
1.560152 -2.51088 4.071036 16.57333
-1.98683 -2.69564 0.708806 0.502405
2.246826 -2.71632 4.963148 24.63284
4.948135 -2.81727 7.765408 60.30157
2.13473 -2.89079 5.025517 25.25582
-0.89137 -2.98104 2.089672 4.366727
24.62359 131.6327
MAD(MEAN ABSOLUTE DEVIATION) 4.103931
MSE(MEAN SQUARE ERROR) 21.93878

TABLE 6

All Runs Training Training Cross Cross Validation

Minimum Standard Validation Standard Deviation
Deviation Minimum
Average of 0.008269769 3.629 0.009674991 5.18987E-05
Minimum
MSEs
Average of 0.008439734 0.000102508 0.009888757 0.000458422
Final MSEs

TABLE 7

Best Networks Training Cross Validation

Run # 4 1
Epoch # 1873 1964
Minimum MSE 0.008231771 0.009582917
Final MSE 0.008402246 0.009630799
260  Strategic Service Management

TABLE 8

Actual Results by Network Effectiveness

3.30 0.239734 Y
-3.45 -0.15448 Y
3.06 0.861343 Y
0.06 0.100086 Y
-2.45 0.504197 N
-3.53 -2.26943 Y
0.39 -2.17553 N
-1.58 -1.39177 Y
3.80 1.080647 Y
2.81 1.862518 Y
-0.23 2.239632 N
2.04 1.556131 Y
-3.79 -0.85081 Y
0.91 -0.40975 N
0.57 -0.95809 N
-1.21 0.146214 N
2.31 0.704835 Y
3.04 1.395552 Y
0.66 2.03869 Y
-0.30 1.055412 N
-1.59 -0.54708 Y
1.78 -0.14099 N
-3.42 -1.34188 Y
-2.91 -1.68119 Y
-0.22 -2.33575 Y
0.30 -0.68754 N
-2.21 -0.3649 Y
-0.24 -0.40176 Y
0.91 -0.16697 N
0.59 0.73526 Y
-0.71 0.484473 N
-3.20 -1.00424 Y
-2.09 -1.99269 Y
0.23 -1.78113 N
-2.94 -1.44866 Y
1.56 -0.05188 N
Contd...
 Effectiveness of Artificial Neural Networks in Forecasting BSE Sensex Index Values  261

-1.99 -0.78925 Y
2.25 0.911308 Y
4.95 1.824976 Y
2.13 2.695417 Y
-0.89 1.957654 N
1.27 0.708007 Y
0.28 0.115724 Y
-0.39 0.305456 N
5.10 1.38449 Y
0.50 1.531262 Y
2.08 2.200261 Y
3.47 1.635712 Y
0.45 1.6382 Y
-4.78 -0.42631 Y
1.47 -1.03091 N
1.99 -0.60428 N
4.51 2.206388 Y
1.80 2.29987 Y
1.97 2.37868 Y
0.57 1.292041 Y
1.51 1.190657 Y
2.90 1.431444 Y
-2.99 0.400352 N

TABLE 9

ACTUAL(Yt) PREDICTED Yt^ ERROR MOD ERROR ERROR 2

3.30 0.24 3.0603 3.06 9.365228
-3.45 -0.15 -3.2955 3.30 10.86045
3.06 0.86 2.1987 2.20 4.834093
0.06 0.10 -0.0401 0.04 0.001607
-2.45 0.50 -2.9542 2.95 8.72728
-3.53 -2.27 -1.2606 1.26 1.589037
0.39 -2.18 2.5655 2.57 6.581944
-1.58 -1.39 -0.1882 0.19 0.035431
3.80 1.08 2.7194 2.72 7.394881
2.81 1.86 0.9475 0.95 0.897722
-0.23 2.24 -2.4696 2.47 6.099082
2.04 1.56 0.4839 0.48 0.234129
Contd...
262  Strategic Service Management

-3.79 -0.85 -2.9392 2.94 8.638838

0.91 -0.41 1.3198 1.32 1.74174
0.57 -0.96 1.5281 1.53 2.335059
-1.21 0.15 -1.3562 1.36 1.839316
2.31 0.70 1.6052 1.61 2.576555
3.04 1.40 1.6444 1.64 2.704209
0.66 2.04 -1.3787 1.38 1.900786
-0.30 1.06 -1.3554 1.36 1.837142
-1.59 -0.55 -1.0429 1.04 1.087682
1.78 -0.14 1.921 1.92 3.690203
-3.42 -1.34 -2.0781 2.08 4.318583
-2.91 -1.68 -1.2288 1.23 1.509974
-0.22 -2.34 2.1158 2.12 4.476398
0.30 -0.69 0.9875 0.99 0.975235
-2.21 -0.36 -1.8451 1.85 3.404394
-0.24 -0.40 0.1618 0.16 0.026166
0.91 -0.17 1.077 1.08 1.159864
0.59 0.74 -0.1453 0.15 0.0211
-0.71 0.48 -1.1945 1.19 1.426766
-3.20 -1.00 -2.1958 2.20 4.821362
-2.09 -1.99 -0.0973 0.10 0.009469
0.23 -1.78 2.0111 2.01 4.044644
-2.94 -1.45 -1.4913 1.49 2.224095
1.56 -0.05 1.6119 1.61 2.598157
-1.99 -0.79 -1.2008 1.20 1.441801
2.25 0.91 1.3387 1.34 1.792096
4.95 1.82 3.125 3.13 9.765775
2.13 2.70 -0.5654 0.57 0.319696
-0.89 1.96 -2.8477 2.85 8.109133
1.27 0.71 0.562 0.56 0.315836
0.28 0.12 0.1643 0.16 0.026987
-0.39 0.31 -0.6955 0.70 0.483659
5.10 1.38 3.7155 3.72 13.80501
0.50 1.53 -1.0313 1.03 1.063501
2.08 2.20 -0.1203 0.12 0.014463
71.88 153.1266
 24

Role of Banks to Solve the

Pr oblem of Financial Ex
Problem clusion
Exclusion

Reena Rani*
Reeta Menia**

The paper highlights on the role of financial inclusion in the fionancial sector. The paper also
identified the reasons for financial exclusion which include poor infrastructure, lack of awareness,
low income and illiteracy from demand perspective and distance from branch, branch timing
and staff attitude from supply perspective. The paper also discusses the initiatives taken by RBI
to bring about the financial inclusion, in addition views of IT for successful implementation of
financial inclusion is also discussed.
Keywords: Financial Inclusion, Financial Exclusion, RBI, IT

INTRODUCTION
Today many financial services including short-term credit have been acknowledged as
essential services. Exclusion from such services can be described as financial exclusion, which
can itself lead to “Social exclusion” in the sense of being denied full participation in society.
The financially excluded sections largely comprise marginal farmers, landless labourers,
unorganised sector enterprises, migrants and women. While there are pockets of largely
excluded population in all parts of the country, the North-East, Eastern and Central regions
contain most of the financially excluded population. There were several hurdles in the
implementation of concept of financial inclusion. The measures like Local Area Banks have
been created, Kisan Credit Card scheme has been introduced, special Agriculture branches
have been opened by the Public Sector Banks to cater to financial needs of agriculture and
allied activities, concept of Micro-finance and SHG linkage has been given prime importance.
It is imperative need of the hour to go in a big way for the successful implementation of the
process of Financial Inclusion. It is becoming increasingly important that the Banks have to
* Lecturer, Government Degree College, R S Pura, Jammu
** Lecturer, Government Degree College, Gandhinagar, Jammu
264  Strategic Service Management

adopt a holistic approach in creating awareness about financial products and services among
the excluded people. The banks have to evolve specific strategy to expand outreach of their
services in order to promote financial inclusion.

REASONS FOR FINANCIAL EXCLUSION

There are a variety of reasons for Financial Exclusion. In remote, hilly and sparsely populated
areas with poor infrastructure, physical access itself acts as a deterrent. From the demand
side, lack of awareness, low income and illiteracy act as barriers. From the supply side,
distance from branch, branch timing, staff attitudes are common reasons for exclusion. The
requirements of independent documentary proof of identity and address can be a very
important barrier in having a bank account especially for migrants and slum dwellers. The
majority of rural population more especially the poor lot has been excluded from reaping
the benefits of recent developments in the fields of globalization, liberalization and financial
sector reforms.
Some of the major causes of financial exclusion are given below:
Geographical: In a vast country like India with large terrains, inadequate basic infrastructure
in terms of roads, telecommunication, education and primary health is the root cause of
financial exclusion.
Historical and Cultural Legacies: Discriminatory practices in local communities based on
caste, religion, sex, creed, etc. inhibit inclusion.
Ignorance: Vulnerability of the disadvantages to exploitation by others for commercial benefits
is another reason leading to financial exclusion.

RECENT INITIATIVES MADE BY THE RESERVE BANK OF INDIA

There were several hurdles in the implementation of the concept of financial inclusion.
During the reform era, the following measures have been introduced to bring about the
financial inclusion.
(i) Local Area Banks have been created.
(ii) Kisan Credit Card Scheme has been introduced.
(iii) Special Agriculture branches have been opened by the Public Sector Banks to cater to
financial need of agriculture.
(iv) Concept of Micro-finance and SHG linkage has been given prime importance.

STRATEGIC APPROACH FOR ENSURING SUCCESS OF THE

FINANCIAL INCLUSION
At the regional level, a forum called the State Level Bankers’ Committee (SLBC) has been in
operation since nationalisation. SLBC is a group of bankers and government officials and is
convened by a bank having major presence in the State called the SLBC convener Bank. It
meets quarterly and reviews the banking developments in the state. At the district level, the
 Role of Banks to Solve the Problem of Financial Exclusion  265

District level Committee functions, which is headed by the District Commissioner and is
convened by the designated lead bank for the district.
In early 2006, one district in each state was identified by the SLBC for 100% financial
inclusion. So far, SLBCs have reported having achieved 100% financial inclusion in the
Union Territory of Pondichery and in some districts in Haryana, Himachal Pradesh,
Karnataka, Kerala and Punjab. In the district taken up for 100% financial inclusion, surveys
were conducted using various data bases such as electoral rolls, public distribution system
or other household data to identity households without bank account and responsibility
given to the banks in the area for ensuring that all those who wanted to have a bank account
were provided with one by allocating the villages to the different banks. Mass media was
deployed for creating awareness and publicity. The banks used different approaches to
communicate the advantage of having a bank account.
Cooperative Banks and Regional Rural Banks being local level institutions are well suited
for achieving financial inclusion. These banks are being revived and strengthened with
incentives for better governance. Being local institutions they are ideally suited for achieving
financial inclusion.
The role of an efficient payment system for financial inclusion cannot be overstressed and
the efforts are being made to bring about improvements in the payment system especially
in the relatively less developed parts of the country.

Use of Information Technology in the Successful Implementation of the

Financial Inclusion
The use of Information Technology solutions for providing banking facilities at doorstep
hold the potential for scalability of the Financial Inclusion initiatives. Pilot projects have
been initiated using smart card for opening bank accounts with biometric identification.
Link to mobile or hand held connectivity devices ensure that the transactions are recorded
in the bank’s books on real time basis. Some state Governments are routing social security
payments as also payments under the National Rural Employment Guarantee Scheme
through such smart cards. The same delivery channel can be used to provide other financial
services like low cost remittances and insurance. The use of IT also enables banks to handle
the enormous increase in the volume of transactions for millions of households for processing,
credit scoring, credit record and follow-up. There are under noted six key areas where
technological innovations could provide greater institutional efficiency and either directly
or indirectly, and provide greater access to creditor financial services.
1. Client access to savings, Credit or Insurance products,
2. Client access to market and product information,
3. Collateral management,
4. Institutional management information system,
5. Credit scoring, and
6. Financial education.
266  Strategic Service Management

ROLE OF GOVERNMENT IN THE SUCCESSFUL IMPLEMENTATION OF

THE FINANCIAL INCLUSION
State Governments can play a pro-active role in facilitating financial inclusion. Issuing official
identity documents for opening accounts, creating awareness and involving district and block
level functionaries in the entire process, meeting cost of cards and other devices for pilots,
undertaking financial literacy drives, etc. are some of the ways in which the state and district
administration have involved themselves. Indian postal services are also looking to diversify
their activities and leverage on its huge network of post-offices, the postman’s intimate
knowledge of the local population and the enormous trust reposed in them. Banks are entering
into agreements with India post for using post-offices as agents for branchless banking.

Present Status
The Finance Minister in his budget for 2007-08 has announced the setting up of two
funds for Financial Inclusion, the first called Financial Inclusion Fund for Developmental
and Promotional Interventions and the other called Financial Inclusion Technology Fund
to meet cost of technology adoption of about $ 125 million each. The scope of these funds
is being worked out. Setting up of financial literacy centres and credit counselling on a
pilot basis, launching a National Financial Literacy Campaign, linkages with informal sources
with suitable safeguards through appropriate legislation, evolving industry-wide standards
for information technology solutions, facilitating low cost remittance products are some of
the initiatives currently under way for furthering Financial Inclusion.

CONCLUSION
Having seen the ill effects of financial exclusion, it is imperative need of the hour to go in a big
way for the successful implementation of the process of Financial Inclusion. It is becoming
increasingly important that the Banks have to adopt a holistic approach in creating awareness
about financial products and services among the excluded people. The banks have to evolve
specific strategies to expand outreach of their services in order to promote financial inclusion.
Technology can be very valuable tool in providing access to banking services and products in
rural areas. ATMs - cash dispensing machines can be modified suitably to make them user
friendly. To sum up, banks need to redesign their strategies to promote financial inclusion of
low-income people treating it both as business opportunity and corporate social responsibility.

References
Jerinabi U, Micro Crdit Mangement by Women’s Self Help Groups.
Manimekalai M, Nature and Performance of informal Self Help Groups.
Minhas, R.S (1974), Planning and the Poor, S. Chand and Company limited New Delhi.
Rahul Saha (2007), Micro Financing Rural India (A Review of Self Help Groups Banking in India) man and
Development, Volume XXIX, No. 2 June.
Vasanth Desai, Indian Banking Nature and Problems, Himalaya Publishing House, Bombay.
Yogesh Atal, Poverty and Participation in Civil Society, Abhinav Publication, New Delhi.
 25

Managerial PPer
erception towar
erception ds Corporate
towards
Governance Disclosure Practices in
J&K Bank Private Ltd

Dr Hardeep Chahal*
Archana Kumari**

The effective and transparent control of company affairs in the interest of stakeholders has
remained acme interest for the regulatory concerns. The incorporation of corporate governance
practice provides a pathway to accomplish fairness, transparency, accountability and responsibility
objectives and to overcome lacunae existing in the present corporate sector. Keeping this in
background the paper highlights the corporate governance disclosure practices adopted by Jammu
and Kashmir Bank (JKB). JKB is a listed company (private) with about 53% equity of J&K
state government and is bankers’ bank to government of J&K state. The CG practices are
analysed using internal structure criteria. The five dimensions namely, responsibility,
transparency, effectiveness, social responsibility and integrity are used to assess the quality of
internal structure of corporate governance based on responses of 23 bank branches operating in
Jammu city and its peripheral areas. The data is analysed to identify significant dimensions of
internal CG quality. The paper concludes with future research and limitations.
Keywords: Corporate Governance(CG), Disclosure Practices, Corporate Governance Report

INTRODUCTION
The effective and transparent control of company affairs in the interest of stakeholders has
remained the acme interest for the regulatory concerns yet the cases of frauds;
misappropriation of funds, manipulation of accounts, etc. are seen on-rise. The major
scandals, such as Adelphia, Enron, WorldCom, and other high profile scandals have
motivated scholars to work for the practices that can monitor such things (Reaz & Hussain
2001). Because of unethical and opaque practices which are not in the interest of organisations

* Associate Professor, Department of Commerce, University of Jammu, Jammu

** Research Scholar, Department of Commerce, University of Jammu, Jammu
268  Strategic Service Management

and other stakeholders increasing concern is expressed by policy makers on firms to

demonstrate high ethical standards. Further, in response to existing regulatory practices,
such as, Accounting Standards, Legal practices, etc., certain group of researchers argued
that accounting figures do not represent accurate economic reality of firm (O’Connell,
2004). Per se, their continuous research attempts have led to the development of practices,
such as Corporate Governance (CG) and forensic accounting. Good governance is considered
to be the key variable in the firm valuation process which gives credibility to the accounting
figures and confidence to investors. CG has been defined from varied perspectives. It is a set
of relationships among company’s board members, shareholders and other stakeholders
that is used in setting objectives of the company and attaining these objectives and monitoring
performance of the organizations (OECD 1999). Turnbull (1997) defines CG as varied
influences affecting the institutional processes during production and sale of products and
services. The mechanism of exercising power and control over corporation’s working is
considered to be CG according to Monks and Minnow (1995). Cadbury (1992) considers
it to be the system of financial and non-financial controls that enables a company to follow
effective and transparent operational system. The investor’s perspective specifically is used
by Shleifer and Vishny (1997) in describing CG. According to them CG involves such
practices which ensure effective ROI to the suppliers of finance from the concerns. Corporate
governance is the process carried out by the board of directors, and its related committees,
on behalf of and for the benefit of the company’s stakeholders, to provide direction, authority,
and oversights to management (Sobel, 2005). In other words, it is the system which provides
guidelines to the companies for its transparent operationalisation and management.
The good CG practices reflect on corporate business practices and quality of disclosure
standards with respect to the requirements of regulators and interests of its financial
stakeholders, that is, its shareholders, lenders and creditors. Good CG is based on the four
core principles of corporate governance practices namely, fairness, transparency, accountability
and responsibility, laid down by the business sector advisory group of OECD. Various
committees constituted by the Securities and Exchange Board of India and the Reserve
Bank of India in context to CG practices focus on dimensions, such as ownership structure,
management structure including board level issues, quality of financial reporting and other
disclosures and fulfillment of interests of the financial stakeholders (Hinduonnet, 2001).

CORPORATE GOVERNANCE DIMENSIONS

The present paper proposed that effectiveness of corporate governance system depends on
the quality of internal structure and external structure. The internal structure is considered
as sound platform for operationalising the external structure component. Narayana and
Mohan (2007) remarked accountability, social responsibility and board structure are key
elements in designing corporate governance structure. Further as quoted by ex RBI governor
Dr Bimal Jalan, there is a need to introduce maximum transparency, accountability and
disclosures to provide rational and objective information to investors and users to take their
own decisions. Responsibility, fairness, discipline, trusteeship, independence in addition
to general attributes, such as transparency, responsibility and social responsibility to be
significant in assessing quality of corporate governance (Ghosh, 2007). In the same year,
 Managerial Perception towards Corporate Governance Disclosure Practices  269

Namee & Fieming (2007) discussed three dimensions namely respect at individual level
(honesty, integrity, privacy, personal commitment), equity at social level (diversity, tolerance,
transparency) and responsibility at political level (accountability, effectiveness, efficiency,
trustworthiness) to conceptualise CG. Based on literature review, five dimensions namely
responsibility, transparency, effectiveness, social responsibility and integrity are identified
that can contribute to the quality of corporate governance. The external structure of corporate
governance relates to the information disclosed in the annual report. The significant
components of this structure include composition, role and responsibilities of BOD towards
stakeholders, regulatory environment, and societal pressures. The various committees, such
as Management Committee, Asset Liability Management/Integrated Risk Management,
Compensation, Grievance, Shareholder Information/Organization Structure, Nomination
Committee, Share Transfer Committee, Customer Service Committee, IT Committee, etc.
are formulated to accomplish the corporate objectives. In additional information on matters
such as Insider Trading Agreement, Code of Professional Conduct, EVA and other relevant
information forms the part of external structure of corporate governance.

CG in Banks
Corporate governance of banks is important for both developed and developing countries
for several reasons. First, banks activities are less transparent and thus more difficult for
shareholders and creditors to monitor (Pati, 2007). It becomes more opaque when the
largest amount of share capital is with the government. Second, as financial markets are
usually underdeveloped, banks are typically the most important source of external finance
for the majority of firms (Levine, 1997). Third, the economy is dominated by many small-
scale firms and most of them depend on banks. Fourth, by providing a generally accepted
means of payment, banks are the main depositories for the economy’s savings. Fifth, banks
also differ from most other companies in terms of the complexity and range of their business
risks.

Profile of Jammu Kashmir Bank

The Jammu and Kashmir Bank (JKB), incorporated in the year 1938, is a premier financial
institution of the Jammu and Kashmir state. It is one of the largest private sector banks of
the country owned by the Jammu and Kashmir government with equity exceeding Rs.
4847 lac (Annual Report 2006-07). It is seen as a bank with a regional focus, a national
focus and international standards of operations. The Bank has adopted a comprehensive
policy based on all the four pillars of good governance: transparency, disclosures,
accountability and value, enabling it to practice trusteeship, transparency, fairness and
control, leading to shareholders delight, enhanced shareholder value and ethical corporate
citizenship. In the latest bank’s annual report (2007-08, pp 67), efficiency and accountability
of the corporation is considered to be the major dimensions of CG atmosphere among
other dimensions or principles. It is the bankers to the government of Jammu and Kashmir
and has a network of more than 400 branches spread across the country, with central office
at Srinagar and regional office at Delhi. It is one of a few banks rated as “Good” by Reserve
Bank of India (RBI). CRISIL, one of the leading credit rating agency has re-affirmed ‘P1+’
270  Strategic Service Management

rating to the bank’s certificate of deposit programmes, indicating highest degree of safety
for timely payment of principal and interest. Being largest private bank with more than
500 branches and banker’s bank to the state government, J&K bank is playing major role
in state economy. As such the paper makes a modest attempt to look into the corporate
governance system of the bank.

OBJECTIVES OF THE STUDY

The study on corporate governance practices of J&K bank is undertaken to assess the corporate
governance practices of the bank with respect to external and internal corporate governance
structure. Specifically, the internal structure of corporate governance will be determined
using five dimensions namely responsibility, transparency, effectiveness, social responsibility
and integrity, based on primary hand information collected conveniently from the bank
managers.

METHODOLOGY
Twenty three managers of the banks were contacted on the basis of convenience sampling
to collect data on internal structure dimension of CG using Likert based statements. The
scale used comprises five specific variables on CG relating with responsibility (15 statements),
transparency (6 statements), effectiveness (6 statements), social responsibility (10 statements)
and integrity (6 statements). In addition six statements on organisation performance are
also used to assess impact of CG practices. originally but later reduced on the basis of
insignificant correlation criteria. All the items are selected after reviewing relevant literature
on CG, discussion with bank managers and academicians. The data is collected from fifty
percent of the branches operating in Jammu City and its peripheral areas. The branch
managers were contacted to have information on the selected dimensions.

RELIABILITY AND VALIDITY

The Cronbach alpha values for the overall CG scale and for its dimensions are given in Table
1. All the values except transparency dimension met threshold criterion of 0.7 values.
Overall Cronbach Alpha value arrived at 0.853 indicating good degree of reliability of the
CG scale. The face and content validity were assessed through review of literature and
discussions with the relevant persons. The construct validity of the scale was checked through
KMO values and Variance Explained criteria (Table 1). The values revealed that all the
constructs explain more than 50% variance as both variance explained and KMO values are
found to be above the threshold limit except responsibility dimension which score KMO
value little bit less (0.47) but variance explained came to be 61.36, which is quite good. As
such the scale possessed validity characteristics.

Analysis
The study identified significant factors related with five internal structure dimensions on
the statements selected after deleting insignificant correlated statements ( less than 0.3 )
and checking KMO values, based on exploratory factor analysis using Principal Component
 Managerial Perception towards Corporate Governance Disclosure Practices  271

Methods (Kline, 2005). Varied factors identified for the five dimensions are discussed as
under:
1. Responsibility: The KMO value was found to be equal to 0.470 and BTS = 26.73, df
=28 and p= 0.002. The varimax rotation was then used to categorically distinguish
22 statements into five clustered groups, evolved after 20 iterations. The clustered
items under different factors are explained as under:
 Overall Effectiveness: The first factor comprises six statements out of twenty two
statements. These dimensions viz; formal criteria to asses performance, delegation
of responsibility, up most use of human resources, effective responsibility records,
transparent and clear structure, and met targets assigned scored positive Factor
Loading (FL) values of 0.837, 0.818, 0.773, 0.764, 0.739 and 0.547 respectively
and mean score value of 3.17, 3.16, 3.65, 3.61, 3.69 and 4.04 respectively
indicating regulatory guidelines are average in general excluding dimension
“personal responsibility”. The result further reveals that formal criteria to assess
performance, effective delegation of responsibility and maintaining responsibility
records items are highly appreciated by 82.6%, 78.2% and 69.6% in respect of
managers respectively.
 Management Responsibility: The factor 2 evolved four items that include role and
responsibility of board, conduct of board meeting, code of conduct and corporate
vision with factor values of 0.813, 0.781, 0.769 and 0.669 and mean value of
4.37, 4.08, 4.00 and 4.43 respectively. The result indicates that bank branches
are very particular in meeting core corporate governance guidelines which is
supported by about 91.3% managers.
 Job description: This job description factor identified ‘clearly defined job
responsibilities’ and ‘training on corporate governance to discharge job
responsibilities effectively’ with factor loading values of 0.902 and 0.763
respectively. Both statements score high and positive factor loading and mean
value of 3.95 and 3.81 respectively indicating that efforts are needed to implement
corporate governance effectively.
 Meetings: The factor four (Meeting) has identified two items viz; ‘attendance
performance’ (68.2%), and ‘board members attend board meetings’ (68%) with
factor loading values and mean values as 0.738 & 4.39 and 0.633 & 4.30
respectively. The findings signify that board members in general are particular
about their participation in the meetings.
 Performance: The factor five christened as “Performance” has identified
‘performance assessment criteria’ and ‘performance assistance’ with factor loading
values 0.908 and 0.762 and mean values as 3.95 & 4.04 respectively. 82.6%
and 69.5% managers respectively agreed with these two items. The result indicates
that bank managers consider performance of the board of directors quite good.
2. Transparency: The KMO value was found to be equal to 0.538 and BTS = 54.73, df
=28 and p= 0.002. The varimax rotation was then used to categorically distinguish
272  Strategic Service Management

11 statements into two factors F1 and F2, evolved after 10 iterations. The total variance
explained by this construct came out to be 56.71% and grand mean score value came
out to be 3.62. The factors are explained as under:
 Corporate policies: Factor 1 christened as ‘corporate policies’ consisted of three
statements viz; up to date version of policies followed (FL = 0.858), timely
publication of annual financial statements (FL = 0.804), and regular analyst
meeting are held (FL = 0.766). All statements scored have high and positive
loading values with mean value obtained as 3.35, 3.83, and 3.40 respectively.
The quality of internal structure of CG practices of J&K bank as such can be
rated little bit more than average. The corporate policies are revealed by about
60.8% respondents to be not updated regularly and further about 47.8%
respondents reveal that analytical meetings are required to be scheduled properly.
 Information: This factor has taken three statements viz; financial analysts are
treated equally about information, clear and well established mechanism for all
types of employees and users and information regarding meeting communicated
well before time, scored factor loading values of 0.89, 0.86 and 0.68 respectively.
The item least contributing to corporate governance quality relates with proper
and timely dissemination of information as stated by 60.9%.
3. Effectiveness: The KMO Measure of Sampling Adequacy (0.627) and BTS (Chi-square
=97.395, df= 55 and p= 0.000) indicates effectiveness of the construct for grouping
of variables. The application of varimax rotation method at five iteration, helped in
identifying two factors, which explained 75.80 percent variance. The grand mean
value of 3.73 indicates average degree of quality of internal structure of CG ( Table 4).
The factor analysis categorised eleven items into two factors christened as performance
system and effective communication. These are discussed underneath:
 Performance System: The measure factor recognises three dimensions i.e. managerial
performance, effective performance system, and effective communication system
which have scored factor loading values 0.842 (69.6%), 0.838 (60.9%) & 0.666
(78.2%) respectively. The mean value of these statements ranged between
minimum 3.52 to maximum 4.04 respectively. The overall mean score is valued
at 3.73 which verifies the significance of effectiveness.
 Effective communication: The factor two evolved three statements namely adequate
measure to protect risk, employees erratic/unethical behaviour and management
communicates to BOD scored positive factor loading values of 0.798, 0.706,
0.685 & 0.634 and mean satisfaction scores of 2.82, 3.00, 3.52 & 4.56
respectively. The overall mean score valued at 3.11 reflects that quality of
communication to be just average. As revealed by 69.5% respondents, there is
need to improve risk measures and further about 61% reveal that erratic and
unethical behaviour of employees when found is never communicated. These
factors may have led to just average quality of CG.
4. Social Responsibility: The KMO measure of Sampling Adequacy (0.514) and BTS
(chi - square = 158.90, df = 66 and p = 0.000) indicate social responsibility construct
 Managerial Perception towards Corporate Governance Disclosure Practices  273

to be reliable for grouping of variables (Table 5). The principal component application
helped in identifying three factors, which explained 80.66 percent variance. The average
degree of social responsibility (3.70) is contributing to the internal structure dimension
of CG. The factor analysis derived ten items under three factors christened as
environment, operational functioning and other which are discussed underneath.
 Organisation Welfare/Environment: The organisation welfare factor recognises five
dimensions that is social responsibility to protect the environment (66.2%),
adequate complaint and suggestions to resolve issues (73.9%), policies are
upgraded unbiasedly irrespective of user-specific interest (73.85), social
responsibility to protect the community (81.8%), and mobile branches to serve
customers (52.2%) which have scored loading values as 0.916, 0.884, 0.800,
0.658 and 0.516 respectively. The mean values of these statements are found in
the level of average quality of CG level and overall mean score is arrived at 3.66.
The result concludes that organisation welfare/environment of the bank is required
to be improved specifically with regard to mobile services (47.8%) and banks
contribution to work for green and clean environment (34.7%).
 Operational functioning/Technology: The factor two titled “Operational
functioning/technology” relates with three items namely operational functioning
of ATM, adequate security at ATM, and effective online bank services with positive
and high factor loading values of 0.932, 0.913 and 0.913 and mean satisfaction
scores of 3.82, 3.69 and 3.73 respectively. Percentage of respondents agreeing
with these respect arrive at 73.9%, 65.2% and 69.6%.
 Others: The factor three consists of statements, help to needy persons (65.2%)
and branches are located at convenient places (73.9%), with positive and high
factor loading values of 0.933 & 0.825 and the mean satisfaction score of 3.60
& 3.86 respectively.
5. Integrity: The KMO measure of Sampling Adequacy (0.718) and BTS (chi - square =
60.04, df = 15, and p = 0.000 ) for the items that indicate the suitability of the data
for grouping analysis (Table 6). The managers remarked quality of integrity dimension
to be good (Mean Score = 4.11).
 Integrity: The factor analysis developed only one factor. The factor comprises six
statements namely: male and female composition of employees (0.846), actively
functioning committees (0.834 ), mix of varied age groups (0.828), top
management supported (0.721), customer complaints are resolved (0.695), and
top management meets regularly (0.652) reflecting the relative importance of
the statement with factor 5. All dimensions are being agreed by majority of the
managers.

CONCLUSION
The analysis of the internal structure and external structure dimensions of corporate
governance indicates average to good performance of J&K bank. Among the various factors
identified for varied CG dimensions, regulatory guidelines (Responsibility), corporate policies
274  Strategic Service Management

(Transparency), effectiveness (effectiveness), integrity (integrity) are found to be affecting

significantly the quality of corporate governance as these factors have scored maximum
variance. Specifically on analysing the relationship between internal structure dimensions
and its relationship with organisation performance, the study found that performance and
returns are positively affected. Specifically, factor first ‘performance’ comprising four
statements viz valuable services are provided, customers are satisfied, organisations achieve
desired goals, and financial goal with factor loading values of 0.868, 0.806, 0.794 and
0.724 respectively. The overall mean score reflects average perception of managers (4.14)
towards corporate governance. The factor two (returns) comprises only two items namely
returns on assets and measures profitability, with positive factor loading values of 0.899 &
0.813 and mean values of 3.82 & 4.08 respectively. And as per the information disclosed
in the annual reports, the bank seems to be particular about its functioning and has various
committees which look into the specific activities. Though committees are meeting in
compliance with legal requirements, but participation of members is never complete. Taking
into consideration the significance of such meetings the reasons about the absence of members
should be highlighted. The CG, surrogate measure of organisation culture, reflects the
organisational practices of the JKBL and indicate partial CG disclosure practices for last all
previous five years but the last period. The latest annual report (2007-08) is found to be
the best as it has given detailed information on all relevant external structure dimensions
and has added certain additional element as well.

LIMITATIONS AND FUTURE RESEARCH

The study being exploratory in nature with regard to analysing dimensions of internal
structure of CG, is based on conveniently selected only on twenty three branch managers of
J&K bank. The study used factor analysis for data grouping only and not for data reduction
and purification. For genralising and confirming the results, there is a need to increase
sample size and to extend the same in other banking and financial institutions. As such
operational employees working towards the CG goals should be included to assess the
corporate governance quality more holistically. Further board of directors, being directly
involved in CG practices could not be contacted and are required to be considered in the
future research. Secondly, to conceptualise the internal structure dimension of corporate
governance, the perception of shareholders and other users is required to be explored in the
future research. Lastly, the work can add more value to the existing literature by incorporating
comparative analysis of CG practices operative in varied public and foreign banks.

References
1. Cadbury (1992) Cadbury Report (1992) Report of the Committee on Financial Aspects of Corporate
Governance (Chairman. Sir Adrian Cadbury). London, Gee.
2. Fan, J.P.H. and Wong, T.J. (2002), “Corporate Ownership Structure and the Informativeness of
Accounting Earnings in East Asia”, Journal of Accounting and Economics, Vol. 33, pp. 401-25.
3. Ghosh, Sumona (2007), Looking Beyond Corporate Governance Code, Vol 56, No. 5, 819-826.
4. Kline, Theresa J.B (2005), Psychological Testing, Vistaar Publications, New Delhi
 Managerial Perception towards Corporate Governance Disclosure Practices  275

5. Monks, R.A. and Minnow, N. (1995), Corporate Governance, Blackwell Publishers.

6. Namee, Mc Michael John &Scott Fleming (2007), Ethics Audit and Corporate Governance: The Case
of Public Sector Sport Organisation, Vol-73, 425-437.
7. Narayana, M. Srinivas and V.V Sesha Mohan (2007), Corportae Governance in Indian Banking
Industry, The Management Accountant, Vol. 42, No. 1. 850-853.
8. O’Connell, B.T. (2004), “Enron con: He That Filches From Me My Good Name ... Makes Me Poor
Indeed”, Critical Perspectives on Accounting, Vol. 15, pp. 733-49.
9. OECD (1999), Principles of Corporate Governance. Paris, OECD.
10. Reaz Masrur & Mohammed Hossain (2007), Corporate Governance around the World: An Investigation,
Journal of American Academy of Business, Cambridge. Hollywood: Sep 2007. Vol. 11 (2), 169.
11. Shleifer A R.W and Vishny (1997), “A Survey of Corporate Governance”, Journal of Finance, Vol. 52,
pp. 737-83.
12. Sobel, Paul J. (2005), Auditor’s Risk Management Guide: Integrating Auditing And Erm 2005)
www.corpgov.net.library/definitions, ( Visited on January 16, 2008).
13. Turnbull, S. (1997), Corporate Governance: Its Scopes, Concerns and Theories. Corporate Governance,
5 (4).
14. Hinduonnet, (2001), Corporate Governance, hinduonnet.com.2001.07.12.stories.htm
15. Annual Reports, The Jammu & Kashmir Bank Ltd (2001-02, 2002-03, 2003-04, 2004-05, 2005-
06 and 2006-07).
276  Strategic Service Management

TABLE 1: OVERALL AND CG DIMENSION-WISE RELIABILITY AND VALIDITY VALUES

Dimensions Cronbach KMO BTS Value ( p Variance

Alpha Value value) Explained
value (%)
Responsibility .834 .470 68.87( .004) 61.36
Transparency .587 .543 54.73 (.002) 56.71
Effectiveness .668 .614 97.40 (.000) 45.89
Social Responsibility .932 .574 158.91( .000) 69.59
Integrity .854 .718 60.04 (.000) 58.85
Overall .853 .680 78.99(.004) 58.90
Organisation .807 .800 54.19 (,000) 75.85
Performance

TABLE 2: STATEMENT-WISE FACTOR LOADING, MEAN SCORE AND

COMMUNALITY VALUES FOR BANK MANAGERS’ OPINION TOWARDS
RESPONSIBILITY DIMENSION OF CORPORATE GOVERNANCE

Factor - wise Dimensions Factor Mean % Resp.

Loading Values
Values A N D

Overall Mean Score = 3.94 & Total % of variance =61.36)

F1 Regulatory guidelines (Mean Score = 3.61 & % of Variance = 22.71)
a) Formal criteria to assess performance 0.837 3.17 82.6 - 17.4
b) Effective delegation of responsibility 0.818 3.56 78.2 - 21.7
c) Up most use of human resources 0.773 3.65 52.2 - 47.8
d) Maintains responsibility records 0.764 3.60 69.6 - 30.4
e) Transparent and clear structure 0.739 3.69 60.9 - 39.1
f) Personal responsibility 0.547 4.04 65.2 - 34.7
F2 Management Responsibility (Mean Score = 4.3 & Total % of variance =15.88)
a) role and responsibility of board 0.813 4.39 91.3 - 8.7
b) Conducts records of board meetings 0.781 4.08 91.3 - 8.7
c) Company has clear corporate vision 0.669 4.43 91.3 - 8.7
F3 Job description (Mean Score = 3.88 & Total % of variance = 12.67)
a) Clear defined job description 0.902 3.95 73.9 - 26.1
b) Participate in training on corporate governance 0.763 3.81 86.3 - 13.6
F4 Meetings (Mean = 4.345 & % of variance =10.58)
a) Attendance performance 0.738 4.39 68.2 - 31.8
b) Board members attended board meetings 0.633 4.30 87 - 13
F5 Performance (Mean = 3.995 & Total % of variance =9.49)
a) Define criteria to asses its performance 0.908 3.95 82.6 - 17.4
b) Performance assistance 0.762 4.04 69.5 - 30.4
Note: A: Agree N: Neutral D: Disagree
 Managerial Perception towards Corporate Governance Disclosure Practices  277

TABLE 3: STATEMENT-WISE FACTOR LOADING, MEAN SCORE AND

COMMUNALITY VALUES FOR BANK MANAGERS’ OPINION TOWARDS
TRANSPARENCY DIMENSION OF CORPORATE GOVERNANCE

Factor - wise Dimensions Factor Mean % of Resp.

Loading Value
Values s A N D

Transparency (Overall MS = 3.62 & % Total % of Variance =56.71)

F1 Corporate Policies (Mean = 3.526 & % of variance = 29.11)
a) Up to data version of corporate policies followed 0.858 3.35 39.1 - 60.8
b) Timely company annual financial statement 0.804 3.83 65.2 - 34.7
published
c) Regular analytical meetings held 0.766 3.40 52.2 - 47.8
F2 Information (Mean = 3.71 & Total % of variance=27.59)
a) Financial analysis are treated equally about 0.89 4.00 77.3 - 22.7
information
b) Clear and well established mechanism for 0.86 3.74 69.6 - 30.4
users/employees
c) Information regarding meetings communicated well 0.68 3.40 39.1 - 60.9
before time
Note: A: Agree N: Neutral D: Disagree

TABLE 4: STATEMENT-WISE FACTOR LOADING, MEAN SCORE AND

COMMUNALITY VALUES FOR BANK MANAGERS’ OPINION TOWARDS
EFFECTIVENESS DIMENSION OF CORPORATE GOVERNANCE

Factor - wise Dimensions Factor Mean % of Resp.

Loading Value
Values s A N D

Effectiveness (Overall MS = 3.76 & Total % of variance 45.89)

F1 Performance (Mean =3.73 & % of Variance = 25.08)
a) Managers performance reflects corporate objectives 0.842 3.65 69.6 - 30.4
b) Performance evaluation system 0.838 3.52 60.9 - 39.1
c) Effective communication system 0.666 4.04 78.2 - 21.7
F2 Effective communication (Mean = 3.11 & Total % of Variance = 20.80)
a) Adequate measures to protect risk 0.798 2.82 30.4 - 69.5
b) Employees communicate about erratic/unethical 0.706 3.00 38.1 - 60.9
behavior
c) Management communicates to the B.O.D 0.685 3.52 53.5 - 43.5
Note: A: Agree N: Neutral D: Disagree
278  Strategic Service Management

TABLE 5: STATEMENT-WISE FACTOR LOADING, MEAN SCORE AND

COMMUNALITY VALUES FOR BANK MANAGERS’ OPINION TOWARDS
SOCIAL RESPONSIBILITY DIMENSION OF CORPORATE GOVERNANCE

Factor - wise Dimensions Factor Mean % of Resp.

Loading Values
Values A N D

Social Responsibility (Overall MS =3.70 & Total % of variance 69.59)

F 1 Organistion Welfare/Environment (Mean = 3.66 & Total % of variance =26.70)
a) Social responsibility to protect environment 0.916 3.86 66.2 - 34.7
b) Adequate complaint & suggestion 0.884 3.95 73.9 - 26.1
c) Social responsibility to protect the community 0.800 3.95 73.9 - 26.1
d) Policies are upgraded to unbiased irrespective of 0.658 3.47 81.8 - 18.1
customers
e) Mobile branches to serve customers 0.516 3.08 52.2 - 47.8
F2 Operational functioning (Mean = 3.77 & Total % of Variance =25.81)
a) Operational functioning of ATM 0.932 3.82 73.9 - 26.1
b) Adequate security at ATM 0.913 3.69 65.2 - 34.7
c) Effective online bank service 0.913 3.73 69.6 - 30.4
F3 Others (Mean =3.73 & Total % of variance =17.07)
a) Help to needy persons 0.933 3.60 65.2 - 34.7
b) Branches are located at convenient places 0.825 3.86 73.9 - 26.1
Note: A: Agree N: Neutral D: Disagree

TABLE 6: STATEMENT-WISE FACTOR LOADING, MEAN SCORE AND COMMUNALITY VALUES FOR
BANK MANAGERS’ OPINION TOWARDS INTEGRITY DIMENSION OF CORPORATE GOVERNANCE

Factor -wise Dimensions Factor Mean % of Resp.

Loading Values
Values A N D

Integrity (Overall MS = 4.1 & Total % of Variance = 58.85)

F1 (Mean = 3.51 & Total % of Variance=58.85)
a) Male and female composition 0.849 3.82 69.6 - 30.4
b) Active functioning of committees through mix 0.834 4.09 67.3 - 22.7
of nature of members
c) Mix of various age groups 0.828 4.09 73.9 - 26.1
d) Top management support 0.652 4.34 73.9 - 26.1
e) Customers complaint are resolved 0.695 4.04 60.9 - 39
f) Top management meets regularly 0.721 4.22 86.4 - 13.6
Note: A: Agree N: Neutral D: Disagree
 Managerial Perception towards Corporate Governance Disclosure Practices  279

TABLE 7: STATEMENT-WISE FACTOR LOADING, MEAN SCORE AND COMMUNALITY VALUES FOR
BANK MANAGERS’ OPINION TOWARDS ORGANISATIONAL PERFORMANCE

Factor -wise Dimensions Factor Mean % of Resp.

Loading Values
Values A N D

Overall MS = & Total % of Variance = 75.80

F1 Organization Performance (Mean = 4.14 & % of Variance = 43.82)
a) Valuable service are provided 0.868 4.21 95.7 - 4.3
b) Customers are satisfied 0.806 4.04 77.3 - 18.2
c) Organization achieve desired goals 0.794 4.13 78.3 - 21.7
d) Effective in achieving financial goals 0.729 4.21 87 - 13
F2 Returns (Mean = 4.14 & Total % of Variance = 31.97)
a) Return on assets 0.899 4.21 78.2 - 21.7
b) Measures department profitability 0.813 4.08 82.6 - 17.3
Note: A: Agree N: Neutral D: Disagree
280  Strategic Service Management

26

Review of Corporate Governance Practices in

J&K Bank Ltd.

Preeti Aggarwal*

The paper reviews the ongoing Corporate Governance (CG) practices of J&K Bank within the
framework of Clause 49 guidelines of SEBI. The content analysis approach is applied to
examine the functioning of mandatory and non-mandatory committees of the bank for disclosure
of CG practices. The corporate governance reports published in the annual reports of J&K bank
from 2001-02 to 2007-08 are analysed to assess the quality of CG. The paper concludes with
needed suggestions for improvement, limitations and future research.
Keywords: Corporate Governance, Clause 49, Mandatory CG Practices

INTRODUCTION
Development of the International Corporate Governance Code, rising expectations of the
shareholders and incidents of corporate frauds have given fuel to countries to develop
corporate governance codes. In India, the concept of Corporate Governance has started
gaining momentum since early 1990’s with the implementation of economic reforms in
1991. Companies Act 1956 is the principal legal instrument which contains provisions
with regard to governance of companies. The recently developed codes in this context
include Confederation of Indian Industry (CII) Code 1998, Kumar Mangalam Birla
Committee Report 1999, Naresh Chandra Committee Report 2002 and N.R. Narayana
Murthy Committee Report 2003. According to Confederation of Indian Industry (CII) (1997)
CG which deals with implicit rules that determine company’s ability to take managerial
decisions vis-a vis its claimants: maximizing shareholder’s value. In the same year Shleifer
and Vishny (1997) and Mathieson (2002) opine CG as a field in economics to improve
financial performance of the company, i.e. to improve competitive rate of return. Organization
for Economic Cooperation and Development (OECD) (1999) described CG to control and
direct business corporations and to specify the distribution of rights and responsibilities

* ????????
 Review of Corporate Governance Practices in J&K Bank Ltd.  281

among boards, managers, shareholders and other stakeholders and spells out the rules and
procedure for making decisions on corporate affairs. Further, it also provides the structure
through which the company objectives are set and the means of attaining those objectives
and monitoring performance. Later, Securities Exchange Board of India (SEBI) (2002)
recommended that one of the objectives of Corporate Governance is to enhance shareholder’s
value keeping in view the interest of other stakeholders. Recently, Ubha (2007) has explained
Corporate Governance as the relationship among various participants in determining the
directions and performance of corporations.
Corporate Governance practices primarily cover all the stakeholders ranging from shareholders
to society and work with common objectives to provide all maximum satisfaction. More
specifically, it is the set of processes, customs, policies, laws, and institutions affecting the
way people direct, administer or control a corporation. CG also includes the relationship
among the many players involved (the stakeholders) and the corporate goals.

CLAUSE 49
Revised Clause 49(2004) of the Listing Agreement of SEBI provides information to be
disclosed in the annual reports of banks. The banks should disclose mandatory information
regarding board of directors, audit committee, remuneration committee, shareholders
committee, general body meetings, and general shareholder’s information. Among the non-
mandatory disclosures the banks should disclose the information regarding the executive/
non-executive chairman, remuneration committee, shareholder rights, audit qualification
and whistle blower policy. Besides, the bank can also disclose additional information about
other committees, such as compensation, asset liability management, integrated risk
management, etc. under the Clause 49.

OBJECTIVES OF THE STUDY

The present study is undertaken with the main objective to examine Corporate Governance
disclosure practices of the Jammu and Kashmir Bank Ltd. from 2001-02 to 2007-08 financial
periods. The specific objectives of the study are as under:
(i) To examine the compliance of the bank with respect to mandatory requirements of
Corporate Governance practices under Clause 49 of Listing Agreement with Stock
Exchanges.
(ii) To examine the compliance of the bank with respect to non-mandatory/non-
quantitative/voluntary guidelines as given under Clause 49.
(iii) To specifically examine the composition of committees, participation of executive
and non-executive directors in various committees of the bank
(iv) To make suggestions to improve Corporate Governance practices to be considered by
SEBI and the Bank.
282  Strategic Service Management

RESEARCH METHODOLOGY
The research design of the study has data of seven financial years beginning from 2001.
The research is based on secondary data collected from the Annual Reports of the bank
from 2001-2002, when the bank starteded implementing CG practices under Clause 49 of
the Listing Agreement, to the last financial year i.e. 2007-2008. The various committees of
the Board are examined and analyzed under mandatory and non-manadatory guidelines of
Clause 49. The composition of the committee of the Board, participation by the executive
and non-executive members and the number of meetings held by the committees have
been studied, described and analyzed

CORPORATE GOVERNANCE PRACTICES IN THE BANK

Mandatory CG Practices
The major findings of the mandatory CG practices of the bank are discussed with respect to
composition, board meetings and participation in mandatory meetings.

Board of Directors (BODs)

Composition: The composition of BODs is found to be inadequate for four years (2001-
2002, 2002-2003, 2003-2004 and 2004-2005) and quite adequate for three financial
years, i.e. 2005-2006, 2006-2007 and 2007-2008 (Table 1). The improper composition
in earlier years was primarily because of non inclusion of executive directors which was duly
taken care of in the financial years from 2005-2006 onwards. Further, the composition of
independent non-executive directors is above the required criteria of 1/3rd of the total board
in the year 2005-2006 onwards.
Board meetings: Regarding the number of general meetings held during the seven financial
years (Table1), the results reveal that the bank is following the CG guidelines as mentioned
in Clause 49 of the Listing Agreement from financial year 2003-2004 onwards. But in the
years 2001-2002 and 2002-2003, number of meetings held during the tenure of each
category of directors has not been mentioned which is a mandatory requirement. However,
the performance of the bank can be considered as remarkable in terms of frequent number
of general meetings held in the last 7 years (2001-2002 to 2007-2008).
Participation: The overall participation of BODs in general meetings and annual general
meeting showed a reflecting fluctuating position. Specifically, the participation of executive
directors in general meetings and annual general meeting in years 2005-2006, 2006-2007,
2007-2008 was quite remarkable. Similarly, participation of independent non-executive
directors was found to be above average for majority of the financial periods. However, the
results show below average participation of non-executive directors excluding two financial
years i.e., 2005-2006 and 2007-2008 where the participation was just 60%. On comparing
the participation of each category of directors, the overall results disclose that the participation
of non-executive directors in the general meetings of the board throughout the seven financial
years under study is much less as compared to the participation of other category of directors
in the board.
 Review of Corporate Governance Practices in J&K Bank Ltd.  283

Audit Committee
Composition: The composition of audit committee through out seven financial years was
found to be adequate (Table 2). The independent non-executive directors, which are
essentially required to constitute audit committee, were apt in number. The results reveal
that though the inclusion of executive directors in the audit committee is not compulsory
yet the bank included the executive directors in the years 2006-2007 and 2007-2008.
Similarly, non-executive directors, which too are not essentially required in audit committee,
were included in the financial years 2003-2004 and 2005-2006 onwards.
Committee meeting: Regarding the number of audit committee meetings held during the
seven financial years, the results disclosed that bank’s audit committee met frequently during
each financial year with an average gap ranging between 25 days to 63 days as against the
required three to four months gap between two meetings. This shows admirable
implementation of CG practices in terms of number of audit committee meetings held
during seven financial years, i.e. 2001-02 to 2007-2008. However, the number of audit
committee meetings held during the tenure of each category of directors is not clearly
mentioned in the annual reports of financial years 2001-2002 and 2002-2003.
Participation: Overall, the participation of different members of audit committee is found
to be average (Table 2). Specifically, among the varied members, the participation of
independent non-executive directors was quite appreciable. The results reveal that in majority
of years the participation of independent non-executive directors is 80% and above. On the
other hand, the participation of chairman was not satisfactory specifically from 2002-2003
to 2005-2006 years where it ranged between 50%-63%. The chairman’s participation is
found to be 100% in 2007-2008, 80% in 2006-2007 and 83% in 2001-2002. The
executive directors participated in meetings only in last two years i.e. 2006-2007 (100%)
and 2007-2008 (89%). The participation of non-executive directors (included in 2003-
2004 and 2005-2006 onwards) is not satisfactory as it was nil in 2006-2007, 50% in
2005-2006 and 67% in the financial years 2003-2004 and 2007-2008.

Management Committee
Composition: The overall results reveal that the independent non-executive directors form
the management committee in four financial years i.e. 2001-2002, 2002-2003, 2003-
2004 and 2004-2005 (Table 3). There were neither executive directors nor non-executive
directors in the composition of management committee of the bank which is however not
essentially required as per CG guidelines. Moreover, in the financial years 2005-2006,
2006-2007, and 2007-2008 apart from chairman, executive directors and independent
non-executive directors constitute the management committee where as non-executive
directors were included only in 2006-2007 and 2007-2008. The inclusion of executive
directors and non-executive directors in management committee in last 2-3 years indicates
significant focus of bank in rational and transparent decision-making.
Committee Meetings: The results reveal that the bank’s management committee met very
frequently with minimum average gap of 25 days and maximum 46 days in all the seven
financial years from 2001-2002 to 2007-2008. The findings thus reveal that bank is playing
284  Strategic Service Management

quite active role in resolving issues and problems relating to material, financial and
commercial transaction as and when they arise.
Participation: The analysis of table 3 depicts very poor participation of non-executive directors
in the management committee meetings throughout the period under study. The executive
directors though included in the committee from 2005-2006 onwards showed remarkable
participation in comparison to non-executive directors who were included in the committee
from 2006-2007 onwards. The non-executive directors showed worst participation (Nil)
in the year 2007-2008 and only 25% in the financial year 2006-2007. The excellent
participation is observed for chairman who remained present in all the meetings. The
independent non-executives directors who form the major composition of management
committee showed appreciable participation ranging between minimum of 68% and
maximum of 92%.

Shareholders/Investors Grievances Committee

Composition: The overall results show improving trend in the composition of grievance
committee. The grievance committee was started with only one member as chairman in the
financial year 2001-2002 and the number remained the same in the next financial year
2002-2003, too. The composition was extended in the financial year 2003-2004 with 4
independent non-executive directors which were reduced to two members in next three
financial years, i.e. 2004-2005, 2005-2006 and 2006-2007. However, in the last financial
year i.e. 2007-2008 the number of independent non-executive directors was reduced again
to 1 only where as in the same year two executive directors were included in the grievance
committee for the first time. The non-executive directors were totally ignored in the
composition of shareholders/investors grievance committee of the board throughout seven
financial years, i.e. 2001-2002 to 2007-2008 (Table 4).
Committee Meetings: The average gap (in days) between two grievance committee meetings
ranges between minimum of 21 days and maximum of 93 days which is quite good. The
results reflect that the members met quite often to redress the grievances of the shareholders/
investors. However, no information regarding the grievance committee meetings held and
attended by the members is given in two financial years 2005-2006 and 2006-2007.
Participation: The findings exhibit a casual attitude of the bank towards the shareholders/
investors grievance committee, as nothing has been mentioned regarding the participation
of independent non-executive directors in grievance committee meetings in the years 2004-
2005, 2005-2006 and 2006-2007. However, the participation of chairman and independent
non-executive directors in financial years 2003-2004 and 2007-2008 and executive directors
in the year 2007-2008, is appreciable. For rest of the periods no information is disclosed in
annual reports of the bank.
Service Complaints/Grievances (received and redressed): A close analysis of complaints received
and redressed reveal that 16 types of complaints were received in the years 2001-2002,
2002-2003, 2003-2004, 2004-2005, 17 types of complaints were received in the financial
years 2005-2006, 2006-2007 and 18 types of complaints (including non receipt of annual
reports and legal cases before Consumer forums) have been received by the bank which
 Review of Corporate Governance Practices in J&K Bank Ltd.  285

were all redressed in time. The Table 4 shows declining trend of number of complaints
received from the financial year 2001-2002 to financial year 2006-2007 which depicts the
satisfaction of shareholders or investors and remarkable performance of committee members
in redressing the grievances. All this indicates effective compliance of CG guidelines by the
bank. However, the number of complaints was increased from 621 in year 2006-2007 to
846 in financial year 2007-2008. As disclosed in annual reports all service complaints were
redressed within seven days of their receipts and share transfer requests were expeditiously
attended within 30 days of receipt and confirmation was communicated to investors and
depository participants within five working days. It has been found that the bank has
created a separate e-mail id for redressal of investor’s complaints and grievances. The results
categorically reflect that problem redressal system of the bank is quite effective.

Other Mandatory Corporate Governance Practices

In addition to the aforesaid mandatory CG practices of the bank, other mandatory Corporate
Governance practices of the bank under Clause 49 are as under:
1. Philosophy on code of governance: The detailed analysis of annual reports of the Jammu
and Kashmir Bank Ltd discloses that the bank is trying to use CG as an instrument of
economic and social transformation. The bank being an example of “public-private
partnership” aspires to catalyse economic transformation and capitalize growth. The
bank has twin objectives: to provide the people of Jammu and Kashmir, international
quality financial services and solutions; also to be a super specialist bank in rest of the
country (Annual Report 2005-2006 onwards). The bank is committed to the best
and transparent CG practices which in turn provide the best value to all its stakeholders
through highly motivated personnel, visionary, leadership, respect for people and
society, innovation and sound fiscal discipline.
2. Information on General Body Meetings: Overall, it can be concluded that the bank is
disclosing all the relevant and necessary information relating to the general body
meetings of the bank from the time it has started publishing the Corporate Governance
Report.
3. General Shareholders Information: Regarding CG practices on disclosing General
Shareholders Information such as stock exchange, shareholders agent, outstanding
GDRs, etc. the bank can be considered to be following all the relevant guidelines as
given in Clause 49 of Listing Agreement throughout the 7 financial years (2001-
2002 to 2007-2008) in general.
4. Information on Remuneration Committee: As per the information disclosed in Table
5, the findings reveal that the bank is not properly disclosing information on
remuneration committee as per Clause 49. The bank till today has not constituted
remuneration committee at all which is mandatory, though the bank has started
giving information on remuneration policy from the last four financial years (2004-
2005, 2005-2006, 2006-2007, and 2007-2008).
5. Means of Communication: The bank is furnishing all the information to its shareholders and
other stakeholders through newspapers and its website www.jammuandkashmirbank.com.
286  Strategic Service Management

The bank is also providing communication forms to shareholders so that the shareholders
can be served without any delay.
6. Other Disclosures: The bank discloses information relating to code of conduct for
prevention of insider trading pursuant to SEBI (Insider trading (Amendment)
Regulation 2002), comprehensive regulations on ethical standards to be mandatory
observed by all the employees of the bank. The bank has also introduced a corporate
ethical policy for setting forth a code of accountability of the bank’s directors, officers
and employees in the discharge and performance of their responsibilities. The bank
also discloses the cases of non-compliances by the bank, penalties imposed by SEBI
and RBI.

Non-mandatory Corporate Governance Practices

The detailed study of CG section of annual reports discloses that the Chairman of the
Board is Chief Executive Director and as such it is not necessary for the bank to have a non-
executive chairman. The board has not constituted its remuneration committee but is
providing the information relating to remuneration policy of chairman, non-executive
directors, executive directors and independent non-executive directors. As far as disclosing
the information on shareholders rights is concerned, the bank started providing the
information on shareholders rights from 2003-2004 onwards. Thus, the bank is following
the CG guidelines in respect of disclosing information shareholders rights. The bank has
not mentioned anything about the training of board members but it can be considered
very important for updating knowledge base of the directors. It is not required for the bank
to disclose information regarding its mechanism for evaluating non-executive directors which
can be proved fruitful as the decision taken by them effects the corporate business and its
future development. Moreover, the bank has not mentioned anything regarding its whistle
blower policy which enables the employees to access to the chairman of audit committee in
case of any grievances. The bank is implementing the guidelines for audit qualification
from the financial period it has started adopting the code of CG under Clause 49 of Listing
Agreement.

SUGGESTIONS
CG practices have become a mandatory requirement for all the banking companies in India
and abroad. As the banks have started raising funds through GDR and ADR from
international market, it has become necessary for the banks to be more transparent to its
shareholders and other stakeholders. Proper disclosure of the relevant information will help
the present and potential investors and other stakeholders in taking economic decisions. In
order to improve the performance of the bank and preventing it from scams like Satyam
Computers (2009) in future, following suggestions with regard to mandatory requirements,
and non-mandatory requirements are being offered to extend the existing format of CG
guidelines from a wider perspective.
 Review of Corporate Governance Practices in J&K Bank Ltd.  287

Mandatory Requirements
(i) It has been seen that the bank does not disclose the information about the reasons for
the absence of members in the general meetings, annual general meetings and
committee meetings of the board. The reasons for not attending the meetings by the
members should be disclosed in the annual reports.
(ii) Though brief profile of the members/directors at the end of each financial year is
given. However, it is suggested that brief profile of members retired during the financial
year should also be mentioned, so as to give more transparent view of the board of
directors of the bank.
(iii) Clear and concrete information about the number of meetings held during the tenure
of each category of director in each financial year should be disclosed for better clarity
to the shareholders.
(iv) Clause 49 of the Listing Agreement with SEBI does not differentiate between non-
executive directors and independent non-executive directors, however, both non-
executive directors as well as independent non-executive directors are mentioned in
all the annual reports of the bank. This creates confusion in the minds of the users.
(v) It is suggested that all the mandatory committees of the board should have judicious
mix of each category of directors so that rationality in decision can be maintained,
otherwise the whole responsibility lies on only one or two categories of directors (like,
Management Committee and Audit Committee). Judicious and rational mix of
directors brings new ideas to improve the performance of the bank and helps in
improving image of the bank.
(vi) Shareholder Grievance Committee, which occupies a very important place in board
committees, has not been properly composed. For better transparency, rational decision-
making and accountability towards shareholders/investors, due attention should be
given in terms of composition and participation of each category of directors.
(vii) Clause 49 of the Listing Agreement with Stock Exchanges requires the constitution of
remuneration committee from the day it was notified but till today the bank has not
constituted it. As such it is suggested to form the committee so that shareholders
queries about the remuneration of chairman, executive directors and non-executive
directors can be answered in the annual general meeting.

Non-Mandatory Requirements
(i) It is recommended to have whistle blower policy in the bank where in the employees
can easily submit their grievances to audit committee and get it redressed. Employees
being the integral part of the bank should find a place in the CG Report of the bank.
(ii) The bank is advised to ensure that the directors are exposed to latest managerial
techniques, technological developments in banks and financial markets, risk
management systems, etc., to discharge their duties to the best of their abilities. The
information regarding this should be disclosed in the report. The shareholders and
288  Strategic Service Management

other stakeholders should come to know that the board members though expert in
their fields have been updating their skills from time-to-time.
(iii) In order to keep the employees abreast with the latest information, it may be suggested
to send the employees to attend seminars and conferences being conducted by financial
institutions or government bodies and for training and interaction with other banks
which are performing well.
(iv) As per Clause 49, it is voluntarily required for the bank to disclose information about
the evaluation of non-executive directors. The investors, shareholders, employees and
other stakeholders and public in general may be furnished with the information
regarding the appraisal of non-executive directors, by the peer group appointed by
the bank, which form an important component in effective decision-making.

CONCLUSION
In short, it can be concluded that the CG practices of the bank is based on the principle
and philosophy of code of Corporate Governance. The bank is protecting the interest of the
shareholders by providing higher rate of dividends continuously and also protecting
shareholders rights by redressing their grievances well in time. The bank functions under
Banking laws and regulations thereby following business values and ethical code. It is
contributing towards society by providing employment and protecting environment,
promoting sports, education and providing assistance to needy people up to 1% of its
published net profits. The bank has effective and efficient human resources who are eminent
directors and executive body, expert in the field of banking, finance, commerce, etc. The
board is furnishing accurate information and facts to its stakeholders, thereby adhering to
its significant principle of disclosure and transparency. Presently, the bank is fulfilling all
the requirements of CG practices and adopting all the 4 pillars of CG namely; value,
disclosure, transparency and accountability. But at the same time specific efforts are required
to be undertaken by the Jammu and Kashmir Bank Ltd. to make the working of committees
more competent. Therefore, inclusion of detailed information on composition of committees
and participation of existing and retired members along with specific actions of the various
committees should be disclosed.

LIMITATIONS AND FUTURE RESEARCH

Despite all the efforts undertaken to make the study objective and rational, certain limitations
could not be barred out. The study is focused only on a single case, i.e. the Jammu and
Kashmir Bank Ltd. and that too only on post CG period, i.e. 2001-2008. The study needs
to be strengthened for comparative analysis to include other private banks, such as, Citi
Bank and public sector banks like SBI, PNB, etc. For more in depth analysis on pre CG and
post CG periods should be conducted to assess the change in the functioning of the bank.
The study is restricted to the composition, participation of executive and non-executive
members of the board in various committees of the bank. The relationship of CG with
financial performance can also be undertaken. Being based on secondary data, perception
of directors, managers, employees, shareholders and other stakeholders should also be
measured and analyzed in the future research.
 Review of Corporate Governance Practices in J&K Bank Ltd.  289

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13. Ubha, Dharminder Singh (2007), “Corporate Governance - An Indian Spiritual Perspective”, Journal
of Finance Reporting - Current Trends (Feb. 2007), ICFAI University Press, pp. 38.
 TABLE 1: COMPOSITION AND PARTICIPATION OF BOARD OF DIRECTORS IN GM AND AGM OF THE J&K BANK LTD. (YEARS 2001-2002
TO 2007-2008)
S.No. Particulars 2001-02 2002-03 2003-04 2004-05
No. Meetings % No. Meetings % No. Meetings % No. Meetings %
Participation Participation Participation Participation

GM
GM
GM
GM

AGM
AGM
AGM
AGM

HELD
HELD
HELD
HELD

ATTENDED
ATTENDED
ATTENDED
ATTENDED
1. CEO 1 16 16 100 100 1 10 10 100 100 1 11 11 100 100 1 14 14 100 100

2. ED - - - - - - - - - - - - - - - - - - - -
290  Strategic Service Management

3. INED 13 131 170 77 38 13 73 104 70 92 13 77 93 83 82 12 93 119 78 100

4. NED 2 16 32 50 100 2 9 20 45 100 4 8 17 47 100 5 20 42 48 100

S.No. Particulars 2005-06 2006-07 2007-08

No. Meetings % Participation No. Meetings % Participation No. Meetings %
Participation

GM
GM
GM

AGM
AGM
AGM

HELD
HELD
HELD

ATTENDED
ATTENDED
ATTENDED

1. CEO 1 10 10 100 100 1 11 11 100 100 1 15 15 100 100

2. ED 1 7 7 100 - 2 11 13 85 100 2 25 28 89 100
3. INED 10 63 78 81 89 5 41 55 75 100 5 49 63 78 80
4. NED 2 6 10 60 100 1 4 11 36 100 1 9 15 60 100

* NOTE AGM: ANNUAL GENERAL MEETING, NED: NON-EXECUTIVE DIRECTOR, GM: GENERAL MEETING, INED: INDEPENDENT NON-EXECUTIVE DIRECT, CEO: CHIEF
EXECUTIVE OFFICER, ED: EXECUTIVE DIRECTOR
 TABLE 2: COMPOSITION AND PARTICIPATION OF AUDIT COMMITTEE OF THE J&K BANK LTD. YEARS 2001-2002 TO 2007-2008
S.No. Particulars 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
No. Meetings No. Meetings No. Meetings No. Meetings No. Meetings No. Meetings No. Meetings

Held
Held
Held
Held
Held
Held
Held

Attended
Attended
Attended
Attended
Attended
Attended
Attended

% Participation
% Participation
% Participation
% Participation
% Participation
% Participation
% Participation

1. Chairman 1 5 6 83 1 3 5 60 1 4 7 57 1 5 8 63 1 3 6 50 1 7 8 80 1 9 9 100
2. ED - - - - - - - - - - - - - - - - - - - - 1 1 1 100 3 8 9 89
3. INED 5 17 27 63 5 16 20 80 5 17 20 85 6 28 31 90 6 48 51 94 3 18 19 95 2 17 18 94
4. NED - - - - - - - - 1 2 3 67 - - - - 1 2 4 50 1 0 8 0 1 2 3 67

* Note ED: Executive Director, INED: Independent Non-Executive Director, NED: Non-Executive Director

TABLE 3: COMPOSITION AND PARTICIPATION OF MANAGEMENT COMMITTEE OF THE J&K BANK LTD. YEARS 2001-2002 TO 2007-2008
S.No Particulars 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
No. Meetings No. Meetings No. Meetings No. Meetings No. Meetings No. Meetings No. Meetings

Attended
Held
% Participation
Attended
Held
% Participation
Attended
Held
% Participation
Attended
Held
% Participation
Attended
Held
% Participation
Attended
Held
% Participation
Attended
Held
% Participation

1. Chairman 1 8 8 100 1 9 9 100 1 9 9 100 1 13 13 100 1 5 5 100 1 8 8 100 1 10 10 100

2. ED - - - - - - - - - - - - - - - - 1 5 5 100 1 6 8 75 2 9 10 90

3. INED 6 31 39 79 6 25 37 68 7 23 42 79 9 68 74 92 8 23 31 74 3 21 24 88 3 25 30 83

4. NED - - - - - - - - - - - - - - - - - - - - 1 2 8 25 1 Nil 2 Nil

* Note ED: Executive Director, INED: Independent Non-Executive Director, NED: Non-Executive Director
Review of Corporate Governance Practices in J&K Bank Ltd.  291
 TABLE 4: COMPOSITION AND PARTICIPATION OF SHARE HOLDER GRIEVANCES COMMITTEE OF THE J&K BANK LTD.
YEARS 2001-2002 TO 2007-2008

S.No Particulars 2001-02 2002-03 2003-04 2004-05

. No. Meetings No. Meetings No. Meetings No. Meetings

HELD
HELD
HELD
HELD

%
%
%

COMPLAINTS
COMPLAINTS

ATTENDED
ATTENDED
ATTENDED
ATTENDED

PARTICIPATION
PARTICIPATION

COMPLAINTS

PARTICIPATION
COMPLAINTS
PARTICIPATION
1. CHAIRMAN 1 - 17 - 2866 1 - 12 - 2055 1 7 7 100 1616 1 - 4 - 1397

2. ED - - - - - - - - - - - - - - - - - - - -
292  Strategic Service Management

- - - - - - - - - -
3. INED 4 10 10 100 - 2 - 4 - -
- - - - - - - - - -
4. NED - - - - - - - - - -

2005-06 2006-07 2007-08

No. Meetings No. Meetings No. Meetings
%

HELD
HELD
HELD

%
COMPLAINTS

PARTICIPATION

COMPLAINTS

ATTENDED
ATTENDED
ATTENDED

PARTICIPATION
COMPLAINTS
PARTICIPATION
1 NM NM 687 1 NM NM NM 621 1 4 4 100 846

- - - - - - - - - - 2 3 3 100 -
2 - - - - 2 - - - - 1 4 3 75 -
- - - - - - - - - - - - - - -
* NOTE AGM: ANNUAL GENERAL MEETING, NED: NON-EXECUTIVE DIRECTOR, GM: GENERAL MEETING, INED: INDEPENDENT NON-EXECUTIVE DIRECT, CEO: CHIEF
EXECUTIVE OFFICER, ED: EXECUTIVE DIRECTOR
TABLE 5: OTHER MANDATORY CORPORATE GOVERNANCE DISCLOSURES OF THE J&K BANK LTD. YEARS 2001-2002 TO 2007-2008
S.No. Particulars 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
1. Philosophy on Code of Yes Yes Yes Yes Yes Yes Yes
Governance
2. Information on General Body
Meeting
i) Annual General Meeting Yes Yes Yes Yes Yes Yes Yes
ii) Extra Ordinary General Meeting - - - Yes Yes Yes Yes
3. General Shareholders
Information
i) Annual General Meeting Yes Yes Yes Yes Yes Yes Yes
ii) Stock Exchange Information Yes Yes Yes Yes Yes Yes Yes
iii) Share / Share Transfer Yes Yes Yes Yes Yes Yes Yes
Information
iv) Financial Calander & Related Yes Yes Yes Yes Yes Yes Yes
Information
v) Others Yes Yes Yes Yes Yes Yes Yes
4. Information on Remuneration
Committee
i) Remuneration Committee NC NC NC NC NC NC NC
ii) Composition - - - - - - -
iii) Attendance - - - - - - -
iv) Remuneration Policy - - - Yes Yes Yes Yes
v) Shares / Debentures held by Non- - - - - Yes Yes Yes
Executive Director
5. Means of Communication
i) Newspapers Yes Yes Yes Yes Yes Yes Yes
ii) Website - Yes Yes Yes Yes Yes Yes
iii) Forms of Communication - - - - Yes Yes Yes
6. Other Disclosure
i) Insider Trading Code Yes Yes Yes Yes Yes Yes Yes
ii) Code for Professional Conduct Yes Yes Yes Yes Yes Yes Yes
iii) Ethical Standards Employed by Yes Yes Yes Yes Yes Yes Yes
the Bank
iv) Legal Compliance Yes Yes Yes Yes Yes Yes Yes

* NOTE: NC: NOT CONSTITUTED

Review of Corporate Governance Practices in J&K Bank Ltd.  293
 TABLE 6: NON-MANDATORY CORPORATE GOVERNANCE DISCLOSURES OF THE J&K BANK LTD. YEARS 2001-2002 TO 2007-2008

S.NO PARTICULARS 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

1 Board CEO CEO CEO CEO CEO CEO CEO
2 Remuneration Committee NC NC NC NC NC NC NC
3 Shareholders Rights NM NM YES YES YES YES YES
4 Audit Qualification YES YES YES YES YES YES YES
Training of Board of
5 Directors NM NM NM NM NM NM NM
Mechanism for Evaluating
294  Strategic Service Management

6 NED NM NM NM NM NM NM NM
7 Whistle Blower Policy NM NM NM NM NM NM NM
CEO:
* NOTE CEO: CHIEF EXECUTIVE EXECUTIVE
CHIEF OFFICER, NM: NOT MENTIONED, NC: NOT CONSTITUTED, NED: NON EXECUTIVE DIRECTOR
TABLE 7: ADDITIONAL INFORMATION DISCLOSURES OF THE JAMMU AND KASHMIR BANK LTD. YEARS 2001-2002 TO 2007-2008

2001- 2002- 2004- 2005-

S.NO PARTICULARS 02 03 2003-04 05 06 2006-07 2007-08

1 Compensation Committee YES YES YES YES YES YES YES

i) Chairman 1 1 1 NM NM NM 1

ii) ED/INED/NED NM NM 2INED NM NM NM 2INED/1 NED

iii) %Participation/Meetings held NM NM NM NM NM NM 100/1

iv) Average gap (in days) NM NM NM NM NM NM -

2 Asset Liability Management Committee YES YES YES - - - -

i) Chairman 1 1 1 - - - -

ii) ED/INED/NED 4INED 3INED 5INED - - - -

iii) %Participation/Meetings held NM NM 100/3 - - - -

iv) Average gap (in days) NM NM 79 - - - -

3 Integrated Risk Management Committee - - YES YES YES YES YES

i) Chairman - - 1 1 NM 1 1

ii) ED/INED/NED - - 4INED 8INED NM 2ED/2INED 2ED/2INED

iii) %Participation/Meetings held - - NM 83/3 NM 100/2 93/4

iv) Average gap (in days) - - NM 94 NM 48 91

4 Information Technology Committee - - YES YES YES YES YES

i) Chairman - - 1 1 NM NM 1

ii) ED/INED/NED - - 2 INED 3 INED NM NM 2ED/ 1INED

Contd...
Review of Corporate Governance Practices in J&K Bank Ltd.  295
 iii) %Participation/Meetings held - - 100/1 78/3 NM NM 88/3

iv) Average gap (in days) - - - 52 NM NM 82

5 Nomination Committee - - - - YES YES YES

i) Chairman - - - - NM NM 1
ii) ED/INED/NED - - - - NM NM 4 INED
iii) %Participation/Meetings held - - - - NM NM 100/2
iv) Average gap (in days) - - - - NM NM 163
6 Monitoring of Large Value Frauds Committee - - YES - YES YES YES

i) Chairman - - 1 - NM NM 1
296  Strategic Service Management

ii) ED/INED/NED - - 3 INED/1 NED - NM NM 2ED/2 INED

iii) %Participation/Meetings held - - NM - NM NM 100/3
iv) Average gap (in days) - - NM - NM NM 44
7 Customer Service Committee - - - - YES YES YES
i) Chairman - - - - NM NM 1
ii) ED/INED/NED - - - - NM NM 3ED/2 INED
iii) %Participation/Meetings held - - - - NM NM 86/3
iv) Average gap (in days) - - - - NM NM 93
8 Share Transfer Committee YES YES YES NM YES YES YES
i) Chairman 1 1 1 NM NM NM NM
ii) ED/INED/NED NM NM 4 INED NM NM NM NM
NM / NM /
iii) %Participation/Meetings held 48 49 NM / 43 NM NM NM NM
iv) Average gap (in days) NM NM NM NM NM NM NM
9 Economic Value Addition NM NM NM 4.16% 8.07% 12.06% 13.18%
* NOTE ED: Executive Director, NED: Non-Executive Director, INED: Independent Non-Executive Director, NM: Not Mentioned