The Research Repository - Gitarattan International Business ...

The Research Repository

Volume 3, Number 1 August 2015 - July 2016

Yearly Journal of Gitarattan International Business School, Rohini, DelhiVolume 3, Number 1, August 2015 - July 2016

EDITORIAL ADVISORY BOARD

Prof. R. K. MittalProfessorGGSIP University, Delhi

Prof. K.C. SethiProf. Emeritus and Former Director, IMT, Ghaziabad

Prof. S. ChandrasekharFormer Professor FORE School of Management, Delhi

Prof. N. R. BhusnurmathManagement Development Institute (MDI), Gurgaon

vuqla/kku (Anusandhan) - The Research Repository: Published by Gitarattan International Business School,

Delhi. The views expressed in this Journal are those of the authors. No part of the publication may be reproduced in any form without the written consent of the Publisher. All rights reserved © Gitarattan International Business School (giBS).

EDITORIAL BOARD

Anirudh Jindal

Editor-in-ChiefProf. S. ChaturvediDirector

EditorsProf. A.S. PandeyProfessor

Dr. Neeru ChaudharyAssociate Professor

Dr. Uma GulatiAssociate Professor

Dr. SheetalAssociate Professor

Chief PatronShri R.N. JindalChairman, Gitarattan International Business School

PatronShri Vice Chairman, Gitarattan International Business School

- The Research Repository

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S.No. Title of the Paper Page No.

MARKETING

1 Factors Influencing Consumers' Socially Responsible Behaviour: A Study with

special reference to Delhi-NCR 1

Chirag Malik and Kriti Sharma

2 Factors Affecting Consumer Perception towards Online Shopping 9

Satish Chandra Gaur and Shreyansh Jain

3 Emotional Brand Relationship in Hospitality Industry: A Study on Hospitality

Branding in Delhi/NCR 14

Uma Gulati and Anirudh Kumaria

4 Consumers' Attitude Towards Eco-Friendly Products and Their Purchase Intention in

the Fast Moving Consumer Goods (FMCG) Sector 21

Gayatri Chopra and Nikhil Rajpal

5 Impact of Corporate Social Marketing on Consumer Attitude 26

Jyotsana Vaid and Ayush Gupta

6 Factors Affecting Compulsive Behaviour of Credit Card Users 30

Prerna Garg and Satyendra Kumar

7 Impact of Colour on Consumer Brand Perception 36

D. K. Choudhury and Shidharth Batra

FINANCE & INTERNATIONAL BUSINESS

8 Impact of Asset Quality on Profitability of Selected Public Sector Banks in India 42

Aisha Kakkar and Abhishek Sharma

9 Impact of Merger and Acquisition on Stock Return of Indian Firms with Special

Reference to Bank 48

Vikas Gupta and Surbhi Katal

10 Comparison of The Performance of Equity Mutual Funds: An Analysis Based on

Benchmark Tools 56

Pooja Chaturvedi Sharma and Ishant Goel

11 Correlation of BSE Sensex with BSE Bankex 63

Richa Joshi and Ayushi Jain

ANUSANDHAN - THE RESEARCH REPOSITORY 2015 -2016

CONTENTS

12 Relationship Between BSE Index Returns and Financial Services Returns 69

Swati Jain and Lokesh

13 Consumer Ethnocentrism of Consumer Perception in India with special reference to Cosmetic

Industry 74

Shuchi Singhania and Neha Aggarwal

HUMAN RESOURCE MANAGEMENT

14 Impact of Maternity Benefits on Job Satisfaction in Private Health Care Sector in Delhi 81

Anup Kumar Ghosh and Mona Chanchal

15 Impact of Emotional Labour and Emotional Intelligence on the Perception of

Effective Leadership 89

Sheetal and Anu Gautam

16 Impact of Organisational Culture on Employee Commitment 94

Shweta Malhotra and Kanishka Chauhan

17 Employee Engagement in BPO Sector 99

Kanupriya Malhotra and Akshat Bhardwaj

18 Role of Organisational Culture in Formation of Organisational Citizenship Behavior

in Public and Private Banks 103

Mitu Mandal and Himanshi Bhadouria

19 Role of Appraisal Techniques on Employee Satisfaction with Emphasis on E-Commerce

Firms 108

Meetali Bahl and Rajni Yadav

Anusandhan - The Research Repository, Volume 3, Number 1 1

FACTORS INFLUENCING CONSUMERS' SOCIALLY RESPONSIBLE BEHAVIOUR :

A STUDY WITH SPECIAL REFERENCE TO DELHI-NCR

Chirag Malik1

Kriti Sharma2

ABSTRACT

The consumption pattern of consumers is rapidly changing and now consumer has several options before buying any service or

the product. There are multiple number of factors which influence a consumer before buying a product. One of the major factors

which consumers tend to ignore is the social factor. That is the impact of the consumption on the society as a whole. Being

responsible towards the society is the buzz word in the present time. Consumers must be inclined towards the society and must

think about the impact of his consumption behaviour on the society at large. This paper aims at identifying the factors which

contribute in formation of socially responsible behaviour with special reference to socio-psychological dimensions. Descriptive

research along with factor analysis was used to identify the factors influencing consumers' socially responsible behaviour

(SRB). Four factors, namely, 'individual effectiveness', 'social security', 'social inclination', and 'social savings', were identified

affecting socially responsible behaviour.

Keywords: Ecological Concern, Socio-psychological factors, Socially Responsible Behaviour, Social Security.

1 Assistant Professor, Gitarattan International Business School, Rohini, New Delhi2 Student, Gitarattan International Business School, Rohini, New Delhi

INTRODUCTION

Socially responsible behaviour is an ethical framework that

has an obligation to act for the benefit of society, as a whole. It

involves certain duties that every individual should perform in

order to maintain a balance between economy and economic/

ecosystem. Social responsibility focuses mainly on the welfare

of the society and the environment and it should not be limited

to the organization but also the individuals of the society.

If an individual doesn’t smoke a cigarette, he is directly

performing his social responsibility by taking a protective

measure for himself as well as the environment and

surrounding. Similarly, if an individual is engaged with an

institution or activities which promote anti-smoking, he/she is

taking a protective measure which is affecting indirectly the

environment and surrounding. Furthermore, individual’s

socially responsible behaviour is an act that morally binds and

suggests that each person should act in such a way that

minimizes the adverse effect to those immediately around them.

It is a commitment everyone should have towards society by

contributing towards social, cultural and ecological causes. It

is based on individual’s ethics and supports issues for

philanthropic reasons. Consumers’ socially responsible

behaviour is majorly affected by his/her culture, attitude and

personality, values and belief system.

Culture is a set of values, norms and attitudes that are the

essence of human behaviour. The behavior that results from

culture is usually passed from one generation to the next.

Several years ago, certain actions were taken by government

to ban the use of plastic bags as plastic is not recyclable and

liters the environment but individuals did not realize their social

responsibility and turned a deaf ear to the ban.

Values are principles, standards or qualities that an individual

or group of people hold in high regard. These values guide the

way we live our lives and the decision we make. Beliefs come

from real experiences but often individuals forget that the

original experience is not the same as what is happening in life

now. Our values and beliefs affect the quality of our work and

relationships. Attitude can be referred to as lasting group of

feelings, beliefs and behavior tendencies directed towards

specific people, group, ideas or objects.

Urgency: Individual behaviour is such that it tends to fluctuate

when urgency is created in its surrounding or if worse situation

comes up. As the environment is getting polluted day by day,

the organizations came up with the idea of green products.

These products are non-toxic, energy and water-efficient and

harmless to the environment are called green products. These

are also recyclable and biodegradable. Products are certified

as green only if they satisfy the norms of government

environmentally preferable products (EPP) program, Fair

Trade, Energy star. Oil Gone Easy Home-This is an eco-friendly

product that is used to clean oil stains. It is called a green

product because it makes use of bioremediation technology,

which cleans oil and fuel spills without harming the

environment.

Awareness: The green products developed are to be promoted

in such a manner that individuals as consumers are aware about

these products. It’s important and urgent to inform consumers

the adverse effects of the current products in comparison to

green products. Green products are natural products such as

wooden cabinets, tables and chairs, plastics are not green

products, silk and cotton is natural, nylon and rayon are not.

Anything made from bamboo is a green product.

Anusandhan - The Research Repository, Volume 3, Number 12

Interest: Individuals behaviour is affected when he/she has

own interest in something. As a consumer, person tries to

minimize the cost and maximize his benefit. Such an example

can be an individual purchasing a CNG or Solar vehicle in

order to save the cost of petrol or diesel. This indirectly leads

to fulfillment of social responsibility as CNG is environment

friendly.

Although forms of ethical consumption have been around for

a long time, this phenomenon has only risen to prominence in

the last decade (Carrigan, Szmigin and Wright, 2004). Today,

ethical consumerism addresses the social and environmental

consequences of globalization, where the “consumer considers

not only individual but also social goals, ideals and ideologies”

(Uusitalo and Oksanen, 2004). This has fueled a debate on the

importance of ethical consumerism to the marketing of products

and the day-to-day strategic management of business (Auger,

Burke, Devinney and Louviere, 2003). It is apparent from the

arguments above that for the consumer who cares about

corporate social responsibility (CSR), the level of social

responsibility observed by companies bolsters or diminishes

the value of the product or service that they provide (Mohr

and Webb, 2005). What makes for a socially responsible and

ethical consumer? Are all consumers socially responsible? A

number of researchers have investigated the characteristic of

this ethical and socially responsible consumer (Antil, 1984;

Leigh, Murphy and Enis, 1988; Roberts, 1995). Their findings

suggest that a number of personal traits would affect ‘if’ or

‘how’ strongly consumers respond to a company’s level of

social responsibility. They termed one such attribute socially

responsible consumer behavior (SRCB), which is an enduring

trait that involves the consumer’s concept of self.

Socially responsible consumer behaviour involves the concept

of Ethical consumerism (alternatively called ethical

consumption, ethical purchasing, moral purchasing, ethical

sourcing, ethical shopping or green consumerism) is a type of

consumer activism that is based on the concept of dollar voting.

It is practiced through ‘positive buying’ in that ethical products

are favored, or ‘moral boycott’, that is negative purchasing

and company-based purchasing.

OBJECTIVE OF THE STUDY

To identify demographic and socio-psychological factors which

influence the socially responsible behaviour of consumers.

RESEARCH METHODOLOGY

Data Collection

The data has been collected from primary sources. Descriptive

research design is adopted in this paper. Data collection

instrument is questionnaire which is designed using

standardized scale having 30 questions in all. Convenience

and judgmental sampling is used. Total sample size was 150

respondents.

To identify the relevant factors influencing socially responsible

behaviour, factor analysis is used. T-test and Anova are used

to test the influence of demographic attributes on socially

responsible behavior.

LITERATURE REVIEW

Today’s consumers are fully informed and committed ethical

consumers who seek out environmentally friendly product and

boycott those firms perceived as unethical as the information

guides the ethical purchasing behaviour, Sproles et al., (1978).

According to Roberts (1996) an attitude-behaviour gap was

identified where the consumers expressed willingness to make

ethical purchases linked to good reputation. The discussion

was taken to some respondents where they stated that if the

consumers were made aware of any unethical corporate

behaviour through media exposure it would affect their

purchase decision. Like everyone knows about McDonald’s

cutting down trees and promoting unhealthy food but still

everyone eats at McDonalds. At the end all respondents thought

that the firm’s social behaviour doesn’t influence the purchase

behaviour of consumers and it depends on every consumer

what attitude he/she has while purchasing the product.

Mohr, Webb, and Harris (2004) defined consumers with the

SRCB trait as ‘‘a person basing his or her acquisition, usage,

and disposition of products on a desire to minimize or eliminate

any harmful effects and maximize the long-run beneficial

impact on society.’’ Consumers who are high on this attribute

would alter their consumption pattern in a wide variety of ways

in order to endeavor toward the ideal of improving society.

They would avoid buying products that might harm society or

the environment and actively seek out products and services

from companies that practice social responsibility (Mohr and

Webb, 2005). Schrum, McCarthy and Lowry (1995) further

classified this segment of consumers as more likely to be

opinion leaders, knowledgeable information seekers and careful

shoppers. They found that only consumers that were active

information seekers would switch from their current brand to

a less effective but environmentally friendly brand. However,

some limitations of the SRCB approach may be that existing

concepts of SRCB imposed on consumers represent the first

and foremost limitation of the study. Respondents had to rate

the importance of different responsibilities and actions that

had been defined and classified in advance. Therefore, the

findings report on their evaluations of certain pre-defined

concepts of socially responsible behavior, but do not describe

consumers’ own definition of these responsibilities.

Haesun and Stoel (2005) explained a model of socially

responsible buying decision making process. It has become a

complicated issue in the society and for which the purpose of

the study was to build an exploratory model by adopting ethics

and attitude theories. The Socially Responsible Behaviour

(SRB) scale created for this study is focused on the apparel/

shoe buying context, which may limit its applicability to other

industries. Also, SRB was measured through subjective


perceptions of the respondents, which may be subject to some

degree of social desirability bias. One source of optimism

comes from confirmation that the economic downturn has not

dented people’s desire to minimise their impact on the

environment and their spend on ethical products. What is also

clear is that behaviour change is possible, with basic

environmentally friendly actions, such as switching off unused

lights, recycling and washing at 40 degrees or lower now deeply

ingrained. For example, virtually all those over 16 years old

undertake at least one environmental or ethical action regularly.

The purchase of ethical products with high awareness and broad

appeal, like fair trade and locally produced goods, is also on

the rise. But the very scale of the issues that are being faced,

especially around climate change, makes many individuals feel

powerless and therefore reduces their belief that their own

behaviour can make a meaningful difference. The motive of

the article was to explain the factors that will influence the

consumers to pay premium for a product or service providing

ethical information.

According to Carter Robert E (1997) there is a sequence of

events that leads consumers to be willing to pay premium as

the sequence starts with need for information which in turn

leads to socially responsible behaviour, social sacrifice and

finally influences to pay premium price for ethical information

about products and services. The research involves the multi-

step consumer decision making process that marketers also

have to understand in order to market a premium priced product

they should also provide a product with social benefit.

Therefore socially responsible behaviour is not limited to pay

premium for the products but willingness to make sacrifice

which then further leads to intentions to pay a premium price.

Willingness to pay more is consistent across income groups,

per the report. When sorting by age, though, the study reveals

a strong increase in the percentage of youth with that inclination.

According to Kaushik and Gandhi (2016), there is a need to

promote socially responsible consumption as it would help to

accelerate the economic growth and sustainable development.

It is necessary for each individual to think for the benefit of

entire society while purchasing products or services to facilitate

development of economy. The initiative should be taken by

the government as well as the corporate through CSR initiatives.

The analysis delivered a finding that personal contribution is

the most important factor where there was no difference gender

wise but education involved inverse relationship with socially

responsible consumption behaviour. The people who were in

the middle income group with lower incomes and younger in

age exhibited socially responsible behaviour. The results of

the study will be used to target the customers to focus on the

joy of personal contribution in being socially responsible while

they also fulfill their product purchase needs that could create

a loyal segment of consumers who would buy such products

and further spread a positive word of mouth to convert non

consumers into buyers leading to sustainable economic

development.

Lao (2015) explored the mechanism of the influence of

consumer innovativeness on consumer reasoned green

consumption behaviour to understand more about behaviour

and help improve the green marketing. The study focuses on

consumer innovativeness influence on green consumption

behaviour. The consumer innovativeness influences consumer

attitude, subjective norm and further influences green

consumption intention and behaviour. Furthermore male,

young, highly educated and high income consumers have

stronger consumer innovativeness. The influence of consumer

innovativeness is more in male, old, less educated and low

income consumers. The research made an initial attempt to

establish relationship between consumer innovativeness and

green consumption behaviour. The organic or green products

provide many benefits to the individual as well as the society.

These products are non-toxic, energy and water-efficient and

harmless to the environment are called green products. These

are also recyclable and biodegradable. Products are certified

as green only if they satisfy the norms of government

environmentally preferable products (EPP) program, Fair

Trade, Energy star. Oil Gone Easy Home-This is an eco-friendly

product that is used to clean oil stains. It is called a green

product because it makes use of bioremediation technology,

which cleans oil and fuel spills without harming the

environment.

An individual purchases a CNG or Solar vehicle in order to

save the cost of petrol or diesel. This indirectly leads to

fulfillment of social responsibility as CNG is environment

friendly (Marigold et al, 2015). The role of social values in a

society is highlighted as a resource channel to encourage

environmentally responsible consumer behaviour. Sustainable

consumer behaviour is consumers’ behaviors that improve

social and environmental performance as well as meet their

needs. It studies why and how consumers do or do not

incorporate sustainability issues into their consumption

behaviour. Also, it studies what products consumers do or do

not buy, how they use them and what they do with them

afterwards.

The study by Brookshire (2011) helped in investigating

significant factors which influenced consumers’ willingness

to pay a premium for three different socially responsible

products – organic cotton, sustainable cotton and US grown

cotton. The study findings indicated that more than half of

respondents were willing to pay a premium for organic,

sustainable and US-grown cotton shirts.

Norum and Brookshire’ (2011) further determined consumer

attitudes toward socially responsible apparel, attitudes toward

environment, age, and gender to be significant factors for

consumers’ willingness to pay a premium. Four apparel product

evaluative criteria, brand name, laundering requirements,

colour and fit were also found important for consumers’

willingness to pay a premium. In a nutshell, the findings showed

relationships among attitudes, product evaluative criteria,

demographic characteristics, and willingness to pay a premium


for three different options of socially responsible cotton apparel,

in order to help close the gap between attitudes and behaviour

in consumer research.

An exploratory study conducted by ‘Simona Romani’ and

‘Silvia Grappi’ (2014), tested the role of moral elevation as a

mediator that facilitates the effects of company CSR activities

in social domains on two specific types of pro-social behaviour

displayed by consumers: ‘donating money’ and ‘volunteering

time’ for the same cause sponsored by the company. The authors

conducted two quantitative studies to test their hypothesis. By

using experimental and control conditions, they were able to

manipulate corporate actions in social contexts, and a

meditational analysis was conducted. Further, the results

showed that moral elevation mediates the positive relationship

between CSR activity and consumer intention to donate to

social causes and the CSR activity and volunteering intention.

Singh (2009) used a slightly modified SRCB scale in the study

among two equal groups representing urban and rural

consumers. The study further determined that urban

respondents scored high in all demographic categories in

comparison with rural consumers. The behaviour was quite

symmetrical in both the groups (gender-wise). There was an

inverse relationship between socially responsible consumer

behaviour-mean values and educational level. In respect of age

group, young females demonstrate high scoring on the socially

responsible consumer behaviour scale. According to income

level, significant difference was revealed in urban area where

the lower income category scored high because they had just

begun earning.

Kozar and Connell (2013) developed an online questionnaire

to assess knowledge of and attitude towards, issues of social

responsibility, including social and environmental aspects

related to production and distribution of apparel and textile

goods. Participants were students. Later, it was found that

participants were knowledgeable and attitudes of social and

environmental issues were significant predictors of socially

and environmentally responsible purchasing behaviour. This

study found that consumers have the ability to effect change in

the marketplace through their purchasing behaviour. Socially

and environmentally responsible operation is essential for

development which only reaches its full significance if practiced

on a sustainable basis. Consumers with the socially responsible

consumer behaviour trait act as a person basing his or her

acquisition, usage, and disposition of products on a desire to

minimize or eliminate any harmful effects and maximize the

long-run beneficial impact on society. Consumers who are high

on this attribute would alter their consumption pattern in a wide

variety of ways in order to endeavor toward the ideal of

improving society. They would avoid buying products that

might harm society or the environment and actively seek out

products and services from companies that practice social

responsibility.

Culture can be seen as a system of meanings shared by members

of a specific society. Different cultures may give prominence

to different values and these values can affect the roles that

companies play in society, Burton, Farh and Hegarty, (2000).

Culture represents an evolving and on-going set of norms and

values, where acculturation is characterized by conflict,

creativity, democratization, disagreement, innovation, internal

or external industrialization and modernization (Oyserman

1993; Rohner 1984). Research on cultural values (Hofstede,

1980) suggests that the value systems differ from country to

country. Fischer et al. (2010) argue that in the context of

marketing, this can be relevant since the meaning of brands

may vary between individuals from different countries.

The collection of information for the estimation of the model

was done through surveys and the main findings suggested

that Portuguese consumers are guided by personal cultural

values as Consumer Innovativeness, Tradition and Consumer

Ethnocentrism which influences consumer perceptions about

the social responsibility practices. Schneider Susan et al 2005,

further determined these factors or elements as – cognition,

values and emotions. According to the findings, cognition refers

to ascription of responsibility to oneself that determines whether

people act in accordance of their moral obligation (Eisenberg,

1996). It is a personal feeling that motivates voluntary

responsible behavior and if a consumer has a high score on its

integrity and morality, he will be highly socially responsible.

The purpose of this research paper was to highlight the role

and importance of consumer education and awareness in

enhancing or developing socially responsible behavior. Alvin

and Ben (2000) observed and concluded in their findings that

consumer education programs can provide significant benefits,

including identification of market information, complaint and

consumer redress procedures and understanding a more

advanced, updated and technology–based consumer

environment.

All purchase behaviour is in some sense ethical involves moral

judgment. The paper is more focused on ethical decision

making involving purchase decisions where those ethical

concerns are tied to business practices. Sandra J. Burke

developed hypothesis which had different results as each had

different concerns.

ANALYSIS AND DISCUSSION

Reliability Test

Table 1: Reliability Measurement

Reliability Statistics

Cronbach's Alpha N of Items

0.921 29

By using SPSS software, reliability test was The Th The

consistency of the questionnaire was evaluated using

Cronebach’s Alpha value which was calculated as 0.921. Since

the value of Cronbach’s Alpha is more than the acceptable value

of 0.6, it implies that the scale used is reliable.


Table 2: KMO and Bartlett’s Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.895

Approx. Chi-Square 1628.652

Df 351

Bartlett's Test of Sphericity Sig. 0.000

Table 3: Total Variance Table

Initial Eigen values Extraction Sums of

Squared Loadings

Rotation Sums of Squared

Loadings

Component

Total % of

Variance

Cumulative

%

Total % of

Variance

Cumm

%

Total % of

Variance

Cumulative

%

1 11.52 42.681 42.681 11.52 42.681 42.681 5.032 18.636 18.636

2 2.118 7.844 50.526 2.118 7.844 50.526 4.4 16.297 34.933

3 1.619 5.995 56.521 1.619 5.995 56.521 3.569 13.219 48.151

4 1.228 4.55 61.071 1.228 4.55 61.071 3.488 12.92 61.071

5 0.99 3.666 64.738

6 0.905 3.35 68.088

7 0.871 3.225 71.312

8 0.779 2.885 74.197

9 0.664 2.46 76.657

10 0.647 2.396 79.053

11 0.605 2.241 81.293

12 0.557 2.061 83.355

13 0.545 2.019 85.374

14 0.482 1.785 87.158

15 0.464 1.719 88.877

16 0.421 1.56 90.437

17 0.386 1.43 91.867

18 0.342 1.267 93.134

19 0.312 1.156 94.289

20 0.286 1.061 95.35

21 0.255 0.945 96.295

22 0.222 0.821 97.116

23 0.209 0.775 97.891

24 0.178 0.658 98.549

25 0.153 0.568 99.117

26 0.133 0.492 99.609

27 0.106 0.391 100

Factor Analysis

To ascertain the compatibility of the data for performing factor

analysis using Principle Component menthod, Kaiser-Meyer

Olkin (KMO) and Bertlett’s test have been conducted. KMO

measure is 0.895 (As shown in Table-2) which is more than

the acceptable value of 0.7 ensuring the adequacy of data. It

means that the data is sufficient.


As shown in Table-3, only those components have been selected

whose Eigen values are greater than 1. The total variance

explained from first four components (also called factors) is

61.07%. Basing upon the factors loading given by rotated

component matrix, statements associated with each of the four

factors were identified. All the statements having cross-loadings

were either removed or were added with the factor having more

relevance with the statement. The four factors identified are,

Individual Effectiveness, Social Security, Social Inclination

and Social Saving.

The first factor of ‘Individual Effectiveness’ has nine statements

which explains 42.68% of the variation in SRB of the consumer

(Refer Table 3 column 4). The statements of the first factor

along with the reliability of their scale are shown in Table 4.

The second factor of ‘Social Security’ has seven statements

which along with the first statement (cumulatively) explain

50.52% of variation in the SRB (Refer Table 3 column 4). The

statements of the second factor along with the reliability of

their scale are shown in Table 5. The third factor of ‘Social

Inclination’ has 5 statements to measure and it cumulatively

explains 56.52% of variation in SRB (Refer Table 3 column

4). The statements of this third factor long with the reliability

of the scale are shown in Table 6.

Table 4: Factor 1 (Individual Effectiveness)

S. No. Statements Loading Reliability

(Cronebach’s

Alpha Value)

1 I believe that my contribution will make a difference in the society. 0.821

2 I believe that my contribution will make a difference in the environment. 0.763

3 Being socially responsible is the most important factor to make the society a better place for present as well as future generation

0.685

4 I avoid buying from companies that harm endangered plants and animals. 0.680

5 Whenever possible, I walk, or use public transportation to help reduce air pollution.

0.647

6 I ask my friends to be more socially and environmentally responsible. 0.605

7 I get influenced by any of my friend, colleague or family member’s responsible behaviour towards the society and environment.

0.604

8 Whenever possible, I buy products packaged in reusable containers. 0.568

9 When I have a choice between two equal products, I always purchase the one that is less harmful to other people and to the environment.

0.549

0.914

Table 5: Factor 2 (Social Security)


(Cronebach’s

Alpha Value)

1 I try to buy from companies that hire people with disabilities. 0.794

2 I make an effort to buy products/services from companies that pay all their employees a living wage.

0.766

3 When given a chance, I switch brands where a portion of the price is donated to charity.

0.739

4 I try to buy from companies that support victims of natural calamities. 0.645

5 I am willing to pay a premium price for an environment friendly product. 0.638

6 I help in recycling plastic containers. 0.566

7 When I am shopping, I try to buy from companies that are working to improve conditions for the employees in their factories.

0.508

0.869


Table 6: Factor 3 (Social Inclination)


(Cronebach

Alpha Value)

1 I ask others to be socially responsible. 0.629

2 Whenever possible I car pool to help reduce air pollution 0.717

3 I try to buy from companies that make donations to medical research. 0.589

4 I try to buy from companies that help the needy. 0.588

5 I avoid products that pollute water 0.504

0.819

Table 7: Factor 4 (Social Savings)


(Cronebach

Alpha Value)

1 I will not buy a product/service made using child labour. 0.562

2 I make an effort to avoid products/services that cause environmental damage.

0.697

3 I avoid using products that pollute air 0.481

4 I limit my use of energy or natural gas to reduce my impact on environment.

0.617

5 I avoid products /services from a company that discriminate against minorities

0.480

6 I avoid buying products that are made from endangered animals 0.548

0.799

Fourth factor of ‘Social Saving’ has six statements which along

with the first statement (cumulatively) explain 61.7% of

variation in the SRB (Refer Table 3 column 4). The statements

of the fourth factor along with the reliability of their scale are

shown in Table 7.

FINDINGS/RESULTS OF THE STUDY

After doing factor analysis, four factors were formed namely:

(a) Individual Effectiveness

(b) Social Security

(c) Social Inclination and

(d) Social Savings

Further, individual reliability of these factors was calculated

and in order to be reliable, individual effectiveness should be

more than 0.7. It was observed that individual reliability of

each factor was greater than 0.7, i.e., 0.914, 0.869, 0.819 and

0.799 respectively.

However, all these four factors explain approximately 61% of

the variation in SRB. It means other factors which are not

identified through this paper. Other demographic factors might

also have influence on SRB.

REFERENCES

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FACTORS AFFECTING CONSUMER PERCEPTION TOWARDS ONLINE SHOPPING

Satish Chandra Gaur1

Shreyansh Jain2

ABSTRACT

Online trend for shopping in India has grown in the last few years. When we compare our country to other countries leading in

online shopping, we find our self at the beginning stage. In this current scenario internet touches everyone's life directly or

indirectly. In this era of innovation in management social and digital platforms becomes a powerful and cost free approach for

businesses to attract consumer. Internet plays a vital role in the life of youth globally so, India is no exception. There was a time

for window shopping but now youth want to spend more time on online shopping websites like Amazon, Myntra, Flipkart,

Snapdeal, Olx, Jabong etc. With the growth of Internet, Industries have chosen different ways of marketing and distribution. The

purpose of this study is to examine the different factors that influence consumer perception towards e-shopping. Mainly primary

data were collected through questionnaire for the study. The study is also helpful for researchers who want to know the different

factors play a vital role to understand online shopping.

Keywords: Consumer Perception, Demographic factors, Online Shopping and Purchase Decision.

1 Associate Professor, Gitarattan International B-School, Rohini, Delhi,Email: [email protected] Student (2014-15), Gitarattan International B-School, Delhi, Email: [email protected]

INTRODUCTION

Internet is not only a networking medium, but also a means of

transaction for customers at global market. Internet changed

the way customers shop and buy goods and services.

Customer is no longer bound to opening times or specific

location to purchase the products or services. For instance,

consumers recognize the need for buying some product, they

refer to the Internet to buy online. They start search for the

information and look for all the alternatives and finally make a

purchase which best fits to their needs. Before making final

purchase consumers are bombarded by several factors which

limit or influence consumers for the final decision. Many

companies now operate on the Internet. Some of companies

only have a web presence, called as click-only dot-coms, such

as Amazon.com and Expedia.com. These companies sell

products and services directly to consumers via the Internet.

On the other hand traditional companies also enhance their

marketing strategies to adopt today’s requirements and create

their own online sales channels and become click-and-mortar

companies. Nowadays it is hard to find an organization that

doesn’t have a web presence. E-commerce is divided into four

categories considering the characteristics of the buying and

selling parties.

These categories are: business to business (B2B), business to

consumer (B2C) or consumer to consumer (C2C) or consumer

to business (C2B). B2B e-commerce is the electronic support

of business transactions between companies and covers a broad

spectrum of applications that enable an enterprise or business

to form electronic relationships with their distributors, resellers,

suppliers, and other partners. E-commerce help businesses to

enhance their organizational coordination and decrease

transaction costs for the buyer teams. Furthermore, Wise and

Morrison state that e-commerce helps organisations to access

too many buyers and sellers.

Business to consumer (B2C) e-commerce activities also known

as e-retailing, take place between organizations and the

customers. E-commerce is just another tool for retail companies

selling products by using web-based technologies.

www.gap.com is an example for this kind of companies which

use a web site to reach their customers and also providing

shipping services. To overcome apprehensions such as products

cannot be seen or touched by consumers or customers do not

have a previous experience, companies have to reassure

customers on theses aspects. The trust is an important element

for commercial activities more so for electronic transactions.

Moreover, organisations should be customer-centric.

C2C e-commerce, The third type is consumer to consumer e-

commerce action which provides to consumers to put their

goods on the market for other consumers ‘in auction format’.

eBay is the first and most popular C2C type of e-commerce

company. If an individual wishes to sell its product, can simply

register to a web-site and put the product on the market. After

that a buyer can browse and search the product they interested

in. Later, if the buyer is willing to buy the product they can buy

it directly from the seller. In this way, the organization (eBay)

acts as an interface between two players and generates revenue

from this action. Organizations usually charge fees from seller

side, not from the buyer. The final online marketing domain is

consumer to business online marketing. With today’s Internet

environment consumers can reach companies easily. Using the

web, consumers can carry out transactions with businesses,

rather than the other way around.


Global Internet Shopping Scenario

The rapidly increasing popularity of online shopping is a truly

global phenomenon. Online shoppers can be found scattered

across the globe, but the world’s most avid Internet shoppers

hail from South Korea - 99 percent of Internet users in South

Korea have shopped online. German, British and Japanese

consumers come in a close second. US consumers are slightly

more recalcitrant, clocking in at number eight. At the other

end of the spectrum, the world’s slowest adopters come from

Egypt, where 67 percent of the online population have never

made a purchase over the Internet, followed by Pakistan (60%)

and Philippines (55%).

LITERATURE REVIEW

Jadhav and Khanna (2016) concluded that the main influencing

factors for online shopping were identified as availability, low

price, promotions, comparison, convenience, customer service,

perceived ease of use, attitude, time consciousness, trust and

variety seeking. Gupta and Bansal (2016) concluded from the

study that online shopping via such social media platforms

was effective way for marketers to promote their products in

the market and for building a brand image among consumers.

Shanthi and Kannaiah (2015) in their study on suggested that

the majority of the people who shop online buys books online

as it were cheaper compared to the market price with various

discounts and offers. The second most influencing factor was

security, the third most influencing factor on online purchase

was Guarantees and Warrantees followed by delivery time.

Puranik and Bansal (2014) conducted a research and as a result

of study seven factors emerged, they were: Relevant

Information, Trustworthiness, Prior Experience, Instant

Review, Product Delivery, Transparency and Image of Seller.

The study helps in understanding the drivers of consumer

perception and their intention to shop on the Internet.

Jain, Goswami and Bhutani (2014) conducted a research on

Consumer Behavior towards Online Shopping. The research

findings revealed that perceived risk negatively impact

consumers attitude towards online shopping while perceived

usefulness, perceived ease of use and perceived enjoyment has

no impact on consumers’ attitude towards online shopping.

Kumar and Rawat (2013) gave three factors that describe the

consumer perceptions on online promotions were:

Effectiveness, Credibility and Impulsiveness.

Xiaoying, Ling, Kwek, Liu and Min (2012) findings revealed

that website design, security, information quality, payment

method, e-service quality, product quality, product variety and

delivery service were positively related to consumer satisfaction

towards online shopping in China.

Salehi (2012) study was focused on nine independent variables

namely appearance, quick loading, security, sitemap, validity,

promotion, attractiveness, believability, and originality. The

findings of the study indicated that the first five factors influence

consumers towards online shopping and security is the factor

that contributes most towards online shopping.

Delafrooz and Ali (2010) research indicated that utilitarian

orientation, convenience, price, and a wider selection

influenced consumers’ attitudes towards online shopping.

Chuleeporn (2006) in his findings three factors (past

experience, perceived benefits, and perceived ease of online

shopping) were rated higher by the online group. Such results

indicate that those consumers who perceived a higher risk and

higher uncertainty with online shopping prefer shopping at a

physical store.

Shergill (2005) conducted a study where seventeen variables

were divided in to four major factors namely Website Design,

Website Reliability/Fulfillment, Website Customer Service and

Website Privacy/Security. The findings were: Website reliability

and fulfillment had the highest rating score, followed by website

customer service. Website design ranked third, and the lowest

was website security/privacy. One of the findings also indicated

that different types of online purchasers (i.e., trial, occasional,

frequent and regular online buyers) have different evaluations

of website design and website reliability/fulfillment. They have

a similar evaluation of website security/privacy and website

customer service.

OBJECTIVES OF STUDY

To identify the factors affecting consumer perception towards

online shopping.


The primary data was collected from customers located in

Delhi/NCR with the help of a self-constructed and pre-tested

questionnaire. For valid and reliable results, convenience and

judgment sampling method has been undertaken including

customers segments in a sample size of 100. Reliability and

validity of the questionnaire was established during the pre-

testing phase. The study is descriptive in nature. The cross-

sectional study design was used. Techniques used for data

analysis is Factor Analysis. A Questionnaire including 19

statements was used as the major tool for collecting primary

data while journals, Internet and magazines and other relevant

publications have been used as secondary sources of data.

RESULTS AND DISCUSSIONS

The value of Cronbach’s Alpha was found to be 0.893(Table

1), which indicates that the questionnaire was found to be

reliable to be used for the study.


Table 1: Reliability Statistics

Cronbach's Alpha No. of Items

0.893 19

Kaiser-Meyer-Olkin Test

Since the value of Kaiser-Meyer-Olkin Measure of Sampling

Adequacy is more than 0.7, we can say that data is adequate.

We can proceed with the factor analysis.


Kaiser-Meyer-Olkin

Measure of Sampling

Adequacy

.803

Approx. Chi-Square

979.448

df 171

Bartlett's Test of Sphericity

Sig. .000

Factor Analysis

As shown in Table 3, four factors have been extracted having

Eigen value more than 1. The cumulative variance explained

by these four factors is 62.64%, which means that these four

factors cumulatively explain 62.64% variation in consumer

perception towards online shopping.

By using Factor Analysis four factors were identified as shown

in Table 4 (a) to (d). Factor Loading of each statement is also

shown in Table 4. These factors are Website design/features,

Referential Marketing, Time Saving, Convenience and Security

that affect the consumers’ perception towards online shopping

CONCLUSION

Online shopping is becoming more popular day by day with

the increase in the usage of World Wide Web. This study

focused on factors that influence consumers to shop online.

From the results we have concluded that the most influencing

factor is website design/features followed by referential

marketing.

Table 3: Eigen Values and Variance

Total Variance Explained

Initial Eigen Values Extraction Sums of Squared

Loadings

Rotation Sums of Squared

Loadings

Comp

onent

Total % of

Variance

Cumulative

%

Total % of

Variance

Cumulative % Total % of

Variance

Cumulative

%

1 6.952 36.590 36.590 6.952 36.590 36.590 4.861 25.583 25.583

2 2.250 11.843 48.433 2.250 11.843 48.433 2.788 14.672 40.255

3 1.625 8.551 56.984 1.625 8.551 56.984 2.237 11.773 52.028

4 1.075 5.657 62.641 1.075 5.657 62.641 2.017 10.613 62.641

5 .992 5.223 67.864

6 .882 4.641 72.504

7 .788 4.146 76.651

8 .760 4.000 80.651

9 .615 3.239 83.890

10 .536 2.820 86.710

11 .435 2.290 89.000

12 .416 2.188 91.188

13 .361 1.901 93.089

14 .312 1.643 94.733

15 .289 1.521 96.254

16 .266 1.400 97.654

17 .178 .938 98.591

18 .148 .780 99.372

19 .119 .628 100.000

Extraction Method: Principal Component Analysis.


Table 4 (a): Rotated Component Matrix

Component (Factor Loading) Factor 1: Website Design/Features

1 2 3 4

While shopping online, I prefer to purchase from a website that provides safety and ease of navigation and order.

.788

I can buy the products anytime 24 hours a day while shopping online. .770

I like to shop online from a trustworthy website. .692

I prefer to buy from website that provides me with quality of information. .685

The website design helps me in searching the products easily. .672

The website layout helps me in searching and selecting the right product while shopping online.

.663

Detail information is available while shopping online. .663

It is easy to choose and make comparison with other products while shopping online.

.653

Table 4 (b): Rotated Component Matrix

Component (Factor Loading) Factor 2: Referential Marketing

1 2 3 4

The opinion and experiences of my family affect my purchase decision. .842

The opinion and experiences of my friends affect my purchase decision. .806

Table 4 (c): Rotated Component Matrix

Component (Factor Loading) Factor 3: Time Saving

1 2 3 4

Online shopping saves time. .865

Online shopping takes less time to purchase. .674

I feel that it takes less time in evaluating and selecting a product while shopping online. .627

Table 4 (d): Rotated Component Matrix

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1. Constantini Desefthymios (2004), Inˆ ûuencing the online

consumer’s behavior: the web experience retrived from

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shopping behavior: an empirical study, Journal of

American Science 6(1).

3. Dhola Kiaroy Ruby and Uusitaloouti (2002)., Switching

to electronic stores: consumer characteristics and the

perception of shopping benefits, international journal of

retail and distribution management, September.

4. Gupta Shweta, & Bansal Ekta (2016), Consumer

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5. Guoxiaoying, Ling choonk Wek & Liu Min (2012),

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7. Jain Dipti, Goswami Sonia and Bhutani Shipra (2014),

Consumer behavior towards online shopping: an empirical

study from Delhi, Journal of Business and Management

16(9).

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customer perceptions towards online promotions,

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social & management sciences 1(3).

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based shopping: consumers’ attitudes towards online

shopping in new zealand, Journal of Electronic Commerce

Research, 6 (2).


EMOTIONAL BRAND RELATIONSHIP IN HOSPITALITY INDUSTRY:

A STUDY ON HOSPITALITY BRANDING IN DELHI/NCR

Uma Gulati1

Anirudh Kumaria2

ABSTRACT

The Hospitality industry is defined as "hosts offering services to guests", which includes reception, entertainment, and other

services for travelers and tourists. Hospitality is a long running folklore in India. India holds a special place in the international

world of hospitality. In the highly competitive hotel industry, where products and services have reached "commodity" status,

hoteliers are required to find ways to set their products and services apart from other. Every time the consumer takes the direct

path to hotel, marketers save on marketing and sales spend required to capture new customers and induce them to select their

services over competition. In hospitality industry, there are few differences between the offerings made by one player and

another, brand differentiation are vital for regular customers. This need has given rise to the use of emotional brand relationship

strategies as a source of differentiation. This study makes an attempt to give broad overview of emotional brand relationship

growing in the industry. The purpose of this study is to investigate emotional brand relationship in hospitality industry among

different demographic groups. Data collected has been analyzed using descriptive statistics, independent sample t test and

ANOVA. The study finds that there is no difference in perception of gender group and married and single group towards

emotional brand relationship in hospitality Industry. The study also finds that there is significant difference in perception of

different age and occupation group towards emotional brand relationship but there is no significant difference in perception of

different income group towards Emotional brand relationship. Marketers would gain much by continuously monitoring customers'

perceptions towards emotional brand relationship in Hospitality Industry.

Keywords: Brand differentiation, Brand relationship strategies, Emotional brand relationship, Hospitality, Perception.

1 Associate Professor, Gitarattan International Business School, Delhi. [email protected] Student, MBA (2014-16), Gitarattan International Business School, Delhi

INTRODUCTION

The Indian hospitality industry has emerged as one of the key

industries driving growth of the services sector in India. The

fortunes of the hospitality industry have always been linked to

the prospects of the tourism industry and tourism is the foremost

demand driver of the industry. The Indian hospitality industry

has recorded healthy growth fuelled by robust inflow of foreign

tourists as well as increased tourist movement within the

country. It has become one of the leading players in the global

industry with innovations taking place at different levels

providing signal for future growth and prosperity at all levels.

The hospitality industry is a broad category of fields within

the service industry that includes lodging, event planning, theme

parks, transportation, cruise line, and additional fields within

the tourism industry. The hospitality industry is a multibillion-

dollar industry that depends on the availability of leisure time

and disposable income. A hospitality unit such as a restaurant,

hotel, or an amusement park consists of multiple groups such

as facility maintenance and direct operations (servers,

housekeepers, porters, kitchen workers, bartenders,

management, marketing, and human resources etc.) Innovations

in the Indian hospitality sector can be analyzed on many

different levels. This analysis makes an attempt to give a broad

overview on innovations taking place in the industry according

to various categories of hotels as well as relevant functions,

concluding with a brief outlook on future directions these

innovations might take. India holds a special place in the

international world of hospitality.

Culturally, the country might very well be the most diverse

place in the world. It is a vivid kaleidoscope of landscapes,

magnificent historical sites and royal cities, misty mountain

retreats, colorful people, rich cultures, and festivities. Luxurious

and destitute, hot and cold, chaotic and tranquil, ancient and

modern - India’s extremes rarely fail to leave a lasting

impression. The hospitality industry is defined as “hosts

offering services to guests”, which includes reception,

entertainment, and other services for travellers and tourists.

Hospitality is a long running tradition in India. From the

majestic Himalayas and the stark deserts of Rajasthan, over

beautiful beaches and lush tropical forests, to idyllic villages

and bustling cities, India offers unique opportunities for every

individual preference. However, until fairly recently this was

hardly evident when looking at India’s hospitality industry. By

now, accommodation options throughout India have become

extremely diverse; from cozy home stay sand tribal huts to

stunning heritage mansions and maharaja palaces.

From Kashmir to Kanyakumari, from Gujarat to Assam, there

are different cultures, languages, life styles, and cuisines. This


variety is increasingly reflected by many forms of

accommodation available in India, ranging from the simplicity

of local guest houses and government bungalows to the opulent

luxury of royal palaces and five star deluxe hotel suites. People

spend a lot on stay to whichever place they go. Selection of

hotel is one important activity which brings brand relationship

into picture. Good experience with a hotel will fetch the same

customer again and again. Similarly is the case with dining

services.

Restaurants play a vital role in today’s society. They provide a

convenience for busy two-career families and a means of

entertainment for those who enjoy going out and having others

prepare and serve food to them. Restaurants were originally

established as a necessary option for people who had to be

away from home and couldn’t use their own kitchens. The

aesthetics, staff, services, food all add up to create emotional

brand relationship with the restaurant. Service recovery is

difficult in hospitality industry; therefore, marketers have to

be cautious for everything they provide. The study tries to make

an attempt to find out as to how brand relationship is built in

hospitality industry and how emotional brand relationship is

created in this Industry.

LITERATURE REVIEW

Blackston (1992) is among the first to identify an overt

connection between feelings and brand relationships. He sees

brand relationships as analogous to relationships between

people: “The concept of a relationship with a brand is neither

novel nor outrageous. It is readily understandable as an

analogue between brand and consumer of that complex of

cognitive, affective, and behavioral processes which constitute

a relationship between two people”. This suggests that feelings

operate equally alongside performance and usage in defining

relationships, but most people now believe that feelings tend

to exert the greater influence. As Gordon puts it, “There is no

such thing as ‘rational’ versus ‘emotional’—the two are

intertwined. Sometimes ‘rational ‘appears to take the high

ground, but ‘emotional’ is the underlying force” Gordon (2006).

And although experimental work has been done on the nature

and properties of different types of person-brand relationships

Aaker and Fournier (1995); Aggarwal (2004), and also on the

potential causes of breakup of person-brand relationships

Aaker, Fournier, and Brasel (2004) Fajer and Schouten (1995),

little has been done to examine exactly how emotions in

advertising contributes toward and strengthens brand

relationships.

Early discussions about the way people feel about brands

centered mainly on the concept of brand personality. Plummer

(1985) describes brand personality as “an articulation of what

we would like consumers out there in the world to feel about

our brand over time.”And although he did not use the term

relationship, he clearly envisaged a relationship situation when

he imagined those who use and favor brands saying that they

see themselves in that brand. Common usage of the term brand

relationships grew in the late ’90s, alongside the drive to

develop improved customer satisfaction. This has led some to

assume that brand relationships have little to do with advertising

and come into existence only when a product or service is being

used.

Relationship marketing has been expended in the consumer

setting, with Fournier (1998) conceptualization of Brand

Relationship Quality (BRQ) framework. The superiority of

brand relationship metaphor is explained in its ability to provide

insight into roles of brands in consumers’ lives and understand

consumers’ needs Breivik & Thorbjornsen, (2008); Fournier

(1998); Monga, (2002). To date, brand relationship has reached

a new phase, becoming one of the principal foci of research on

consumers and brands, Aaker, Fournier, & Brasel, (2004);

Breivik & Thorbjornsen (2008); Chang & Chieng (2006); Haas

(2007); He (2006); Huber, Vollhardt, Matthes, & Vogel (2009);

Ji(2002); Kaltcheva & Weitz (1999); Kates (2000). However,

the suitability of metaphoric transfer of the human metaphor

to the consumer-brand context for all the brands is still unclear

and whether brand relationship quality could influence

consumers’ intentions and behavior in hotel industry is limited.

Mattila (2006) in his study stated that in highly competitive

hotel industry, hoteliers are required to find ways to set their

products and services apart from others. Choi and Chu (2001)

in his study “customer satisfaction and retention in the Hotel

industry” stated that positive relationship can create customer’s

higher commitment and increase their return rate. Hotels are

increasing their investments to improve service quality and

the perceived value for guests so as to achieve better customer

satisfaction and loyalty, thus resulting in better relationships

with each customer, Hederick, Beverland & Minahan (2007).

Relationship quality has a remarkable positive effect on hotel

guests’ behavior: it creates positive word of mouth (WOM)

and increments repeated guest rates (Kim et al., 2001). This

need has given rise to the use of branding strategies as a source

of differentiation.

Building strong hotel brands creates value for both the firm

and the customer. This is the reason that Marketers want to

build emotional brand relationship with their customers. To

gain new insights in this important area, the purpose of this

study is to examine the applicability in hotel industry and

especially investigates the effects of brand relationship quality

on hotel consumer’s behaviors under the circumstance of

service failures. In the business arena, every manager hopes to

prolong their business lifespan through customer loyalty.

Therefore, it is important to understand the predictor and

influence of customer trust in order to strengthen the customer-

brand relationship. Customer trust is formed from rational and

emotional perspective. However, the latter trust is less studied

despite being argued to be more stable as compared to rational-

based trust.

OBJECTIVES OF THE STUDY

(a) To examine the emotional brand relationship of the

customer in Hospitality industry.


(b) To study the significant difference in perception among

different demographic groups towards emotional brand

relationship in hospitality industry .

HYPOTHESES OF THE STUDY

H1: There is significant difference in perception of male and

female towards the emotional brand relationship in hospitality

industry.

H2: There is significant difference in perception of married &

single people towards the emotional brand relationship in

hospitality industry.

H3: There is significant difference in perception of different

age groups towards the emotional brand relationship in



occupation groups towards the emotional brand relationship

in hospitality industry.


income groups towards the emotional brand relationship in


RESEARCH METHODOLGY

Research Framework

The purpose of the current research was to study the perception

of different demographic groups towards the emotional brand

relationship in hospitality industry. According to the objective

of the research, the study proposes emotional brand relationship

as dependent variable and based on the purpose of the study,

perception towards emotional brand relationship has been

measured among different demographic factors like gender,

age marital status, occupation and income. These factors are

independent variables and each of them has been measured on

categorical scale.

Methodology for Data Collection

Perception towards emotional brand relationship among

different demographic factors has been measured using 18

statements on five point Likert scale. Pilot study was carried

out to check reliability test. The Cronbach Alpha was 0.847

which suggested that the instrument used for the study is

appropriate. Both primary and secondary sources were used

for data collection. A structured questionnaire was major tool

for collecting data while journals, magazines, Internet and other

relevant manuals and publications were used for secondary

sources of data.

Sampling Technique

Convenience and judgment sampling were used for data

collection. The reason for using convenience and judgment

sampling was ease of access and to ensure that sample selected

is true representative of the population. Convenience and

judgment sampling were done among the respondents in Delhi/

NCR.

Sample Size

For valid and reliable results, a random selection method was

undertaken including customers of various segments in a

sample size of 108 out of which 8 were rejected. A total of 100

completed questionnaires were considered for final analysis.

Only those respondents who have been regular availing dining

services were eligible for participating in the study.

Methodology used for Data Analysis

Data collected was analyzed using descriptive statistics,

independent sample t test and ANOVA to investigate whether

the group means differ from one another. Each group was

measured on same dependent variable i.e. emotional brand

relationship. T-test was used to test differences in means

between gender (male & female group) and marital status

(married & unmarried group) where as ANOVA was used for

occupation, age and income group. As far as statistical tool is

concerned, SPSS was applied to analyze data.

RESULTS AND DISCUSSIONS

Perception of Male and Female towards Emotional

Brand Relationship

Table 1 shows that in total sample of 100, there are 48 females

and 52 males. The mean for females is 69.71 and the mean for

males is 67.54. The standard deviation for females is 9.70 where

as for males, it is 13.16. Table 2 depicts the output of

indepenedent sample t-test. Since p-value (“sig”) of Levene’s

test is greater than the chosen significance level of 0.05,

therefore the assumption of equal variance across the two

groups (i.e. males and females) has been met. The results for

the actual independent sample t-test would be interpreted from

first row of output. The result shows that the calculated value

t.05

, 98

(.932) is less than critical value t.05, 98

(1.984). Hence we

reject hypothesis (H1) and conclude that there is no significant

difference in the perception of males and females towards

emotional brand relationship in Hospitality Industry.

Table 1: Descriptive Statistics

Dependent

Variable

Gender N Mean Std. Deviation Std. Error

Male 52 67.5385 13.15885 1.82480 Emotional Brand Relationship

Female 48 69.7083 9.70404 1.40066


Table 2: Independent Samples t-Test on Perception for EBR among Gender Group

Independent Samples Test

Levene’s test for Equality

of Variances

t-test for Equality of Means

95% Confidence

Interval of the

Difference

F Sig t

stat

t

critical

df Sig.(2-

tailed)

Mean

Difference

Std. Error

Difference

Lower Upper

Equal variances assumed

4.537

0.36 -.932 1.984 98 .354 -2.16987 2.32801 -6.78973 2.44999

Equal variances not assumed

-.943 93.558 .348 -2.16987 2.30038 -6.73761 2.39787


Dependent

Variable

Gender N Mean Std. Deviation Std. Error

Married 32 65.3125 12.26439 2.16806 Emotional Brand Relationship

Single 68 70.1176 11.06902 1.34232

Table 4: Independent Samples t-Test on Perception for EBR among Single and Married Group

Independent Samples Test

Levene’s test for Equality

of Variances


95% Confidence

Interval of the

Difference

F Sig t

stat

t

critical

df Sig.(2-

tailed)

Mean

Difference

Std. Error

Difference

Lower Upper


.774 0.381 -1.956 1.984 98 .053 -4.80515 2.45685 -9.68069 .07040

Equal variances not assumed

-1.884 55.545

.065 -4.80515 2.354996 -9.91425 .30396

Perception of Married & Single Group towards

Emotional Brand Relationship

Table 3 shows 32 married and 68 single persons in sample

size of 100. The mean for married group is 65.31 and the mean

for single group is 70.12. The standard deviation for married

people is 12.26 where as for single, it is 11.07. Table 4 reveals

the output of independent sample t-test. Since p-value (“sig”)

of Levene’s test is greater than the chosen significance level of

0.05, therefore the assumption of equal variance across the

two groups (i.e. married and single) has been met. The results

for the actual independent sample t-test would be interpreted

from first row of output. The result shows that the calculated

value t.05

, 98

(-1.956) is less than critical value t.05, 98

(1.984),

therefore, we reject hypothesis and conclude that there is no

significant difference in the perception of married and single

group towards emotional brand relationship in Hospitality

Industry.

Perception of Age Groups towards Emotional Brand

Relationship

To test the hypothesis that there is significant difference in

perception of different age groups, one way ANOVA was used.

Four categories for age were taken, viz., below 20, 20 -29, 30-


39 and above 40 years. Table 6 highlights F ratio which is

proportion of variation between groups and within groups. The

mean square of between groups is 711.532 and mean square

of within groups is 117.081. This indicates that variation is

more between groups as compared to within groups. Table 6

shows that calculated value of F .05(3, 96)

is 6.077 where as critical

value of F.05 (3, 96)

is 2.68. Table also shows that p value of

ANOVA (.001) is less than chosen significance level of 0.05.

Since F calculated is larger than F critical, we accept hypothesis

and conclude that there is significant difference in perception

of different age group towards the emotional brand relationship



Age group N Mean Std.

Deviation

Std.

Error

95% Confidence

Interval for Mean

Minimum

Minimum Maximu

m

Below 20 14 65.64 6.368 1.70199 61.9659 69.3198 55.00 80.00

20-29 42 73.74 10.81 1.66785 70.3698 77.1064 50.00 94.00

30-39 21 62.38 9.55 2.08335 58.0352 66.7268 46.00 74.00

40& above 23 66.61 13.65 2.84635 60.7057 72.5117 43.00 91.00

Total 100 68.58 11.62 1.16230 66.2737 70.8863 43.00 94.00

Table 6: One Way ANOVA by Age Groups towards EBR


Occupati

on Group

N Mean Std.

Deviation

Std.

Error

95% Confidence

Interval for Mean

Minimum

Minimum Maximum

Student 32 66.03 10.87 1.92316 62.1089 69.9536 46.00 91.00

Service 22 65.81 14.52 3.09701 59.3776 72.2588 43.00 94.00

Business 46 71.67 9.95 1.46754 68.7181 74.6297 50.00 90.00

Total 100 68.58 11.62 1.16230 66.2737 70.8863 43.00 94.00

Table 8: One Way ANOVA by Occupation towards EBR

Occupation group Sum of Squares df Mean Square F stat F critical Sig.

Between Groups 816.010 2 4028.005 3.151 3.071 .047

Within Groups 12558.350 97 129.468

Total 13374.360 99


Income Group N Mean Std.

Deviation

Std.

Error

95% Confidence

Interval for Mean

Minimu

m

Maxi

mum

Below 2,00,000 35 67.71 10.76 1.81986 64.0159 71.4127 44.00

2,00,000- 299999 21 67.95 11.68 2.54902 62.6352 73.2695 43.00

3,00,000-399999 22 72.18 11.44 2.43943 67.1088 77.2549 49.00

4,00,000 & above 22 66.95 13.05 2.78250 61.1680 72.7411 46.00

Total 100 68.58 11.62 1.16230 66.2737 70.8863 43.00


Table 10: One Way ANOVA by Income towards EBR

Income Group Sum of Squares df Mean

Square

F

stat

F

critical

Sig.

Between Groups 378.037 3 126.012 .931 2.680 .429

Within Groups 12996.323 96 135.378

Total 13374.360 99

To study the perception of occupation groups, three categories

were taken, students, service and business group. Table 8

depicts the results of one way ANOVA where F ratio indicates

that variation is more between different occupation groups as

compared to within groups. ANOVA table shows that calculated

value of F .05(2, 97)

is 3.151 where as critical value of F.05 (2, 97)

is

3.071. We can also see in table that p value of ANOVA (.047)

is less than chosen significance level of 0.05. Since F calculated

is larger than F critical, we accept hypothesis and conclude

that there is significant difference in perception of different

occupation groups towards the emotional brand relationship


Perception of different Income Groups towards Emotional

Brand Relationship

Table 10 affirms the results of one way ANOVA by income

group for testing the significant difference in perception of

income group towards emotional brand relationship. Four

categories of income were considered for studying the

difference in their perception. F ratio in Table 10 indicates

that variation is more within groups as compared to between

groups. Calculated value of F .05(3, 96)

is .931 where as critical

value of F.05 (3, 96)

is 2.680. We can also see in table that p value

of ANOVA (.429) is more than chosen significance level of

0.05. Since F calculated is less than F critical, we reject

hypothesis and conclude that there is no significant difference

in perception of different income groups towards the emotional

brand relationship in hospitality industry.

CONCLUSION

This research focuses on investigating the perception of

consumers towards emotional brand relationship in hospitality

industry. Building strong hotel brands creates value for both

the firm and the customer. This is the reason that marketers

want to build emotional brand relationship with their customers.

The results obtained from the analysis of data throw a

significant amount of light on various parameters which play

an important role in deciding customer brand relationship. It

is evident from the result that male and female consumers carry

same perception towards emotional brand relationship where

as consumers belonging to different age groups carry different

perception towards emotional brand relationship in hospitality

industry.

The perception of consumers belonging to different

occupational groups also carries different perception towards

emotional brand relationship in hospitality industry whereas

consumers of different income group do not differ in their

perception. Hence it would be appropriate to conclude that

emotional brand relationship is an important predictor and

influences customer trust in order to strengthen customer brand

relationship

MANAGERIAL IMPLICATIONS

In a highly competitive hotel industry, marketers have to

understand the emotional brand relationship concept to retain

customers. Services are easily copied, so is the case with

restaurants/ dining services. Every time the consumer turns

towards his hotel/ restaurant, he carries the perception that he

will be treated differently being the regular customer. This

perception has given rise to the use of emotional brand

relationship strategies as a source of differentiation. The

marketer must study customers’ emotions as it plays dominant

role in explaining satisfaction and brand loyalty. Marketers

must understand that the brands are created by building brand

relationship with customers. This study would be a contribution

to enrich marketers’ knowledge of EBR application in service

context and the role of EBR in consumer marketing research.

Moreover, it would be helpful to understand further

complexities in consumer’s perception and to improve the

measurement and tracking of brand loyalties in the marketplace.

With the findings, managers may consider brand relationship

as a strategic tool in building brand loyalty. This study could

be a reference for the hotel organizations to whether the quality

of the consumer-brand relationship should be one of the firm’s

priority lines of action.

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CONSUMERS' ATTITUDE TOWARDS ECO-FRIENDLY PRODUCTS AND THEIR

PURCHASE INTENTION IN THE FAST MOVING CONSUMER GOODS (FMCG) SECTOR

Gayatri Chopra1

Nikhil Rajpal2

ABSTRACT

This research was conducted with the major aim to identify the relationship between consumers' attitude towards eco-friendly

products and their purchase intention in the Fast Moving Consumer Goods (FMCG) sector. Convenience sampling technique

was employed with the sample size of 133 respondents. The primary data for the study was collected using a self-designed

questionnaire. Correlation and Regression analysis was used to identify the relationship between consumers' attitudes towards

eco-friendly products and their purchase intention in the Fast Moving Consumer Goods (FMCG) sector. The study revealed that

there is a significant relationship between consumers' attitudes towards eco-friendly products and their purchase intention. The

key recommendation of the research is about adopting innovative techniques for generating awareness regarding eco-friendly

FMCG products amongst the consumers.

Keywords: Advertising, Attitude, Consumer Behaviour, Eco Friendly, Purchase Intention.

1 Assistant Professor, Gitarattan International Business School, Delhi.2 Student, MBA (2014-16), Gitarattan International Business School, Delhi

INTRODUCTION

Fast-moving consumer goods (FMCG) or consumer packaged

goods (CPG) are products that are sold quickly and at relatively

low cost. Examples include non-durable goods such as soft

drinks, toiletries, over-the-counter drugs, processed foods and

many other consumables. In contrast, durable goods or major

appliances such as kitchen appliances are generally replaced

over a period of several years. The term was coined by Neil H.

Borden in “The Concept of the Marketing Mix” in 1965.

The Indian FMCG sector is the fourth largest sector in the

economy with an estimated size of Rs.1300 billion. The sector

has shown an average annual growth of about 11% per annum

over the last decade. Unlike the developed markets, which are

prominently dominated by few large players, India’s FMCG

market is highly fragmented and a considerable part of the

market comprises of unorganized players selling unbranded

and unpackaged products. There are approximately 12-13

million retail stores in India, out of which 9 million are FMCG

kirana stores.

FMCG have a short shelf life, either as a result of high consumer

demand or because the product deteriorates rapidly. Some

FMCGs, such as meat, fruits and vegetables, dairy products,

and baked goods, are highly perishable. Other goods, such as

alcohol, toiletries, pre-packaged foods, soft drinks, chocolate,

candies, and cleaning products, have high turnover rates. The

sales are sometimes influenced by some holidays and season.

Though the profit margin made on FMCG products is relatively

small (more so for retailers than the producers/suppliers), they

are generally sold in large quantities; thus, the cumulative profit

on such products can be substantial. FMCG is probably the

most classic case of low margin and high volume business.

Products which have a swift turnover and relatively low cost

are known as Fast Moving Consumer Goods (FMCG).

Green FMCG Products and their characteristics

The products manufactured using green technology and that

cause no environmental hazards are called green products.

Promotion of green technology and green FMCG products is

necessary for conservation of natural resources and sustainable

development. We can define green FMCG products by

following measures:

(a) Products those are naturally grown,

(b) Products those are recyclable, reusable and

biodegradable,

(c) Products with natural ingredients,

(d) Products containing recycled contents, non-toxic

chemical,

(e) Products contain approved chemicals,

(f) Products that do not harm or pollute the environment,

(g) Products that are not be tested on animals, and

(h) Products that have eco-friendly packaging i.e. reusable,

refillable containers etc.

Evolution of Green Marketing

The green marketing has evolved over a period of time.

According to Peattie (2001), the evolution of green marketing

has three phases. First phase was termed as “Ecological” green

marketing and during this period all marketing activities were

concerned to help and provide remedies for environmental


problems. Second phase was “Environmental” green marketing

and the focus shifted on clean technology that involved

designing of innovative new products, which take care of

pollution and waste issues. Third phase was “Sustainable” green

marketing. It came into prominence in the late 1990s and early

2000.

Consumer Buying Behaviour

Consumer buying behaviour is the sum total of a consumer’s

attitudes, preferences, intentions and decisions regarding the

consumer’s behaviour in the marketplace when purchasing a

product or service. The study of consumer behaviour draws

upon social science disciplines of anthropology, psychology,

sociology and economics.

In a psychological sense attitude is defined as a “Tendency

that is expressed by evaluating a particular entity with some

degree of favour or disfavor” (Eagly and Chaiken, 1993). In a

consumer behaviour approach, Solomon et al. (2010) defined

the attitude as “A lasting, general evaluation of people

(including oneself) objects or issues.” The AMA defines it also

as “A cognitive process involving positive or negative valences,

feelings, or emotions”. Attitude is an important part in the study

of consumer behaviour. Many theories have been constructed

on the attitudes. As the consumption of green product is a

current and relevant subject, many studies have been conducted

about the attitudes towards green products.

Consumer intentions play an important role in marketing

strategies (to implement four P strategies) because they permit

companies to evaluate how many products could be produced

according to the demand.

In a study conducted by Blackwell et al. (2006), to predict the

purchase intention, companies can interview consumers about

their past behaviours in order to forecast their future behaviours

but the products that people bought in the past can be different

of those they will buy. Thus another method is to ask consumers

what they intend to do However, “Measuring what people

intend to do may sometimes be less predictive of their future

behaviour than measuring what they expect to do”. So

companies also use behavioural expectations which represent

“The likelihood of performing a behaviour”; thus to forecast

relevant purchase intentions, a time indication can be included.

Indeed it is easiest for a consumer to predict his/her purchase

intention of a product tomorrow or in one month than in five

years because behaviours change with time.

LITERATURE REVIEW

It has been the global concern to preserve the environment

from pollution and degradation. Many studies have been done

on the green marketing exploring the importance of the topic

and relationship to the attitude and purchasing behaviour of

the consumers of eco-friendly products. Through the vital

information provided by the competent and experience

researchers, companies have understood the importance of

green marketing in order to produce eco-friendly products.

According to Reddy (2015), the objective of the research was

to look into and explore the influencing of the four traditional

marketing-mix elements, satisfaction and word of mouth

(WOM) on attitude and purchasing intentions of consumers

on eco-friendly products specifically fasting moving consumer

goods (FMCG) or non-durable ones. The purpose of the study

was to obtain information from consumers’ point of view.

Furthermore, one perspective of the study was to look into the

comparison of the customer attitudes towards eco-friendly

products and how they are influenced by the marketing-mix

elements (4P), satisfaction and WOM concerning green

attitude.

Nowadays, Green marketing has to confront a lot of challenges

because of the lack of a universally accepted definition of the

concept “green”. The impact of human action on the

environment’s quality is visible, so in order to prevent the

negative influence on the environment green marketing has to

become a norm (Sandu, 2014).

According to Sheikh et. al. (2014) customers will likely to buy

such products if they are of good quality or equal to the non-

green products in quality and the price is compatible with the

quality. Some of the customers are willing to pay more prices

for green products and some prefer quality and functions of

green products over non-green products. Most of the people

prefer to have green products over non-green products at a

reasonable price.

According to Nagaraju (2014) identifying the eco-friendly

FMCG products through the eco-label and therefore it can be

considered as a major tool for environmental marketing. The

government, the organization and the customers have to move

in creating awareness of eco-friendly products.

The negative consequences on the environment due to

companies’ and human activities have led companies to develop

eco-friendly products. Remind that “Sustainable development

is development that meets the needs of the present without

compromising the ability of future generations to meet their

own needs.” This definition appeared for the first time in 1987,

in the Brundtland report also called: Our Common Future.

Grant (2007) defines sustainability as “The idea that

environmental (and ethical) objectives are not incompatible

with ongoing economic prosperity.”

The consumption of eco-friendly products and consumers’

attitudes towards these products has led to the development of

the green marketing mix (Datta and Ishaswini, 2011).

Green marketing term appeared at the end of the 1980’s. This

concept has been defined by many researchers such as Stanton

and Futrell (1987), Mintu and Lozanda (1993) and Polonsky

(1994), in a broad sense it is the marketing activities which

facilitate exchanges to satisfy consumer needs and wants by

minimizing the impact of these activities on the physical

environment.


According to Chen and Chai (2010) green marketing is defined

as the activities taken by firms concerned about environmental

problems or green problems, by delivering the environmental

sound goods or services to create customers’ and society’s

satisfaction. Welford (2000) defined green marketing as “The

management process responsible for identifying, anticipating

and satisfying the requirements of customers and society in a

profitable and sustainable way”.

In a research by Kumar (2011), green marketing has been

developing because even if the human wants are unlimited the

natural and artificial resources are limited.

According to Chitra (2007), green marketing-mix elements and

eco-friendly products are designed and developed as having

less harmful for the environment.

Marly et al (2011) emphasised that environmental issues

became world known issues when much debate cropped up in

the 1960s in which Rachel Carson’s Silent Spring published

and examined critical concern on the sustainable and healthy

environment. This publication has 8 significant importance on

the recently concern of the today’s issues since the environment

has become a challenge for the worldwide leaders and have

realized the danger of the environmental degradation and

pollution.

Rahbar and Wahid (2011) defined the green marketing tools

as including eco-label, eco brand and environmental

advertisements. First two elements have importance in the

consumers’ behaviour towards green products.


To establish relationship between consumers’ attitudes towards

eco-friendly products and their purchase intention in the Fast

Moving Consumer Goods (FMCG) sector.

HYPOTHESIS OF THE STUDY

H1: There is a significant relationship between consumers’

attitudes towards eco-friendly products and purchase intention

in the Fast Moving Consumer Goods (FMCG) sector.


The data was collected from primary sources. For valid and

reliable results, a random sampling method was undertaken in

a sample size of 133 respondents. A self-designed questionnaire

was used as the tool for collecting primary data. The 5 point

Likert Scale questionnaire comprised ten statements measuring

respondents’ attitude and seven statements measuring their

purchase intention. The collected data was analysed using

Correlation and Regression Analysis.

Reliability of Questionnaire

The questionnaire was found to be reliable to be used for the

study as the Cronbach’s Alpha value was 0.846, refer Table 1.



0.846 28

RESULTS AND DISCUSSION

Demographic Profile

The respondents to the questionnaire were 75 males and 58

females in number. The respondents belonged to diverse age,

occupation, and income groups. 69 respondents belonged to

the age group of 18-24 years. 40 respondents were from 25-34

years. 21 respondents in the age group of 35-44 years and 3

respondents were from the age group of 45-54 years. 69 out of

133 respondents belonged to income generating group and the

remaining 64 were either students or housewives who did not

have an income. 59 of the total respondents for the study were

employed and 19 were unemployed, 55 were students and none

of the respondents were retired (Table 2, 3, 4 and 5).

Table 2: Gender of Respondents

Gender No. of Persons

Male 75

Female 58

Total 133

Table 3: Age of Respondents

Age No. of Persons

18-24 69

25-34 40

35-44 21

45-54 3

Total 133

Table 4: Income Group

Income Group No. of Persons

Income Generating 69

Non- Income Generating 64

Total 133

Table 5: Status

Type No. of Persons

Employed 59

Unemployed 19

Student 55

Retired 0

Total 133


Table 6: Correlation Analysis Intention

Intention Attitude

Pearson Correlation Intention 1.000 .737

Attitude .737 1.000

Sig. (1-tailed) Intention .000

Correlation is significant at .000 level; N=133 Level of Significance: 0.05

Table 7 : Model Summary

Change Statistics Model R R

Square

Adjusted R

Square

Std. Error of

the Estimate R Square

Change

F

Change

df1 df2 Sig. F

Change

1 .737a .543 .539 3.25200 .543 155.572 1 131 .000

a. Predictor: attitude Level of Significance: 0.05

Table 8: ANOVA

Model Sum of Squares Df Mean Square F Sig.

Regression 1645.244 1 1645.244 155.572 .000

Residual 1385.387 131 10.575

Total 3030.632 132

Dependant Variable: Intention; Predictor: Attitude Level of Significance: 0.05

Relationship between Consumer Attitude and Purchase

Intention

The value of correlation between the two variables consumer

attitude and purchase intention is 0.737 (Table 6). The value

of the R2 is 0.543 (Table 7). It means that consumers’ attitude

towards green advertisement explains only 54.3% of their

purchase intention of eco-friendly products in FMCG sector.

As the p value of 0.000 (Table 8) is less than the significance

level (0.05), so the hypothesis is accepted. It is concluded that

there is significant relationship between consumers’ attitude

towards eco-friendly products and their purchase intention in

the Fast Moving Consumer Goods (FMCG) sector.

CONCLUSION

The current research and the previous findings confirm that if

there is a positive attitude and inclination towards eco-friendly

products then it does lead to a greater interest towards the

purchase behaviour that is exhibited by the customer. There

could be other factors also, that could determine the purchase

behaviour towards eco-friendly FMCG products. However, the

present study does not incorporate those factors.

The research suggests business organizations to follow

strategies in order to get benefits from the environmentally

friendly approach as green marketing offers business incentives

and growth opportunities while it may involve start-up costs,

it will save money in the long term. Therefore, in the product

strategy, marketers can identify customers’ environmental needs

and develop products to address this issue, produce more

environmentally responsible packages (recycle, biodegradable,

reuse), and ensure that products meet or exceed the quality

expectations of customers.

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IMPACT OF CORPORATE SOCIAL MARKETING ON CONSUMER ATTITUDE

Jyotsana Vaid1

Ayush Gupta2

ABSTRACT

Cause-related marketing as part of corporate social responsibility has become an increasingly used tool by companies operating

in the market. Increased consumer pressure on companies to behave more responsibly combined with the competitive challenge

of brand differentiation has stimulated interest in activities such as cause-related marketing (CRM). The purpose of this study

was to investigate the impact of corporate social marketing on consumer attitude. The study was carried out on 100 respondents

who were selected using Convenient Sampling from East Delhi region. For the purpose of data analysis, SPSS and regression

analysis were used to support the hypothesis testing. The study reveals that corporate social marketing has an impact on

consumer attitude.

Keywords: Corporate Social Responsibility, Consumer attitude, Cause-related marketing.

1 Assistant Professor, Gittaratan International Business School, Rohini, Delhi, [email protected] Student, Gittaratan International Business School, [email protected]

INTRODUCTION

Corporate social marketing is the systematic transfer of

commercial marketing concepts and tools to programs designed

to influence the voluntary behaviour of target audiences, where

the primary objective is to improve the social welfare of the

target audiences and/or the society of which they are a part.

Business enterprises are no longer expected to play their

traditional role of mere profit making enterprises. The ever-

increasing role of civil society has started to put pressure on

companies to act in an economically, socially and

environmentally sustainable way.

The companies are facing increased pressure for transparency

and accountability, being placed on them by their employees,

customers, shareholders, media and civil society. Business does

not operate in isolation and there is today, an increased

realization that not only can companies affect society at large,

but they are also in a unique position to influence society and

make positive impact.

The emerging concept of CSR goes beyond charity and requires

the company to act beyond its legal obligations and to integrate

social, environmental and ethical concerns into company’s

business process. What is generally understood by CSR is that

the business has a responsibility – towards its stakeholders

and society at large – that extends beyond its legal and

enforceable obligations.

The triple bottom line approach to CSR emphasizes a

company’s commitment to operating in an economically,

socially and environmentally sustainable manner. The emerging

concept of CSR advocates moving away from a ‘shareholder

alone’ focus to a ‘multi-stakeholder’ focus. This would include

investors, employees, business partners, customers, regulators,

supply chain, local communities, the environment and society

at large.Consumer attitude is a composite of three elements:

cognitive information, affective information, and information

concerning a consumer’s past behaviour and future intentions.

Consumer attitudes are both an obstacle and an advantage to a

marketer. Choosing to discount or ignore consumers’ attitudes

of a particular product or service—while developing a

marketing strategy—guarantees limited success of a campaign.

In contrast, perceptive marketers leverage their understanding

of attitudes to predict the behavior of consumers. These savvy

marketers know exactly how to distinguish the differences

between beliefs, attitudes, and behaviors while leveraging all

three in the development of marketing strategies.Decades of

research on attitudes and persuasion have suggested that people

are quick to form attitudes toward a wide variety of products,

persons and issues, and that attitudes are often held and

defended with remarkable tenacity.

Cause related marketing or social marketing is a form of

marketing in which a company and a charity team up together

to tackle a social or environmental problem and create business

value for the company at the same time. Typically, in cause-

related marketing campaigns, a brand is affiliated with a cause

and a portion of the proceeds from the sales of the brand is

donated to the cause. It has a great impact on both consumers’

perception as well as their attitude as if there is something for

a cause then people willingly contribute into that thing and

also show interest to help those who are in need in such a

manner. This is a way to aware and educate people for the

achievement of social good.

LITERATURE REVIEW

Goldsmith (2015) conducted a study on The Influences of

Brand Consumer and Cause Congruence on Cause Related

Marketing stated in this research that Cause Related Marketing


(CRM) was a widely used type of brand alliance in which

companies donate a portion of their sales to social causes with

whom they ally.

Dropulji (2015) conducted a study on Consumers’ Attitudes

Towards Cause-Related Marketing.They saw cause-related

marketing campaigns as a good communication tool; they find

a cause to be relevant for their personal involvement in

campaigns, although the match between the cause and the

product’s characteristics seems to be less important.

Okhli (2014) conducted a study on a survey on the relationship

between consumer perception of Cause-Related Marketing and

Brand Image. It is found that cause-related marketing is one of

novel strategies for marketing in companies in order to create

special value for customers; such marketing defines a direct

relationship between products sale and the help an enterprise

devotes to a charity.

Ladero (2013) conducted a study on Does the Product Type

Influence on Attitudes Toward Cause-Related Marketing? He

found that many variables can influence consumer’s purchase

behaviour in general and attitudes towards Cause Related

Marketing (CRM) in particular.

Qamar (2013) conducted a study on Impact of Cause Related

Marketing on Consumer Purchase Intention: Mediating Role

of Corporate Image, Consumers’ Attitude and Brand

Attractiveness. The results of this study show that Cause Related

Marketing campaigns do contribute in consumers purchase

intention.

Rajput (2011) conducted a study on Social Cause Related

Marketing and its Impact on Customer Brand Preferences

examined that Social Cause Related Marketing (CRM) has

emerged as a top management priority in the last decade due

to the growing realization that it is one of the most valuable

intangible tool that firms have to gain better corporate image

from internal as well as external customers.

Pawlak (2011) conducted a study on Influence of a Company’s

Social Initiatives on Consumers. The results obtained show

that when undertaking a social programme which is not

consistent with thecompany’s actions to date, the attitude

towards it can even become worse.

Anghel (2011) conducted a study on Cause-Related Marketing,

Part of Corporate Social Responsibility and its influence upon

consumers’ attitude. The findings of the study shows that there

is a significant relationship between cause related marketing

and consumer attitude.

Akdogan (2011) conducted a study on Ethical Perceptions of

Social Marketing Campaigns: An Empirical Study on Turkish.

Consumers mostly emphasize that social marketing campaigns

are the intensive advertisement areas for the companies which

focus on increasing the sales and far from marketing social

thoughts.

Sharma (2010) conducted a study on Consumer Perception

and Attitude towards the Visual Elements in Social Campaign

Advertisement. Results indicate that perception towards image

of social advertisements differed quite significantly between

the male and the female respondents.

Lin (2010) conducted a study on The Impact of Social Cause’s

on Consumer Involvement on Brand Personality and Purchase

Intention. Result showed that there is a positive relationship

between cause-related marketing efforts and purchase intention.

Pileliené (2010) conducted a study on Impact of Social

Marketing Tools on Consumer Behaviour. The article analyses

socio-cultural aspects of sustainable development. The socio-

cultural sustainability reflects society’s ability of solving social,

economic, and environmental problems. Government and

socially responsible organizations can encourage and involve

people in the society to contribute to the improvement of the

quality of our lives.

Guchait (2008) conducted a study on Customer Perceptions

of Corporate Social Responsibility of Service Firms: Impact

on Customer Attitudes and Behavioural Intentions. The results

show that customer perceptions of CSR have a positive and

significant influence on customer attitudes and behavioural

intentions.

Farache (2007) conducted a study on Cause Related Marketing:

Consumers’ Perceptions and Benefits for Profit and Non-Profits

Organizations. The research found that consumers have a better

perception of firms that work with charities and good causes

than those that do not.

Westberg (2004) conducted a study on The Impact of Cause-

Related Marketing on Consumer Attitude to the Brand and

Purchase Intention: A Comparison with Sponsorship and Sales

Promotion. He found that Cause-related marketing was an

emerging area within the marketing discipline, originating in

the United States in the 1980s.

Westberg (2004) conducted a study on The Effect of Corporate

Societal Marketing on Consumer Attitudes: A Comparison of

Strategies. The study finds that corporate societal marketing

refers to marketing strategies that encompass at least one social

objective. Increased consumer pressure on companies to

behave more responsibly combined with the competitive

challenge of brand differentiation has stimulated interest in

activities such as cause-related marketing (CRM). The findings

indicate that, when controlling for existing brand attitude and

perception of fit, consumers have a more positive attitude to

CRM and that CRM can elicit a more favorable change in brand

attitude.

Chattananon (2003) conducted a study on The Impact of

Societal Marketing Programs on Customer Attitudes Toward

Corporate Image in Thailand stated in this research paper that

Corporations in the twenty-first century are increasingly

concerned about managing societal issues in marketing to

benefit key stakeholder interests, particularly customer groups.



The objective is to study the impact of Corporate Social

Marketing on consumers’ attitude.


The data has been collected from both primary and secondary

sources. For valid and reliable results, a random sampling

method has been used. The sample size for the study was 100.

A self designed questionnaire has been used as the major tool

for collecting primary data while journals, magazines, internet

and other relevant information were used as secondary sources

for data collection.

HYPOTHESIS

H1: There is impact of Corporate Social Marketing on

Consumer Attitude.

DISCUSSION & RESULTS

Reliability Analysis

The Cronbach’s Alpha was calculated for the twenty two

statement questionnaire. Value of the coefficient was found to

be .721 (Table 1) which indicates the reliability is higher than

the value of 0.7. So, all the items in the questionnaire are highly

reliable in nature.

Table 1: Chronbach’s Alpha

Cronbach's Alpha Value No of Items

0.721 22

Demographic Profile

Table 2 depicts the demographic profile of the respondents.

The demographic profile of the respondents indicate that

majority of the respondents were female, falling in the bracket

of 25-28 years and are graduates.

Table 3 indicates that mean of corporate social marketing is

42.18 and mean of consumer attitude is 41.45; standard

deviation of corporate social marketing is 4.27 and that of

consumer attitude is 4.11.

Table 2: Demographics Analysis

Item Frequency Percentage

Gender

Male 47 47

Female 53 53

Age

25-28 40 40

29-32 25 25

33-36 20 20

37-40 15 15

Education Level

Table 3: Mean and Standard Deviation

Mean Std.

Deviation

N

Corporate Social Marketing 42.18 4.27674 100

Consumer Attitude 41.45 4.1179 100

Impact of Corporate Social Marketing on Consumer

Attitude

Table 4 shows Karl Pearson’s coefficient of correlation between

Corporate Social Responsibility and Consumer Attitude as

0.493, which is quite less. However, p-value (0.00) is less than

significance level 0.05, therefore we accept alternate hypothesis

and conclude that there is significant relationship between

corporate social marketing and consumer attitude.

Table 4: Correlation Table

Corporate

Social

Marketing

Pearson Correlation .493

Sig. (2-tailed)

P-value 0.00

Consumer Attitude

N 100

Level of significance 0.05

Regression Analysis

Table 5 shows that R square value is 0.243, it means Corporate

Social Marketing only explains 24.3% relationship with

consumer attitude.


Table 5: Model Summary

R R Square Adjusted R

Square

Std. Error

of the

Estimate

0.493 0.243 0.236 3.60045

From the Table 6 it is shown that p-value is less than 0.05, the

alternate hypothesis is accepted. Hence, corporate social

marketing has significant impact on consumer attitude.

Table 6: ANOVA Results on Corporate Social Marketing and

Consumer Attitude

Model Sum of

Squares

Df Mean

Square

F Sig.

(p)

Regression 408.352 1 408.35 31.5

0 0

Residual 1270.398 98 12.963

Total 1678.75 99

Level of Significance 0.05

CONCLUSION

The study analyzed past literature and data that helped to

understand the relationship between consumer attitude and

corporate social marketing. Research revealed that consumers

are aware about the concept of corporate social responsibility.

The research also showed that the consumers don’t buy the

product only for the support cause but the quality of the product

also matters to them and plays a crucial role in their buying

decision. Finally, to conclude research shows that corporate

social responsibility impacts the attitude of the consumers.

There may have been research similar to this topic but the

situations in all the researchers may be different, including this

research.

REFERENCES

1. Akdogan, Sukru (2011) Ethical Perceptions of Social

Marketing Campaigns: An Empirical Study on Turkish

Consumers, Journal of Marketing, vol. 61, pp. 28-29.

2. Anghel, Laurenc´iu Dan (2011) Cause-Related

Marketing, Part of Corporate Social Responsibility and

its Influence upon Consumers’ Attitude, European Journal

of Marketing, vol. 35, no. 3, pp. 28.

3. Chattananon, Apisit (2003) The Impact of Societal

Marketing Programs on Customer Attitudes Toward

Corporate Image in Thailand, European Journal of

Marketing, vol. 35, no. 3/4, pp. 33.

4. Dropulji´, Marija (2015) Consumers’ Attitudes Towards

Cause-Related Marketing, Cause and effects marketing,

Brandweek, vol. 37, pp. 24.

5. Farache, Francisca (2007) “Cause Related Marketing:

Consumers’ Perceptions and Benefits for Profit and Non-

Profits Organisations”, Journal of Sales & Marketing

Management, vol. 146, pp. 31-32.

6. Goldsmith, Ronald (2015) “The Influences of Brand

Consumer and Cause Congruence on Consumer Responses

to Cause Related Marketing”, Journal of the Academy of

Marketing Science, vol. 28, no. 2, pp. 23-24.

7. Guchait, Priyanko (2008) “Customer Perceptions of

Corporate Social Responsibility of Service Firms: Impact

on Customer Attitudes and Behavioral Intentions, Journal

of the Academy of Marketing Science, vol. 16, pp. 31.

8. Lin, CP (2010) The Impact of Social Cause’s Consumer

Involvement on Brand Personality and Purchase

Intention”, Journal of General Management, vol. 21, no.

1, Autumn, pp. 30.

9. Okhli, Raheleh (2014) A Survey on the Relationship

between Consumer Perception of Cause-Related

Marketing and Brand Image, International Marketing

Review, vol. 15 no. 6, pp. 24-25.

10. Pawlak, Marek (2011), Influence of a Company’s Social

Initiatives on the Consumer Attitude towards It, Journal

of Personality and Social Psychology, vol. 47, pp. 27.

11. Pileliené, Lina (2010) Impact of Social Marketing Tools

on Consumer Behaviour, European Business Review, vol.

98, no. 1, pp. 30-31.

12. Qamar, Nida (2013) Impact of Cause Related Marketing

on Consumer Purchase Intention: Mediating Role of

Corporate Image, Consumers’ Attitude and Brand

Attractiveness, Advances in Consumer Research, vol. 26,

pp. 25-26.

13. Rajput, Sneha (2011) Social Cause Related Marketing and

its Impact on Customer Brand Preferences, Journal of

Service Marketing, vol. 10, no. 4, pp. 26-27.

14. Sharma, Ashish (2010) Consumer Perception and Attitude

towards the Visual Elements in Social Campaign

Advertisement, European Journal of Marketing, vol. 35,

no. 3/4, pp. 29.

15. Serban, Corina (2012) Exploring the Importance of Cause-

Related Marketing Campaigns: Empirical Evidence on

Romanian Society, Chronicle of Philanthropy, vol. 14, no.

4, p. 26.

16. Virvilaite, Regina (2011) Corporate Social Responsibility

in Forming Corporate Image, Marketing Bulletin, vol. 3,

pp. 27-28.


FACTORS AFFECTING COMPULSIVE BEHAVIOUR OF CREDIT CARD USERS

Prerna Garg1

Satyendra Kumar2

ABSTRACT

The study focuses to identify the most significant factors which affect the compulsive behaviour of credit card users. Literature

Review was carried out to understand the underlying factors affecting credit card usage and form a rough framework to design

the instrument to serve the objectives. The study was conducted on a sample size of 120 respondents from Delhi, selected using

convenience sampling. Factor Analysis was conducted to identify factors. Total nine significant factors were identified, viz.,

Convenience to use, Necessity, Status, Impulsive, Self-Prestige, Complexity in use, Benefits associated, Cash less and Over

expenditure. There is lack of trust regarding credit card usage among people. The credit card industry should make certain

policies by which credit card users can rely on using of credit cards to a greater extent.

Keywords: Behaviour, Cashless, Compulsive, Credit card, Impulsive.

1 Assistant Professor, Gitarattan International Business School, [email protected] Student, Gitarattan International Business School, [email protected]

INTRODUCTION

Debt is a major problem for many people. The financial choices

a person makes when they begin adulthood will affect whether

they become one of the many. Spending habits as well as the

use of credit cards can affect a person’s financial stability

throughout their lifetime; therefore, it is important for

individuals to learn good spending choices before they become

adults and enter into the realm of credit.

Credit card is a mode of payment that is widely used by

consumers to purchase goods and services on credit. The

growth in credit card usage is parallel with the growth in other

types of consumer credits such as bank overdrafts, personal

loans, hire purchase and others. Credit card use represents a

customer lifestyle and increase in the standard of living.

There are many factors that may influence credit card debt

and a significant amount of research that has looked for and

examined these factors. Financial knowledge is “one of the

strongest predictors of debt,” according to Norvilitis et al.

(2006).

LITERATURE REVIEW

There is a great amount of research that states that financial

knowledge has a strong relationship with credit card use.

Financial planning practices correlated with positive credit

usage (Moore & Carpenter, 2009). Lai (2010) found that taking

a course in financial planning decreased the likelihood of

impulse buying.

Robb (2011) also found that students who engaged in more

responsible credit card use were more likely to have higher

scores on a measure of personal financial knowledge.

Compulsive behaviour is defined as performing an act

persistently and repetitively without it necessarily leading to

an actual reward or pleasure. Compulsive behaviour could be

an attempt to make obsessions go away. Compulsive behaviours

are a need to reduce apprehension caused by internal feelings

a person wants to abstain or control. It is a negative form of

behaviour that leads to overspending. Compulsive buyers are

likely to relate money to power, success, and status. Compulsive

buyers perceive their purchases as a way of overcoming

negative self esteem and anxiety.

Compulsive buying is chronic, repetitive purchasing that

becomes a primary response to negative events of feelings

(O’Quinn and Faber, 1989). Moreover everyone regardless

their gender, age or social status may be the victim of

compulsive buying. Compulsive behaviours are a need to

reduce apprehension caused by internal feelings a person wants

to abstain or control.

D’Astous (1990) describes it as a generalised urge to buy while

Brougham et al. (2011) speak more strongly of the inability to

control purchasing behaviour. More comprehensively, McElroy

et al. (1994) describe it as a maladaptive preoccupation with

shopping which leads to irresistible impulses to buy items that

are not needed and cannot be afforded, often frequently, causing

distress and financial problems which interfere with social and

occupational life. A mild form of such behaviour would be a

‘shopping spree’, while the other end of the scale is

characterised by serious patterns of overspending (Wansink,

1994).

Arabzadeh & Aghaeian (2015) revealed that usage of credit

card can influence lifestyles and purchasing behaviour of the

cardholders as well as its impact on attitude toward debt.

However, there is no proof of connection between management


of credit cards and lifestyles or purchasing behaviour. Further,

socio-economic and demographic characteristics of credit

cardholders found to be radically involve attitudes towards

routine outcomes of credit card usage. Furthermore, there is a

strong correspondence between credit card selection factors,

personal income levels and choice of credit card issuing bank.

According to Ponnam, Sahoo et al (2014), credit card selection

factors and personal income level were together identified as

factors affecting the type of bank. Alam, Rahim et al (2014)

selected Factors that affect credit card debts which were credit

card related knowledge, aggressive promotion by credit card

industry and low minimum payment requirements.

Anto & Prabhu (2014) concluded that the main reason for using

credit card is “easy to purchase” as it scored first rank in the

analysis. In a study by Khare et al (2013) aimed to understand

the moderating influence of Multi-item List of Value (MILOV)

on credit card attributes, age, and gender in credit use among

Indian customers, Use and convenience emerged as the major

determinants of credit card use among Indian customers. Use,

convenience, and status attributes were moderated by sense of

belonging and sense of fulfilment dimensions of MILOV

According to a study conducted in Malaysia by Omar, Rahim,

et. al. (2013), the credit card misuse by the working adults was

directly related to materialism, budget constraint, impulsive

buying and compulsive buying. The findings also showed the

compulsive buying behaviour was prevalent among working

adults who had budget constraint and impulsive buying as well

as embraced materialism. Recent researches also proved that

Consumers appeared to be generally satisfied with the use of

their credit cards even though they have different views

regarding other users. Certain practices by the credit card issuer

companies are negatively viewed by the consumers. Some

results largely supported the intention to use credit card and

possibility of overuse credit card are impact on compulsive

buying behaviour. According to Lin, Wang et al (2013),

Consumers who tend to use credit card are more compulsive

than consumers who tend to avoid using credit card As study

“The Effect of Egyptians’ Money Attitudes on Compulsive

Buying with the Role of Credit Card Use” indicated that when

the independent variables of money attitudes were first tested

without the moderating variable credit card use, all had a

significant relationship with compulsive buying except for

distrust. In addition to distrust, quality also had an insignificant

relationship with compulsive buying when tested with credit

card use as stated by Ihab, Hafez, Sahn, (2013). Studies have

also indicated that age, income, and marital status have

significant correlation with credit card holders’ spending

behaviour. The same goes to two of the three items identified

under banks’ policies (benefits given and payment policies)

and attitudes toward money (willingness to pay and awareness

of the total debt owed). Teoh, Chong et al (2013) researched

that Occupation, qualifications to apply for credit card, and

management of income vs. expenses are not significantly

related to credit card spending behaviour among Malaysians.

Materialism is a partial mediator in the relationship between

image consciousness and compulsive spending. Yong (2011)

concluded that Compulsive spending is not a mediator in the

relationship between materialism and credit card usage

intentions. However, compulsive spending does exert a sizable

influence.

METHODOLOGY

A descriptive study was carried out to identify factors affecting

compulsive behaviour of credit card users. The data was

collected from both primary and secondary sources employing

a self designed standardized questionnaire as the major tool

for collecting primary data while journals, Magazines, internet

and other relevant manuals/publications as secondary sources

of data collection.

For valid and reliable results, a random sampling method was

used including customers of various segments with a sample

size of 120. Data collected from the respondents has been coded

and tabulated using MS Excel and findings has been drawn.

Factor analysis has been used to reduce the data and identify

significant factors affecting compulsive behaviour.

Demographic Analysis of Respondents

Table 1 illustrates the demographic profiles of respondents

according to variable gender, age, Occupation and income

respectively.

Table 1: Demographics of Respondents

Gender Total Numbers (%)

Male 83 69 %

Female 37 31 %

Age

20-25 48 40%

26-30 41 34%

31-35 21 18%

35 above 10 8%

Occupation

Service 86 72%

Business 34 28%

Income Group (Per Month)

Below 20,000 19 16%

20,001-40,000 59 49%

40,001-60,000 30 25%

60,000 Above 12 10%


In this study, the main focus is to look at the factors affecting

compulsive behaviour of credit card users. The reliability

analysis result showed that the Cronbach’s Alpha was 0.850


for 29 items. Since the value of Cronbach’s Alpha exceeds

0.70, therefore, there was internal consistency of the scales.

Hence, the instrument used in this study has a high reliability

value.

Factor Analysis

Factor analysis has been used to construct the new factors

affecting compulsive behaviour of credit card users. Bartlett’s

test of sphericity and the Kaiser-Meyer-Olkin measure of

sampling adequacy are both tests that can be used to determine

the factorability of the matrix as a whole.

The value of Bartlett’s test of sphericity is significant (p<0.001,

p=0.000), refer Table 2. In addition, the Kaiser-Meyer-Olkin

measure is 0.736 which is greater than 0.6. Thus, it is

appropriate to proceed with Factor Analysis to examine factors

that affect compulsive behaviour of credit card users.


Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

.736

Approx. Chi-Square

1082.142

Df 406

Bartlett's Test of Sphericity

P value .000

Table 3 shows the total variance explained at nine stages for

factors that affect compulsive buying behaviour of credit card

holders. Nine factors were extracted because their Eigen values

were greater than one, which explain 63.68 percent of the

variance.

Table 4 shows the rotated factor matrix for the questionnaire.

After performing Varimax Rotation with Kaiser Normalization,

Factor 1 comprised of five items with factor loadings ranging

from 0.52 to 0.70. The items in Factor 1 are S2, S3, S4, S5 and

S21.

Factor 2 comprised of four items with factor loadings ranging

from 0.62 to 0.77. The items in Factor 2 are S24, S18, S23,

S19. Factor 3 comprised of four items with factor loadings

ranging from 0.43 to 0.70. The items in Factor 3 are S8, S7,

S28 and S1. Factor 4 comprised of three items with factor

loadings ranging from 0.54 to 0.82. The items in Factor 4 are

S13, S14, S15.

Factor 5 comprised of three items with factor loadings ranging

from 0.63 to 0.66. The 3 items in Factor 6 are S26, S29, S25.

Factor 6 have 3 items ranging from 0.53 to 0.73 and Factor 7

comprised of two items S20, S22 ranging from 0.72 to 0.76.

Factor 8 and 9 has 2 items each with 0.57 to 0.76 and 0.63 to

0.73.

Table 3: Total Variance Explained

Rotation Sums of Squared Loadings Component

Total % of Variance Cumulative %

1 2.646 9.124 9.124

2 2.601 8.968 18.091

3 2.594 8.943 27.034

4 2.001 6.900 33.935

5 1.996 6.882 40.817

6 1.892 6.524 47.341

7 1.820 6.277 53.618

8 1.491 5.141 58.758

9 1.427 4.922 63.680


Table 4: Rotated Component Matrix with Factor Loadings

Rotated

Component

Matrix

Statements

1 2 3 4 5 6 7 8 9

Statement

No

I am more impulsive when I shop with credit cards.

.703 S2

I spend over my available credit limit most of the time.

.671 S3�

I often take cash advances on my credit cards.

.623 S4�

I often make only the minimum payment on my credit card bills.

.545 S5�

I like to use the maximum limit of my credit cards.

.524 S21�

It is necessary to have a credit card with you when you travel overseas.

.771 S24�

Paying with credit card is always more advantageous than paying with cash.

.765 S18�

There are more advantages with credit card payments, than with cash.

.632 S23�

It gives me self-confidence to pay with credit card when I am abroad.

.620 S19�

I must admit that I sometimes boast about how much money I make through credit card.

.702 S8�

I must admit that I use credit card because I know they will impress others.

.675 S7�

The reason why most people adopt the credit card is that it makes them feel cool and fashionable.

.479 S28�

I am less concerned with the price of a product when I use a credit card.

.435 S1�

I developed the habit of paying the minimum debt on my credit card bills.

.824 S13�

I often act impulsive when I do my purchases with credit cards.

.625 S15�

Sometimes I lose my control and do purchases that I cannot afford with my credit card.

.545 S14�

It is too complicated to use a credit card

.661 S27�


I don’t think about EMI and interest when I use credit card.

.650 S12�

I think that I show more respect to people with more money than I have.

.635 S9�

People come across difficulties frequently when they use credit cards.

.730 S26�

Paying by credit card makes people feel important and wealthy.

.540 S29�

The usage of a credit card would encourage people to buy things beyond their budget.

.530 S25�

I cancel the credit cards which require membership fees.

.760 S20�

I occasionally use a credit card for only specific purchases.

.726 S22�

I am very prudent with money when I am going to shopping.

.761 S11�

I always do not have enough money to spend every month, so I use credit card.

.573 S6�

It is more difficult to control expenditures with credit card payment.

.737 S16�

My budget limits me from over-spending even if I use my credit cards.

.637 S17�

* Factor Loadings equal to or above 0.40 were accepted and therefore Statement No. 10 has been eliminated on account of low Factor

Loading.

Nine new factors were successfully constructed using factor

analysis and assigned as the factors affecting compulsive

behaviour of credit card users. Table 5 shows the names of the

new factors and percentage of variance explained for each of

the factors. The first factor shows the highest percentage of

variance.

CONCLUSION

(a) There are nine factors which affect the compulsive

behaviour of credit card user. These are Convenience to

use, Necessity, Status, Impulsive, Self- Prestige,

Complicity in use, Seek benefits, Cash less, and over

expenditure and the most significant factors out of nine

factors which affect the compulsive behaviour of credit

card user are Convenience to use, Necessity, Status,

Impulsive, and Self- Prestige.

(b) Credit cards were considered convenient in financial

transactions. The “convenience” attribute can increase

the use and adoption of credit cards.

(c) On the basis of interviews conducted with the

respondents, it was concluded that credit card use is

influenced by the age of the customers. Younger people

are more likely to use credit cards while older people

are comfortable with cash payment methods. Moreover,

in Delhi, gender differences exist related to credit card

use as men are more likely to have credit cards than

women.

(d) The survey shows that majority of the respondents of

credit card users were males falling in the age group of

20-25 years and were from service having income

between 20,000-40,000 per month.


Table 5: Factors affecting Compulsive Buying among Credit

Card Users

Factor Name % of Variance

1 Convenience to use 9.124

2 Necessity 8.968

3 Status 8.943

4 Impulsive 6.900

5 Self -Prestige 6.882

6 Complexity in use 6.524

7 Benefits sought 6.277

8 Cash less 5.141

9 Over expenditure 4.922

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Relationship of Usages and Management of Credit Cards

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Che & Alam, Syed Shah. (2013). Compulsive buying and

credit card misuse among credit card holders: The roles

of self-esteem, materialism, impulsive buying and budget

constraint. International Journal of Computing and

Business Research, 10(1), 52-74.

7. Ponnam, Abhilash, Sahoo, Debajani, Sarkar, Abhigyan,

& Narayan Mohapatra, Surya. (2014). An exploratory

study of factors affecting credit card brand and category

selection in India. Journal of Financial Services Marketing,

19(3), 221 –233.

8. Rahim, Ruzita Abdul, Alam, Syed Shah, Haq, Ridhwanul

& Khan, Atiqur Rahman. (2014). What influence credit

card debts in young consumers in Malaysia. Journal of

Public Administration, Finance and Law, (6), 106-116.

9. Themba, Godfrey & Tumedi, Clara. B. (2012). Credit Card

Ownership and Usage Behaviour in Botswana.

International Journal of Business Administration, 3(6), 60-

71.

10. Veludo-de-Oliveira, Tania Modesto, Falciano, Marcelo

Augusto & Perito, Renato Villas Boas. (2013) Effects of

credit card usage on young Brazilians’ compulsive buying.

Asia Pacific Journal of Marketing and Logistics, 15(2),

111-124.


IMPACT OF COLOUR ON CONSUMER BRAND PERCEPTION

D.K.Choudhury1

Shidharth Batra2

ABSTRACT

Colour is ubiquitous and is a source of information. The earlier researchers argued that the prudent use of colours can contribute

not only to differentiating products from competitors, but also to influencing moods and feelings and therefore, to attitude

towards certain products. The interactive effects of colours show that the relationship between brands and colour hinges on the

perceived appropriateness of the colour being used for the particular brand. There have been numerous attempts to classify

consumer responses to different individual colours, but the truth of the matter is that colour is much dependent on personal

experiences to be universally translated to specific feelings. The previous works of researchers have revealed that our brains

prefer recognizable brands, which makes colour incredibly important when creating a brand identity. It has suggested researchers

that it is paramount importance for new brands to specifically target logo colours that ensure differentiation from entrenched

competitors. So, it is important that the managers understand the importance of colours in marketing and use it appropriately

in advertising, packaging, and designing company's logo. With this backdrop, this research work was designed to find out the

impact of colour on consumer brand perception. The outcome of this study reveals that the white, red, black and brown colour

has impact on sincerity, excitement, sophistication, and ruggedness respectivelyof the brand.

Keywords: Colour, Brand, Perception, Hue, Psychology, Sincerity, Excitement, Competence, Sophistication, Ruggedness.

1 Professor, Gitarattan International Business School, Delhi2 Student, Gitarattan International Business School, Delhi

INTRODUCTION

Creating a brand is the ultimate aim of marketing endeavor

(Harsh et al. 2008). According to the American Marketing

Association, a brand is a name, term, sign, symbol or design,

or a combination of them, intended to identify the goods or

services of one seller or group of sellers and to differentiate

them from those of competitors while a brand image is the set

of human characteristics linked to the brand that consumers

hold in memory (Keller 1991).

The perception is the process by which an individual selects,

organizes and interprets stimuli into a meaningful and coherent

picture of the world (Batra et al. 2013). Marketers are using

colour in innovative ways as colour attracts consumers and

can shape their perceptions. Through colour, a brand can

establish an effective visual identity and position itself among

competitors in the market place. In the real life situation, Pepsi

moved away from red and embraced the colour blue, which is

painting a Concorde jet in its signature blue colour to

distinguish itself from its main competitors (Cooper 1996).

Colour sells products. It is a powerful marketing tool that

significantly influences consumer purchases, so much so that

it develops huge impact on our mind to purchase a product.

Colour is the visual perceptual property of humans having

categories called red, blue, yellow, etc.

According to the science, colour is derived from the spectrum

of light. It interacts in the eye with the spectral sensitivities of

the light receptors. The fundamentals of colour are based on

Albert H.Munsell’s theory of colour.

The way we visually match colour today is the result of Albert

H. Munsell’s work nearly a century ago. In fact, modern day

colour theory and mathematical colour system is based on

Munsell’s theory of colour. For years,scientists had studied

the mechanics of colour going as far back as Newton’s early

colourwheel. But A.H. Munsell had combined the art and

science of colour into a single colour theory. His ground

breaking work laid the foundation for today’s computerized

colour matching systems and enabled a greater understanding

of colour principles for generation to come.

According to Munsell34colour system, each colour has three

attributes: Hue, value (brightness), and chroma (saturation).

Hue is the wavelength of a colour and determines its label.

Red, yellow, green, blue and purple are identified as the five

principal hues in the Munsell colour system. Value (brightness)

refers to the degree of darkness or lightness of the colour,

extending from white to black. The Chroma (saturation) of

colour describes the degree of purity of colour; it is the amount

of pigment in a colour and it can be explained as the mixing of

white with a colour, which reduces the saturation of colour

(Lauren et al. 2012).

The resultant effect of three attributes, as mentioned above,

determine how people perceive colour. Like a carefully chosen

brand name, colour carries intrinsic meaning that becomes

central to the brand’s identity, contributes to brand recognition

(Abril et al. 2009) and communicates the desired image

(Bottomley and Doyle 2006). Colour psychology is the study


of hues as a determinant of human behavior. Colour psychology

is widely used in marketing and branding. Many marketers see

colours as an important part of marketing because colour can

be used to influence consumers’ emotions and perceptions of

goods and services. Companies also use colour when deciding

on brand logos.

Brand perception refers to the process by which a customer

selects, organizes, and interprets information/stimuli inputs to

create a meaningful picture of the brand or the product. It is

three stage processes that translate raw stimuli into meaningful

information. Each individual interprets the meaning of stimulus

ina manner consistent with his/her own unique biases, needs

and expectations. Three stages of perception are exposure,

attention and interpretation. The brand personality refers to

the set of human characteristics associated with a brand. It

provides an emotional identity for a brand and encourages

consumers to respond with feelings and emotions towards a

brand. A brand personality is something to which the consumer

can relate, and an effective brand will increase its brand equity

by having a consistent set of traits. This is the added-value that

a brand gains, aside from its functional benefits. Basically brand

personality reflects how people feel about a brand, rather than

what they think the brand is or does.

Aaker (1997) suggested that the brand personality dimensions

might operate in different ways or influence consumer

preference for different reasons where sincerity, excitement,

competence represents an innate part of human personality and

sophistication, ruggedness tap dimensions that individuals

desire but do not necessarily have.

LITERATURE RIEVIEW

The literature review was conducted covering in details the

concept of brand personality, colour and views of researchers

about colour on consumer brand perception.

Concept of Brand Personality

The brand personality has been expressed by researchers in

different ways. The symbolic nature of brands examined

through early research eventually gave rise to the concept of

brand personality (Aaker 1997, Aaker et al. 2001, and Plummer

1984). In developing this construct, researchers have

established reliable scales(Aaker 1997). It was revealed by

researchers (Belk 1988, Kleine et al. 1993 and Malhotra 1981)

how brand personality encourages self-expression and

association and it was tested for the benefits and consequences

of brand personality (Batraet al. 1993, Freling and Forbes 2005

and Freling et al. 2010).

Brand personality can influence consumer preferences and

usage (Biel 1993), transform user experiences (Aaker and

Stayman 1992), and serve as a building block for relationship

building, trust, and loyalty (Fourier 1998). The brand

personality metaphor compares the unique traits of brands with

people (Stern 2006). The brand dimensions of Aaker (1997) is

a framework to describe the profile and traits of a brand in five

core dimensions, each divided into set of facets. It is easy to

understand the model to describe the profile of a brand using

an analogy with a human being. The five core dimensions and

their facets are:

(a) Sincerity (down-to-earth, honest, wholesome, cheerful)

(b) Excitement (daring, spirited, imaginative, up-to-date)

(c) Competence (reliable, intelligent, successful)

(d) Sophistication (upper class, charming)

(e) Ruggedness (outdoorsy, tough)

Each facet in turn is measured by a set of traits. Examples of

traits for the different types of brand personalitiesare:

(a) Sincerity: Genuine, kind, family oriented, thoughtful.

(b) Excitement: Carefree, spirited, and youthful.

(c) Competence: Successful, accomplished, influential, a

leader.

(d) Sophistication: Elegant, prestigious, and pretentious.

(e) Ruggedness: Rough, tough,outdoors,athletic.

Marketing scholars have largely embraced this scale and

validated it across a variety of contexts and cultures (Aaker et

al. 2001). The scale is not immune to criticism, especially

regarding its conceptual validity (Azoulay and Kapferer 2003).

Recent empirical work shows that the brand personality alters

consumer attitudes and increase purchase intention (Batra et

al. 2004; Freling et al. 2010).

Concept of Colour

Colour is an integral element of corporate and marketing

communications. It includes moods and emotions, and

influences consumer’s perceptions and behavior and helps

companies position or differentiate from the competition

(Hynes 2009). Colour carries intrinsic meaning that becomes

central to the brand’s identity and contributes to brand

recognition (Abril et al. 2009). According to Bottomley and

Doyle (2006), colour communicates the desired image. Brand

loyalists thus become attached to a brand’s visual identity and

may complain in response to changes in brand’s colour scheme

(Kahney 2003). Existing discussion on the use of colour

generally are based on anecdotal evidence and offer scant

insight into the process by which colours affect perception

(Gorn et al. 1997). It has been observed that in general, for

making colour choices, brand managers often rely on trial and

error or the recommendationof consultants. In interview with

12 creative directors, Gorn et al. (1997) informed that 11

confessed they were not familiar with colour theory and simply

trusted their preferences or gut feelings to make colour

decisions. Colour has been established as an important variable

in the marketing literature and has been observed to affect

consumer perceptions of advertising (Gorn et al. 1997).

However, academic research has not yet investigated the ways


in which colour can shape consumer brand perceptions such

as brand personality.

Aesthetic Stimuli

Aesthetic stimuli have the potential to stimulate and shape

people’s perception through both embodied and referential

meaning. According to aesthetic philosophy, embodied

meaning is intrinsic to the stimulus, while referential meaning

depends on the network of association activated from exposure

to the stimulus. Research in marketing has supported this

framework in terms of understanding how another stimulus,

music, can communicate meaningful messages and association

(Zhu and Meyers Levy 2005). Support for a two dimensional

framework in terms of colour has been established (Crowley

1993), where one dimension is purported to stimulate arousal,

producing physiological responses such as increased brain

activity and heart rate, while the other stimulates evaluative

responses, which induce attitude change. This study is

concerned with how colour alters consumer perceptions and

attitudes and accordingly it has been focused on the referential

meaning of colour.

Effect of Colour and its Association

The effect of colour remains relatively consistent across several

studies conducted by researchers. The work of Eliot and Niesta

(2008) supports the notion that the formation and activation of

colour associations can be understood through models of

semantic memory such as associative network theory. Levy

(1984) stated that the effect of colour provides some empirical

evidence of a systematic relationship between colour and

emotions while functioning. For example, people tend to choose

consistent colour-emotion pairings e.g. yellow and cheerful

(Collier 1996), and such associations appeared to be consistent

(D’Andrade and Egan 1974). According to memory models,

people store semantic information in a complex network

comprised of conceptual nodes and links; the nodes represent

concepts, which take on activation values based on a weighted

sum of their inputs from the environment and linked nodes

(McClelland 1988). The links represent the pathways between

the nodes and are the medium by which the units interact. Links

are weighted and may be both positive and negative, so that a

node can either excite or inhibit related nodes based on the

strength and valence of their links and the resulting outcome is

determined by the pattern of activation.

Associations are triggered in memory through colour’s

referential meaning. The colour that is hue, saturation, and value

of a brand logo usually activates related colour association

(e.g. reliable, intelligent) which contributes to the perception

of a brand’s personality (e.g. competent). Other non-colour

aesthetic stimuli, such as logo shape, can activate other brand

associations which together with colour inform consumers

about brand’s personality. Therefore, when a consumer receives

a branding message through a brand logo which has no relevant

brand associations existing in memory then the resulting brand

personality perception is triggered by the referential meaning

of the colour.

As brands pair with colours, brand association and colours

become linked in memory, thus semantic meanings of colour

are created through a dynamic and reflexive process.

Importantly, the activation of colour associations as well as

their influence on affect, cognition, and behavior, may occur

without a person’s conscious awareness or intention (Elliot et

al. 2007). In order to demonstrate how colour influences

consumer brand perceptions through referential meaning, the

findings from previous work on colour associations have been

mapped to items in brand personality scale (Aaker 1997) and

hypotheses have been developed for the five dimensions

mentioned and explained earlier under concept of brand

personality.

The theoretical argument for subsequent studies is that when a

consumer sees a logo or package, the referential meaning of

the colour activates relevant associations, which influence the

perception of the brand, specifically the brand person.


(a) To develop a framework based on aesthetic s and colour

psychology to map hues onto brand personality

dimensions.

(b) To find out the different aspects of colour psychology

and the impact of colour on consumer brand perception.


Methodology Used for Data Collection

Primary data was collected by questionnaire survey along with

the display of logos of single colour. Sample size was 100 and

sampling technique used was non-probability convenience

sampling because of their convenient accessibility and

proximity.

Methodology Used for Data Analysis

The technique used for data analysis is Regression. The

regression technique was applied to demonstrate a relationship

between colour (independent variable) and brand personality

dimensions (dependent variables).

HYPOTHESES FORMULATION

First Hypothesis

Fraser and Banks (2004) argued that white, being the total

reflection of all colours, can be linked to sincerity as it is

associated with purity, cleanness, simplicity, hygiene, clarity

and peace while Clarke and Costall (2007) went on to add that

white is also associated with happiness. We, therefore,

hypothesize:

H1: There is impact of white hue on the perceived sincerity of

a brand.


Second Hypothesis

Researchers have expressed that longer wavelength hue such

as red induces states of arousal and excitement (Walters et al.

1982). The colour red can be linked to excitement as it is

considered as an arousing, exciting and stimulating colour

(Bellizzi et al. 1983, Clarke and Costall 2007, Crowley 1993,

Gorn et al. 1997, and Walters et al. 1982). Moreover, according

to Fraser and Banks (2004), the colour red is generally

associated with the characteristics of activity, strength and

stimulation and is considered up-to-date (Bellizzi et al. 1983).

It has, therefore, been hypothesized:

H2: The presence of red hue has impact on the perceived

excitement of a brand.

Third Hypothesis

Black stands for sophistication and glamour (Fraser and Banks

2004, Mahnke 1996). It is a very powerful colour that signals

power, stateliness and dignity (Wexner 1954). In the fashion

world, black expresses status, elegance, richness and dignity

(e.g. black limousines, black tie events, tuxedos, suits). It has,

therefore, been hypothesized:

H3: The presence of black hue has impact on the perceived

sophistication of a brand.

Fourth Hypothesis

Clarke and Costal (2007) linked brown to ruggedness through

associations of seriousness, nature and earthiness. Fraser et al.

(2004) and Mahnke (1996) linked brown to reliability and

support while Wexner (1994) linked brown to protection. The

above statements provided the logic to hypothesize:

H4: The presence of brown hue has impact on the perceived

ruggedness of a brand.

DISCUSSION AND RESULTS

For testing all four hypotheses, the data were collected based

on the questionnaires. The reliability of questionnaires was

found out and the value of Cronbach alpha in all the four cases

was found to be more than 0.70 which indicated that the

questionnaires used for the survey were reliable.

For testing the hypotheses, the data collected through

questionnaire survey were processed using SPSS and the

outputs obtained are presented in Table 1, 2, 3 and 4.

Table 1: Coefficients - Perceived Sincerity of a Brand

Unstandardized

coefficients

Standardized

coefficients

B Std.

Error

Beta

Calculated t Significance Critical value

of t

(Constant)

White

19.625

.798

2.366

.200

.396

8.296

3.994

.000

.000

1.645

Table 2: Coefficients – Perceived Excitement of a Brand

Unstandardized

coefficients

Standardized

coefficients

B Std.

Error

Beta

Calculated t Significance Critical

value of t

(Constant)

Red

17.977

1.301

1.219

.141

.706

14.753

9.254

.000

.000

1.645

Table 3: Coefficients –Perceived Sophistication of a Brand

Unstandardized

coefficients Standardized

coefficients

B Std.

Error

Beta

Calculated t

Significance

Critical value

of t

(Constant) Black

16.861 1.373

1.145 .127

.760

14.727 10.838

.000

.000

1.645


Table 4: Coefficients – Perceived Ruggedness of a Brand

Unstandardized

coefficients

Standardized

coefficients

B Std.

Error

Beta

Calculated t Significance Critical value

of t

(Constant)

Brown

13.261

1.467

1.773

.164

.695

7.478

8.967

.000

.000

1.645

Since, p-value (0.000) in Table 1, 2, 3 and 4 is less than 0.05,

so, at 5% Significance level, we accept H1, H

2, H

3 and H

4 and

conclude as follows:

(a) White hue has impact on the perceived sincerity of a

brand.

(b) Red hue has impact on the perceived excitement of a

brand.

(c) Black hue has impact on perceived sophistication of a

brand.

(d) Brown hue has impact on perceived ruggedness of a

brand.

CONCLUSION

The nature of the study was complex and involved many

complexities in understanding. Colour choice once was limited

to paints, clothing, cosmetics and cars but it now extends to

various products. This research examined how colours play a

role in the formation of consumer brand perception. The

outcome of the study demonstrates a relationship between

colour and brand personality. Further, the results and analysis

clearly shows that the white, red, black and brown colours have

impact on sincerity, excitement, sophistication and ruggedness

respectively of the brand. The outcome of this research work

suggest that the marketing managers may use colour knowledge

to choose an appropriate colour scheme for logos, packaging

and advertisements that will perhaps create and strengthen a

specific brand personality.

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IMPACT OF ASSET QUALITY ON PROFITABILITY OF

SELECTED PUBLIC SECTOR BANKS IN INDIA

Aisha Kakkar1

Abhishek Sharma2

ABSTRACT

Asset Quality is an aspect commonly associated with bank management which entails the evaluation of a firm's asset-mix in

order to determine the level and size of associated credit risk and the expanse of provisions required for potential losses. The

present study aims to explore the impact of asset quality on profitability of selected public sector banks in India. The banks were

selected on the basis of market capitalization. Using suitable financial ratios as proxies for bank performance and asset quality,

the data for the period 2010-11 to 2014-15 was collected. Simple regression technique was employed to investigate the relationship

between the constructs. The results revealed that there is significant relationship between bank performance and asset quality

indicating that improving the overall quality of the loan portfolio and the credit administration program can lead to better bank

performance.

Keywords: Asset Quality, NPA, Profitability, Public Sector Banks, Regression.

1 Assistant Professor, Gitarattan International Business School, Rohini, Delhi. E-mail Id: [email protected] Student, Gitarattan International Business School, Rohini, Delhi. E-mail Id: [email protected]

INTRODUCTION

Asset quality refers to the overall risk attached to the various

assets held by an individual or institution. This term is most

commonly used by banks to determine how many of their assets

are at financial risk and how much allowance for potential

losses they must make. The most common assets requiring a

strict determination of asset quality are loans, which can be

non-performing assets if borrowers default on repayment

obligations. The ability to identify, measure, monitor and

control credit risk is reflected in the quality of the loan portfolio

and the credit administration program. The main motto behind

measuring the Asset Quality is to ascertain the component of

Non-Performing Assets (NPA) as a percentage of Total Assets.

These NPAs should be considered against not just Total Assets

but also against the Advances because NPAs primarily arise

from Advances. This indicates what type of Advances the bank

has made to generate interest income.

NPAs affect the profitability of the banks adversely by way of

affecting both income and expenses. A high NPA means the

asset is not performing or bringing in the interest income it

was expected to. Income from NPAs can be booked only on

actual realization of the same and not on accrual basis. So this

will have an adverse impact on bank’s interest income. A lower

interest income would lead to lower total income and hence

lower net profits. From expenses point of view, a high NPA

means higher provisioning requirements as well as higher

expenses involved in NPA recovery process (like litigation and

administrative costs), both of which would reduce the net profit

(Ghosh, 2013).

NPAs generate a vicious cycle of effects on the sustainability

and growth of the banking system, and if not managed properly

could lead to bank failures. The level of non-performing assets

is at the alarming rate in Indian banking compared to other

countries. This level is much higher in case of public sector

bank due to their directional credit to priority sectorproject

and social development projects. Due to their socio economic

role, there has always been high level of NPA’s in their asset

portfolio. However, after the liberalization in 1991, situation

even worsened as they faced high level competition from

private and foreign banks and out of this furious competition

and challenge for survival, they are forced to improve the

performance.

DESCRIPTION OF KEY RATIOS

Asset Quality: Net NPAs to Net Advances

This ratio is the most standard measure of Assets Quality. This

ratio measures Net NPAs as a percentage of Net Advances.

Net NPAs are Gross NPAs net of provisions for loss on NPAs

and interest in suspense account. Net NPAs to Net Advances =

Net NPAs / Net Advances

Profitability: Net Profit Margin

Net profit margin is a measure of profitability of a firm

calculated by finding the net profit as a percentage of the total

revenue. This ratio takes into consideration the net profit arrived

after comprehensive profit margin analysis on account of

several elements of incomes and expenses thus indicating a

firm’s overall profitability.

LITERATURE REVIEW

Joo& Bashir (2015) in his study analysed the impact of asset

quality and credit quality on the profitability of Indian banks.


The aim of the study was to evaluate the credit quality of Indian

Banks, and to gauge impact of credit quality on the profitability

of banks. The study was conducted with the panel data of 35

observations from the public and private sector banks for period

of ten years from 2003-04 to 2012-13.The effect of identified

variables on the bank profitability was computed through

regression analysis. It was concluded that the credit quality is

an important parameter to gauge the soundness of a bank. A

non-performing asset not only declines bank profitability by

requiring high loan loss provisions charged to the profit and

loss account, but carrying cost of NPAs also swell-up due to

avoidable management attention.

Sharma (2015) conducted an exploratory study with a sample

of ten nationalised banks in order to analyse their asset quality

over a period of ten years (2004-05 to 2013-14). Techniques

like coefficient of variance (CV) and coefficient of correlation

(r) were used and the researcher found that there is a

significance relationship in assets quality of among nationalised

banks which reflect their varied efficiency in the management

of assets quality. Also it was accounted that Bank of Baroda

and Andhra Bank are top two nationalised banks in term of

assets quality. Indian banking system can now claim that their

level of NPAs have registered a declining trend over a period

of time. But effective cost management, recovery management,

technological intensity of banking, governance and risk

management, financial inclusion are the areas, which can be

used as key bearing and ability of Indian banks to remain

competitive and enhance soundness.

Pandya & Bhargav (2015) studied the impact of priority sector

advances of scheduled commercial banks operating in India

on their profitability. The study examined the causal

relationship between priority sector advances and five measures

of bank profitability viz. Return on Assets (ROA), Return on

Investments (ROI), Ratio of Operating Profit to Total Assets

(OPTA), Ratio of Interest Income to Total Assets (INTTA)

and Return on Equity (ROE) encompassing the sample of all

scheduled commercial banks including nationalized banks,

private sector banks and foreign banks operating in India. The

basic objective of the study was to further an existing literature

by providing empirical evidence regarding the priority sector

advances and impact thereof on bank profitability. Primarily

using secondary data pertaining to all scheduled commercial

banks operating in India covering the period ranging from 2005

to 2014, the study revealed that priority sector advances affect

all the parameters of profitability except ROE which implies

that banks should exercise caution while advancing loans to

priority sector else it would be adversely affecting the

profitability of the banks.

Andrew et. al. (2015) in their paper investigated the relationship

between CAMELS criteria for asset quality and the profitability

performance of fifteen (15) quoted Nigerian commercial banks

from 1980 – 2013. Return on Investment (ROI) was modeled

as the function of percentage of non-performing loans to Total

Loans (NPL/TL), percentage of Nonperforming Loans to Total

Customers’ Deposit (NPL//TCD), percentage of Loan Loss

Provision to Total Loans (LLP/TL) and percentage of Loan

Loss Provision to Total Asset (LLP/TA). Multiple regressions

with econometric view statistical package were used as data

analysis method. Findings from the regression result proved

that percentage of non-performing loans to Total Loans and

percentage of nonperforming Loans to Total Customers’

Deposit have positive relationship with Return on Investment.

While percentage of Loan Loss Provision to Total Loans and

percentage of Loan Loss Provision to Total Asset have negative

relationship with Return on Investment of the commercial

banks. The study concludes that there is significant relationship

between asset quality and the profitability of the commercial

banks. It recommends that bank lending environment should

be well examined before and after credit and the regulatory

authorities should ensure sound bank lending environment to

avoid the incidence of non-performing loans to enhance the

profitability of commercial banks in Nigeria.

Mistry et. al. (2015) examined the financial data of twenty

one Indian private sector banks for the financial period 2010-

11 to 2012-13 with a view to examine the relationships among

measures such as bank’s size, operational efficiency, asset

management, return on assets and interest income and thereby

to discuss their impact on performance of the banks. Relying

on the secondary sources of data, financial results were analysed

using techniques of ratio analysis, correlations and regression.

The study revealed that there exist an impact of operational

efficiency, asset management and bank size on financial

performance of the Indian Private Sector Banks.

ICRA (2015) analysed the performance of 26 public sector

banks (PSBs) and 15 banks in the private sector (private banks)

for the period ended September 30, 2015. These 41 banks

collectively account for around 90% of the total credit portfolio

and deposits of all scheduled commercial banks in India. The

study revealed that Gross NPAs of PSBs increased to 5.6% as

on September 2015 (vs. 5.0% as on March 2015), private banks’

Gross NPAs were 2.2% (vs. 2.0% as on March 2015). Within

PSBs, SBI Group fares much better on asset quality with Gross

NPAs of 4.3% as on September 2015 while nationalized banks

reported Gross NPAs of 6.3% as on same date. Further, it was

emphasized that higher credit costs dilute PSBs’ profitability

and Q3 FY16 could be more challenging as most PSBs lowered

base rates by around 25 bps. PSB’s PAT was very low at around

0.3% in Q2 FY16 vs. 1.6% of private banks during the same

period. As was the case with asset quality, within PSBs, SBI

group fares better (PAT/ATA of 0.72%) vs. nationalised banks

(PAT/ATA 0.18% of ATA) during Q2 FY16.

Modi (2014) conducted the research “Impact of NPA on

Profitability of Public & Private Sector Banks” with an aim of

studying the impact of non-performing assets on profitability

of these banks. For the purpose of study, it was hypothesized

that there is no significant relationship between non-performing

assets and return on equity. The study relied on secondary

sources for collecting data of 74 banks covered under the study


and regression analysis was used for the purpose of analysis.

The finding of the study attributed a positive relation between

total advances, net profits and NPA of bank to the

mismanagement and wrong choice of clients resulting in an

adverse effect on the liquidity of bank. Also it was observed

that the extent of NPAs has comparatively higher in public

sectors banks.

Swamy (2015) in his study examined the impact of asset quality

on the profitability of both public and private sector banks of

India. For the purpose of study, secondary sources were tapped

to collect the panel data consisting of different groups of banks

in the Indian banking industry (such as State Bank Group,

nationalized banks, old private banks, new private banks and

foreign banks) across a period from March 1997 to March

2009. The study findings reveal some interesting results that

run contrary to established perceptions. Priority sector credit

has been found to be not significant in affecting NPAs. Bad

debts are dependent more on the performance of industry than

on other sectors of the economy. This study establishes that

private and foreign banks have advantages in terms of

efficiencies in better credit management in containing NPAs,

which indicates that bank privatization can lead to better

management of default risk. The State Bank group and

nationalized banks appear to lag behind their private

counterparts in NPA management. It can be summarized that

the NPA management practices of state-owned banks need

sharpening.

Chisti et. al. (2012) in his paper investigated the effects of

loan quality on performance of selected private sector banks

in India, for the period 2006-07 to 2010-11. Using suitable

financial ratios as proxies for variables under the study, multiple

regression model was employed to test the relationship. The

results indicated that that asset quality and profitability are

negatively correlated in the banking industry. It was further

supported that the higher the quality of the loan processing

activities before loan approval, the lower the non-value-added

activities that is required to process problematic loans, and

thus the higher the banking operating performance will be.


(a) To study the relationship between Asset Quality and

Profitability in selected Public sector Banks in India.

(b) To access the impact of Asset Quality on the Profitability

of selected Public sector Banks.

SCOPE OF THE STUDY

The scope of the study is confined to 4 Public Sector banks

viz. State Bank of India, Punjab National Bank, Bank of Baroda

and IDBI Banks selected on the basis of market capitalization,

covering a period of 5 years from 2010-11 to 2014-15. Further,

to study the impact of asset quality on profitability of these

banks, Net NPAs to Net Advances and Net Profit Margin have

been respectively taken as proxy financial ratios.

HYPOTHESIS

H1: There is a significant relationship between bank asset

quality and profitability of public sector banks in India.

H2: There is a significant impact of asset quality on profitability

of public sector commercial banks in India.


Methodology for Data Collection

The study relied on secondary sources for the purpose of data

collection. Financial data was extracted from bank’s balance

sheet, annual reports, and other relevant manuals and

publications using Internet.

Methodology for Data Analysis

The data collected has been analysed using correlation and

regression analysis with the help of SPSS. Correlation is the

statistical tool used to describe the degree to which one variable

is linearly related to another and regression attempts to

determine the strength of the relationship between one

dependent variable and a series of other changing variables

known as independent variables. A simple linear regression

equation is modeled as Y= a+ b(x), where ‘a’ is the intercept

and b is the slope of the line, x is the independent variable and

y is the dependent variable. In the study, Profitability is taken

as dependent variable and asset quality as independent variable.

RESULTS AND DISCUSSION

State Bank of India

Table 1 depicts that the value of Pearson correlation coefficient

(r) is -0.385, signifying a moderate degree (for a range = -0.5

to -0.3) of negative correlation between the asset quality and

profitability. Also it shows that P value is .523 is greater than

0.05, there is no statistically significant relationship bank asset

quality and profitability of public sector banks in India.

Bank of Baroda

The results of Table 2 shows that Pearson Correlation

coefficient in case of Bank of Baroda is -0.990, which is

significant at the 0.01 level conferring that there is statistically

significant relationship between profitability and asset quality.

The direction of relationship is negative which means that both

the variables tend to move in the opposite direction. Also the

strength of the relationship is very high as coefficient is closer

to 1.0.


Table1: Correlation

Profitability Asset Quality

Pearson Correlation 1 -.385

Sig. (2-tailed) .523

Profitability

N 5 5

Pearson Correlation -.385 1


Asset Quality

N 5 5

Table 2: Correlation




Profitability

N 5 5



Asset Quality

N 5 5


Model R R Square Adjusted R Square Std. Error of the Estimate

1 .990 .981 .974 .72514

Table 4: Coefficients

Unstandardized Coefficients Standardized

Coefficients

Model

B Std. Error Beta

T

Sig.

(Constant) 21.318 .699 30.496 .000 1

Asset Quality -6.817 .555 -.990 12.285 .001





Profitability

N 5 5



Asset Quality

N 5 5

Table 3 depicts the R-square value which indicates the

proportion of variance of dependent variable that is explained

by independent variables. It is observed that approximately

98% of variability in dependent variable (profitability) is

accounted for by independent variable (asset quality).

Table 4 shows the coefficient value for the model. Based on

this table, the equation for the regression line can be formed

as:

Profitability = 21.318-6.817 (Asset Quality).

It indicates that 1 % increase in Asset quality leads to 6.8%

decrease in Profitability in case of Bank of Baroda for the


concerned period. Also, here the significance value tells the

individual significance of Independent variable. It can be noted

from table 5 that the p value (=.008) for asset quality is < 0.05.

Hence asset quality has significant impact on profitability.

Punjab National Bank

Table 5 explains that Pearson’s coefficient of Correlation for

profitability and asset quality in case of Punjab National Bank

is -0.965, which shows high degree of negative correlation

between the variables and the P value is less than 0.05, so we

fail to reject the alternate hypothesis meaning there is significant

relationship between profitability and asset quality.

In the Table 6, the value of the R-square is .931 which means

that 93% of variability in profitability is accounted by asset

quality. The Table 7 shows the coefficient value for the model.

Based on this table, the equation for the regression line can be

formed as:

Profitability =18.427 –3.151 (Asset Quality).

The equation depicts that 1 % increase in Asset quality will

bring 3.151 % decrease in Profitability of Punjab National

Bank.

Also, here the significance value or p value tells the individual

significance of Independent variable. It can be noted that the p

value for asset quality is 0.008 which is less than 0.05.

Further, the null hypothesis for t statistics is that coefficient

=0, which can be rejected when p < 0.05. It is clear from the

table that p value is less than 0.05 and thus we fail to reject the

alternate hypothesis meaning that asset quality has statistically

significant impact on profitability.

Industrial Development Bank of India (IDBI)

Based on the results of Table 8, it can be observed that the

value of Pearson correlation of profitability and asset quality

for IDBI bank is -0.958 indicating a high degree of negative

correlation between the two variables which is statistically

significant at the 0.05 level as the p value is less than 0.05.

Additionally, it can be inferred that the alternate hypothesis is

not rejected meaning there is significant relationship between

the variables under study.

Table 9 indicates that the R Square value for the model is .919

which means that 91% of variation in profitability is explained

by asset quality. There are very few other variables on which

dependent variable depends.


�


1 .965 .931 .908 1.22494


Unstandardized

Coefficients

Standardized

Coefficients

Model

B Std. Error Beta

T

Sig.

(Constant) 18.427 1.276 14.439 .001 1

Asset Quality -3.151 .496 -.965 -6.358 .008





Profitability

N 5 5



Asset Quality

N 5 5



1 .958 .919 .892 .87696



Unstandardized

Coefficients

Standardized

Coefficients

Model

B Std. Error Beta

T

Sig.

(Constant) 12.739 1.145 11.129 .002

1 Asset Quality -3.326 .571 -.958 -5.820 .010

Extracting values from Table 10, the equation for the regression

line can be formed as:

Profitability =12.739 –3.326 (Asset Quality).

This equation denotes that one unit increase in Asset quality

will bring a 3.326 units decrease in the profitability of IDBI

Bank.

Also, here the significance value or p value tells the individual

significance of Independent variable. It can be noted that the p

value for asset quality is 0.01 which is less than 0.05. Further,

the null hypothesis for t statistics is that coefficient =0, which

can be rejected when p < 0.05. It is clear from the table that p

value is less than 0.05 and thus we fail to reject the alternate

hypothesis implying that asset quality has statistically

significant impact on profitability.

It is clear from the table that p value is less than 0.05 and thus

we fail to reject the alternate hypothesis meaning that asset

quality has statistically significant impact on profitability.

CONCLUSION

It can be concluded that there is significant impact of asset

quality on the profitability of three banks out of four selected

for the purpose of this study. Even though there is no immediate

significant impact in case of SBI but relationship between the

variables could definitely be traced there too. The overall Asset

Quality of banks can be affected by improving the quality of

loan portfolio and the credit administration program. It is better

to avoid NPAs at the nascent stage of credit consideration by

putting in place of rigorous and appropriate credit appraisal

mechanisms.

REFERENCES

1. Andrew, Nwosi Anele and Lucky, Anyike Lucky (2015),

Asset Quality and Profitability of Commercial Banks:

Evidence from Nigeria, Research Journal of Finance and

Accounting, Vol.6, 26-34.

2. Chisti, Khalid Ashraf (2012), The Impact of Asset Quality

on Profitability of Private Banks in India: A Case Study

of JK, ICICI, HDFC & YES Banks, Journal of African

Macro Economic Review, Vol.2, No.1, 126-146.

3. ICRA Limited (2015), Indian Banking Sector:

Performance Update and Outlook.

4. Joo, Bashir Ahmad (2015),Relationship of Credit Quality

and Profitability in Banks: An Empirical Investigation,

Indian Journal of Applied Research, Vol.5, No.2, 832-835.

5. Mistry, Dharmendra S. and Savani, Vijay (2015), A

Comparative Study Of The Profitability Performance In

The Banking Sector: Evidence from Indian Private Sector

Bank, XVI Annual Conference Proceedings Delhi School

Of Professional Studies And Research, 346-360.

6. Modi,Shikha (2014), Impact Of NPA On Profitability of

Public & Private Sector Banks, International Journal of

Multidisciplinary Research,Vol.2,No.1.

7. Pandya, Bhargav (2015), Impact of Priority Sector

Advances on Bank Profitability: Evidence from Scheduled

Commercial Banks of India, BVIMSR’s Journal of

Management Research, Vol. 7, No.2, 75-81.

8. Sharma, Deepak Kumar (2015), An Analysis Of Assets

Quality Of Nationalised Banks, International Journal of

Research in Finance and Marketing, Vol. 5, No.10, 75-

81.

9. Swamy, Vighneswara (2015), Modeling Bank Asset

Quality and Profitability: An Empirical Assessment,

Discuss Paper, Economics E-Journal.


IMPACT OF MERGER AND ACQUISITION ON STOCK RETURN

OF INDIAN FIRMS WITH SPECIAL REFERENCE TO BANKS

Vikas Gupta1

Surbhi Katal2

ABSTRACT

The banking sector is one of the most important instrument of the national development, occupies a unique place in a nation's

economy. Economic development of the country is evident through the soundness of the banking system. Deregulation in the

financial market, market liberalization, economic reforms have witnessed astounding changes in banking industry leading to

incredible competitiveness and technological sophistication leading to a new era in banking. Since then, every bank is relentless

in their endeavor to become financially strong, operationally efficient and effective. In order to achieve goals, organizations

need to remain competitive and work towards its long term sustainability. Corporate restructuring has facilitated thousands of

companies to re-establish their competitive advantage and respond more quickly and effectively to new opportunities and

unexpected challenges. Since last two decades as especially after the liberalization and consequent globalization and privatization

have resulted into tough competition not only in Indian business. This paper is an attempt to evaluate the impact of mergers and

acquisition on the performance of the banks. The study is based on secondary data. In order to calculate the impact of merger

and acquisition, ratio analysis, mean, and standard deviation have been used as tools of analysis. The study concludes that

investors are getting abnormal returns due to announcement of merger and acquisition. Moreover, the event had positively

impacted overall financial valuation of the company.

Keywords: Economic Development, Financial Performance, Merger, Acquisition, Ratio Analysis.

1 Associate Professor, Gitarattan International Busniess School, Delhi2 MBA IV Semester Student, Gitarattan International Busniess School, Delhi

INTRODUCTION

Indian banks are the dominant financial intermediaries in India

and have made good progress during the global financial crisis;

it is evident from its annual credit growth, profitability and

trends in NPAs. Company’s growth is possible in two ways,

organic or inorganic. Organic growth is also referred as internal

growth, occurs when the company grows from its own business

activity using funds from one year to expand the company the

following year. Such

growth is a gradual process spread over a few years but firms

want to grow faster. Inorganic growth is referred as external

growth and considered as a faster way to grow which is most

preferred. Inorganic growth occurs when the company grows

by merger or acquisition of another business. The main motive

behind the merger is to create synergy, that is one plus one is

more than two and this rationale captivate the companies for

merger at tough times. Merger and acquisitions help companies

in getting the benefits of greater market share and cost

efficiency.

For expanding the operations and cutting costs, Banks are using

Merger and Acquisitions as a strategy for achieving larger size,

increased market share, faster growth, and synergy for

becoming more competitive through economies of scale.

Under the monopolies and restrictive trade practices act, take

over means acquisition of not less than 25% of voting powers

in a corporate. HDFC bank merges Centurion bank of Punjab

(CBoP) for the sake of their growth prospects. The swap ratios

led to 25 shares of Rs 1 of CBoP, converted into one share of

Rs 10 of HDFC Bank. After announcement of the news share

price of CBoP moved from Rs 49.85 to Rs 56.40 within two

days. The ICICI Bank Merger with Bank of Rajasthan was the

seventh voluntary merger and the latest in India after the merger

of HDFC Bank - Centurion Bank of Punjab in the year 2008,

compared with other voluntary mergers. Bank of Rajasthan

agreed to merger with ICICI bank on 18th May 2010. Swap

ratio for the deal was decided at 25 shares in ICICI for every

118 shares in Bank of Rajasthan. SBI had merger with one of

the associate bank State bank of Indore on 28th July 2010.

The deal became effective from 26th August 2010 and the swap

ration was 34 shares of SBI for 100 shares in state bank of

Indore. United western bank was merged with IDBI on 12th

September 2006. Company decided to pay 28 per share to all

the share holders of united western bank. Bharat Overseas bank

was merged with Indian Overseas Bank. The deal became

effective from April 01, 2007.

REVIEW OF LITERATURE

Bassi and Gupta, (2015), this paper attempts to evaluate the

impact of mergers and acquisition on the performance of the

banks. The study was based on secondary data of five banks.

In order to calculate the impact of merger and acquisition ratio

analysis, mean, and standard deviation had been used as tools


of analysis. The study concludes that investors were getting

abnormal returns due to announcement of merger and

acquisition. Moreover the event had positively impacted overall

financial valuation of the company.

Duggal, Neha (2015) this paper aims at analyzing the change

in the financial performance post merger activity in Indian

banking sector. For this purpose a set of 5 financial ratios have

been analyzed of the sample banks listed in Bombay Stock

Exchange for pre 3 years and post 5 years period and tested

with paired sample t-test. The present research focuses on

examining the impact of mergers on the performance of Indian

banks with the objectives to study the impact of merger

announcement on the financial performance of the banks in

the merger periods.

Verma, Neha and Sharma, Rahul (2014) this paper attempts to

study the impact of mergers and acquisitions on the

Performance of Indian Telecom industry, by examining some

pre and post-merger financial and operating variables. For the

purpose of the study, companies which had been merged or

acquired during the period 2001-02 to 2007-08 had been

selected. The objectives of the paper were to analyze the impact

of select financial and operating performance variables on

Return on Shareholder’s Fund (ROSF) in the Indian Telecom

Sector companies which were merged or acquired during the

period 2001-02 to 2007-08 and to identify M&A induced

changes in financial and operating performance of the

companies In data collection three years data from Pre-M&A

period and three years data from post-M&A period of the

companies which were involved in the M&A.

Bhardwaj, Mamta (2014) this paper attempts to find out

whether the merger and acquisition deal between the two banks

i.e. (Centurion Bank and Bank of Punjab) was successful or

not. In the research methodology the research problem given

was investigated on the basis of Secondary data collection.

Information was gathered from magazines, journals and books

from the different sources and several information was also

gathered from internet, internal files, and in house journals

and from the records .The research methodology applied in

the study is descriptive in nature. The sampling period was

considered as year from 2004-2007 (Centurion Bank of

Punjab). In the tools and technique formulae use was Capital

Adequacy Ratio, EPS, Net Worth, Gross Profit Margin, and

Current Ratio. All the ratios profitability, solvency, liquidity

and other were use for the analysis purpose.

Patel, Ritesh (2014) this paper studies the Pre-Merger and Post-

Merger Financial & Stock Return Analysis with reference to

selected Indian Banks. This paper was prepared to check

whether any improvement was in financial & stock return in

banks in post-merger period. The objective of the study was to

analyze the financial strength of the selected Indian Banks on

the basis of key financial ratios and to examine the effects of

merger on equity shareholder’s wealth. The research design in

this study was descriptive research design as this study will

assist the decision maker in determining, evaluating, and

selecting the best course of action to take in a given situation.


(a) To analyze the impact of merger on the financial

performance of Indian Overseas Bank and Bharat

Overseas Bank.

(b) To examine the effects of merger on equity shareholders

of Indian Overseas Bank using EPS and Return on

Equity.

(c) To evaluate the performance of Indian Overseas Bank

in terms of Net Profitability.

(d) To find out the impact of merger on Indian Overseas

Bank in terms of financial coverage.

RESEARCH HYPOTHESES

H1: There is significant difference between the pre and post

merger Net Worth.


merger Net Profit Margin.


merger Debt Equity.


merger Earning Per Share.


merger Return on Equity.

RESEARCH METHODOLOGY DATA COLLECTION

Methodology used for Data Collection

The study is based on secondary data. The financial and

accounting data of banks collected from the annual report of

the Indian overseas Bank and Bharat Overseas Bank to examine

the impact of mergers and acquisitions on the performance of

the Bank. Data are also collected from the Research Paper and

Websites.

Technique

T test technique is used for data analysis. A two-sample t-test

examines whether two samples are different and is commonly

used when the variances of two normal distributions are

unknown and when an experiment uses a small sample size.

PERIOD OF THE STUDY

The present study is mainly intended to examine the financial

performance of merged company three years before merger

and eight years after merger starting from 2004 to 2015.

DATA ANALYSIS

Return on equity is the amount of net income returned as a

percentage of shareholders equity. Return on equity measures


a corporation’s profitability by revealing how much profit a

company generates with the money shareholders have invested.

Return on Equity of Indian Overseas Bank

Table 1 shows the positive impact of merger on the return on

equity in post merger year as it is show increasing trend in post

merger year 2008 and 2009 which means company is able to

generate a profit from the money shareholder have invested

which is positive for the company but after that is decreasing

and negative in 2015.

Debt Equity Ratio

The D/E ratio indicates how much debt a company is using to

finance its assets relative to the amount of value represented

in shareholders’ equity.

Table 2 shows that the debt equity ratio in post merger year is

increasing which means If your ratios are increasing there’s

more debt in relation to equity and bank is being financed by

creditors rather than by internal positive cash flow, which may

be a dangerous trend so, it is a negative impact of merger.

Net Profit Margin

It is the percentage of revenue remaining after all operating

expenses, interest, taxes and preferred stock dividends (but

not common stock dividends).

Table 1: Return on Equity of Indian Overseas Bank

Particulars Year Return on Equity (%)

2004 94.12

2005 119.55

Pre-Merger

2006 143.78

Merger Period 2007 185.10

2008 220.69

2009 243.35

2010 114.26

2011 134.57

2012 113.64

2013 45.92

2014 48.71

Post-Merger

2015 -36.78

Table 2: Debt Equity Ratio of Indian Overseas Bank

Particular Year Debt Equity Ratio

2004 77.5

2005 82.3

Pre-Merger

2006 94.1


2008 166.45

2009 195.79

2010 219.86

2011 265.99

2012 253.51

2013 243.98

2014 204.34

Post-Merger

2015 213.93


Table 3 shows that negative impact of merger on the net profit

margin in post merger year which means bank not able to

generate percentage of revenue remaining after all operating

expenses, interest, taxes and preferred stock dividends (but

not common stock dividends) have been deducted from a

company’s total revenue, which is continuously decreasing after

a merger.

Net Worth

Net worth is the amount by which assets exceed liabilities. Net

worth is a concept applicable to individuals and businesses as

a key measure of how much an entity is worth. A consistent

increase in net worth indicates good financial health;

conversely, net worth may be depleted by annual losses or a

substantial decrease in asset values relative to liabilities. In

the business context, net worth is also known as book value or

shareholders’ equity.

Table 3: Net Profit Margin of Indian Overseas Bank

Particulars Year Net Profit Margin (%)

2004 13.65

2005 16.48

Post-Merger

2006 17.77


2008 15.08

2009 13.75

2010 6.9

2011 8.86

2012 5.87

2013 2.74

2014 2.65

Post-Merger

2015 -1.89

Table 4: Net Worth of Indian Overseas Bank

Particulars Year Net Worth Rs (000)

2004 1,930.37

2005 2,433.37

Pre-Merger

2006 3,054.97

Merger period 2007 3,872.39

2008 4,742.70

2009 5,941.39

2010 6,348.98

2011 8,164.94

2012 -102,198.17

2013 -101,336.30

2014 14,356.27

Post-Merger

2015 13,934.49


Table 4 depicts that Net Worth of Indian Overseas Bank is

rising in post merger year but there is downfall in Net Worth in

year 2012 and 2013 but after that again it goes upward in year

2014 and 2015. It means merger was not able to leave so much

impact on net worth of bank because the rate at which the net

worth increases is very small mainly in post merger 2008 and

2009.

Earning Per Share

The portion of a company’s profit that is allocated to each

outstanding share of common stock, serving as an indicator of

the company’s profitability.

Table 5: EPS of Indian Overseas Bank

Particulars Year EPS in Rs.

2004 9.41

2005 11.96

Pre-Merger

2006 14.38


2008 22.07

2009 24.34

2010 12.98

2011 17.33

2012 13.18

2013 6.14

2014 4.87

Post-Merger

2015 -3.68

Table 6: T-Test on Net Worth

Paired Samples Statistics

Mean N Std. Deviation Std. Error Mean

Pre Merger Net Worth 2472.90 3 563.34 325.24 Pair 1

Post Merger Net Worth 5677.69 3 834.97 482.07

Table 7: T-Test on Net Worth

Paired Samples Test

Paired Differences

95% Confidence

Interval of the

Difference

Mean Std.

Deviation

Std. Error

Mean

Lower Upper

t df Sig. (2-

tailed)

Pair

1

Pre Merger Net Worth

– Post Merger Net

Worth

-3204.78 356.32 205.72 -4089.94 -2319.62 -15.57 2 .004


Table 5 shows the positive impact of merger on the earning

per share in post merger year as it is show increasing trend in

post merger year 2008 and 09 till 2012 but decreasing in 2013

and 2014 and negative in 2015; so the impact of merger on

post merger year is positive. It means higher the EPS higher

will be the worth shares of stock because investors are willing

to pay more for higher profits.

DATA ANALYSIS

Table 6 & 7 show that the T-test on Net Worth of Indian

Overseas Bank in which the Standard Error of Pre-Merger and

Post Merger is 325.24 and 482.07 respectively. Standard

Deviation of Pre-Merger and Post-Merger is 563.34 and 834.98

respectively. The significance Level is .004 which is less than

p value .05 which means that there is significant difference

between the pre and post merger net worth.

Table 8 & 9 show that the T-test on Net Profit Margin of Indian


Post Merger is 1.22 and 2.53 respectively. Standard Deviation

of Pre-Merger and Post-Merger is 2.11 and 4.39 respectively.

The significance Level is .378 which is more than p value .05

which means that there is no significant difference between

the pre and post merger net profit margin.

Table 8: T-Test on Net Profit Margin



Pre Merger Net Profit Margin 15.96 3 2.10 1.21 Pair 1

Post Merger Net Profit Margin 11.91 3 4.38 2.53

Table 9: T-Test on Net Profit Margin

Paired Samples Test

Paired Differences

95% Confidence

Interval of the

Difference

Mean Std.

Deviation

Std. Error

Mean

Lower Upper

t df Sig. (2-

tailed)

Pair 1

Pre Merger Net Profit Margin

Post Merger Net Profit Margin 4.05 6.25 3.61 -11.48 19.59 1.12 2 .37

Table 10: T-Test on Debt Equity



Pre Merger Debt Equity 84.63 3 8.54 4.93 Pair 1

Post Merger Debt Equity 194.03 3 26.74 15.44

Table 11: T-Test on Debt Equity

Paired Samples Test

Paired Differences

95% Confidence

Interval of the

Difference

Mean Std.

Deviation

Std.

Error

Mean

Lower Upper

t df Sig. (2-

tailed)

Pair 1

Pre Merger Debt Equity - Post Merger

Debt Equity -109.40 18.74 10.82 -155.95 -62.84 -10.11 2 .01


Table 12: T-Test on Earning Per Share



Pre Merger EPS 11.91 3 2.48 1.43 Pair 1

Post Merger EPS 19.79 3 6.01 3.47

Table 13: T-Test on Earning Per Share

Paired Samples Test

Paired Differences

95% Confidence

Interval of the

Difference

Mean Std.

Deviation

Std. Error

Mean

Lower Upper

t df Sig. (2-

tailed)

Pair 1

Pre Merger EPS

Post Merger EPS -7.88 8.03 4.64 -27.84 12.08 -1.69 2 .23

Table 14: T-Test on Return on Equity



Pre Merger ROE 119.15 3 24.83 14.33 Pair 1

Post Merger ROE 192.76 3 68.93 39.79

Table 15: T-Test on Return on Equity

Paired Samples Test

Paired Differences

95% Confidence

Interval of the

Difference

Mean Std.

Deviation

Std. Error

Mean

Lower Upper

t df Sig. (2-

tailed)

Pair 1 Pre Merger ROE

Post Merger ROE -73.61 89.33 51.57 -295.53 148.30 -1.42 2 .29

Table 10 & 11 show that the T-test on Debt Equity of Indian


Post Merger is 4.93 and 15.44 respectively. Standard Deviation

of Pre-Merger and Post-Merger is 8.54 and 26.75 respectively.

The significance Level is .010 which is less than p value .05

which means that there is significant difference between the

pre and post merger debt-equity.

Table 12 & 13 show that the T-test on Earning Per Share of

Indian Overseas Bank in which the Standard Error of Pre-

Merger and Post Merger is 1.43 and 3.47 respectively, Standard

Deviation of Pre-Merger and Post-Merger is 2.49 and 6.01

respectively. The significance Level is .232 which is more than

p value .05 which means that there is no significant difference

between the pre and post merger Earning Per Share.

Table 14 & 15 show that the T-test on Return on Equity of

Indian Overseas Bank in which the Standard Error of Pre-

Merger and Post Merger is 14.33 and 39.79 respectively,

Standard Deviation of Pre-Merger and Post-Merger is 24.83

and 68.93 respectively. The significance Level is .29 which is

greater than p value .05 which means that there is no significant

difference between the pre and post merger Return on Equity.

FINDINGS

The impact of merger on return on equity of Indian Overseas

Bank (IOB) is positive which indicates that the IOB is able to

generate profit with the money of the shareholders which they

have invested. Debt equity ratio is increasing in post merger

year which means more debt in comparison to equity. There is

a negative impact on the net profit margin in post merger year


which indicates that bank is not able to generate sufficient

revenue for the disbursement of operating expenses, interest,

taxes and preferred stock dividends (but not common stock

dividends). It is continuously decreasing after the merger. Net

Worth of the company is increased after merger but with very

small amount so the impact of merger on net worth is not very

attractive or positive. A consistent increase in net worth

indicates good financial health. Earning per Share of the bank

is increased in post merger year which is positive for the

shareholders.

CONCLUSION

Generally, the news like Merger and acquisition is perceived

as positive. Moreover, these events also affect the fundamental

value of Acquirer Company but considering their stock market

movement. No doubt market provides an opportunity to

investor to gain some profits but not for all the stock equally.

Based on the analysis of pre and post merger financial ratios

of Indian Overseas bank, it can be concluded that the

significance value of Net profit margin ratio and Return on

equity is greater than .05 which means that there is no significant

difference between their pre and post merger values. The

significant value of Net Worth, Debt-Equity ratio is less than

.05 which means that there is significant difference between

pre and post merger values.

REFERENCES

1. Bassi, Poonam and Gupta, Varsha (2015), “A Study On

Impact of Announcement of Merger and Acquisition on

the valuation of the companies (With Special Reference

To Banks)”, Asia Pacific Journal of Research, 2320-5504",

Vol XXI.

2. Bhardwaj, Mamta (2014), “A study of Merger and

acquisition between Centurion Bank with Bank of Punjab:

Analysing Premerger and Postmerger Financial

Performance”, International Journal of Innovation and

Scientific Research, 2351-8014 Vol. 8 No.

3. Duggal, Neha (2015), “Mergers and acquisitions in India:

A case Study on Indian Banking Sector”, International

Journal of Research and Development, 2319–5479,

Volume-4.

4. Patel, Ritesh (2014), “Pre-Merger and Post-Merger

Financial & Stock Return Analysis: A Study with reference

to selected Indian Banks”, Asian Journal of Research in

Banking and Finance, Asian Journal of Research in

Banking and Finance, 2249-7323,Vol.4

5. Verma, Neha and Sharma, Rahul (2014), “Impact of

Mergers & Acquisitions on Firms Long Term Performance:

A Pre & Post Analysis of the Indian Telecom Industry”,

International Journal of Research in Management &

Technology, 2249-9563, Vol. 4, No.1.


COMPARISON OF THE PERFORMANCE OF EQUITY MUTUAL FUNDS:

AN ANALYSIS BASED ON BENCHMARK TOOLS

Pooja Chaturvedi Sharma1

Ishant Goel2

ABSTRACT

The Indian mutual fund industry has evolved from a single player in 1964 to a fast growing, competitive market on the back of

a strong regulatory framework. This study aims to carry out the comparative analysis of top ranked equity mutual funds in India

in terms of risk and return. The horizon of this study is multifarious as it includes different mutual fund schemes and discusses

about the growth of the schemes, growth of Indian and global mutual fund industry, provides suggestions for investors as well

as for fund managers about the betterment of the industry and concludes with the idea of investing in the right schemes according

to the risk taking abilities, time horizon and investment objectives of an investor. On the basis of time, scope of the study has been

kept limited to five years from January 2011 to December 2015.

Keywords: Jenson Ratio, Mutual Funds, NAV, Sharpe Ratio, Treynor Ratio.

1 Assistant Professor, Gitarattan International Business School, Rohini, Delhi, E-Mail id: [email protected] Student, Gitarattan International Business School, Rohini, Delhi.

INTRODUCTION

One of the most promising Asian country which is indisputably

emerging as the next gigantic investment destination riding on

a high savings and investment rate, as compared to other Asian

economies is “India”. It is in the milieu of some of these

encouraging facts and figures that the Indian mutual fund

industry has fostered itself. Since 1990, when the mutual fund

industry opened up to the private sector, the industry has

traversed a long path, adapting itself continuously, to the

changes that have come across. Various fresh dimensions have

also struck the right chord in context of mutual funds in Indian

market. A major case in point here is India’s Prime Minister,

Mr. Narendra Modi’s “Make in India” policy. As a result

numbers of fund houses are coming with schemes that will

invest in Indian manufacturing sector. Apart from

manufacturing sector, several other sectors like auto, auto

ancillaries, defense, consumer goods etc. are also expected to

get a push from this policy.

Mutual funds really captured the public’s attention in the 1980s

and ’90s when mutual fund investment hit record highs and

investors saw incredible returns. However, the idea of pooling

assets for investment purposes has been around for a long time.

Section below looks at the evolution of this investment vehicle,

from its beginning in the Netherlands in the 18th century to its

present status as a growing, international industry.

Origination

Some historians cite that closed-ended investment companies

launched in the Netherlands in 1822 by King William I as the

first mutual funds, while others point to a Dutch merchant

named Adrian van Ketwich whose investment trust created in

1774 may have given the king the idea. Ketwich probably

theorized that diversification would increase the appeal of

investments to smaller investors with minimal capital. In the

same context, Saini (2011) mentioned that next wave of near-

mutual funds included an investment trust launched in

Switzerland in 1849, followed by similar vehicles created in

Scotland in the 1880s. The idea of pooling resources and

spreading risk using closed-ended investments soon took root

in Great Britain and France, making its way to the United States

in the 1890s.

Mutual Funds

“The basis of mutual fund is the pooling concept. Alternatively,

mutual funds pool money from a cross-section of investors by

issuing units, constructs a diversified portfolio of stocks, bonds

and other investment instruments, and invests the same in the

capital market” (Sadhak, 2008).

Professional fund managers, who use their investment

management skills to invest in various financial instruments,

manage this money. It is a set up in the form of a trust. A unit

holder is the investor, who owns the units based on the amount

invested by him. The increase in value of the investments along

with other incomes earned from it is then passed on to the

investors.

A mutual fund should be compulsorily registered with SEBI,

which regulates the securities market, before it can collect funds

from the public. The plethoras of schemes provide a variety of

options to suit the individual objectives, whatever their age,

financial position, risk tolerance, and return expectations are.

Mutual funds came as a respite to the investors who had neither

the expertise nor the time to conduct a careful analysis before

investing their hard-earned money. Mutual funds provide them

professional portfolio management services at a low cost. Most


mutual funds are administered through a parent management

company, which may hire or fire fund managers and they are

liable to a special set of regulatory, accounting, and taxation

rules (Singh, 2012).

Mutual Funds were introduced in India by UTI in 1960. In the

late 80s, Indian Mutual Fund market witnessed entry of a

number of public sector players and in 1993 private sector

was allowed to enter into the market. After the entry of private

as well as other public sector units in this industry, legal

framework has undergone a number of changes. Because of

which, the incubator of the industry (UTI) slipped down to

fifth position after having enjoyed monopoly status for a quarter

of a century. Nevertheless, it remains a strong brand with more

than 10 million unit holders, evidencing the huge scope for

this industry (Sinha, 2015). Table1 displays a synopsis of the

evolution phases of Indian mutual fund industry.

By the close of the 90s, market share of household financial

assets in mutual funds was over 8% in the US, 8% in Germany,

and about 2% in India (Sadhak, 2008). A glimpse on the present

Indian mutual industry will throw some light on it’s pace of

growth. AUM of Indian mutual fund industry has increased

from Rs.12.65 trillion in June 2015 to Rs. 14.90 trillion in

June 2016, which shows a growth of 18% in assets. Individual

investors presently hold a lower share of industry’s assets, i.e.

45.6% in June 2016 but on the contrary, value of assets held

by individual investors in mutual funds increased from Rs. 5.72

lakh Cr in June 2015 to Rs. 6.80 lakh Cr in June 2016, an

absolute increase of 18.95%. Institutional investors have

occupied greater pie in the market share with 54.4% of the

assets. Out of 45.6% share of individual investors, 85% of

funds have gone into equity oriented schemes whereas liquid

and money markets have been dominantly ruled by institutional

investors with 92% share (Amfi, 2016).

LITERATURE REVIEW

Solitary fact about stock market is its “Volatility”. Indian

financial market has been a bystander of numerous peaks and

lows in the period of January 2011 to December 2015 and

same track is still present in the market. This precariousness

has impinged on almost all the sectors in various proportions.

Mutual funds have given binary benefits to its investors as on

one hand it lessens the tax burden and on the other side, it

offers a substantial yield with the comfort of diversification of

risk. As an outcome of its multifarious advantages as an

investment alternative, it attracts attention and crafts interest

in researchers and academicians to perform research on it. But

at the same time, it also has its own flaws and challenges.

Furthermore, in context of mutual funds comparative

performance evaluation of various mutual fund policies and

AMCs has always pondered an incredible debate.

Table 1: Phases of Evolution of Indian Mutual Fund Industry

First phase-1964-87 Second Phase- 1987-1993

Third Phase-1993-2003

Fourth Phase-since

February 2003

Started in 1963 with UTI, Govt. Of India & RBI.

In 1987, public sector banks and LIC & GIC got the entry in MF Industry.

In 1993, first MF regulation came into being under which all MF, except UTI were to be registered and governed.

In February 2003, following the repeal of UTI Act 1963, UTI was bifurcated into two separate entities.

In 1978, UTI was de-linked from RBI and functioned under the regulatory and administrative control of RBI

SBI was the first non-UTI fund establishment in June 1987.

Kothari Pioneer (now merged with Franklin Templeton) was the first private sector MF registered in July 1993.

One is the Specified Undertaking of UTI (SUUTI). This undertaking is functioning under the rules framed by the Government of India and does not come under the purview of the Mutual Fund Regulations.

First scheme launched by UTI was Unit Scheme 1964.

LIC established its MF in June 1989 while GIC in Dec 1990.

1993 SEBI Regulations were substituted by a more comprehensive and revised regulations in 1996- SEBI (Mutual Fund) Regulations 1996

Second is the UTI Mutual Fund, sponsored by SBI, PNB, and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.

Source: Sharma & Pandey (2014).


Sharma (2013) have worked to evaluate the return earned by

some selected mutual fund schemes & compared them with

the standard market returns & found that large number of mutual

funds have given higher returns. In nutshell, Indian AMCs are

competent enough to beat their benchmarks on an average.

Same conclusions were supported by Hemadivya (2012) and

further, categorically, it was also found that liquid funds and

balanced funds generated higher returns and proper evaluation

measures occupy extremely vital position as they work as the

correct guiding barometer in the process of decision making

especially for retail investors.

Zafar (2010), Dhanda & Anjum (2012) and Sapar & Narayan

(2003) extended this phenomenon by providing sufficient

information on risk and return association and the role played

by fund’s ranking to boost their performance and found that

majority of the sample funds were able to provide reward for

associated variability and volatility.

Along with these mutual funds possess a very alluring feature,

for all categories of investors, which is tax saving.

Performance evaluation of mutual funds is a major dilemma

for most of the investors. As a wide variety of calculative

mechanisms exist in the concerned area and comparisons can

also be made on the basis of industry to which a particular

fund belongs.

As Alekhya (2012), Bawa (2011) and Sivakumar (2010)

evaluated the performance of mutual funds in public and private

sector in India on the basis of returns earned by them and

concluded that due to higher risk factor involvement, private

sector offers higher returns to investors and plays a greater

role in resource mobilization.

Mutual funds offer an improved investment avenue primarily

to retail investors. Several studies have been conducted to find

out the intentions of investors while investing and the most

preferred saving instrument and factors affecting them. It was

found that investors invest their funds with the intention of

acquiring various resources and bank deposits are the most

popular and relied saving instrument. Choice of investment

avenues could be affected by investment objective, time span,

performance facet of the asset class. Saha (2011), Choudhary

and Chawla (2014) analysed the performance of the growth

oriented equity diversified schemes on the basis of return and

risk evaluation. The analysis was achieved by assessing various

financial tests. The analysis depicts that majority of funds

selected for study have outperformed under Sharpe Ratio as

well as Treynor Ratio.

Bantwa and Bhuva (2012) carried out research to evaluate the

performance of selected 20 equity diversified schemes. An

attempt has been made to evaluate the fund’s performance,

level of diversification and manager’s ability to pick the

undervalued stocks. The study revealed that except one all the

sampled schemes have performed better than market. Risk

adjusted performance in terms of Sharpe and Treynor ratio

showed that 55% of the fund schemes bear positive values.

The findings also revealed that majority of the schemes were

adequately diversified, fund managers remained successful in

reducing unique risk through better diversification. The study

also revealed that about 60% of the schemes were able to beat

the market with help of better stock selection skill of fund

managers. Bhatt and Vyas (2014) aimed at evaluating

performance of mutual funds and also to inspecting the role of

asset management companies in reference to public and private

sector. The main objective of this study is to study financial

performance of selected mutual fund schemes through the

statistical parameter. The findings of the study revealed that as

private sector securities have higher risk content so they offer

higher returns as well.

Karrupasamy and Vanaja (2013) in their study evaluated the

performance of different mutual fund schemes on the basis of

returns and comparison with their bench marks and also to

appraise the performance of different category of funds using

risk adjusted measures as suggested by Sharpe, Treynor and

Jensen. The study revealed the investors for investment below

2 years can choose large cap schemes and investment beyond

3 years can be made in Small & mid cap schemes.

Mutual funds are expanding their market share with each

passing day as a large number of mutual funds have surpassed

the market benchmark indexes Sharma (2013) but Pandey

(2011) found that no single fund has surpassed the standards

in all the categories, different funds perform best in different

categories. Along with this, researcher also suggested that

investors should diversify the investments between a few funds

and have warned investors not to judge a fund merely by its

NAV (Net Asset Value).

Research work of Nimalathasan and Gandhi (2012) also

focused on the financial performance analysis of mutual fund

schemes of selected banks. The objective of this research was

to analyse financial performance of selected mutual fund

schemes with the help of various statistical parameters and

ratios. This study has also revealed the same results.

Poornima and Sudhamathi (2013) analyzed about the

performance of the growth oriented equity diversified schemes

by using Sortino ratio. 102 growth oriented equity diversified

schemes were selected for the study. The analysis using Sortino

ratio depicts that out of 102 funds, 97 funds were able to

produce return more than minimum acceptable rate of return.

Whereas 5 funds were found to produce return less than

minimum acceptable rate of return. This research paper clearly

reveals the fact that careful evaluation using appropriate

performance measure will guide the investor in selecting the

best funds. Considering the same, apart from considering NAV,

various data analysis tools have been used in this study.

Vasantha et.al. (2013) have also analyzed the fund based on

various criteria such as risk prevailing in the market, variations

on the return and deviations occur in the returns etc. Risk

appetite of an investor plays an important role in the selection

of mutual fund.


Narayanasamy and Rathnamani (2013) mainly focused on the

performance of selected equity large cap mutual fund schemes

in terms of risk- return relationship. The main objectives of

this research work is to analyse financial performance of

selected mutual fund schemes through various statistical

parameters The findings of this research study works as a guide

to investors for their future investment decisions.

Bajaj (2013) worked in detail on the outlook of the Indian

mutual fund industry and has discussed about the changes in

various costs and directives in this trade since 2006. Initial

issue expenses have been completely stopped by 1 January

2008. By August 2009, entry loads were also removed

completely from all types of mutual funds. Along with this,

exit loads were also determined at subject to a maximum of

1% in August 2009. With the passage of time, SEBI has relaxed

several rules & regulations of mutual fund industry, which has

played a pivotal role in extending its spheres in the form of its

various products and its abundant clientage.

Saini (2011) through his research concluded that growing

market coverage by mutual funds required analysis of its

comparative returns to ensure market’s steadiness in the long

run.


(a) To study the performance of a growth scheme of a

selected mutual funds.

(b) To examine the return from the selected mutual funds.

(c) To know whether the mutual funds are able to provide

reward to variability and volatility.

(d) To identify security market return with fund return.

SCOPE OF STUDY

The time period of this research work is from January 2011 to

December 2015. The NAV of selected schemes has been

compared for three years with annual return. Then these

schemes are compared with the benchmark return to evaluate

the performance.

METHODOLOGY

This study is entirely based upon secondary data which has

been majorly collected with the help of financial dailies like

The Economic Times, SEBI Bulletin, etc. Along with this

financial website like www.amfi.com, www.mutualfu

ndsindia.com has also been referred. Research design is

empirical and sampling technique used for this analysis is

judgment sampling. Samples have been selected on the basis

of market presence and CRISIL ratings. i.e. funds which have

been floating in market from last three years have been

considered. Sampling frame comprises of one broad category

of mutual fund i.e. Equity Mutual Funds. The top 5 equity

funds according to CRISIL are considered for evaluation.

CRISIL is a global analytical company providing ratings,

research, and risk and policy advisory. Period of study is five

years (2010- 2015).

The Sharpe ratio, Treynor ratio, and Jensen ratio are common

ratios for evaluating investment manager’s effectiveness and

investment portfolios.

Beta

It describes the relationship between the stock’s return and the

index returns. The beta value may be interpreted in the

following manner, a 1% change in Nifty index would cause a

1.042% (beta) change in the particular fund. It is the slope of

characteristic regression line.

Where, n= number of days

x= returns of the index

y= returns of the fund

Treynor’s Ratio

It is a ratio that helps the portfolio managers to determine the

excess return generated as the difference between the fund’s

return and the risk free return. The excess return to beta ratio

measures the additional return on a fund per unit of systematic

risk. Ranking of the funds is done based on this ratio.

Where, R= Return on investment

RFR= Risk Free return

Sharpe’s Ratio

Sharpe’s ratio is similar to Treynor’s ratio the difference being,

instead of beta here we take standard deviation. As standard

deviation represents the total risk experienced by the fund, it

reflects the returns generated by undertaking all possible risks.

A higher Sharpe’s ratio is better as it represents a higher return

generated per unit of risk.

Jensen Ratio

A risk-adjusted performance measure that represents the

average return on a portfolio over and above that predicted by

the capital asset pricing model (CAPM), given the portfolio’s

beta and the average market return. This is the portfolio’s alpha.

Jensen Ratio (JR) =

α

β


Mutual fund Category description

(a) Large Cap oriented Equity Funds: Equity funds that

invest > 75% in CRISIL-defined Large Cap Stocks for a

minimum of six out of nine months in each period over

the past 3 years, refer Table 2.

(b) Diversified Equity funds: Investment funds that contains

a wide array of securities to reduce the amount of risk in

the fund, as shown in Table 2.

Table 2: Mutual Fund Category Description

Category 1:Large Cap Equity Funds Schemes

(i) Franklin India Opportunities Fund

(ii) SBI Blue Chip Fund

Category 2:Diversified Equity funds Schemes

(i) Franklin India High Growth Companies Fund

(ii) ICICI Prudential Export and Other Services Fund

(iii) ICICI Prudential Value Discovery Fund

DATA ANALYSIS AND FINDINGS

When analyzing the Sharpe ratio, the higher the value, the more

excess return investors can expect to receive for the extra

volatility they are exposed to by holding a riskier asset. The

Sharpe ratio was originally developed as a forecasting tool,

but it can also be used to calculate a historical risk-adjusted

return. In the present study, the resulting Sharpe ratios shown

in Table 3 indicates that the ICICI Prudential Export and other

services fund, with a Sharpe Ratio of 0.79, provided the highest

monthly return per unit of risk out all the funds over the 5 year

period. As revealed from the study, Franklin India Opportunities

Fund experienced lowest Sharpe ratio of 0.41, as it had the

lowest volatility and produced the lowest average return.

According to the values of Sharpe ratio Funds have also been

ranked and accordingly ICICI Prudential Export and other

Services Fund has been ranked first. Although, it is more

volatile and thus riskier fund, but investors with investments

in the index have been much better compensated for the risk

compared to holders of other securities during that period. If

investors expect this to continue in the future, they should favor

ICICI Prudential Export and other services fund over other

funds, as it would offer a higher expected return per unit of

risk.

The Treynor ratio uses a portfolio’s “beta” as its risk. Beta

measures the volatility of an investment relative to the stock

market. More volatile stocks will have a beta greater than one,

whereas less volatile stocks have a beta lower than one. The

Treynor ratio attempts to put all investments on equal footing.

The results show how much performance investors enjoyed

for each unit of risk. Treynor ratios shown in Table 3 indicate

that the ICICI Prudential Value Discovery Fund, with a Treynor

Ratio of 17.04, provided the highest monthly return for each

unit of risk out of all the funds over the 5 year period. As

revealed from the study, Franklin India Opportunities Fund

experienced lowest Treynor ratio of 4.4, although it had beta

more than one, but still it had the lowest volatility and produced

the lowest average return. According to the values of Treynor

ratio Funds have also been ranked and accordingly ICICI

Prudential Value Discovery Fund, has been ranked Ist.

Although, it is more volatile and thus riskier fund, but investors

have been well compensated for the risk compared to holders

of other securities during that period.

Jensen’s alpha is a statistic that is commonly used in empirical

finance to assess the marginal return associated with unit

exposure to a given strategy. Generalizing the above definition

to the multifactor setting, Jensen’s alpha is a measure of the

marginal return associated with an additional strategy that is

not explained by existing factors. Jensen’s measure is one of

the ways to determine if a portfolio is earning the proper return

for its level of risk. If the value is positive, then the portfolio is

earning excess returns. In other words, a positive value for

Jensen’s alpha means a fund manager has “beaten the market”

with his stock picking skills. A positive alpha of 50.717, of

Franklin India Opportunities Fund in this example shows that

the mutual fund manager earned more than enough return to

be compensated for the risk he took over the course of the

year. But calculated alpha in the case of all other funds is

negative. This shows that the mutual fund amount of risk he

has taken.

Based on data analysis, Table 4 displays ranking of funds on

their risk and return compatibility relationship. On the basis of

analysis, it is evident that Funds of diversified category have

been offering higher and better risk –return trade off

comparatively as in two research tools i.e. Sharpe and Treynor,

they have been ranked top and only in case of Jensen ratio

Large cap fund has shown better portfolio composition which

is able to spread the systematic risk of the funds included in

the portfolio.

FINDINGS

Findings of any study conducted can provide some authentic

directions to be viewed by all participants but can’t be


volatility in majority cases and have been a right investment

decision for investors.

CONCLUSION

It has been accurately said that change is the only constant.

The ocean of transformations in the Indian financial and

economic scenario has fetched a fresh wave of opportunities.

These opportunities should be materialized in a quick manner

by all the participants of the industry to benefit the present

investors and to convert the potential investors into real ones.

Along with this, old established as well as new fund houses

should now shift their concentration to find effective

elucidations of the newly emerging challenges timely. These

are interesting times for the industry insiders as well as

outsiders, which needs to be enjoyed by all, with a pinch of

caution.

Mutual funds provide a wide variety of investment avenues

after due observance to the needs of various categories of

investors Precisely, steps need to be taken to infuse confidence

in the minds of the investors towards this mode of investment

as mutual fund industry have not crashed wherever it has

performed according to statutory and regulatory norms. At the

end, investors should endow with the idea of investing in the

right schemes according to the risk appetite, time horizon and

their investment objectives.

generalized as it is carried out in the conditions prevailing

during the period covered and its sample. The present study

investigates the performance of mutual fund schemes based

on Large Cap oriented Equity funds and Diversified Equity

funds from 201-15.

BSE Sensex has been used for market portfolio. The Historical

Performance of the selected schemes was evaluated on the basis

of Sharpe, Treynor and Jensen’s measures.

The results of the study show that ICICI Prudential Export

and Other Services Fund with a Sharpe ratio (0.79) was the

top performer followed by ICICI Prudential Value Discovery

Fund (0.55).

According to Treynor measures ICICI Prudential Value

Discovery Fund with a ratio of (17.04) was amongst the top of

all mutual funds followed by ICICI Prudential Export and other

Services Fund (9.3). Jenson measures indicated that Franklin

India Opportunities Fund with a ratio of (50.71) was amongst

the top of all mutual funds. Consequently, it can be concluded

that investments with a medium tenure are offering better

returns in case of Diversified Equity Funds in present market

scenario. Although Large Cap Equity Funds are evergreen and

have been a major contributor to the mutual fund industry since

past more than a decade but in the contemporary times, this

category is beneficial for long term investment purposes. In

addition to this, on the basis of data analysis, it has been found

that mutual funds are able to provide reward to variability and

Table 3: Risk and Return Analysis of Mutual Fund

Mutual Fund Name/ Ratio Sharpe Ratio Treynor Ratio Jensen Ratio

Franklin India Opportunities Fund 0.41635371 4.40833 50.7175805

SBI Blue Chip Fund 0.52377064 7.897573 -13.5177

Franklin India High Growth Companies Fund 0.52009 9.18585 -27.034513

ICICI Prudential Export and other Services Fund 0.7925 9.3568 -36.9421

ICICI Prudential Value Discovery Fund 0.5594 17.04713 -5.1199

Table No. 4: Ranking Table

Ratio/

MutualFundName

Franklin India

Opportunities

Fund

SBI Blue Chip

Fund

Franklin India

High Growth

Companies

Fund

ICICI

Prudential

Export and

other Services

Fund

ICICI Prudential

Value Discovery

Fund

Sharpe Ratio V III IV I II

Treynor Ratio V IV III II I

Jensen Ratio I III IV V II


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CORRELATION OF BSE SENSEX WITH BSE BANKEX

Richa Joshi1

Ayushi Jain2

ABSTRACT

Investing in equity market is always a complicated process and it requires some amount of intelligence and information base.

Equity market return represents the total return of the market index (SENSEX). Stock Market Indices act as barometer to

measure the performance of shares from various sectors. Banks are generally considered as safe investment areas. Their share

prices are considered less volatile than other industries. Hence, an attempt is made in this study to know the nature and extent

of influence of banking sector (Bankex) on BSE SENSEX. For this purpose, last five years data of SENSEX and Bankex were

analysed and it was found that there is very positive correlation between them. Thus, the share prices of banks are also as

volatile as SENSEX so enough caution has to be made while investing in banks.

Keywords: BSE Bankex, BSE SENSEX, Correlation coefficient, Regression.

1 Assistant Professor, Gitarattan International Business School, Rohini, Delhi. Email: [email protected] Student, Gitarattan International Business School, Rohini, Delhi. Email: [email protected]

INTRODUCTION

Established in 1875, BSE (formerly known as Bombay Stock

Exchange Ltd.), is Asia’s first & the Fastest Stock Exchange in

world. The BSE Index, S&P BSE Sensex (S&P Bombay Stock

Exchange Sensitive Index), also called the BSE 30 or simply

the SENSEX, is a free-float market-weighted stock market

index of 30 well-established and financially sound companies

listed on Bombay Stock Exchange (BSE). The S&P BSE

Bankex index comprises constituents of the S&P BSE 500 that

are classified as members of the banks sector as defined by the

BSE industry classification system. Bankex tracks the

performance of the leading banking sector stocks listed on the

BSE. In this background, this paper is an attempt towards the

understanding of the returns of Sensex in relation with the

Bankex returns.

LITERATURE REVIEW

Jain (2016) examined that Banks were generally considered

as safe investment areas. Their share prices were considered

less volatile than other industries. To study the truth in this

phenomenon a critical study relating to BSE Sensex and its

relationship with Bankex was made. For this purpose last three

years monthly opening data of Sensex and Bankex were

analyzed and it was found that there is very positive correlation

between Sensex and Bankex. The share prices of banks are

also as volatile as Sensex so enough caution has to be made

while investing in banks.

Rao (2014) investigated the short run and long run relationship

between Indian stock market (Sensex) and stock indices of

major countries in the Asia-Pacific region. Monthly closing

stock market indices of India (Sensex) and that of Australia

[All Ordinaries (AORD)], Hong Kong [Hang Seng Index

(HIS)], Indonesia [Composite Index (JKSE)], JAPAN [Nikkei

225(N225)], Malaysia [Composite Index (KLSE)], Korea

[KOSPI Composite Index (KS11), Singapore [Straits Times

Index (STI)] and Taiwan [TSEC Weighted Index(TWII)] for

the period of April, 2004 to March, 2014 are taken as sample.

The study was tested with cross correlation, Unit root test,

Granger causality test and Johansen co-integration test to seek

the relationship, stationarity, directional causality and either

short or long run equilibrium between the Sensex and the

selected indices of various stock markets. The result obtained

by the econometric tools shows that the correlation between

the Sensex and the other selected indices is high and significant.

The data are stationary in the first difference, both

unidirectional and bidirectional causality occurs and the long

term relationship is found between Sensex and other selected

indices.

Nagendra and Ravi (2014) studied the correlation between NSE

Nifty and industry sectors in India. They analyzed that some

of the Index stock weightages were more in NSE Nifty, but

influence was less than other index stocks. It means that the

weightage was only not the factor to influence the correlations

between indexes. It was concluded that Nifty influence the

performance of sectoral indices performance and FMCG and

Pharma indices less influenced by other sectoral indices.

Shankar and Ramulu (2014) examined that concept of risk and

return plays a vital role in the investment process, business

organization, economic, political, and technological issues/

problems. In their study, three levels had been taken to measure

the performance of the Stock Indices. In the first level, the

Return (Log Mean), Risk (Standard Deviation), Skewness,

Kurtosis and Value at Risk (VaR) had been calculated. In the

second level, ranks had been allotted to the Stock Indices based

on their return and risk performance using the performance

Measures (Sharpe, Treynor, and Jensen). The correlation among


the Indices performance had been calculated in the third level.

Based on the analysis of results all the indices had been

observed to be highly volatile in the year 2008-09, the indices

VaR was also high in the year 2008-09. Based on the

performance measure results FMCG, Consumer Durables and

Auto industry have been placed in the top position compared

to all other indices. The indices of Metal, IT and Oil & Gas

Industries were placed among the last positions on the basis of

performance measure ratios. The Correlation results show that

the IT industry and Tech industry have a high Positive

correlation and Auto and Metal, Bank and Oil & Gas, Bank

and Tech, Oil & Gas and Tech industries have a positive

correlation on the basis of last seven years daily returns.

Anbukarasi and Nithya (2014) in their study had attempted to

provide an empirical support to identify the volatility in sectoral

indices and CNX Nifty index. The indices selected for the study

are CNX Nifty index, CNX Auto index, CNX Bank index,

CNX Energy index, CNX Finance index, CNX FMCG index,

CNX IT index, CNX Media index, CNX Metal index, CNX

Pharma index, CNX PSU Bank index, and CNX Realty index

for the period from January 2013 to June 2014. The study found

that the correlation is significant for most of the indices except

the CNX Metal index, CNX Pharma index, CNX PSU Bank

index, and CNX Realty index and further found that the indices

CNX Pharma index and CNX PSU Bank index have more

impact on Nifty.

Rajamohan and Muthukamu (2014) made an attempt in their

study to know the nature and extent of influence by banking

sector with other sectors during the bull and bear market phase.

Pearson correlation coefficient technique was applied to find

the nature and extent of influence by banking sector with other

sectors and it was found that there is a positive correlation

between banking stock index and most of the other sectoral

stock indices.

Lakshmi and Swarna (2013) used the ARCH model to measure

the volatility in NIFTY and various sectoral indices in India.

Global meltdown started all over the world around the year

2007. But in India the year 2008 seems to be highly volatile.

Hence they had taken period of study from 2008 to study the

crucial impact till 2013. As NSE witness higher turnover, the

11 sectoral indices of NSE were taken for study and the

volatility of the sectors such as NSE CNX Auto, NSE CNX

Bank, NSE CNX Energy, NSE CNX Finance, NSECNX

FMCG, NSE CNX IT, NSE CNX Media, NSE CNX Metal,

NSECNX Pharma, NSE CNX PSU Bank, NSE CNX Realty

were measured. The sectors that have higher and lower volatility

than the NIFTY have been discussed and also it had been found

out that the realty sector has witnessed higher volatility than

any other sector and the reasons for that have been discussed.

Nateson, et. al. (2013) in their study had found that the quick

diffusion of information had led to increasing free flow of

capital from one market to another or within markets that had

led to market integration. This market integration had led to

volatility transmission or spillover which had grabbed attention

of many researches. Not much attention had been given on

volatility transmission to the sectoral indices from the major

indices that had contributed to find the spillover effect of

volatility in Sensex on BSE sectoral indices. All the sectoral

indices of BSE had been selected and Spillover GARCH model

had been employed for the current study. There was volatility

transmission from the BSE. Sensex to BSE Auto, BSE Bankex,

BSE Consumer Durables, BSE Capital Goods, BSE FMCG,

BSE Healthcare, BSE IT, BSE Metal, BSE Oil & Gas, BSE

Realty and BSE PSU. On the other hand shocks to the BSE

Sensex do not transmit to the BSE Power and BSE TECk

indices.

Shanmugasundram and Benedict (2013) in their study

attempted to provide an empirical support to identify the risk

factors in sectoral indices and CNX Nifty index and also to

see the risk relationship in different time intervals. The indices

selected for the study were CNX Nifty index, CNX Auto index,

CNX Bank index, CNXFMCG index, CNX Infrastructure

index and CNX Information Technology index for the period

from 01/01/2004 to 30/04/2012. The data had been taken from

the official website of National Stock Exchange. The results

show that there is no difference in the Standard deviation among

various sectoral indices. The One-way ANOVA within groups

had been used to identify, if there is any difference in the risk

across time intervals. The results show that there is a significant

difference in the mean scores of various time intervals. The

results exhibit important implications to individual investors

and portfolio managers in terms of reducing portfolio risk and

enhancing their returns.

Saluja et. al. (2013) studied empirically explored market

efficiency and dynamics of relationship of the BSE SENSEX

and Sectoral Indices of the Bombay Stock Exchange for the

period April 2006 to March 2013. The study states that the

variables under consideration are not Weak Form Efficient i.e.,

do not follow Random Walk and are dependent on each other.

The dependency also reflects that the price mechanism is able

to determine prices on historical basis and publically available

information is readily available to all. Also significant

correlation among different sectoral indices was found;

Regression Model was significantly found to be fit; Johansen

Co-integration Test confirmed long term relationship in most

of the Sectoral Indices.

Sinha (2012) studied emphasizes on the impact of

macroeconomic variables on the stock market performance of

a developing economy and also, investigated the performance

of real estate stocks under both the phases to take decisions of

investing in the real sector. She had given suggestion for

investing in stock market in Real Sector.

Kumar and Singh (2011) in their study found that the variance

in all sectoral indices and the market Index (BSE) return and

illustrates the significance of the individual sector performance

and their impact upon the market index returns. Their study

had also explained the liquidity of the sectoral indices and

market index on the basis of price returns by calculating market


efficiency coefficient. It was found that the Sensex returns can

be explained with the help of selected sectoral index returns.

The study was carried out in different phases and has found

significant difference with inclusion of power and realty sector.

It was the time lag which increased the model fit and inclusion

of realty and power indices returns also increase of fitness in

ARIMA model. The study exemplified that forecasting of the

Sensex returns with help of differenced first order regressive

method provides better results. The peculiar observations reveal

that health and consumer durable indexes are earning against

the market index returns, whereas technology, oil, capital goods

and banking remained the main contributors to the overall

market index returns. The liquidity measured on the basis of

market efficiency coefficients (MEC) have provided that the

sectors like health care, consumer durables and auto sectoral

indices have high long term variance in returns where as oil

and gas sector have lower value. It is found that performance

of the few sectoral indexes is very high compared to the market

index return.

Chakrapani, Kannaiah, and Redddy (2011) examined that stock

exchange is an organized market place where securities are

traded. These securities were issued by the government, semi-

government bodies, public sector undertakings and companies

for borrowing funds and raising resources. Securities were

defined as any monetary claims (promissory notes or I.O.U)

and also included shares, debentures, bonds and etc., if these

securities are marketable as in the case of the government stock,

they are transferable by endorsement and alike movable

property. They are tradable on the stock exchange. So are the

case shares of companies.

Mallikarjunappa, and Afsal (2008) examined the volatility

implications of the introduction of derivatives on stock market

volatility in India using the S&P CNX Nifty Index as a

benchmark. To account for non-constant error variance in the

return series, a GARCH model was fitted by incorporating

futures and options dummy variables in the conditional variance

equation. They found that clustering and persistence of

volatility before and after derivatives, while listing seems to

have no stabilisation or destabilisation effects on market

volatility. The post-derivatives period shows that the sensitivity

of the index returns to market returns and any day-of-the-week

effects have disappeared. That is, the nature of the volatility

patterns has altered during the post-derivatives period.

Mukherjee (2007) discussed the trends, similarities and patterns

in the activities and movements of the Indian Stock Market in

comparison to its international counterparts. The study covered

New York Stock Exchange (NYSE), Hong Kong Stock

exchange (HSE), Tokyo Stock exchange (TSE), Russian Stock

exchange (RSE), Korean Stock exchange (KSE) from various

socio politico-economic backgrounds. Both the Bombay Stock

exchange (BSE) and the National Stock Exchange of Indian

Limited (NSE) had been used in the study as a part of Indian

Stock Market. The time period had been divided into various

eras to test the correlation between the various exchanges to

prove that the Indian markets have become more integrated

with its global counterparts and its reaction are in tandem with

that are seen globally.


The present study is empirical in nature and is based on

secondary data. Correlation and regression has been used for

establishing relationship. Closing prices of S&P BSE Sensex

and BSE Bankex were collected from the official website of

Bombay Stock Exchange i.e., www.bseindia.com for the period

- January 2011 to December 2015. From the closing prices of

the first of every month, returns were calculated by applying

the formula: (Current Month’s Price – Previous Month’s Price)

/ Previous Month’s Price. Collected data comprises of:

(a) S&P BSE SENSEX, which is a free-float market

weighted stock market index of 30 well-established,

actively traded and financially sound companies listed

on Bombay Stock Exchange.

(b) BSE Bankex, which comprises of 12 stocks which

represent 90 percent of the total market capitalization

of all banking sector stocks listed on BSE.


(a) To identify the trend of BSE Sensex and Bankex.

(b) To find out if there is a relationship between the Returns

of BSE Sensex and BSE Bankex.

(c) To find out the impact of BSE Bankex on BSE Sensex

Returns.

SCOPE OF THE STUDY

The scope of the study is restricted to BSE Sensex and a

selected sectoral index i.e. BSE Bankex and the period of the

study was 2011-2015. Data was collected on monthly basis.

HYPOTHESIS

H1: There is significant relationship between the Returns of

BSE Bankex and BSE Sensex.

DATA PRESENTATION AND ANALYSIS

To determine the correlation between BSE Sensex and Bankex,

closing monthly rates of the indices were collected. The data

is presented in Table1


Table 1: Closing Prices of BSE Sensex and Bankex from 2011-15

MONTH BANKEX SENSEX MONTH BANKEX SENSEX MONTH BANKEX SENSEX

Jan’2011 18327.76 12064.01 Sep’2012 18762.74 13138.71 May’2014 24217.34 16953.86

Feb’2011 17823.4 11840.34 Oct’2012 18505.38 12947.29 Jun’2014 25413.78 17475.08

Mar’2011 19445.22 13299.77 Nov’2012 19339.9 13951.88 Jul’2014 25894.97 17485.61

Apr’2011 19135.96 13076.97 Dec’2012 19426.71 14344.99 Aug’2014 26638.11 18003.68

May’2011 18503.28 12543 Jan’2013 19894.98 14580.26 Sep’2014 26630.51 17615.46

Jun’2011 18845.87 12821.05 Feb’2013 18861.54 13203.87 Oct’2014 27865.83 19505.16

Jul’2011 18197.2 12447.83 Mar’2013 18835.77 13033.35 Nov’2014 28693.99 21212.07

Aug’2011 16676.75 10904.24 Apr’2013 19504.18 14363.74 Dec’2014 27499.42 21458.11

Sep’2011 16453.76 10850.73 May’2013 19760.3 14261.24 Jan’2015 29182.95 22715.52

Oct’2011 17705.01 11454.03 Jun’2013 19395.81 13257.76 Feb’2015 29361.5 22572.97

Nov’2011 16123.46 9850.43 Jul’2013 19345.7 11440.96 Mar’2015 27957.49 20865.31

Dec’2011 15454.92 9153.39 Aug’2013 18619.72 10304.35 Apr’2015 27011.31 21030.88

Jan’2012 17193.55 11390.7 Sep’2013 19379.77 10964.19 May’2015 27828.44 21511.65

Feb’2012 17752.68 11974.16 Oct’2013 21164.52 13086.92 Jun’2015 27780.83 20982.18

Mar’2012 17404.2 11751.18 Nov’2013 20791.93 12730.3 Jul’2015 28114.56 21499.24

Apr’2012 17318.81 11828.63 Dec’2013 21170.68 13001.94 Aug’2015 26283.09 19637.15

May’2012 16218.53 10884.53 Jan’2014 20513.85 11712.31 Sep’2015 26154.83 19681.55

Jun’2012 17429.98 11908.71 Feb’2014 21120.12 12284.27 Oct’2015 26656.83 19773.88

Jul’2012 17236.18 11910.46 Mar’2014 22386.27 14572.46 Nov’2015 26145.67 19916.3

Aug’2012 17429.56 11515.94 Apr’2014 22417.8 14706.66 Dec’2015 26117.54 19328.74

Table 1, depicts that Sensex is moving along with Bankex and

whenever Bankex falls, Sensex also falls and vice versa. To

understand it more clearly, Figure 1 gives a graphical

presentation of the data. The entire banking related upside/

downside was basically linked to credit growth/decline.

Political and economic factors affect the Sensex and influence

this barometer of the economy to reach new highs.

Figure 1: Closing Prices of BSE Sensex and Bankex from 2011-15



Sensex Bankex

Pearson Correlation 1 .967


N 63 63

Pearson Correlation .967 1


N 63 63

Note: Correlation of 0.967 is significant at 0.01 level (2-tailed)



1 .967 .934 .933 1081.13383


Unstandardized Coefficients Standardized Coefficients Model

B Std. Error Beta

t Sig.

(Constant) 5785.354 555.653 10.412 .000 1

Bankex 1.057 .036 .967 29.448 .000

Table 2 clearly indicates that the calculated value of correlation

coefficient (r) between BSE Sensex and Bankex is positive;

indicating a strong and direct relationship of Bankex returns

with Sensex returns (calculated value r is 0.967). As the p value

(0.000) obtained from table is less than 0.01, the hypothesis

(H1) is accepted and it is proved that there is a significant

positive relationship between the returns of Bankex and Sensex.

Regression is established taking Bankex as independent

variable and Sensex as dependent variable. As per Table 3, R-

Square of 93.4% indicates the fit of the model is good.

Regression equation:

BSE_return = a + b * (Bankex_return)

Where, a is constant and b is coefficient of variable.

From Table 4, the values of a= 5785.354 and b=1.057, the

regression equation between the two variables thus becomes:

Sensex_return = 5785.354 + 1.057 (Bankex_return)

CONCLUSION

This study has attempted to understand the movement of

Bankex returns and its contribution towards the Sensex returns.

In view of the emergence of the banking stocks as a major

segment in the equity market, BSE considered it desirable to

design an index exclusively for bank stocks namely, BSE

Bankex. After analyzing the nature of BSE Sensex and Bankex,

it is found that there exists a strong and positive correlation

between both the indices. Any change in the volatility of the

Bankex has a significant impact on the BSE Sensex.

REFERENCES

1. Ambukarasi, M and Nithya, B. (2014) Return and Volatility

Analysis of the Indian Sectoral Indices-With Special

Reference to NSE. EPRA International Journal of

Economic & Business Review. Vol. 2.

2. Chakrapani, R. and Kannaiah, P. and Reddy, G. Malla.

(2011) A Study on Indices at NSE. International Journal

of Management & Business Studies. Vol. 1, pg. 136-145.

3. Jain, Krati. (2016) A critical study on relationship of BSE

Sensex and Bankex. Journal for Advanced Research in

Commerce and management studies. Vol.3, pg. 7-12.

4. Kumar, Pasupuleti Venkata Vijay and Singh, Piyush

Kumar. (2011) A study of return, liquidity of sectoral

indices, market index return of Indian financial market

(BSE). International Journal of Research in Commerce &

Management. Vol. 2, pg. 1-8.

5. Lakshmi P, Swarna. (2013) Volatility Patterns in Various

Sectoral Indices in Indian Stock Market. Global Journal

of Management and Business Studies. Vol. 3, pp. 879-

886.

6. Mallikarjunappa, T. and E.M., Afsal. (2008) The impact

of derivatives on stock market volatility: a study of the

nifty index. Asian Academy of Management Journal of

Accounting and Finance. Vol. 4.

7. Mukherjee, Debjiban. (2007) Comparative analysis of

Indian Stock Market with International Markets. Great

lakes Herald.Vol.


8. Nagendra, M. and Haritha, M. and Ravi, V. (2014) NSE

Nifty & its correlation with sectorial indexes. International

Journal of Conceptions on Management and Social

Sciences. Vol. 2, pg. 9-13.

9. Nateson, C. and Palanisamy, R. and Renukadevi, P. and

Suganya, D. (2013) Spillover Effect of Volatility in BSE

Sensex on BSE Sectoral Indices. IJMBS. Vol. 3, pg. 92-

95.

10. Rao, K. Mallikarjuna. (2014) Interrelationship among

Indian Stock Market and Selected Stock Price Indices of

the Asia-Pacific Region. The Indian Journal of Commerce.

Vol. 67, No. 3, Pg. 13-20.

11. Rajamohan, S. and Muthukamu, M. (2014) Bank Nifty

Index and Other Sectoral Indices of NSE- A Comparative

Study. Indian Journal of Research. Vol. 3, pg. 147-149.

12. Saluja, H.S. and Totala, N. K. and Bapna, Ira and Sood,

Vishal. (2013) Efficiency and Co-integration of SENSEX

and Sectoral Indices of Bombay Stock Exchange: A Shift

to Dynamic Business Environment. Altius Shodh Journal

of Management & Commerce.

13. Shankar, CH. & Ramulu, K. (2014) Volatility and

Correlation of Stock Indices on Indian Stock Market.

International Journal of Research in Business

Management. Vol. 2, pg. 17-26.

14. Shanmugasundram, G. and Benedict, John. (2013)

Volatility of the Indian sectoral indices - A study with

reference to national stock exchange. International Journal

of Marketing, Financial Services & Management

Research. Vol.2.

15. Sinha, Ratna (2012) An analytical study of performance

of reality sector in sensex. Journal of Research in

Commerce & Management. Vol.1.


RELATIONSHIP BETWEEN BSE INDEX RETURNS

AND FINANCIAL SERVICES RETURNS

Swati Jain1

Lokesh2

ABSTRACT

BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India

under the Securities Contracts (Regulation) Act 1956. Financial Sector of India is intrinsically strong and exhibits competence

and flexibility besides being sensitive to India's economic aims of developing a market oriented, industrious and viable economy.

The present study aims to identify the relationship between BSE Index and Financial Services Returns and the impact of Financial

Services' return on BSE Index return. Historical data of years 2006 - 2015 was taken from the official website of BSE. Pearson

Correlation and regression was used for analysis of the data. Results revealed that there is a direct positive relationship between

BSE index returns and Financial Services' returns. The study further revealed that Financial Services' return have an impact on

BSE Index return. The study has managerial implication as it suggests investors should not believe in some fundamental aspects

only because capital markets are driven by number of factors.

Keywords: BSE SENSEX, Closing Price, Financial Services, Opening price, Returns, Stock Price.

1 Assistant Professor, Gitarattan International Business School, Rohini, New Delhi. Email id: [email protected] Student, Gitarattan International Business School, Rohini, New Delhi

INTRODUCTION

Bombay Stock Exchange is the oldest stock exchange in Asia

with a rich heritage, now spanning three centuries in its 133

years of existence. What is now popularly known as BSE was

established as “The Native Share & Stock Brokers’

Association” in 1875.

BSE is the first stock exchange in the country which obtained

permanent recognition (in 1956) from the Government of India

under the Securities Contracts (Regulation) Act 1956. BSE’s

pivotal and pre-eminent role in the development of the Indian

capital market is widely recognized. It migrated from the open

outcry system to an online screen-based order driven trading

system in 1995. Earlier an Association of Persons (AOP), BSE

is now a corporatized and demutualised entity incorporated

under the provisions of the Companies Act, 1956, pursuant to

the BSE (Corporatisation and Demutualisation) Scheme, 2005

notified by the Securities and Exchange Board of India (SEBI).

With demutualization, BSE has two of world’s best exchanges,

Deutsche Bores and Singapore Exchange, as its strategic

partners.

Over the past 133 years, BSE has facilitated the growth of the

Indian corporate sector by providing it with an efficient access

to resources. There is perhaps no major corporate in India which

has not sourced BSE’s services in raising resources from the

capital market.

Financial Sector of India is intrinsically strong, operationally

sundry and exhibits competence and flexibility besides being

sensitive to India’s economic aims of developing a market

oriented, industrious and viable economy.

LITERATURE REVIEW

Venkataramanaiah (2015) conducted study on the relationship

between number of listed companies and SENSEX and market

capitalization as a whole, market capitalization to gross national

product, sector –wise market capitalization, security group-

wise capitalization and company-wise capitalisation were

examined. It was found that there was a positive relationship

between market capitalisation and SENSEX while there was

no positive relationship between market capitalisation and

listed companies and listed companies and SENSEX. Further,

it marked that there was positive relation between market

capitalisation and gross national product. Furthermore, it was

evident that there was a gradual increase in sector-wise market

capitalisation, security group-wise capitalisation and company-

wise capitalisation during the study

Sahu (2015) conducted study on relationship Between NSE &

BSE. The researcher has attempted to find out the effect of

changes in NYSE due to changes in Indian stock market. In

the study the researcher has chosen Bombay Stock Exchange

(BSE) as its SENSEX is the oldest as well as being more

popular stock exchange in India. The NYSE is the largest stock

exchange in the world & its movements affect the world’s

economy. The paper deals with the relationship between BSE

& NYSE The researcher has tried to find out whether movement

in the stocks in BSE has an effect on NYSE & vice versa. It

also takes into account the fluctuations in the returns obtained

from the stock exchanges. In the paper he has also attempted

to show the effect of changes in the returns of the stock

exchange over the GDP of the country. The data of 11 years

were taken into account for doing the research.


Saxena & Rana (2014) conducted study on the impact of

announcement of new banking license policy on the share prices

of selected NBFCS” Stock markets in the world individually

and collectively play a critical role in the economies. The

performance of the stock market is influenced by a number of

factors the main ones among them being the activities of

governments and the general performance of the economy. The

Reserve Bank of India (RBI) on 22nd February 2013 released

the final guidelines for licensing of banks in the private sector.

The study analyses the performance of Non-Banking Financial

Corporations before and after the announcement of final

guidelines of New Banking License with the help of event study

methodology. The results of the study shows that announcement

of New Banking License does not have a significant impact on

value of NBFCs.

Radhika (2005) conducted comparative study on BSE and

sectorial indices. The global economic meltdown has

influenced all the sectors of the Indian economy. Its impact is

more visible on the capital market and the indices. The indices

are falling down and the markets are following the same trend.

The BSE SENSEX has been the worst hit among the Indian

stock market indices. The other sectoral indices are also

following the SENSEX until a revival in the last quarter. In

this backdrop, an attempt was made to study the performance

of the sectoral indices in comparison with SENSEX. The author

has taken the data of the last financial year and studied the

correlation coefficients to establish the relationship between

the selected sectoral indices and BSE. Six leading sectoral

indices were taken for the analysis, which have a significant

impact on the total economic situation of the country.

Luthra and Mahajan (2014) conducted study on “Impact of

Macro factors on BSE Bankex” The purpose of the paper is to

study the impact of macroeconomic factors on BSE Bankex.

Macro economic climate here is comprised of GDP growth

rate, Inflation, Gold Prices and Exchange rate. A multiple

regression model is developed which shows the regression co-

efficient between the share prices and various factors affecting

the same. Regression results indicate that Exchange rate,

Inflation, GDP growth rate affect banking index positively

whereas Gold prices have negative impact on BSE Bankex

but none of them have significant impact on Bankex.

Kumar and Mishra (2013) conducted study on “Impact of

financial Indicators on BSE SENSEX”. The study makes an

attempt to examine the relationship between the market price

and selected four variables namely EPS, price earnings ratio,

price to book ratio, and dividend yield in BSE SENSEX. The

tenure considered in study is twelve years i.e. 2000-2012. The

scope of the study is confined only to selected explanatory

variables in BSE SENSEX. Correlation, regression, and

ANOVA are used for analyzing the relationship between the

market price and selected independent. The finding suggests

that Earning per Share (EPS) and Price to book Value (P/B)

are behaving as a significant factor at 0.05 level of significance.

Moreover, other independent variables such as Price Earnings

ratio (P/E) and Dividend Yield (Yield) seems to be statistically

insignificant in explaining the market price index.

Nateson et. al. (2013) conducted study on “Spillover Effect of

Volatility in BSE SENSEX on BSE Sectoral Indices” found

that the quick diffusion of information has led to increasing

free flow of capital from one market to another or within

markets that has led to market integration. Not much attention

has been given on volatility transmission to the sectoral indices

from the major indices that has contributed to find the spillover

effect of volatility in SENSEX on BSE sectoral indices. All

the sectoral indices of BSE have been selected and Spillover

GARCH (1, 1) model has been employed for the current study.

There is volatility transmission from the BSE SENSEX to BSE

Auto, BSE Banker, BSE Consumer Durables, BSE Capital

Goods, BSE FMCG, BSE Healthcare, BSE IT, BSE Metal,

BSE Oil & Gas, BSE Realty and BSE PSU. On the other hand

shocks to the BSE SENSEX do not transmit to the BSE Power

and BSE indices.

Ganatra and Shettigar (2013) conducted study on “Performance

analysis of BSE Power with major Sectors, Index, USD: INR

and Crude Oil”. Bombay Stock Exchange (BSE) and National

Stock Exchange (NSE) are the two nationalized Stock

exchanges of India. Both the stock exchanges of India are in

cut throat competition with each other. The stock market index

is the most important index of all as it measures overall market

sentiment through a set of stocks that are representative of the

market and provides investors information regarding the

average share price in the market. The indices of BSE and

NSE reflect the overall market sentiments that are both

SENSEX and NIFTY have shown up pattern when economy

was good, both slowed down when there was a depression.

Therefore, both the indices can be referred as benchmark

indices of the Indian Economy.

Aggarwal and Manoj (2012) conducted study on “effect of

economic variables of India and USA on the movement of

Indian capital market”. Economic variables like FII, exchange

rate, gold price, fiscal deficit, IIP and inflation are the important

factors which affect the Indian capital market. In addition to

the Indian economic variables, the US economic variables like

interest rate, inflation and GDP also affect the Indian capital

market. There is also a linkage between US capital market

movement and its affect on the Indian capital market. The

monthly data between 1994 to 2011 has been taken to find that

the Nifty 50 index is significantly affected US GDP, S&P index,

gold prices, Indian WPI, its fiscal deficit, IPI and exchange

rate.

Sinha (2012) conducted study on “An Analytical Study of

Performance of Reality Sector in SENSEX”. Objective of the

study was to analyze the performance of the real estate stocks

with the benchmark index SENSEX and also to analyze the

impact of economic indicator on real stock. The Real Estate

sector is a large, huge diversified sector, one with many verticals

such as land, design, construction, development, investment,

lending etc. The study emphasizes on the impact of


macroeconomic variables on the stock market performance of

a developing economy. The paper investigated the performance

of real estate stocks under both the phases to take decisions of

investing in the real sector.

Saluja et. al. (2012) conducted study on “Efficiency and Co-

integration of SENSEX and Sectoral Indices of Bombay Stock

Exchange” in which he analyzed that an efficient and integrated

stock market is an important infrastructure that influences

capital formation and strengthens the capital market in a

dynamic business environment. The process of capital

formation largely depends upon the efficiency of the stock

market. Stock Market Efficiency refers to a state in which the

current stock prices reflect all the publicly available information

about the security and market. Stock Market Efficiency is a

necessary condition for the economic efficiency, as the stock

prices provide signals for igniting thoughts of investors about

the profitability of investment opportunities in different stock

market indices leading to a paradigm change in a vibrant

business environment.

Bhattacharya & Mukherjee (2009) conducted study on “The

Nature of the Causal Relationship between Stock Market and

Macroeonomic Aggregate in India”. The paper investigates

the nature of the causal relationship between stock prices and

macroeconomic aggregates in India. By applying the techniques

of unit–root tests, co integration and the long–run Granger non–

causality test recently proposed by Toda and Yamamoto (1995),

tested the causal relationships between the BSE Sensitive Index

and the five macroeconomic variables, viz., money supply,

index of industrial production, national income, interest rate

and rate of inflation using monthly data for the period 1992-

93 to 2000-01. The major findings are that there is no causal

linkage between stock prices and money supply, stock prices

and national income and stock prices and interest rate, index

of industrial production leads the stock price, and there exists

a two – way causation between stock price and rate of inflation.

Radhika (2005) conducted study on “BSE and Sectorial

Indices: A Comparative Study”. The global economic meltdown

has influenced all the sectors of the Indian economy. Its impact

is more visible on the capital market and the indices. The indices

are falling down and the markets are following the same trend.

The BSE SENSEX has been the worst hit among the Indian

stock market indices. The other sectoral indices are also

following the SENSEX until a revival in the last quarter.

Because of the declining trends in the capital markets, the

investors are in a dilemma whether their investments will be

safe or not. Even though the situation has stabilized a little bit

now, still there is an ambiguity among the investors about the

performance of the indices. In the backdrop, an attempt was

made to study the performance of the sectoral indices in

comparison with SENSEX.


(a) To examine the relationship between BSE index returns

& Financial Services returns.

(b) To analyze the impact of the Financial Services’ returns

on BSE index returns.


The study was descriptive in nature. Two variables Financial

Services Returns and BSE Index Returns were used. Historical

data of these variables for the years 2006 to 2015 was taken

from the official website of BSE. The techniques used for data

analysis is Correlation and Regression.

The rate of return formula is an easy-to-use tool and following

formula is used for calculating the returns:

[(Current value - Previous value) / Previous value] x 100 =

rate of return

Current value: the current value of the stock.

Previous value: the price at which one purchased the stock.

Model specification

In carrying out this research paper on the relationship between

Financial services return and BSE index return, linear

regression was used:

Y = a + b X

Where:

Y= Bombay stock exchange index returns

X= Financial services returns


H1: There is significant impact of Financial Services returns

on BSE index returns.

RESULTS & DISCUSSION

Correlation Analysis

Since the significant p value (0.000) is less than 0.05 so

alternate hypotheses is accepted. Hence we conclude that there

is significant impact of financial services returns on BSE index

return.


Table 1: Correlation between BSE Index Returns and Financial Services Returns

Variables Financial Services returns BSE Index Returns

Pearson Correlation 1 .947


Financial Services returns

N 120 120

Pearson Correlation .947 1


BSE Index Returns

N 120 120

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



1 .947 .898 .897 .03694

Table 3: ANOVA

Model Sum of Squares df Mean Square F Sig.

Regression 1.412 1 1.412 1035.082 .000

Residual .161 118 .001

Total 1.573 119



Coefficients

Model

B Std. Error Beta

t Sig.

Constant -.003 .003 -.949 .344

Financial Services .823 .026 .947 32.173 .000

Regression Analysis

Table 2 provides the R and R2 values. The R value represents

the simple correlation and is 0.948 (the “R” Column), which

indicates a high degree of correlation. The R2 value indicates

how much of the total variation in the dependent variable (BSE

index Returns) can be explained by the independent variable

(Financial Services Returns). Any change in the financial

services returns impacts BSE index returns by 89.8 %. It shows

that financial services returns explains BSE index return by

89.8%.

Table 3 is the ANOVA table. Here, F-test is used to determine

whether the model is a good fit for the data. This indicates the

statistical significance of the regression model that is 0.000,

which is less than 0.05, and indicates that, overall, the

regression model statistically significantly predicts the outcome

variable (i.e., it is a good fit for the data). Hence, financial

services return has significant impact on the BSE index returns,

that is alternative hypothesis is accepted at 5% level of

significance.

Table 4, beta Coefficient column shows the predictor variables

(constant Financial services). The variable constant represents

the height of the regression line when it crosses the Y axis. In

other words, this is the predicted value of BSE SENSEX returns

when all other variables are 0. These are the values for the

regression equation for predicting the dependent variable from

the independent variable.

Thus, the regression equation is:

BSE index returns = -0.003 + 0.823 FS services returns

Where,

BSE: Bombay stock exchange index returns

FS: Financial Services Returns

The coefficient of financial services is 0.823 percent so for

every unit (%) increase in financial services returns lead to

increase 0.823 percent in BSE returns is predicted if all other

factors remain constant. The Beta (B) is the standardized

coefficients. These are the coefficients that you would obtain

if one standardized all of the variables in the regression,

including the dependent and all of the independent variables,


and ran the regression. By standardizing the variables before

running the regression, one has to put all the variables on the

same scale, and then compare the magnitude of the coefficients

to see which one has higher effect. The larger betas are

associated with the larger t-values and lower p-values. There

are t-statistics and their associated 2-tailed p-values used in

testing to check whether a given coefficient is significantly

different from zero. The coefficient for Financial services

returns (0.823) is significant because its p-value is 0.000 which

is smaller than 0.05.

Since p value indicates the statistical significance of the

regression model of 0.000, which is less than 0.05, and indicates

that, overall, the regression model statistically significantly

predicts the outcome variable. Therefore, there is a significant

impact of financial services return on BSE index return.

CONCLUSION

Following conclusion can be drawn from the study:

(a) There is a direct positive relationship between BSE index

returns and financial services returns as the value of R

and R Square is respectively 0.947 and 0.898.

(b) Any changes in the financial services returns impacts

BSE index returns by 89.8 %.

(c) There exists a significant impact of financial services

return on BSE index return. Any change in the financial

services returns, results change in BSE index return.

RECOMMENDATIONS

(a) Prediction of capital markets can be made by analyzing

the prices of stocks which would be helpful for the

investors in decision- making.

(b) Since there is strong correlation between financial

services and BSE returns, so the investors should closely

monitor the BSE in order to gain in the long run.

REFERENCES

1. Aggarwal Priyanka & Kumar Manish (2012) Effect of

Economic Variables of India and USA on the Movement

of Indian Capital Market, Journal of Money, Investment

and Banking, 6, 54-65.

2. Bhattacharya Basabi & Mukherjee Jaydeep (2009) The

Nature Of The Causal Relationship Between Stock Market

And Macroeonomic Aggregate In India, Journal of

Finance, Vol. No. 44 pp.1115-1153.

3. Luthra Manisha and Mahajan Shikha (2014), Impact of

Macro factors on BSE Bankex, Journal of Management

& Commerce, Vol. No. 2(2), pp. 179-186.

4. Nateson, C., Palanisamy, R., Renukadevi, P., Suganya, D.

(2013) Spillover Effect of Volatility in BSE SENSEX on

BSE Servicesal Indices, Pacific Business Review

International Journal, Vol. 3, Issue 1, Jan - March 2013.

5. Saluja,H.S., Totala, N. K., Bapna Ira, Sood Vishal (2013),

Efficiency and Co-integration of SENSEX and Sectoral

Indices of Bombay Stock Exchange, Journal of

Management & Commerce Vol. No. 2(2), pp. 120-135.

6. Vashistha, D.S., Singh Umed, Kumar Rajesh (2013) A

Study Of Relationship between S&P BSE-SENSEX And

Economic Growth Rates, Journal of Marketing, Financial

Services & Management Research, Vol.2, No. 7, July

(2013).

7. Venkataramanaiah M.(2015), Market Performance of the

BSE with Reference to Market Capitalization, Pacific

Business Review International Journal, Vol. 5 Issue 2.


CONSUMER ETHNOCENTRISM OF CONSUMER PERCEPTION IN INDIA

WITH SPECIAL REFERENCE TO COSMETIC INDUSTRY

Shuchi Singhania1

Neha Aggarwal2

ABSTRACT

The purpose of this paper is to analyse the influence of consumer ethnocentrism and its antecedents-patriotism on domestic and

foreign buying behaviour in the emerging economy of India. All the consumers are not equally ethnocentric. Consumers differ

in their ethnocentrism due to a variety of socio-psychological and demographic factors. This study presented demographic

factors and described the relationship between the sample and population in terms of characteristics. The study also explains

the relationship between consumer ethnocentric tendency and preference for foreign products in India and the impact of

demographic variables (age, occupation, education level, Income level) on consumer ethnocentric tendency. The study concludes

that there is a negative relationship between consumer ethnocentric tendency and preference for foreign products in India and

no impact of age, occupation, educational level and Income level on consumer ethnocentric tendency.

Keywords: Antecedents, Consumer Ethnocentrism, Demographic Factors, Patriotism, Socio-psychological Factors.

1 Assistant Professor, Gitarattan International Business School, Email: [email protected] Student, Gitarattan International Business School, Email: [email protected]

INTRODUCTION

Global cosmetics market is expected to garner $429.8 billion

by 2022, registering a CAGR of 4.3% during the forecast period

2016 - 2022. Cosmetics Market (makeup or beauty products)

are mixture of chemical generally used to enhance the

appearance or odour of the human body. Sun care, skin care,

hair care, deodorants, makeup and colour cosmetics, and

fragrances are some of the cosmetics products that are

predominantly available and used by individuals. Retail stores

including supermarkets, exclusive brand outlets, and specialty

stores amongst others are the major distribution channels, with

online channels gaining popularity among consumers.

There is a considerable rise in disposable incomes over the

past decade. The growth in global economies, changing

lifestyles, rising demands of skin and sun care products due to

varying climatic conditions encourages the growth of the

market for cosmetics.

Rising demand for natural, herbal and organic beauty products

creates potential opportunities for manufacturers to innovate

and develop new products in accordance to consumer

preferences.

Global cosmetics market is segmented based on category of

cosmetics, mode of sale, gender and geography.

The category segment includes skin & sun care products, hair

care products, deodorants, makeup & colour cosmetics and

fragrances.

Improvement in the current lifestyles of the individuals is

majorly affecting the cosmetics market. Consumers have now

become more conscious regarding the usage of cosmetics in

their daily life in an effort to step up their style quotient and

overall personality.

During recession 2007-2009, there was an overall global rise

in GDP and economies across various regions. Presently,

increasing GDPs of various countries is positively affecting

the global cosmetics market.

Presently, manufacturers are focusing on developing new

products and innovating on the use of different ingredients in

cosmetic products. In order to sustain and maintain their market

position, manufacturers are adopting various strategies.

The cosmetic industry in India is growing at a break-neck pace,

almost twice as fast as that of the markets in the United States

and Europe. According to recent research, the overall Indian

beauty and cosmetic market is currently pegged at INR 60

billion and is expected to reach INR 170 billion by 2020;

growing at the rate of 15-20% per annum.

The prospects of the Indian beauty industry look bright, with

the colour cosmetics segment predicted to continue its

dominance over the market landscape. Valued at INR 3.8

billion, the colour cosmetics market accounts for 90% of the

cosmetics market share.Especially with the advent of low and

medium priced cosmetic goods that are high on quality, the

colour cosmetics market is expected to bring in substantial

revenue in the coming years.

Because of patriotic and sympathetic feelings towards their

fellow men and artefacts, consumers with ethnocentrism tend

to emphasise positive aspects of their own country’s products

and discount virtues of foreign products. Less ethnocentric


consumers, on the other hand, tend to rely more on objective

product attributes and, hence, do not tend to be inherently

biased against imported products.

A number of socio-psychological factors (such as patriotism,

conservatism, collectivism, cultural openness, animosity and

world-mindedness) and demographic factors (such as gender,

age, education and income) act as antecedents to consumer

ethnocentrism. Knowledge of ethnocentric tendency present

among consumers and variations therein across different types

of consumers can be helpful to the international marketers in

identifying market segments relevant to their products and

evolving marketing strategies as appropriate for the selected

segments.

LITERATURE REVIEW

Torres & Gutiérrez (2007) explained that in times of

globalization, when products are designed in one country,

manufactured in another and assembled in another one,

consumers are confused and often struggle to identify or

recognize domestic products.

Lee & Simon (2006) suggested that the attitudes of consumers

towards country of origin and corporate image exert a great

deal of influence on their perceptions of product quality and

purchase behaviour moderated by socio-economic and national

cultural characteristics.

Kyanak & Kara (2002) found that Turkish consumers had

significantly different perceptions of products attributes for

the products coming from countries of different levels of socio

economic and technological development. Also results of the

study revealed that there were several lifestyle dimensions

apparent among the Turkish consumers, which were closely

correlated to ethnocentric biases.

Bamber, Phadke and Jyothishi (2012) explored four

components with reference to an average consumer group in

the under-researched market of India. The concept of consumer

ethnocentrism may improve our understanding of consumer

behaviour and this indicates why certain segments of consumers

prefer domestic goods, whereas others do not discriminate

between domestic and imported products.

Shimp and Sharma (1987) explained more ethnocentric

consumer tends to prefer home made products, based on

morality they attach to the purchase of foreign made ones.

Consumers may prefer foreign brands because of association

of higher prestige.

Khairul Anuar Mohammad Shah and Hazril Izwar Ibrahim

(2012) attempts to explore and examine the effects of several

demographic variables, i.e., gender, age, education level,

income level and geographical region on the ethnocentric

tendencies among Malaysian consumers.

Akshay Pai R, Anupama Sundar (2014) investigated the impact

of Consumer Animosity and Consumer Ethnocentrism on

Repurchase Intent and identified a significant and positive

relation between Consumer Ethnocentrism and Consumer

Animosity

Wanninayake W.M.C.Bandara noted that consumer

characteristics such as quality consciousness, brand

consciousness, and confused by over choice do not have

material impact on the ethnocentric feelings and local brand

preferences of Czech customers.

John E. Spillan and Talha Harcar (2013) tested the validity of

ethnocentrism subscales model in Vietnam and India. Their

goal was to collaborate and the current literature by testing

there liability and validity of the CETSCALE in both India

and Vietnam.

Silili, E.P., Karunarathna, A.C. (2014) identified the impact of

consumer ethnocentrism on Sri Lankan youngsters’ purchase

intention of domestic products.

Sproles & Kendall (1986) observed that brands that supply

stylish packages of features can attract loyal consumers who

are fashion conscious. Fashion leaders or followers usually

purchase or continue repeatedly to purchase their products in

stores that are highly fashionable. They gain satisfaction from

using the latest brands and designs which also satisfies the

consumer’s ego.

Duff (2007) argued that design or visual appearance is the

important part of the product, which includes line, shape and

details affecting consumer perception towards a brand. Also,

results of the study revealed that there were several lifestyle

dimensions apparent among the Turkish consumers, which were

closely correlated with their ethnocentric biases.

Lee J. K. & Lee (2009) explained that consumers evaluate

goods from developing countries unfairly because of the

previous beliefs of people; therefore, developing countries have

a problem with this issue and face unjust evaluation. Studies

have also shown that this effect differs among people similar

to brand, guarantee and price, which contrasts to other tangible

characteristics. In addition, buyers use country of origin as an

indicator of a product’s quality.


(a) To examine the relationship between consumer

ethnocentric tendency and preference for foreign

products in India.

(b) To identify the impact of demographic variable (age,

occupation, education level, Income level) on consumer

ethnocentric tendency and preference for foreign product

in India.

REASEARCH METHODOLOGY

(a) Primary Data: The primary data was collected with the

help of a structured questionnaire consisting of 19

statements on a five point likert scale. The questionnaire

was filled by 105 respondents and reliability was checked

with Cronbach Alpha. Composition of the sample


included 100% female respondents because of the nature

of industry.

(b) Secondary Data: Secondary data was collected from

various materials which included textbooks, journal

articles, studies that have been carried out in this area

before and Internet articles.

(c) Techniques used to Analyze Data: The study is

descriptive in nature. Both primary and secondary data

collection sampling methods were employed to conduct

the research work.

Further, the sampling technique chosen for the research work

is non-probability convenience sampling because respondents

were selected based on their availability for the study. One

way classification of ANOVA is applied on the data.

HYPOTHESES

H1: There is a relationship between consumer ethnocentric

tendency and preference for foreign products in India.

H2: There is an impact of income level on consumer

ethnocentric tendency.

H3:

There is an impact of income level on preference for foreign

product in India.

H4:

There is an impact of age group on consumer ethnocentric

tendency.

H5:

There is an impact of age group on preference for foreign

product in India.

H6: There is an impact of occupation on consumer ethnocentric

tendency.

H7: There is an impact of occupation on preference for foreign

product in India

DISCUSSION AND RESULTS



.869 19


Consumer Ethnocentrism Preference for Foreign Products


P value 0.000

Consumer Ethnocentrism for Domestic Product�

N 105 105

Significance Level is 0.05


Mean Std. Deviation No. of items N

Consumer Ethnocentrism

22.70 7.085 8 105

Preference for Foreign Products

34.51 12.014 11 105


95% C onfidence In terval for M ean � N M ean Std. D ev Std. Error

Low er B ound U pper B ound

B elow 15000 47 2 .89 .874 .128 2 .63 3 .14

15001-30000 28 2 .85 .931 .176 2 .49 3 .21

30001-50000 10 2 .79 1 .046 .331 2 .04 3 .54

A bove 50000 20 2 .73 .820 .183 2 .35 3 .12



Table 1 shows the value of Cronbach’s Alpha was calculated

for nineteen statement questionnaire using the Likert scale.

Value of coefficient was found to be .869 which indicates that

reliability is good. So the questionnaire is reliable

Relationship Between Consumer Ethnocentric Tendency

and Preference for Foreign Products in India

Table 2 shows that when the amount of consumer ethnocentrism

towards domestic product increases, the preference of foreign

product tendency towards foreign product will decreases.

The P value is 0.000. This value is less than .05. Hence,

alternative hypothesis is accepted and we conclude that there

is a statistically significant correlation between ethnocentric

tendency of domestic product and foreign product preference.

The mean value of Preference for Foreign Products in India is

34.51 (Table 3) which is more than the mean value of Consumer

Ethnocentrism in India, which is 22.70. This shows that the

consumers prefers more foreign products than domestic

products.

Impact of Income Level on Consumer Ethnocentric

Tendency

Table 4 shows 45% respondents’ monthly income was below

Rs. 15k, 26% respondents’ monthly income was between 15K-

30K, 10% respondents’ monthly income was between 30K-

50k and 19% respondents’ monthly income was above 50k.

Table 5 shows that the p value is .928 in ethnocentric average

where dependent variable is ethnocentric average and factor

value is Income category. Since, 0.928>.05, alternative

hypothesis is rejected and hence conclude that there is no

impact of Income level on consumer ethnocentric tendency.

Impact of Income Level on Preference for Foreign

Products in India


where dependent variable is preference for foreign product

average and factor value is income category.

Since, 0.248>0.05, alternative hypothesis is rejected and hence

conclude that there is no impact of income level on consumer

preference for foreign product in India.

Impact of Age group on Consumer Ethnocentric

Tendency

Table 7 shows 48% respondent’s age was under 18-25 year

bracket, 29% respondent’s age was under 26-35 year bracket,

13% respondent’s age under 36-45 year bracket and rest 10%

were under 46-55 years.

Table 5: ANOVA (One Way Classification)

Sum of Squares Df Mean Square F P value

Between Groups 0.366 3 0.122 0.152 0.928

Within Groups 81.194 101 0.804

Total 81.56 104

Table 6: ANOVA

Sum of Squares Df Mean Square F P Value

Between Groups 9.347 3 3.116 1.397 .248

Within Groups 225.188 101 2.230

Total 234.535 104

Table 7 Descriptive Statistics

N Mean Std. Deviation Std. Error 95% Confidence Interval for

Mean

� Lower Bound Upper Bound

18-25 50 2.80 .897 .127 2.54 3.05

26-35 29 2.97 .846 .157 2.64 3.29

36-45 14 2.67 .928 .248 2.13 3.21

Above 45 11 3.00 .920 .277 2.38 3.62


Table 8: ANOVA

Table 9: ANOVA

Sum of Squares Df Mean Square F P value

Between Groups 2.238 3 .746 .322 .809

Within Groups 231.406 100 2.314

Total 233.644 103


N Mean Std.

Deviation

Std.

Error

95% Confidence Interval for Mean

� Lower Bound Upper Bound

Businesswomen 15 2.83 .764 .197 2.40 3.25

Teacher 17 2.84 .943 .229 2.35 3.32

Doctor 14 2.68 .843 .225 2.19 3.17

Student 18 2.60 .641 .151 2.28 2.92

Housewives 16 3.29 .987 .247 2.76 3.82

Table 11: ANOVA

Sum of Squares df Mean Square F P Value

Between Groups 4.665 5 .933 1.201 .314

Within Groups 76.895 99 .777

Total 81.560 104

Table 8 shows that the p value is .672 ethnocentric average

(dependent variable) Since, 0.672>0.05, alternative hypothesis

is rejected and hence conclude that there is no impact of age

group on consumer ethnocentric tendency.

Impact of Age Group on Preference for Foreign Product

in India


where dependent variable is Preference of foreign brand

average and factor value is age group.

Since, .809 >0.05, alternative hypothesis is rejected and hence

conclude that there is no impact of age group on consumer


Impact of Occupation on Consumer Ethnocentric Tendency

Table 10 shows 14% respondents’ were businesswomen, 15%

respondents’ were teachers, 14% respondents’ were doctors,

13% respondents’ were students and 15% respondents’ were

housewives.


(dependent variable) and factor value is occupation.

Since, 0.314>0.05, alternative hypothesis is rejected and hence

conclude that there is no impact of occupation on Consumer

ethnocentric tendency.

Impact of Occupation on Consumer Preference for Foreign

Product in India


Table 12: ANOVA

Sum of Squares Df Mean Square F Sig.

Between Groups 10.126 3 3.375 1.519 .214

Within Groups 224.409 101 2.222

Total 234.535 104

Table 12, shows that the p value is .214 in ethnocentric average

where dependent variable is Preference of foreign brand

average and factor value is occupation.

Since, .214>0.05, alternative hypothesis is rejected and hence

conclude that there is no impact of occupation on consumer


FINDINGS AND SUGGESTIONS

Following are the findings and suggestions:

Findings

(a) More the age more the customer will prefer the domestic

product or they are more ethnocentric.

(b) Product quality influences the consumer ethnocentric

tendency towards cosmetic products.

(c) Income and price has an impact on consumer

ethnocentricity.

(d) Consumer patriotism and consumer ethnocentric

tendency in India is more regarding domestic products

rather than foreign products because of positive

relationship.

(e) Product attributes have positive impact of choosing the

domestic product which shows more consumer

ethnocentricity.

Findings mentioned above provides the basic guidelines for

the suggestions to future studies and to overcome the above

limitations the researcher has provided suggestions for the

drafting and monitoring of future easements.

Suggestions

(a) Advertisements should make people more aware about

branded products.

(b) Price of the products should make products more

convenient to purchase so that people can trust it and

can use it more.

(c) Quality of product should make each and every product

manufacturing transparent to its customers.

(d) New strategies are made to influence the customer to

use more ethnocentricity.

(e) Include other test to find the ethnocentricity level of

customer.

(f) Level of ethnocentrism should be found out for each

category to product to estimate its acceptance in Indian

market.

(g) Product features and its advantages and benefits should

laid stress upon for the product/ service to be successful.

CONCLUSION

Consumers are much ethnocentric towards domestic product

rather than accepting foreign brand. Lakme is more suitable

for the Indian customer rather than choosing L’oreal. India has

a strong economic performance and youthful demographic

structure, ensuring a great future for this Industry.

The future prospects for this industry seems to be good. With

increasing awareness, more disposable incomes and the low

price capita spend on the cosmetic in the country; the Industry

will surely soar in time to come.

As the Indian cosmetic industry is still small, compared to the

international markets, it points that there is a greater growth

potential.

Indian cosmetic companies and marketers have strongly

hooked on to this opportunity. Surveys and reports have

suggested that many women were using makeup kits which

were primarily manufactured, advertised and targeted

towards young women.

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IMPACT OF MATERNITY BENEFITS ON JOB SATISFACTION IN

PRIVATE HEALTH CARE SECTOR IN DELHI

Anup Kumar Ghosh1

Ms. Mona Chanchal2

ABSTRACT

The population of working mothers is increasing gradually in different industries. A female worker requires differential working

conditions and benefits after becoming a mother. The Maternity Benefit Act was enacted in 1961 and in these 55 years India has

observed a vast change in its industrial scenario where private players showed their efficiency towards economic development

of the country. Demographic profile of the industrial workforce has also changed a lot with women workers presence in almost

all sectors. But still there is a high rate of attrition of women employees during and after childbirth. This study has been

conducted to assess the impact of working conditions and benefits available to the mothers working in healthcare industry at

Delhi-NCR and thereby on their job satisfaction. The outcome shows that most of the working mothers are not receiving the

benefits as per the Maternity Benefit Act 1961 which creates a high level of Job Dissatisfaction. The maternity benefit has

emerged as one of the prime contributor for job satisfaction of the respondents along with other variables.

Keywords: Healthcare Industry, Job Satisfaction, Maternity Benefit Act 1961, Maternity Leave, Working Mother.

1 Professor, Gitarattan International Business School, Rohini, Delhi2 Student, Gitarattan International Business School, Rohini, Delhi

INTRODUCTION

The republic of India, at its twelfth year, enacted an act to

regulate the employment of women in certain establishments

before and after child-birth and to provide for maternity &

other benefits (Maternity Benefit Act 1961). It was observed

by the law makers that the female employees need a different

employment condition during their period of pregnancy and

without having any specific rules to this regard, they may suffer

from bodily distress to carry out the works which is of arduous

in nature or which involves long hours of standing or which in

any way is likely to interfere with her pregnancy or the normal

development of the fetus, or is likely to cause her miscarriage

or otherwise to adversely affect her health. This point was

considered not only from the individual mother’s health point

of view but from the whole country’s next generation’s health

point of view. It was further identified that after birth, first few

weeks of exclusive breastfeeding is very much important for a

baby to combat malnutrition, diarrhea and other diseases

observed in infants and, thereby, to lower infant mortality rate.

From this viewpoint, Union Govt. of India, through the

enactment of Maternity Benefit Act 1961, made the provision

of 12 weeks paid maternity leave to all the female employees

who have completed their one year service in any type of

organization, whether factory, mines, shops or establishment,

or otherwise, and for all the public, government and private

organizations. The act is very clear at its objective and

modalities. Other than this paid leave, the act also provide

certain provisions for the benefit of the mother and the new-

born like some medical allowance for proper treatment, crèches

with governess, breast feeding free time etc.

After 1961, the industrial demographic scenario has changed

a lot and the country has emerged as one of the fastest growing

developing country. Many multinational companies are now

functioning in the country and the presence of women in

different sectors has increased. After 1991 functioning of

private players in Indian market has galloped. But what are

the present working conditions for the working mothers in the

67th anniversary of the republic or after 55 years of enactment

of Maternity Benefit Act? Are the working mothers satisfied

with their workplace conditions during their period of

pregnancy? Are they treated differently during this period of

pregnancy? Are their employers careful about their sufferings

from bodily distress which may adversely affect their health?

With these research questions, this particular study has been

conducted on the working mothers of private health care sector

in Delhi- NCR to see their job-satisfaction level and how that

job-satisfaction is impacted by maternity benefits alongwith

other related factors.

LITERATURE REVIEW

In India, women are mainly engaged as unskilled labourers in

almost all sectors since British period and they face different

problems at workplace which are serious in nature. The

problems include wage discrimination, gender biasness and

sexual harassment, unhealthy job relationship, lower wages

etc. (Kalpana & Kiran, 2013). These unskilled labourers never

felt any urge to upgrade their skills and their employers are

also equally careless about this issue . In the new millennium,


this trend has changed and female workers are gradually joined

in skilled and semi-skilled works. But after a certain years of

work, women usually left their job and in few cases they

returned to the workplace after some years. So this question is

obvious that why most of the female employees left their job

place after a considerable period of work? The researchers got

the answer that female employees are leaving organisations

because the industries could not keep up the need of the

changing workforce (Mainiero and Sullivan, 2006). Today’s

workers are very different from the traditional ideal worker:

usually a man who is able to dedicate himself completely to

his job because he has a wife at home taking care of the children

and the household. In 1950, 63 percent of the households were

made up of a male breadwinner who worked outside the home

and a female caregiver who stayed home with the children.

Today only 17 percent of households follow this traditional

model (Benko and Weisberg, 2007). The social system of early

marriage for the women has also been modified a lot and instead

of enjoying marital life women used to go for education

followed by joining the workforce. After a few years of work,

women now-a-days, go for marital life and thereafter due to

improper balance quit the job to continue her post-marital social

life. There is a group of women, who again join the workforce

after several years of their marital life. Obviously there would

be certain reason behind this human resource leakage

(Cabera,2009).

Job satisfaction is the prime decision maker behind any such

decision and has been studied widely by different scholars at

different fields. These studies have found relations between

job satisfaction and different parameters. Although, there are

variety of studies in connection to job satisfaction, this study

confined to review only those researches which are related to

health care sector and on Indian context to frame a theoretical

framework.

Price (1997) defined job satisfaction as the way employees

feel about their jobs and different aspects of their jobs. In other

words, job satisfaction was defined as the degree to which

employees have a positive affective orientation towards

employment by the organization. Job satisfaction is one of the

important variables in work & organizational psychology and

is regarded as an indicator of working-life quality. It is a crucial

variable used to determine the quality of health-care systems.

In healthcare units, workers’ job satisfaction is one of the most

important indicator for determining their performance. Every

healthcare professional is an integral to healthcare service

delivery system. Healthcare organizations require a skilled and

competent workforce today as a result of advancement in

medical technology and the demand for more sophisticated

patient care. The study results showed that job satisfaction

among healthcare professionals is increasingly being

recognized as a measure that should be included in quality

improvement programs. Low job satisfaction resulted in

increased staff turnover and absenteeism, which affects the

efficiency of health services. Every individual has unique needs

and desires to be satisfied, which are related to the behaviour

they exhibit, and these play a significant role in their preferences

in different areas such as their workplace, house etc. Social,

cultural and job factors all influence employees’ behaviour.

Satisfied employees tend to be more productive and committed

to their jobs. Factors contributing to high levels of employee

satisfaction have been identified as: supportive colleagues,

supportive working conditions, mentally challenging work and

equitable rewards. Job satisfaction is important in predicting

systems stability, reduced turnover and worker motivation.

In their study, Cranny, Smith & Stone (1992) observed that the

healthcare sector offer services for primary, secondary and

tertiary care and hence it is very much tough to implement

without the contributions of both the employers and the

employees. They also identified that the healthcare sector is

female worker intensive process as personal caring is a natural

quality of women. Hence the question of workers’ satisfaction

particularly women worker satisfaction largely signifies the

organisation’s success. Their research, measured the

satisfaction level of women employees in workplace and its

impact. The study concluded that to sustain in a competitive

market it is very important to retain good employees that

contribute towards the attainment of organizational goal and

customer satisfaction as well. Without having a highly satisfied

workforce, an organization could not sustain sophisticated

patient care system.

Jain and Kaur (2014) studied the impact of work environment

on job satisfaction of the employees at Jaipur city and observed

that the subjects under study are satisfied with good working

condition, refreshment & recreation facility, health & safety

facility, fun at workplace work environment etc. whereas not

satisfied with workload, overtime, fatigue, stress, boredom,

attitude of supervisor. In the same way, Singh & Verma (2014)

got a positive impact of training & development over employee

satisfaction in their study. Pyngavil & Khatwani (2015) had

seen the impact of HRD climate over Job Satisfaction and also

got a positive co-relation. Senboun and Rashid (2013) got

correlation between health-care workers’ overall job

satisfaction and conflict resolution at work, support from one’s

supervisor & relationship with co-workers. Where as, Mandal

& Anand (2015) received a significant correlation between job

satisfaction and motivational factors of the employees working

in pharmaceutical sector in Delhi but the variation was also

observed in the job satisfaction level for the employees working

at different organisational hierarchy.

Cragg (2004) had done a research study based on the pregnancy

at workplace where the employers experiences of handling

maternity situations had been analysed. The employers face

very real challenges in handling maternity situation in small

and medium sized enterprises. In the study, the employer’s

response was negative towards maternity. All most all the

respondents saw these maternity benefits guiltily and

regretfully.

Chaulagain and Khadka (2005) had done research to measure

the factors influencing job satisfaction among healthcare


professionals at Tilganga Eye Centre. The study has been

framed with a back drop that ‘every individual has unique needs

& desires and those needs to be satisfied, which are related to

the behaviour they exhibit, and these play a significant role in

their preferences in different areas such as their workplace’.

Results from the study demonstrate the job dissatisfaction is

related with hygiene factors which include salaries, quality of

supervision and working conditions. Survey findings indicate

that more than two-third of the respondents were significantly

satisfied with their current responsibility on job.

Fitzenberger et. al. (2013) conducted a research study on return-

to-job of female employees after maternity leave. After giving

birth to a child, return-to-job is a major challenge for the female

employees. Observing extended & prolonged maternity leaves

or never returning to their job after baby’s birth as the most

common features for female employees, the researchers argued

that they should have the right to work part-time during

maternity leaves. The study also discussed work-life balance

of a mother between workplace job and baby care as to whether

these two roles are enriching or depleting each other. And finally

the research concluded that the employment pattern of female

employees after child birth is affected both by the employee

herself and by the employer. The employee used to choose not

to return to her job because of family related reasons or because

of a perceived work-family conflict.

Satpathy and Patnaik (2014) made a comparative study on work

life balance dilemmas faced by nurses working in private and

government hospitals. The analysis is carried out on the basis

of socio economic profile and general perception towards the

personal and professional life. Most of the respondents feel

that they are not able to balance work and personal obligations.

In this direction there is a need for creating conducive

atmosphere by the hospital authorities in such a way that this

problem can be solved. Pietersen (2005), examined the job

satisfaction of nursing staff at a government hospital. The

nursing staff at the hospital was, in general, not clearly satisfied

or dissatisfied. As such, the study could not find any relationship

between their general level of job satisfaction and turnover

rate.

Dustmann and Schönberg (2008) demonstrated the effect of

expansions in maternity leave coverage on children’s long-term

outcomes. An important goal of the expansions in leave

coverage around the world was the welfare of children, and

the expansions were explicitly aimed at increasing the time

mothers spend with their infants after childbirth. This is

motivated by the agreement among psychologists that the first

few months and years in a child’s life are crucial for its future

cognitive and emotional development. And finally there is no

evidence that the expansions improved children’s outcomes,

although they had a strong impact on mother’s labor supply

after childbirth.

Lucas (2012), had done a research to identify common themes

arising from South African female employees’ experience of

returning to work following maternity. There is an increasing

need for organizations that employ and wish to retain highly

qualified women to better understand and accommodate the

way in which professional women integrate motherhood and

career breaks with their working lives. Women who have

become mothers can still bring experience and a variety of

invaluable skills to the organization, and companies that value

these women and are willing to accommodate them will reap

the rewards. The results of that study revealed that, despite

viewing work positively, the participants found that returning

to work after childbirth was difficult.

Benjamin’s (2010) research study was based on the impact of

fringe benefits on job satisfaction. First, fringe benefits stand

as an important component of worker compensation. The

theoretical impact of fringe benefits on job satisfaction is not

immediately clear. Second, fringe benefits can act as substitutes

for wages. The impact of a particular fringe benefit on job

satisfaction can be misleading if the worker has unmeasured

individual specific determinants of job satisfaction. Finally,

the estimated coefficients on fringe benefits in job satisfaction

estimations exhibit interesting differences between that of

married and single workers. Overall, fringe benefits play a

significant role in determining employee job satisfaction.

Ho et. Al. (2012), investigated the relationship between work

values, job involvement and organizational commitment of

nurses from Taiwan. This study focused on three specific

determinants of work commitment: work values, job

involvement and organizational commitment. Work values are

a particularly important work commitment construct, as they

play a key role in influencing an employee’s affective responses

in the workplace. Subsequent analyses in that study revealed

that job involvement could play an important role in mediation,

and that establishing a higher level of job involvement may be

more important than focusing only on organizational

commitment. The degree of organizational commitment has

not been shown to be related to the actual amount of nursing

work or labor intensity required in any nursing care

environment.

Lambrou and Kontodimopoulos (2010), studied to investigate

how medical and nursing staff of the Nicosia General Hospital

is affected by specific motivation factors, and the association

between job satisfaction and motivation. Study showed that

motivation was influenced by both financial and non-financial

incentives. The main motivating factors for the health workers

in this public hospital sample were appreciation by managers

and colleagues, a stable job/income and training. The main

discouraging factors were related to low salaries and difficult

working conditions.

Eswari and Palanivelu (2001) studied job satisfaction among

hospital nurses in Coimbatore. Study aimed to find out the job

satisfaction of the women nurses and the relationship between

the socio economic conditions and job satisfaction of women

nurses in Coimbatore city. Result of this study showed that

there are many factors that contribute to dissatisfaction in the

work place. Particular variable within each factor which are


generating satisfaction in an individual is difficult task.

Recognition of frustrations, such as turnover, lack of internal

empowerment, burnout, and elimination of external sources

of stress can decrease satisfaction in the nursing care setting.

Rossins (2010) studied the effects of maternity leave on

children’s birth and infant health outcomes in the United States.

This paper evaluated the impacts of unpaid maternity leave

provisions of the 1993 Family and Medical Leave Act (FMLA)

on children’s birth and infant health outcomes in the United

States. The study found that maternity leave led to small

increases in birth weight, decreases in the likelihood of a

premature birth, and substantial decreases in infant mortality

for children of college-educated and married mothers, who

were most able to take advantage of unpaid leave.

The research study on employee satisfaction by Sinha (2013)

identified five factors namely Empowerment & Work

Environment, Working Relation, Salary & Future prospects,

Training & work Involvement and Job Rotation. But the study

could not find any strong relationship amongst these factors.

On the other hand, the quantity and quality of time a mother

spends with her child in his first year of life matter for the

child’s well-being (Al-Hussami, 2008).

From these research studies it has been observed that the quality

of healthcare service depends on the level of workers’ job

satisfaction. And job satisfaction depends upon different

psychological factors of the workers. Different researchers have

done their surveys with different organizations from different

angles. But in this study the researchers found that no such

attempt has been carried out to relate job satisfaction of the

mothers working in private healthcare sector with maternity

benefits. Therefore, the aim of this study to assess job

satisfaction levels of the mothers working at health-care

industry at Delhi-NCR in relation to maternity benefits is very

much relevant and time perfect.


From the literature it is clear that job-satisfaction of the workers

is one of the most decisive factors for the health-care industry

to perform in the competitive edge. Different researches

identified different factors which have impact over job

satisfaction. This research was planned to study the impact of

maternity benefits on job satisfaction of the working mothers

along with other variables like working condition, work life

balance, job involvement etc. Further, the study also tries to

verify the extent to which maternity benefits are available to

the women workers to fulfil their need and desire during

pregnancy in the light of Maternity Benefit Act, 1961.

HYPOTHESES

On the basis of the above objective, following hypotheses have

been developed:

H1: There is significant relationship between Job Satisfaction

and Working Condition.


and Maternity Benefit.


and Work Life Balance.


and Job Involvement.


and Facilities.


Sampling: For this study 130 working mothers, who are entitled

for maternity benefits as per the act, have been chosen from

different private healthcare organizations to collect data through

purposive sampling technique. Only those employees were

taken who are directly on the roll of the healthcare

organisations, not in the roll of any manpower supplying

agency. It is true that a good number of female employees are

engaged in the job of scavenging, peon, helper, attendant or

security through manpower supplying agency. But their nature

of job is not unique for healthcare industry and hence they

have been kept out of this study. The information has been

collected through structured questionnaire based interviews.

During data screening, 29 respondents have been rejected due

to data insufficiency and ultimately the study confined to 101

respondents. Health care industry has been chosen for the

reason that large number female is associated with this industry

and the number of private players in this industry is pretty high.

Further Indian healthcare industry is growing very rapidly with

a compound annual growth rate of 21% and by 2020 it will

reach a market size of 280 Billion USD (Source: KPMG,

Deloitte).

Questionnaire: The questionnaire developed for this study has

several parts. Michigan Organizational Assessment

Questionnaire has been used for the psychological part. This

questionnaire contains 22 questions and has been developed

by Cammann, Fichman, Henkins & Klesh. On the other hand,

the maternity benefit questionnaire has been taken from the

study of Rossins which contains 6 opinion based questions.

Both of these questionnaires have statements and five different

options from ‘highly disagree’ to ‘highly agree’. The

demographic part contains 16 open ended questions. The fourth

part contains questions about different types of leaves available

and their type.

DISCUSSION & RESULTS

Demographic Analysis

The demographic profile of the sample having a size of 101 is

shown in Table 1, 2 and 3 in respect of different parameters.

The Table 1 shows maximum number of employees are working

as para-medical staff and age-wise maximum number of

employees are in age group of 30-40 years.


Table 1: Age & Nature of Work of the Respondents

Age Range

(years)

Frequency Nature of

Work

Frequency

20-30 25 (25) Administration staff

27 (27)

30-40 55 (54) Doctor 29 (29)

40 & above 21 (21) Para Medical Staff

45 (44)

Total 101(100) 101(100)

Term in parenthesis shows frequency in percentage.

Table 2 indicates that 64% working mothers have only one

child while only few have 2 or more children; maximum number

(57%) children are in age group of up to 5 years.

Table 2: Number of Children and Age of the First Child of the

Respondents

No. of

Children

Frequency Age of the

first child

(years)

Frequency

1 65(64) Up to 5 58 (57)

2 29(29) 6-10 32 (32)

3 1(1) 11-15 10 (10)

4 1(1) 16-20 1 (1)

Pregnant 5(5) - -

Total 101(100) Total 101 (100)


Table 3 shows that maximum numbers of employees (54%)

have their income between Rupees 20,000 to 40,000. The

expenditure pattern shows 45% employees spend 40-60 percent

of their income and 37% spend more than 60 percent of their

income.

Table 3: Income and Expenditure of the Respondents

Monthly

Income

Range

(in Rs)

Frequency

Expendit

ure (Rs)

(% of

income)

Frequency

Below 20000 11(11) 0-20 5 (5)

20000-40000 55 (54) 20-40 13 (13)

40000-60000 19 (19) 40-60 46 (45)

60000 & above

16 (16) 60-80 27 (27)

- - 80-100 10 (10)

Total 101(100) Total 101 (100)


Availability of Maternity Benefits

According to Maternity Benefit Act 1961, every women

employee working in any sector is eligible to receive ‘paid

maternity leave’ of 12 weeks i.e., 84 days. The respondents

were asked about the availability of maternity benefits in terms

maternity leave (paid/unpaid). Table 4 shows the responses of

the respondents.

Table 4: Availability of Maternity Benefits

Availability

of Maternity

Leave

Frequency Maternity

Leave’s

type

Frequency

Yes 63 (62) Paid 5 (8)

No 38 (38) Unpaid 58 (92)

Total 101 (100) 63 (100)


Table 4 indicates that most of the respondents are not receiving

maternity benefits as per Maternity Benefit Act 1961. Out of

101 respondents, only 8% respondents have received ‘paid

maternity leave’ and remaining 92% are out of the scope of

maternity benefit act. The employers of different health-care

organisations developed a system of unpaid maternity leave

which is a gross violation of the act.

Amount of Maternity Leave

To verify the amount of maternity leave given to employees is

as per Maternity Benefit Act 1961, the data collected is shown

in Table 5.

Table 5 shows that only 28% employees received statutory 84

days maternity benefit leave. 15% respondents received

maternity leave between 31 to 83 days. Rest 57% received 0

to 30 days leave. This is another gross violation of Maternity

Benefit Act, 1961.

Table 5: Amount of Maternity Leave

Period of Maternity Leave

(in Days)

Frequency

0 to 30 58 (57)

31 to 83 15 (15)

84 28 (28)

Total 101 (100)


From Table 4 & 5 it is clear that different types of maternity

leave have been given to the respondents which may create

dissatisfaction amongst the respondents.


Relationship between Job Satisfaction and other Factors

To study the relationship of job satisfaction (JS) with maternity

benefits (MB), facilities, working conditions (WC), job

involvement (JI) and work life balance (WLB), correlation

analysis were conducted. The correlation matrix is given in

Table 6.

Table 6: Correlation between Job-Satisfaction and Facilities,

Maternity Benefits, Job-Involvement, Working Conditions &

Work-life Balance

Variables Output Items Job

Satisfaction

Pearson Correlation 0.541

Facilities Level of Significance

(2-tailed): p-value 0.000

Pearson Correlation 0.608 Maternity Benefits Level of Significance

(2-tailed) : p-value 0.000

Pearson Correlation -0.154 Job-

Involvement Level of Significance


Pearson Correlation 0.399 Working

Conditions Level of Significance


Pearson Correlation 0.476

Level of Significance

(2-tailed) : p-value .000

Work-life Balance

N 101

Source: IBM SPSS 20 Output File,Level of Significance 0.05

The results in Table 6 show that Correlation Coefficient

between job satisfaction and (a) facility is 0.541; (b) maternity

benefits is 0.608; (c) job involvement is -0.154; (d) working

conditions is 0.399; and (e) work life balance is 0.476.

Table 6 also shows the p vale for Facilities, Maternity Benefits,

Working Conditions and Work-life Balance is 0.000 and is

less than the significance level (0.05). But for Job Involvement,

the p value (0.124) is greater than the significance level.

Therefore, we accept the Hypotheses H1,

H2, H

3 and H

5 and

reject the hypothesis H4. We conclude that the facilities,

maternity benefits (MB), working conditions (WC) and work

life balance (WLB) are significantly related with job

satisfaction. On the other hand, Job Involvement is not

significantly related with Job Satisfaction.

Impact of Facilities, Work life Balance, Working

Conditions & Maternity Benefits on Job Satisfaction

To find the impact of ‘Facilities’, ‘Work life Balance’, ‘Working

Conditions’ and ‘Maternity benefits’ on Job-satisfaction’

regression analysis was conducted. The results of regression

analysis are shown in Table 7 to 9.

Table 7 shows that the value of R² is 0.494. This indicates that

only 49.4% variation in Job Satisfaction is being explained by

the selected independent variables and 51.6% variation remains

unexplained.

Table 8 indicates that the calculated value of F is 23.451 and

the critical F value as 2.523 for numerator degree of freedom

4, denominator degree of freedom 96 and level of significance

(a) 0.05. Since the calculated value of F is greater than critical

F value, we conclude that ‘Facilities’, ‘Work life Balance’,

‘Working Conditions’ and ‘Maternity benefits’ significantly

impact the job satisfaction.

Table 7: Regression Model Summary

R R Square Adjusted R Square Std. Error of the Estimate

0.703 0.494 0.473 4.872

Source: IBM SPSS 20 Output File

Table 8: ‘F’ value for Predictor Constant, Facilities, WC, WLB, MB and JS

Anova for Sum of Squares Degree of

Freedom (df)

Mean Square F (Calculated) F

(Critical at 0.05%

significance level)

Regression 2226.692 4 556.673

Residual 2278.793 96

Total 4505.485 100 23.737

23.451 2.523



Table 9: Regression Coefficient for Predictor Constant, Facilities, MB, WC, WLB over JS

Un-standardised Coefficients Standardized

Coefficients Model

B Std. Error Beta

‘t' value p-value

Constant 6.548 3.224 2.031 0.045

MB 0.621 0.158 0.355 3.926 0.000

FACILITIES 0.719 0.245 0.257 2.935 0.004

WC 0.147 0.170 0.074 0.862 0.391

WLB 0.468 0.171 0.232 2.729 0.008


FINDINGS OF THE STUDY

From the data analysis, we have received a variety of findings

which are as follows:

1. Majority of the private healthcare industries are not

providing paid maternity leave.

2. Without following the statutes of Maternity Benefit Act,

1961, employers of healthcare industries grant maternity

leave as per their own dictum. A few working mothers

are receiving statutory 12 weeks maternity leave and rest

are receiving from 0 to 60 days maternity leave.

3. A linear relationship has been established between job

satisfaction, facilities, maternity benefits, working

condition and work life balance.

4. Job satisfaction of working mothers of healthcare

industry is highly dependent on maternity benefits,

facilities and work life balance.

CONCLUSION

From this study, we come to the conclusion that job satisfaction

of working mothers is highly dependent on different facilities

provided to them and maternity benefits. Most of the private

health care institutions in Delhi-NCR are not following the

statutory HR norms in general and maternity benefits in

particular. As a result of poor maternity benefits, most of the

working mothers are dissatisfied with their job and

automatically that affects patient care. Poor maternity benefits

and lowered job satisfaction ultimately leads to low level of

job involvement and thereby increasing rate of attrition.

If government does not enforce the act properly, then the

general people will not be benefited with that enactment and

gradually become unfaithful about the governance.

Only amendment of maternity leave from 12 weeks to 26 weeks

will not help the working mothers till its strict implementation

in all the sectors. In conclusion, the researchers suggest that

government should create a proper machinery to inspect the

benefits provided by the employers to the women workers in

the name of maternity benefits stringently and enforce

pecuniary measures against the defaulters.

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IMPACT OF EMOTIONAL LABOUR AND EMOTIONAL

INTELLIGENCE ON THE PERCEPTION OF EFFECTIVE LEADERSHIP

Sheetal1

Anu Gautam2

ABSTRACT

Emotional intelligence is a crucial skill for both leaders and employees. This paper examined the impact of emotional intelligence

on emotional labour and the impact of emotional intelligence on the perception of effective leadership. The data was collected

from 101 respondents employed in banks located in Delhi/NCR using convenience sampling technique. The data collected was

subjected to the descriptive and inferential analysis to understand the relationship between variables under study. The results

suggest that there is a significant positive relationship between emotional intelligence and the perception of effective leadership.

However the present study did not find any significant relationship between emotional labour and emotional intelligence. The

findings stress on the importance of the development of emotional intelligence skills among the employees for effectiveness in

their performance.

Keywords: Emotional Labour, Emotional Intelligence, Leadership.

1 Associate Professor, Gitarattan International Business School, New Delhi, [email protected] Student, Gitarattan International Business School, New Delhi

INTRODUCTION

Emotional intelligence (EI) is the ability to understand and

manage your own emotions, and those of the people around

you. People with a high degree of emotional intelligence know

what they are feeling and what does their emotions mean, and

how these emotions can affect other people. According to

Daniel Goleman, an American psychologist who helped to

popularize EI, there are five main elements of emotional

intelligence namely, Self-awareness, Self regulation,

Motivation, Empathy, Social skills.

Self-awareness: If one is self aware one always knows what

one feels and how one's actions can affect people around him.

Motivation: Self-motivated leaders work consistently toward

their goals, and they have extremely high standards for the

quality of their work.

Empathy: Leaders with empathy have the ability to put

themselves in someone else's situation.

Social skills: Leaders are expert at getting their team to support

them and be excited about a new mission or projects.

Emotional labour is defined as the way of managing publicly

visible emotional displays, those mediated by physiognomies

and body language. Hochschild’s (2003) conceptualization of

emotional labour involves impression management of service

employees. These employees put effort to express emotions

acceptable by customers. Mumby and Putnam (1992)

conceptualized emotional labor as the way individuals change

or manage emotions to make them appropriate or consistent

with a situation, a role, or an expected organizational behaviour.

Ashforth and Humphrey (1993) defined emotional labour as

the act of displaying appropriate emotions, with the goal to

engage in a form of impression management to foster social

perceptions of her/himself as well as to foster an interpersonal

climate. Morris and Feldman (1996) conceptualized emotional

labour as the effort, planning and control needed to express

organizationally desired emotion during interpersonal

transactions. This definition of emotional labour includes the

organizational expectations for employees in their interactions

with the customers, as well as the internal state of tension that

occurs when a person displays emotions that are discrepant

from her/his true feelings. They proposed that emotional labour

consists of four dimensions: (a) frequency of interactions, (b)

attentiveness (intensity of emotions, duration of interaction),

(c) variety of emotions required, and (d) emotional dissonance.

According to this perspective emotional labor is a characteristic

of the job.

Leadership is both a research area and a practical skill,

regarding the ability of an individual or organization to “lead”

or guide other individuals, teams, or entire organizations.

Leadership has been conceived as the focus of group process,

as a matter of personality, as a matter of inducing compliance,

as a form of persuasion, as a power relation, as an instrument

to achieve goals, as effect of interaction, as differentiated role,

as initiation of structure and as many combinations of these

definitions (Bass & Stodgill, 1990). “Leadership may be

considered as the process (act) of influencing the activities of

an organized group in its effort towards goal setting and goal

achievement” (Stodgill, 1950).

Indian Banking Industry

Indian banking industry is expected to witness better growth

prospects as a sense of optimism stems from the Government’s


measures towards revitalizing the industrial growth in the

country. In addition, RBI’s new measures may go a long way

in helping the restructuring of the domestic banking industry.

The Indian banking system consists of 26 public sector banks,

25 private sector banks, 43 foreign banks, 56 regional rural

banks, 1,589 urban cooperative banks and 93,550 rural

cooperative banks, in addition to cooperative credit institutions.

Public sector banks control nearly 80 percent of the market,

there by leaving comparatively much smaller shares for its

private peers. Undoubtedly, banking sector is highly relevant

for the growth of a country like India. Keeping in mind its due

importance, banking sector has been chosen for the present

study.

LITERATURE REVIEW

Hochschild (2003) used the term ‘emotion work’ to refer to

any attempt to modify the experience or expression of a

consciously felt emotion. Callahan and McCollum (2002)

interprets that the term emotional work is appropriate for

situations in which individuals are personally choosing to

manage their emotions for their own non compensated benefits.

The term emotional labour is appropriate only when emotion

work is exchanged for something such as a wage or some other

type of valued compensation. In her definition of emotional

labour, Wharton (Callahan & McCollum, 2002) remarks that

not only such actions are performed for a wage; they are also

under the control of others. Thus, in organizational settings,

emotional labour is under the control of organizations.

Various scholars have conceptualized emotional labor in

various ways. Hochschild’s (2003) conceptualization of

emotional labour involves impression management of service

employees. These employees put effort to express emotions

acceptable by customers. According to this perspective, the

discrepancy between felt and expressed emotion is related to

job stress and burnout.

Mumby and Putnam (1992) conceptualized emotional labour

as the way individuals change or manage emotions to make

them appropriate or consistent with a situation, a role, or an

expected organizational behaviour. According to this view,

expression of wider range of emotions at work is desirable,

not to enhance productivity but to foster subjective well-being

of the organizational members and their families. Morris and

Feldman (1996) conceptualized emotional labor as the effort,

planning, and control needed to express organizationally

desired emotion during interpersonal transactions. This

definition of emotional labor includes the organizational

expectations for employees in their interactions with the

customers, as well as the internal state of tension that occurs

when a person displays emotions that are discrepant from her/

his true feelings. They proposed that emotional labour consists

of four dimensions: (a) frequency of interactions, (b)

attentiveness (intensity of emotions, duration of interaction),

(c) variety of emotions required and, (d) emotional dissonance.

Liu, Perrewe, Hochwarter, & Kachmar, (2004) interpreted

emotional labour as the attempt by individual to reduce the

discrepancy between felt and displayed emotions. From the

perspective of the individual service employee, emotional

labour involves individual differences as well as individual’s

(re)interpretations of their emotional experiences when

examining the causes and consequences of emotional labour.

Individual differences may predispose individuals to feel and

perceive stimuli in certain ways. Individuals do not always

express their real feelings in social settings. Hochschild (1979)

argued that individuals may learn to feel according to the

situation cues, and strategically use their emotional expressions

to achieve certain goals. Emotional display is demanded by

society even in the absence of a corresponding emotional

experience (Hochschild, 1979).

Diefendorff, Croyle, & Gosserand, (2005) argued that it is not

the display rule but the type of display rule that affects

emotional labour. They found that positive display rules

correlate positively with deep acting and negative display rules

correlate positively with surface acting. This pattern of findings

suggest that when individuals perceive requirements to display

positive emotions at work they focus more on trying to

experience a positive emotional state and when individuals

perceive requirements to hide negative emotions, they are more

likely to fake necessary emotions. Consistent with this argument

Grandey (2003) show that awareness of display rules is

positively related to deep acting but not related to surface

acting. This supports the idea that deep acting is a response to

work demands (Rafaeli & Sutton, 1987) and surface acting

occurs in response to work events rather than general rules.

Diefendorff and Gosserand (2003) suggested that the

relationship between awareness of display rules and emotional

displays may be mediated by surface acting and deep acting.

Liu et al. (2004) argued that emotional labour will vary as

individuals perceive and interpret the interaction cues with the

customer differently. Tan et al. (2003) found that the relative

effect of personality over the situation is almost as strong as

that of the situation over personality. Thus, the study of

emotional labour warrants the role of individual differences to

surface.

Several researchers have attempted to accurately describe and

assess the concept of EI. Mayer and Salovey model of EI is

known as the Ability Model. By looking at the definition and

construct of EI by Mayer and Salovey (Salovey& Mayer, 1990;

Mayer & Salovey, 1993; Mayer & Salovey, 1997) it can be

seen that EI is conceived as ability rather than a personality

dimension by narrowly defining the construct in order to

differentiate it from other phenomena. The domain of Mayer

and Salovey Model of EI describes a number of distinct

emotional abilities or dimensions, which are mainly divided

into four competencies i.e. emotional perception, emotion

integration, understanding emotions, and managing emotions.

Leadership is a complex, multi-level and socially-constructed

process (Stentz et al. 2012). Its complexity makes it interesting


and challenging area for study however at the same time

complexity also act as a deterrent in attracting scholars to the

study of leadership. There are almost as many definitions of

leadership as there are persons who have attempted to define

the concept (Bass, 1990). Leadership has always been an

important area of study in organizations but in the wake of

changing business paradigms like increasing importance of

services sectors and other related developments in India, the

study of leadership is becoming even more important given

the fact the status ‘Leadership’ construct has enjoyed over the

years. Leadership is the elephant and there are a lot of blind

people identifying different parts (Khurana, 2010) suggests

on the mammoth amount of leadership research which has been

conducted and explaining only certain aspects of it. One of the

popular construct of leadership given by Kouzes and Posner

in 1987 is ‘exemplary leadership’. The construct is based on

five exemplary practices which a leader may undertake for

becoming effective. They are “Model the Way”, “Inspire a

Shared Vision”, “Challenge the Process”, “Enable Others to

Act” and “Encourage the Heart”. For the present study this

construct of effective leadership is applied.


(a) The impact of emotional intelligence on the perception

of effective leadership.

(b) The impact of emotional intelligence on emotional

labour.


The data was collected using three standardized questionnaires.

For emotional intelligence Wong and Law (2002) scale was

used with 1 to 5 scale, with 1 representing ‘Not at all’ and 5

representing ‘always’. The questionnaire contained 12 items.

For the assessment of the construct of emotional labour;

emotional labour scale (ELS) was used. It was an eight item

self-report questionnaire that measures the facets of surface

and deep acting. The responses were measured on 5 point scale.

For assessment of effective leadership perception, Kouzes and

Posner’s (2007) Leadership Practices Inventory (LPI)

questionnaire was used. The questionnaire assesses effective

leadership by summing up the responses on the five dimensions

as described in the paper earlier. The responses were measured

on five point scale ranging from strongly agree to strongly

disagree.

The sample for the present study was taken from banks located

in Delhi, NCR. The sample was taken using convenience

sampling; the data was collected in three months time through

self-administered questionnaire. The reliability of the

instrument was measured using Cronbach’s Alpha. The data

was analysed using correlation, regression analysis and t-test.

Reliability

The reliability of all three instruments was checked using

Cronbach’s Alpha. The Cronbach’s Alpha was highest for

leadership scale i.e. 0.83 (refer Table 1); emotional intelligence

scale it was 0.63 and for emotional labour scale it was 0.53.

Sample Characteristics

The sample consisted of 101 respondents selected from various

banks located in Delhi-NCR. 75 respondents were from private

sector banks and rest from PSU banks. 80 respondents were

male and largely having experience less than 5 years. Table 2

shows mean score on leadership questionnaire was 89 with

standard deviation of 6.4 and mean score on emotional

intelligence was 58 with standard deviation of 4.3. The mean

score of emotional labour was 24 and standard deviation was

3.4.

HYPOTHESES

H1: There is a significant relationship between Emotional

Intelligence and the perception of effective leadership.

H2: There is a significant relationship between Emotional

Labour and Emotional Intelligence.

ANALYSIS AND DISCUSSION

Relationship between Emotional Intelligence and the

Perception of Effective Leadership

Correlation and regression techniques were applied to

investigate the influence of emotional intelligence on the

perception of leadership among employees of banks; the results

of analysis are shown in Table 3.

The Pearson correlation coefficient between emotional

intelligence and the perception of leadership is 0.512. The p

value (0.000) is less than significance level chosen i.e. 0.01,

therefore we accept alternate hypothesis and which indicates

that correlation between emotional intelligence and effective

leadership is significant.

Table 4 shows that emotional intelligence significantly affects

the perception of effective leadership as p-value (0.000) is less

than the significance level 0.01. Emotional intelligence is

therefore significant predictor of the perception of effective

leadership among the employees of the banking sector.


Table 1: Reliability Statistics for Questionnaire

Questionnaire Type Cronbach's Alpha Cronbach's Alpha Based on

Standardized Items

N of Items

Leadership 0.83 0.573 24

Emotional Labour 0.539 0.475 8

Emotional Intelligence 0.634 0.615 12


N Minimum Maximum Mean Std. Deviation

Emotion Intelligence 101 43.00 67.00 58.0297 4.38282

Emotional Labour 101 20.00 36.00 24.8812 3.48220

Leadership 101 60.00 111.00 89.2673 6.43411

Table 3: Correlation between Emotional Intelligence and Leadership

Emotional

Intelligence

Leadership

Pearson Correlation 1 .512**

Sig. (2-tailed) p-value .000 Emotional Intelligence

N 101 101

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

Table 4: ANOVA with Emotional Intelligence and Effective Leadership

Model Sum of Squares df Mean Square F p-value

Regression 157.274 1 157.274 10.835 .000

Residual 1437.412 99 14.515

Total 1594.686 101

Dependent Variable: Leadership, Predictors: Emotional Intelligence; Level of Significance 0.01

Table 5:Correlation between Emotional Labour and Emotional Intelligence

Emotion

Labour

Emotional Intelligence

Pearson Correlation 1 .162 Emotional

Labour Sig. (2-tailed) p-value .105

Relationship between Emotional Labour and Emotional Intelligence

The correlation analysis for establishing relationship between

emotional labour and emotional intelligence is presented in

Table 5. The result indicates that there is very low correlation

(r=.162) and that too is statistically not significant; as p value

is greater than the significance level chosen i.e. 0.01. Therefore,

we reject the hypothesis that ’there is a significant relationship

between Emotional Labour and Emotional Intelligence’.

The finding is important as it was premised in the present study

that emotionally intelligent employees will be better equipped

to handle emotional labour as the characteristic of their jobs.

Emotional labour is prevalent in jobs especially among the

service sector employees. The findings of the present study

however did not find any relation between the two. Reasons

for such findings can be insufficiency of the sample size or

homogeneity of the sample. This indicates need for the further

research in this area.

CONCLUSION

Given the potential generalization of the study in other service

sector organizations the present study makes a relevant


contribution. The banks should create awareness about the

importance of emotional intelligence skill which can improve

the effectiveness of functioning in organizations. Such skills

will better prepare employees to understand the directions from

the leaders and will be able to relate to it.

REFERENCES

1. Ashforth, B. E., & Humphrey, R. H. (1993). Emotional

labor in service roles: The influence of identity. Academy

of management review, 18(1), 88-115.

2. Bass, B.M. &Stodgill. (1990). Handbook of Leadership;

Theory, research and managerial Applications, (3rd

edition), The free Press, New York.

3. Boyatzis, R. E., Goleman, D., & Rhee, K. (2000).

Clustering competence in emotional intelligence: Insights

from the Emotional Competence Inventory (ECI).

Handbook of emotional intelligence, 343-362.

4. Callahan, J. L., & McCollum, E. E. (2002).

Conceptualizations of emotion research in organizational

contexts. Advances in Developing Human Resources, 4(1),

4-21.

5. George, J.M. (2000). Emotions and leadership: The role

of EI. Human Relations, 53(12),1027–1041. http://

dx.doi.org/10.1177/0018726700538001.

6. Grandey, A. A. (2003). When “the show must go on”:

Surface acting and deep acting as determinants of

emotional exhaustion and peer-rated service delivery.

Academy of management Journal, 46(1), 86-96.

7. Hochschild, A. R. (1979). Emotion work, feeling rules,

and social structure. American journal of sociology, 551-

575.

8. Hochschild, A. R. (2003). The managed heart:

Commercialization of human feeling. Univ of California

Press.

9. Kouzes, J.M., & Posner, B.Z. (2007).The Leadership

Challenge (4th ed.), John Wiley & Sons, Inc. San

Francisco.

10. Liu, Y., Perrewé, P. L., Hochwarter, W. A., & Kacmar, C.

J. (2004). Dispositional antecedents and consequences of

emotional labor at work. Journal of Leadership &

Organizational Studies, 10(4), 12-25.

11. Mayer, J. D., & Salovey, P. (1993). The intelligence of

emotional intelligence. Intelligence, 17(4), 433-442.

12. Mayer, J. D., Salovey, P., Caruso, D. R., & Sitarenios, G.

(2001). Emotional intelligence as a standard intelligence.

13. Mayer, J. D., Salovey, P., & Caruso, D. R. (2004).

TARGET ARTICLES:” Emotional Intelligence: Theory,

Findings, and Implications”. Psychological inquiry, 15(3),

197-215.

14. Morris, J. A., & Feldman, D. C. (1996). The dimensions,

antecedents, and consequences of emotional labor.

Academy of management review, 21(4), 986-1010.

15. Mumby, D. K., & Putnam, L. L. (1992). The politics of

emotion: A feminist reading of bounded rationality.

Academy of management review, 17(3), 465-486.

16. Nohria, Nitin, and Rakesh Khurana, (2010). Handbook

of Leadership Theory and Practice. Harvard Business

Press.

17. Rafaeli, A., & Sutton, R. I. (1987). Expression of emotion

as part of the work role. Academy of management review,

12(1), 23-37.

18. Stogdill, Ralph M. (1950). Leadership, membership and

organization Psychological Bulletin, Vol. 47(1), 1-14.

19. Stentz, J.E., et al. (2012), Applying mixed methods to

leadership research: A review of current practices, The

Leadership Quarterly http://dx.doi.org/10.1016/

j.leaqua.2012.10.001


IMPACT OF ORGANISATIONAL CULTURE ON EMPLOYEE COMMITMENT

Shweta Malhotra1

Kanishka Chauhan2

ABSTRACT

Orgnaisational Culture refers to the beliefs and behaviours that determine how a company's employees and management interact

and handle business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time

from the cumulative traits of the people the company hires. There are many dimensions which it influences. Employee's Commitment

is one of the important dimensions among those. The present study is an attempt to understand the impact of organisational

culture on the commitment of employee. Further it also aims to understand if the commitment level of employees varies with

respect to gender. Correlation, regression analysis and t test were used to test the hypotheses. The results revealed that there was

an impact of organisational culture on the commitment of employees and employee commitmentdid not differ significantly with

respect to gender.

Keywords: Beliefs, Employee Commitment, Gender, Orgnaisational Culture, Values.

1 Assistant Professor, Gitarattan International Business School, Rohini, Delhi, e-mail id: [email protected] Student, Gitarattan International Business School, Rohini, Delhi, e-mail id: [email protected]

INTRODUCTION

Organisational culture is the shared understanding of the beliefs,

values, norms and philosophies of how things work.Another

way to analyze culture is by dividing culture into three

categories namely: (a) bureaucratic cultures a very organized

and systematic culture based on power and control with clearly

defined responsibilities and authority. Organisations with this

culture are mature, stable, structured, procedural, hierarchical,

regulated and power-oriented; (b)innovative culture has a

creative, result oriented, challenging work environment and is

portrayed as being entrepreneurial ambitious, stimulating,

driven and risk-taking; (c) supportive culture displays

teamwork and is a people-oriented, encouraging, and has a

trusting work environment. This culture is open harmonious,

trusting, safe, equitable, sociable, humanistic and collaborative.

Employee commitment is defined as a strong desire to remain

as member of a particular Organisation; definite belief in and

acceptance of the values and goals of the Organisation. The

three dimensions of employee commitment are as follow: (a)

affective commitment involves the employee’s emotional

attachment to, identification with, and involvement in the

organisation; (b) continuance commitment involves

commitment based on the costs that the employee associates

with leaving the organisation; and (c) normative commitment

involves the employee’s feelings of obligation to stay within

the organisation.

REVIEW OF LITERATURE

Momeni et al. (2012) investigated the relationship between

organisational culture and organisational commitment in staff

department of General Prosecutors of Tehran. The results

revealed that organisational culture helps employees to behave

in the organisation and companies with participative culture

reap a return on investment. Hence culture of theOrganisation

was linked to both short-term performance and long-term

survival. The results showed that there was a significant

relationship between all components of organisational culture

including adaptability, involvement, adjustment, mission and

organisational commitment.

Manetje and Martins (2009) investigated therelationship

between organisational culture and organisational commitment.

The objective of the study was to examine the relationship

between organisational culture and organisational commitment.

The focus of the study was an investigation of the relationship

between organisational culture and organisational commitment

in a South African motor manufacturing organisation. The study

involved the use of organisational commitment scale and the

organisational culture questionnaire. The results suggested that

organizational culture has an effect on organisational

commitment.

Agwu (2013) investigated the relationship between

organisational culture and employee commitment in Bayelsa

State Civil Service in Nigeria. The objective was also to find

difference in commitment of employees of different Age,

Gender, and Length of service. The study found that a

significant relationship existed between organisational culture

and employee commitment while significant difference was

observed in commitment of employees with respect to age and

gender.


Alvi et al. (2014)investigated the three Types of organisational

culture and its impact on job satisfaction and employee

commitment in chemical sector of Karachi. The study aimed

at identifying the impact of organisational culture on job

satisfaction and employee commitment.Regression analysis

was done to determine the relationship between supportive

organisational culture, innovative organisational culture and

bureaucratic organisational culture with job satisfaction and

employee commitment. The results showed that when employee

is highly satisfied with his/her job, he/she is less committed to

the organisation, because the only concern of the employee is

his/her job satisfaction more than being loyal to the

organization.

Messner (2013) investigated the effect of organisational culture

on employee commitment in the Indian IT services sourcing

industry. The objective of the study was to examine the linkages

between organisational culture and employee commitment. The

researcher collected data in the first half of 2012 through the

ICCA appraisal framework from 291 Indian IT executives and

managers working for two IT services sourcing provider

organisations in Pune and Bangalore, India. The study found a

stronger correlation between affective and normative

commitment in the Indian context as compared to other North

American studies. The implications for the Indian IT services

sourcing industry were to start thinking about employee

commitment from an organisational culture point of view.

Shoaib Ch. et. al. (2013)investigated the impact of

organisational culture on organisational Commitment in the

Public and Private organisations. The study aimed at finding

out how employees perceived commitment in Pakistani context

and employees commitment levels by the public and private

sector organisations and effect of different culture on

commitment in the organisation. The results showed that clan

culture had the most significant relationship with all the three

commitment dimensions as compared to other types of culture.

Sabir et. al. (2010) investigated the impact of organisational

culture on the employees’ commitmentwith respect to levels

in the organisation. Its focussed on three levels of organisational

culture namely surface level, espoused values and assumptions

values, and their relationship with commitment of employees.

The results revealed there was a positive relationship between

the surface level of organisational culture and organisational

commitment and positive organisational culture leads the

organisational commitment.

Nongo and Ikyanyon(2012) investigated the influence of

corporate culture on employee commitment with reference to

medium small enterprises (SMEs). Corporate culture was

viewed as the independent variable while organisational

commitment was viewed as the dependent variable. The study

examined the impact of four corporate cultural variables

namely, involvement, consistency, adaptability, and mission

on employee commitment to the organisation. Standardized

questionnaires were used for measuring corporate culture and

organisational commitment. The study found that involvement

and adaptability significantly correlated with commitment,

while consistency and mission did not correlate with

commitment. They recommended that managers of SMEs in

Nigeria should encourage employee involvement in decision

making and innovation and teamwork and flexibility in the

performance of tasks, define & communicate mission of

organisation.

Sola et al. (2012) investigated the relationship between

organizational culture and employee commitment in Public

Tertiary Institutions in Lagos State, Nigeria.The researchers

used an instrument tagged “Organisational Culture and

Employees Commitment Questionnaire” was used to collect

data for the study. The results from the data analysis indicated

that significant relationship existed between organisational

culture and employees’ commitment but significant difference

existed in the commitment of employees of different sex, ages

and length of service to their institutions in Lagos State. They

suggested that management should improve on the current

rewards system in their institutions to enhance employees’

commitment levels as well as output among others.

Ghorbanhosseini (2013) investigated the effect of

organisational culture, teamwork and organisational

development on organisational commitment and the mediating

role of human capital. The objective of the study was to examine

the relationship between human capital and organisational

commitment to recognize the conditions vital for managers to

increase employee commitment in the organisations. He found

that organisational culture, teamwork and organisational

development have direct and significant effect on organisational

commitment. Lastly results showed that human capital has

mediating role between organisational culture, teamwork,

organisational development and organisational commitment.

He suggested some guidelines (like job security, team work,

organisational development and to develop human capital)

which will help managers to comprehend how to increase

employee’s organisational commitment.

Van Muijen et al. (1999) investigated the organisational culture

through the Focus Questionnaire. The objective of the study

was the development of an internationally useful questionnaire

for measuring organisational culture and the other one was to

examine influence of country and sector on organisational

culture. The aim of the research group was to construct an

internationally useful instrument for measuring organisational

culture in European companies. The researchers used

ethnography qualitative research methods for study of culture

and quantitative method (questionnaire) for organisational

climate. A group of researchers mainly from Europe, the so-

called FOCUS group, initiated the development of such an

instrument to measure organisational culture and some of the

psychometric qualities of the FOCUS questionnaire. The

members of the FOCUS group formulated 250 items after

discussing the validity of the concepts of the competing values

model in the participating countries. All 128 items were

evaluated by using structured Q-sort technique and were tested


in a pilot study. The researchers used Mokken analyses to select

items that form a one-dimensional scale in each country. They

used partial correlation analyses to test the idea of circumplexity

and explorative research design. The results showed that

country influence both practices and values which is larger on

the aggregate level than on individual level.

Mehta et al. (2014) investigated the study on employee

retention and commitment. The objective of the study was to

identify the best practices and methods adopted by various

organisations across industries to help enhance commitment

and employee retention. The purpose of the study was to review

the findings of research papers of various authors to derive the

factors that impact employee commitment and retention in a

work environment. The researchers examined the following

factors in the study: career development opportunities, effective

talent management strategies, work life balance, culture of the

organisation, leadership, communication, image of the

company, autonomy and empowerment, Gallup audits, personal

causes, role of HR head &supervisors, work related policies

& flexi time, performance appraisals &career growth and

development opportunities. There were no fixed practices

which showed the importance and significance of the influence

of all these above broad points because different organisations

lay different emphasis on these pointers depending upon their

suitability impacting retention. Some suggestions drawn by

researchers were like organisation shouldencourage

communication process, should conduct contests to keep

employees motivated, must do smart hiring, manager should

conduct “stay” and “exit” interviews for better understanding

of employees, should treats everyone the same way without

any bias, and to encourage employee participation which gave

a holistic view on the various practices that organisations should

adopt to keep the level of employee retention and commitment

high.


(a) To examine the impact of organisational culture on

employees’ commitment in Bharat Foils Limited.

(b) To understand whether there is any difference in

Employee commitment with respect to Gender.

SCOPE OF THE STUDY

The study is limited to Bharat Foils Limited and does not

necessary reflect the findings of industry as a whole. The

population of the study comprised of employees from various

departments of the organization under study which include HR,

Marketing, Finance, Production & Operation and they were

selected based on random sampling.Purpose of the study is to

analyse the relationship between organizational culture and

employee commitment at Bharat Foils Limited. The study is

confined to Bharat Foils Ltd in Haryana region.

METHODOLOGY

The present study is descriptive in nature. Data was collected

from both primary and secondary sources. Primary data was

collected through the questionnaire by Joilta Rizwan for

organisational culture and from Balakrishnan & Masthan

questionnaire for employee Commitment. Convenience

sampling was used for the same. The sample size for the study

is 100. Secondary data was collected from the company website

and other Internet sources.

HYPOTHESES

H1: There is a significant impact of organisational culture on

Employee commitment.

H2: There is a significant difference in the level of employee

commitment with respect to gender of employees.

DATA ANALYSIS

Reliability of Questionaire

For assessing the reliability of questionaire, Cronbach’s Alpha

was calculated to examine the stability of each factor separately

as shown in Table 1. Reliability coefficients for each factor

was considered acceptable if their value was greater than or

equal to 0.70. Values of Cronbach’s Alpha show that the

questionnaires are reliable.

Table1:Reliability Test- Output

Items Cronbach’s Alpha based on

Standardized items

N of Items

Organisational Culture 0.767 11

Employee Commitment 0.870 18

Table 2: Model Summary of Regression Values

Change Statistics R R Square Adjusted R

Square

Std. Error of

the Estimate R Square

Change

F Change df1 df2 Sig. F Change

.292 .086 .076 3.751 .086 9.163 1 98 .003


Table 3: Unstandardized and Standardized Coefficients

Unstandardized Coefficients Standardized Coefficients t Sig. Model

B Std. Error Beta

Constant 45.171 5.022 8.995 .000

Organisational Culture .339 .112 .292 3.027 .003

Table 4:Independent T-test- Employee Commitment and Gender

Levene's

Test for

Equality of

Variances


95% Confidence

Interval of the

Difference

F Sig. T Df Sig. (2-

tailed)

Mean

Difference

Std. Error

Difference

Lower Upper


.949 .332 1.254 98 .213 1.70574 1.35989 -.99291 4.40439

Employee commitment Equal

variances not assumed

1.543 10.812 .151 1.70574 1.10516 -.73189 4.14337

Impact of Organisational Culture on Employees’

Commitment

For establishing the relationship between organisational culture

and employees’ commitment, regression analysis was used. The

results in Table 2 revealed that r value i.e. 0.292 which denotes

weak positive correlation between organisational culture and

employees’ commitment.

The value 0.086 of R square shows that only 8.6% variation

in organisation culture eplains employee commitment and

remaining 91.4% depends on the other factors. Sincee the p

value of 0.003 less than the significance level of 0.01, we

conclude that impact of organisation culture on emplyoees’

commitment is statistically significant. Therefore, the

hypothesis H1 is accepted. The regression equation thus

developed from Table 3 is: Employee’s commitment = 45.171

+ 0.339 (Organisational culture)

Difference in the Level of Employees’ Commitment with

respect to Gender of Employees

To test whether there was any significant difference in the level

of organisational commitment based on gender, t test was used.

Table 4 shows that the p- values0 of .213 and 0.151 are more

than the significance level of 0.05. Hence, H2 is rejected,

therefore we conclude that there is no significant difference in

employee commitment with respect to gender.

CONCLUSION

The study reveals that organisational culture impacts

commitment level of the employees. Hence organization could

foster employee commitment by building a culture of trust and

encouraging communication process. To enhance the culture

employees should be motivated through the use of multiple

sources of motivation.Employee participation should be

encouraged into various decisions made for the organisation.

REFERENCES

1. Agwu, O. (2013). Organizational Culture and Employee

Commitment in Bayelsa State Civil Service, Journal of

Management Policies and Practices, 1(1), 35-45.

2. Alvi, H.A., Hanif, M., Adil, M.S., Ahmed, R.R.,

&Vveinhardt, J. (2014). Impact of Organizational Culture

on Organizational Commitment and Job Satisfaction,

European Journal of Business and Management, (27), 30-

39.

3. Ghorbanhosseini, M. (2013). Effect of Organizational

Culture, Teamwork and Organizational Development on

Organizational Commitment: The mediating role of human

capital, Journal- Technical Gazette, 20(6), 1019-1025.

4. Manetje, O., & Martins, N. (2009). The Relationship

between organisational culture and organisational

commitment, Southern African Business Review, 13(1),

87-111.

5. Mehta, M., Kurbetti, A., &Dhankhar, R. (2014). Study on

Employee Retention and Commitment, International

Journal of Advance Research in Computer Science and

Management Studies, 2(2), 154-164.


6. Messener, W. (2013). Effect of organizational culture on

employee commitment in the Indian IT services sourcing

industry, Journal of Indian Business Research, 5(2), 76-

100.

7. Momeni, M., Marjani, A.B., &Saadat, V. (2012). The

Relationship between Organizational Culture and

Organizational Commitment in Staff Department of

General Prosecutors of Tehran, International Journal of

Business Social Science, 3(13), 217-221.

8. Nongo, E.S., &Ikyanyon, D.N. (2012). Influence of

Corporate Culture on Employee Commitment to the

Organization with reference to medium small enterprises

(SMEs), International Journal of Business and

Management, 7(22), 1-8.

9. Sabir, M.S., Razzaq, A.,&Yameen, M. (2010). Impact of

Organizational Culture on the Employees’ Commitment:

Relationship between Levels of Organizational Culture

with Commitment, KASBIT Business Journal, 3(1), 8895.

10. Shoaib Ch., A., Zainab, N., Maqsood, H. & Sana, R.

(2013). Impact of Organizational Culture on

Organizational Commitment: A Comparative Study of

Public and Private Organizations, Research Journal of

Recent Sciences,2(5), 15-20.

11. Sola, A.S., Femi, A., &Kolapo, I. (2012). Organisational

Culture and Employees Commitment in Public Tertiary

Institutions in Lagos State, Nigeria, European Journal of

Globalization and Development Research, 3(1), 128-142.

12. Van Muijen, J.J., Koopman, P., Witte, K.D., Cock, G.D.,

Susanj, Z., Lemoine, C., Bourantas, D., Papalexandris,

N., Branyicski, I., Spaltro, E., Jesuino, J., Neves, J.G.D.,

Pitariu, H., Konrad, E., Peiró, J., González-Romá, V.,

&Turnipseed, D. (1999). Organizational Culture: The

Focus Questionnaire, European Journal of Work and

Organizational Psychology, 8(4), 551-568.


EMPLOYEE ENGAGEMENT IN BPO SECTOR

Kanupriya Malhotra1

Akshat Bhardwaj2

ABSTRACT

"Survival of the Fittest" is the rule of the game. In today's competitive environment, organizations' need to be the best to survive,

thrive and excel. Two organizations may possess same amount of capital, resources, technology, infrastructure etc, but what

differentiates them is their human resource. Human resource is a unique combination of knowledge, skills and abilities. It is very

important to utilize these talents in the best way, which is possible only when their efforts are successfully converted into

commitment. This calls for the need of Employee Engagement in today's era. In BPO sector, the links between employee engagement

and organizational productivity are recognized but are at a very fundamental stage. There is a gap in the survey with regard to

the relationship of Job Satisfaction, Referral and Loyalty with Employee Engagement. Accenture and iEnergizer, being a BPO

is not an exception to this. This paper concludes that, in the aforesaid organizations, extrinsic factors like good working

environment, salary, job security etc are not enough to make any employee engaged at work. It can be done by increasing their

level of satisfaction, referral and loyalty.

Keywords: BPO, Employee Engagement, Job Satisfaction, Loyalty, Referral.

1 Assistant Professor, Gitarattan International Business School, Rohini, Delhi. Email: [email protected] Student, Gitarattan International Business School, Rohini, Delhi.

INTRODUCTION

An organization to have a workforce which is completely

satisfied witah their jobs is the most desirable and optimum

level that it wishes to achieve. But in today’s competitive world,

it has become crystal clear that only job satisfaction is not

adequate to create the connection between employee’s

contribution and organizational productivity. Previously the

organizations emphasized on concepts like customer

satisfaction and profit maximization. But now there is a shift

in the focus, from customer satisfaction to employee

satisfaction. Employers have changed drastically from creating

employees who are purely satisfied with salary and other

benefits, to the employees who are engaged to the organization.

Today organizations like HCL have come with a strategy of

‘Employee First Customer Second (EFCS)’ to make their

employees feel engaged and consider them as a part of the

organization. For employers, employee engagement has

become like a search for ‘Devine Being’.

The challenge today is not just retaining talented people, but

fully engaging them, capturing their minds and hearts at each

stage of their work lives. Employee engagement has emerged

as a critical driver of business success in today’s competitive

market place. Further, employee engagement can be a deciding

factor in organizational success. Not only does engagement

have the potential to significantly affect employee retention,

productivity and loyalty, it is also a key link to customer

satisfaction, company reputation and overall stakeholder value.

Thus, to gain a competitive edge, organizations are turning to

HR to set the agenda for employee engagement and

commitment.

Employee engagement is defined as “the extent to which

employees commit to something or someone in their

organization, how hard they work and how long they stay as a

result of that commitment.”

Engagement is an emotional connection an employee feels

towards his or her employment organization, which tends to

influence his or her behavior and level of effort in work related

activities. The more engagement an employee has with his or

her company, the more effort he/she puts. Employee

engagement also involves the nature of the job itself - if the

employee feels mentally stimulated; the trust and

communication between employees and management; ability

of an employee to see how their own work contributes to the

overall company performance; the opportunity of growth within

the organization and the level of pride an employee has about

working or being associated with the company.

Research shows that the connection between an employees’

job and organizational strategy including understanding how

important the job is to the firms’ success, is the most important

driver of employee engagement. In fact, employees with the

highest levels of commitment perform 20% better and are 87%

less likely to leave the organization, which indicates that

engagement is linked to organizational performance. In

contrast, job satisfaction — a term sometimes used inter-

changeably with employee engagement — is defined as how

an employee feels about his or her job, work environment,

pay, benefits, etc. The happier people are with their job, the

more satisfied they are said to be. Job satisfaction is not the

same as motivation or attitude although it is clearly linked.


Employee engagement is a complex concept, with many issues

influencing engagement levels. Consequently, there are many

pathways to foster engagement, with no one, kit, that fits all

organizations. While each company may define employee

engagement differently, ultimately, the key to effective

engagement will be rooted in the flexibility of approach most

appropriate for each individual firm.

LITERATURE REVIEW

Thiagarajan & Renugadevi (2011) conducted the research with

the purpose to introduce employee engagement and key

research on engagement related factors in BPO Industries in

India. It was found that career development, performance

appraisal and motivation factors were connected to employee

engagement. The implications were that the leaders should be

educated on engagement, career development opportunities

which are particularly important and that performance

improvement should champion work life balance, these

practices are useful to increase engagement.

Safdar & Ajmal (2011) conducted the study with the aim to

test link between job satisfaction, job retention and job

performance. This study correlation between job performance

and job satisfaction (r = 0.52).

Sharma and. Baldev (2011) presented an assessment of the

level of employee engagement among managers of a public

sector undertaking in India. Besides highlighting the level of

engagement, the study has identified the predictors of

organizational commitment, which was used as an important

manifestation of employee engagement. The study is based on

primary data collected from 84 managerial employees on a

number of parameters relating to employee engagement and

its potential predictors. The study has revealed that the level

of employee engagement in this organization is quite modest.

Three factors, namely, pay, job content and objectivity are found

to be the predictors of employee engagement.

Chung and Angeline (2010) examined the extent to which the

engagement of employees in their work mediates the

relationship between their performance and the job resources

that organizations provide. This study revealed that employee

engagement mediates the relationship between job resources

and job performance of employees.

Sharma et al. (2010), conducted research on “Determinants of

Employee Engagement in a Private Sector Organization: An

Exploratory Study” aimed to ascertain the level of employee

engagement and the determinants thereof among the sales

executives of a private sector organization. The results revealed

the two main factors that determine employee engagement of

sales executives are compensation & job security.

Rettab et al. (2009) examines the link between CSR activities

and organizational performance. The results show that CSR

has a positive relationship with all three measures of

organizational performance: financial performance, employee

commitment, and corporate reputation. These results reinforce

the accumulating body of empirical support for the positive

impact of CSR on performance and challenge the dominant

assumption that, given the weak institutional framework in

emerging economies, CSR activities drain resources and

compromise firms’ competitiveness.

Certain interesting findings emerged from the survey conducted

by Blessingwhite and Alexi (2008). The survey defines

‘employee engagement’ as an alignment of maximum job

satisfaction with maximum job contribution. By plotting the

population against these two axes, the employees were

classified into following five segments:

(a) The Engaged

(b) Almost Engaged

(c) Honeymooners and Hamsters

(d) Crash and Burn

(e) The Disengaged

Brownrigg et al. (2008) examined the links between employee

engagement and organizational performance in the public

sector. Five theoretical models linking employee engagement

and organizational performance were presented and concrete

organizational outcomes of employee engagement were

provided.

Sharma (2007) conducted the study which indicated that a good

level of engagement may lead to high retention, but only for a

limited time in the ITES sector. The need for a more rigorous

employee engagement construct is indicated by the study.

Practical implications for retention in the BPO/ITES sector

are referred to employee engagement.

Saks (2006) conducted the study with the aim to test a model

of the antecedents and consequences of job and organization

engagements based on social exchange theory. Results indicate

that there is a meaningful difference between job and

organization engagements and that perceived organizational

support predicts both job and organization engagement; job

characteristics predicts job engagement; and procedural justice

predicts organization engagement. In addition, job and

organization engagement mediated the relationships between

the antecedents and job satisfaction, organizational

commitment, intentions to quit, and organizational citizenship

behavior.

Vazirani (2005) conducted a study on how employee

engagement is an antecedent of job involvement and what

company should do to make the employees engaged. It

concluded that raising and maintaining employee engagement

lies in the hands of an organization and requires a perfect blend

of time, effort, commitment and investment to craft a successful

endeavor.


(a) To measure employee engagement in BPO sector


(b) To examine the impact on employee engagement.on job

satisfaction, loyalty and referral.

(c) To study the difference between Accenture and

iEnergizer in terms of employee engagement.

SCOPE OF THE STUDY

The study is conducted in order to measure employee

engagement and its impact on job satisfaction, loyalty and

referral. It includes employees of Accenture and iEnergizer.

The outcome from this study will give managers the information

to improve management interventions in order to increase

employee engagement. By increasing the overall level of

employee engagement, the effect will be two fold; employees

will have an improved engagement experience and as a result

their performance will be better. Primary data was collected

through questionnaire.

REASEARCH METHODOLOGY

(a) Primary Data: The primary data was collected with the

help of a structured questionnaire consisting of 15

statements on a five point Likert scale in which 1 denotes

strongly disagree and 5 denotes strongly agree. The

sampling technique used for research was convenience

sampling.

(b) Secondary Data: Secondary data was collected from

textbooks, journal articles, studies that have been carried

out in this area before and Internet.

(c) Techniques used to Analyze Data: The statistical tool

used was simple linear regression and t-tests. SPSS

software was used for the analysis of data.

HYPOTHESES

The following hypotheses were formulated to achieve the

research objectives:

H1: There is significant impact of employee engagement on

job satisfaction.


loyalty.


referral.

H4: There is significant difference between Accenture and

iEnergizer in terms of employee engagement.

DATA ANALYSIS AND INTERPRETATION

Table 1 depicts the demographic profile of the respondents on

the basis of gender and age. 70% of the respondents are males

and 76% of respondents are between 30-50 years.

Table 1: Demographic Profile of the Respondents

Gender Distribution (in %)

Male 70

Female 30

Age Distribution (in %)

20-30 10

30-40 39

40-50 37

Above 50 14


The Cronbach’s Alpha was calculated for the fifteen statement

questionnaire. The value of coefficient, as shown in Table 2, is

0.92 which indicates that questionnaire is reliable as the

coefficient value is higher than the standard value of 0.7.



0.92 15

Relationship between Employee Engagement & Job

Satisfaction

Table 3 indicates that the p-value (0.000) is less than the level

of significance of 0.05; therefore, we accept the hypothesis

and conclude that employee engagement significantly impacts

job satisfaction.

Table 3: ANOVA Results for Employee Engagement and Job

Satisfaction

Model Sum of

Squares

df Mean

Square

F Sig./

p

Regression 37.868 1 37.868� 50.81� 0.000�

Residual 73.042 98 0.745

Total 110.910 99


Relationship between Employee Engagement & Loyalty

In this case also, since the p-value (0.000) is less than the level

of significance 0.05 (Table 4), we accept the hypothesis and

infer that there is a significant impact of employee engagement

on loyalty.


Table 4: ANOVA Results for Employee Engagement and

Loyalty

Model Sum of

Squares

Df Mean

Square

F p

value

Regression 52.450 1 52.450 60.97 0.000

Residual 84.300 98 0.086

Total 136.750 99


Relationship between Employee Engagement & Referral

Table 5 shows the results of analysis in respect of employee

engagement and referral. The results bring out that the p-value

of 0.000 is less than the significance level of 0.05. Therefore,

we infer that the employee engagement significantly impacts

referral.

Table 5: ANOVA Results for Employee Engagement and

Referral

Model Sum of

Squares

df Mean

Square

F Sig.

Regression 45.036 1 45.036 94.06 0.000

Residual 46.924 98 0.479

Total 91.960 99


Difference between Accenture & iEnergizer in terms of

Employee Engagement

Table 6 indicates that the p value (0.048) is less than the level

of significance (0.05). We accept alternate hypothesis meaning

that there is a significant difference between Accenture and

iEnergizzer in terms of employee engagement.

Table 6: Two-sample T for Accenture vs. iEnergizer

Mean St Dev

SE Mean p Value

Accenture 49.36 9.59 1.4

iEnergizer 48.18 6.89 0.97 0.048

N (Accenture) = 50, N (iEnergizer) = 50


FINDINGS

The study shows that there exist a relationship between

employee engagement and job satisfaction, loyalty & referral.

Hence researcher would recommend the organizations to take

steps to improve the overall satisfaction of their employees by

clarifying authority and responsibility relationships, setting

clear goals, encouraging employee participation, etc and the

supervisor should provide timely feedback to its subordinates.

The researcher would like to recommend on the basis of

interaction with the respondents that there should be two way

feedback mechanism i.e. the subordinates should also actively

provide their feedback on how engaged they are towards their

work and are they happy with their supervisor’s role in their

development.

REFERENCES

1. Blessingwhite and HR Anexi (2008), “The Employee

Engagement Equation in India”, URL: http://

w w w. h r a n e x i . c o m / E m p l o y e e _ E n g a g e m e n t

_Report_2008.pdf.

2. Brownrigg M.C , Evans Jason, Poilievre Tricia and

Slonowsky Dean (2008), “Employee Engagement and

Organizational Performance: Exploring the Links”, URL:

h t tp : / /www.c io .gov.bc . ca / loca l / c io /k i s /pdf s /

mpa_employee_engagement.pdf.

3. Chung Ng Ging and Angeline Tay (2010), “Does Work

Engagement Mediate the Relationship between Job

Resources and Job Performance of Employees?”, African

Journal of Business Management, Vol. 4(9), pp. 1837-

1843.

4. Kumari Jyotsna (2007); “Talent man-agement strategy of

employee engagement in Indian ITES employees: Key to

Retention” Jounal of Managment, Vol. 2 (3), pp. 27-40.

5. Mamta, Sharma R. Baldev(2011); “Study of Employee

Engagement and its Predictors in an Indian Public Sector

Undertaking”, Journal of Business Management, Vol.

4(10).

6. Muhammad Safdar Rehman and Ajmal Waheed, (2011).

An empirical study of impact of job satisfaction on job

performance in the public sector organizations. Journal

of Contemporary Research in Business, Vol 2, No 9.

7. Saks Alan M.,(2006)”Antecedents and consequences of

employee engagement”, Journal of Managerial

Psychology, 21(7), 600–619.

8. Sakari Taipale, Kirsikka Selander, Timo Anttila, Jouko

Nätti (2011); “Work en-gagement in eight European

countries: The role of job demands, autonomy, and social

support”, Jo0urnal of Contemporary Research in Business,

Vol 2, pp. 14-22.

9. Sharma Baldev Retal (2010); “Determinants of Employee

Engagement in a Private Sector Organization: An

Exploratory Study” Journal of Managerial Psychology,

21(7), p-24-37.

10. Thiagarajan B & Renugadevi V (2011) ; “An empirical

investigation on Employee Engagement Practices in Indian

BPO.


ROLE OF ORGANISATIONAL CULTURE IN FORMATION OF ORGANISATIONAL

CITIZENSHIP BEHAVIOR IN PUBLIC AND PRIVATE BANKS

Mitu Mandal1

Himanshi Bhadouria2

ABSTRACT

Organisational culture is one of the most crucial factors in determining an individual's behavior in an organization. It is

through organization culture a collective mindset is developed in an organization. The present study aimed to assess the

organisational culture and organisational citizenship behaviour of public and private sector banks as well as examined the

impact of organization culture on organization citizenship behavior. Sample consisted of 151 employees of public sector and

private sector banks. Sample was selected through convenience sampling technique. Descriptive statistics, independent sample

t test, pearson correlation and simple regression were used for analysis of the data. Results revealed significant difference in

organisational culture between public and private sector banks, however, in case of organization citizenship behavior no significant

difference was found. The study further revealed that there is a significant impact of organisational culture on organisational

citizenship behavior. The study has wide implication in human resource management, as it suggests that organisational culture

plays a vital role in formation of organization citizenship behavior.

Keywords: Autonomy, Collaboration, Experimentation, Organisational Citizenship Behaviour, Organisational Culture.

1 Assistant Professor in Gitarattan International Business School, Rohini, New Delhi. Email id: [email protected] Student Gitarattan International Business School, Rohini, New Delhi

INTRODUCTION

Banking sector is one of the key sectors of Indian economy.

Indian banking system has been significantly contributing to

the economic development of the country. It has the potential

to become the fifth largest in the world by 2020 and third largest

by 2025. According to KPMG-CII report, India’s banking and

financial sector is expanding rapidly. The Indian banking

industry is currently worth Rs. 81 trillion (US $ 1.31 trillion)

and banks are now utilizing the latest technologies like internet

and mobile devices to carry out transactions and communicate

with the masses. The Indian banking sector consists of 26 public

sector banks, 20 private sector banks and 43 foreign banks

along with 61 regional rural banks (RRBs) and more than

90,000 credit cooperatives.

Organisational culture plays a vital role in determining an

individual’s behavior in an organization. It acts as glue that

bonds people to an organization. Managers, today, are

increasingly challenged with changing organization’s culture

to support new ways of accomplishing work. Therefore, the

purpose of this study was to understand and differentiate the

organisational culture prevailing in the private sector and public

sector banks. It also aimed to identify the role of organisational

culture in formation of organization citizenship behavior.

LITERATURE REVIEW

Organization Culture

Organisational culture is a system of shared assumptions,

values, and beliefs, which governs how people behave in

organizations. These shared values have a strong influence on

the people in the organization and dictate how they dress, act,

and perform their jobs. Every organization develops and

maintains a unique culture, which provides guidelines and

boundaries for the behavior of the members of the organization.

Organisational culture consists of values and behaviors that

contribute to the social and psychological environment of an

organization. Thus, organisational culture affects the way

people and groups interact with each other, with clients, and

with stakeholders. In addition, organisational culture may affect

how much employees identify with an organization.

Researchers have conducted various studies to ascertain the

antecedents and outcome of organisational culture.

Purnama (2013) conducted a study on influence of

organisational culture, organisational commitment, job

satisfaction and organisational citizenship behavior (OCB) on

improved organisational performance. Result indicated that

organisational culture has a positive effect on organisational

commitment, job satisfaction and organisational commitment.

Majority of existing studies on organisational culture have

concentrated on organisational performance. Using the

Denison’s Organisational model, due to its integrative nature

as well as its emphasis on both internal and external factors,

the study examined the relationship between organisational

culture and performance in Ghana. All the variable items for

organisational culture and performance were measured using

five-point Likert scale and using the Denison Organisational

Survey instruments. The study revealed that though there was

a significant difference among the banks in terms of the

organisational culture traits, there was no significant difference


among them with regards to performance. Apparently, none of

the banks was more innovative than the others. Overall, there

was a positive relationship between organisational culture and

performance in the banking industry in Ghana. In all cases,

culture trait has the strongest potential of impacting positively

on performance. Similar result was found by Racelis (2010) in

the Philippine banking sector.

In another different kind of study, Luxmi & Punia, (2005)

conducted a study to test differences in perception of

organisational culture. Organization culture was measured by

using Likert five point scale. Results revealed that organizations

having a strong organization culture perform better than

organizations having weak culture.

Marinova, (2005) conducted a study on organisational culture

perspective on role emergence and role enactment. The survey

was conducted electronically by sending emails. An exploratory

factor analysis (EFA) with principal axis method, correlation

and ANOVA were used for data analysis. Result indicated that

organisational culture was positively related to role emergence

& role enactment and achievement orientation.

Khan & Rashid (2012) conducted a study on the mediating

effect of organisational commitment on organisational culture,

leadership and organisational citizenship behavior. Results

indicated that among all the variables, organisational

commitment has more impact in explaining OCB among

employees which provided a optimistic results in terms of

selecting this as the mediating variable for organization culture,

leadership style and organization justice.

Organisational Citizenship Behavior (OCB)

Organisational citizenship behavior is a concept that describes

a person’s voluntary commitment within an organization or

company that is not part of his or her contractual tasks. Cilla &

Joseph, (2011) conducted a study on exploring the relationship

between organisational citizenship behavior and organisational

climates for creativity. Result indicated that when employees

have challenging work with required resources needed to

perform their own work, they were more inclined not only to

help their co-workers, but also comply with the organisational

rules that are in place and did not focus on negative aspects

within the organization. OCB includes three critical aspects

that are central to this construct. First, OCBs are thought of as

discretionary behaviors, which are not part of the job

description, and are performed by the employee as a result of

personal choice. Second, OCBs go above and beyond that

which is an enforceable requirement of the job description.

Finally, OCBs contribute positively to overall organisational

effectiveness.

Nawaser and Ahmadi (2015) conducted a study on

organisational citizenship behavior and bank profitability in

an Iranian bank. Result indicated that there is a significant

relationship between various dimensions of organisational

citizenship behavior and profitability of bank branches.

Likewise, Mohanty & Rath (2012) conducted a study on the

influence of organization culture on organisational citizenship

behaviour. The results derived indicated a high positive

correlation between organisational culture and organisational

citizenship behavior across all the organizations

(manufacturing, IT, banking). The results also demonstrated a

significant level of correlation between organisational culture

and organisational citizenship behavior in the individual

Organizations as well. Similar type of finding were also

revealed by other researchers (Mohamed & Anisa , 2012;

Mohammad & Mehrabi 2014 & Sarfaraz & Kia, 2015).

Though numerous studies have been conducted on

organisational culture, and relationship between organisational

culture and organization citizenship behavior, there are dearth

of studies in this area particularly in indian banking sector. To

address this gap, the present study has been conducted to assess

the relationship between organisational culture and organization

citizenship behavior in indian banks.


(a) To examine the difference in organization culture in

public and private sector banks.

(b) To examine the difference in organization citizenship

behaviour in public and private sector banks.

(c) To explore the impact of organization culture in

formation of organization citizenship behaviour in public

and private sector banks.


H1: There is difference of organization culture in public and

private banks.

H2: There is difference of organization citizenship behavior

in public and private banks.

H3: There is significant impact of organisational culture on

organisational citizenship behavior in banks.


The research design was descriptive in nature with survey

method used to collect primary data. Standardized

questionnaires measuring organisational culture (developed by

Udai Pareek, 2000) and organization citizenship behavior

(developed by Sheik Mohamed and H Anisa, 2012) were used

for collecting data.

Sample & Procedure

Sample was selected through convenience sampling method.

Total sample size for the study was 151 employees of public

and private sector banks located in Delhi. Data was collected

by personally visiting the bank branches. A prior appointment

was taken from the senior manager to explain the relevance

and objectives of the study. Thereafter, each respondent was


personally approached and responses were obtained through

the standardized questionnaires.

Measures

The organizational culture questionnaire measures

organisational culture in terms of eight values which deals with

the extent to which openness, confrontation, trust, autonomy,

pro-activity, authenticity, collaboration & experimentation are

valued and promoted in the organizations. It was developed

by Udai Pareek. Respondents rate their organizations on these

eight values, using a four-point scale ranging from 1- 4, where

1 implied that the value is rarely shared among the employees

and 4 implied the value is widely shared among the employees.

The questionnaire consisted of 22 statements encompassing

all the eight values.

Following is the detailed description of eight values:

(a) Openness: Freedom to communicate, share and interact

without hesitation,

(b) Confrontation: Facing the problems and challenges

boldly and not shying away,

(c) Trust: Maintaining the confidentiality of information

shared by others and company,

(d) Autonomy: Using and giving freedom to plan and act in

one’s own sphere,

(e) Pro-activity: Taking initiative, preplanning and taking

preventive action,

(f) Authenticity: Congruence between what one feels and

says,

(g) Collaboration: Giving help to and accepting help from

others in team, and

(h) Experimentation: Using and encouraging innovative

approaches to solve problems

Organisational citizenship behavior was measured by using

standardized questionnaire developed by Sheik Mohamed and

H Anisa (2012). The questionnaire consisted of eight (8)

statements and responses were recorded through a five point

likert scale, where 1 implied strongly disagree and 5 implied

strongly agree. The respondents rated their agreement on each

statement measuring organisational citizenship behaviour.

Data Processing & Analysis

Collected data were analyzed by computing mean, SD,

independent t and pearson product moment correlation and

simple regression techniques. Mean was calculated to assess

the average score of organisational culture and organisational

citizenship behavior of employees of both private sector and

public sector banks. Independent t test was computed to

ascertain the significant difference in organisational culture

and organisational citizenship behavior between public and

private sector banks. Correlation was computed to examine

the relationship between organisational culture and

organisational citizenship behavior. Simple regression was

calculated to assess the impact of organisational culture on

organisational citizenship behavior.

RESULTS & DISCUSSION

Reliability Analysis of the Questionnaires

The questionnaires used for measuring organisational culture

and organisational citizenship behaviour were tested for

reliability. Table 1 depicts Cronbach’s Alpha value of the

questionnaires. Both the questionnaires were found to be

reliable as the cronbach’s value were 0.84 and 0.87 for

organizational culture and organizational citizenship behavior

respectively.

Demographic Analysis

After the collection of data, demographic analysis was

conducted to examine the percentage of respondents in each

category such as age, gender, educational qualification and type

of organization. Table 2 depicts the total respondents

participated in the study. Respondents were of different age

groups with varying education levels. According to the age,

the respondents were divided into three categories: below 21-

35, 36-50 and above 50. Table 2 shows, 44% comprised of

males and 56% comprised of females; 79 respondents were

graduate with a percentage of 52% and 72 were postgraduate

with a percentage of 48%; 74 employees belong to private

sector bank and 77 employees belong to public sector bank;

36 % belong to 36-50 age group, maximum (52%) are

graduates.

Table 1: Reliability Analysis

S. No. Variables No. of items Cronbach’s Alpha

1.

2.

Organization Culture

Organization Citizenship Behaviour

25

8

0.84

0.87


Table 2: Frequency of Demographic Variables of Organisational Culture and Organisational Citizenship Behaviour in Public &

Private Banks

Demographic

Variables Classification

Number of

Respondents % of Respondents Total

Age 21 – 35

36 – 50

Above 50

47

54

50

31

36

33

151

Gender Male

Female

66

85

44

56

151

Education level Graduate

Post Graduate

79

72

52

48

151

Organization Private

Public

74

77

49

51

151

Table 3: Mean, SD and t value of Private & Public Banks with regard to Organisational Culture & Organisational Citizenship

Behaviour (N=151)

Variables Private Banks Public Banks

n Mean SD n Mean SD

t Critical

value of

t

Organisational Culture 74 3.17 0.58 77 2.93 .43 2.87 1.64

Organisational Citizenship Behaviour

74 3.91 0.51 77 3.87 .69 0.48 1.64

Level of Significance = 0.01


R R Square Adjusted R Square Std. Error of the Estimate

0.446 0.199 0.188 0.626

Table 5: ANOVA

Model Sum of

Squares

df Mean Square F Critical Value of F

Regression 7.300 1 7.300 18.623 3.84

Residual 29.40 149 .392

Total 36.701 150

Difference of Organization Culture in Public and Private

Sector Banks

Table 3 depicts the Mean, SD, t value and significance level of

private and public sector banks with regard to organisation

culture and organization citizenship behaviour. Independent

sample t test was carried out to statistically test the significant

mean difference of organisation culture between private and

public banks. Since the calculated value of t (2.87) is greater

than critical value (1.64), we accept H1 and conclude that there

is significant difference in organisational culture between

private and public sector banks.

Difference of Organization Citizenship Behavior in

Public and Private Banks

In case of organisation citizenship behavior, Table 3 shows

that calculated value of t is less than the critical value, therefore,

H2 is rejected; we conclude that there is no significant variation

in organisational citizenship behaviour between private and

public banks.

Impact of Organisational Culture on Organisational

Citizenship Behavior in Banks

Simple regression analysis was carried out to study the impact

of organisational culture on organisational citizenship behavior


in banks. Table 4, 5 and 6 depicts the results of regression

analysis.

The R square value of 0.199 in Table 4 implies that

organisational culture only explains 19.9% of variation in

organisational citizenship behaviour. This means organisational

citizenship behaviour is determined by many other variables

which are not included in the study.

Table 5 shows corresponding ANOVA values from the

regression model. Since calculated F value (18.623) is greater

than critical value (3.84) with (1,149) degrees of freedom,

therefore, H3 is accepted. We, thus, conclude that

organisational culture has significant impact on organisational

citizenship behavior.

CONCLUSION

The present study was conducted to assess role of organisational

culture in formation of organisational citizenship behavior in

banks. Following conclusion can be drawn from the study:

(a) There is a significant difference in organisational culture

between private and public sector bank.

(b) There is no significant difference in organisational

citizenship behavior between private and public sector

bank.

(c) Organisational culture has come out to be predictor of

organisational citizenship behavior in banks.

Hence, it is concluded that organisational culture has a vital

role in formation of organizational citizenship behavior.

REFERENCES

1. Cilla, Joseph, M. (2011). Exploring the relationship

between organizational citizenship behavior and

organizational climates for creativity (Master’s Thesis,

University of Maryland, United States). Retrieved from

http://drum.lib.umd.edu/bitstream/handle.

2. Khan, S.K. & Rashid, M.Z.A. (2012). The Mediating

Effect of Organizational Commitment in the

Organizational Culture, Leadership and Organizational

Justice Relationship with Organizational Citizenship

Behavior: A Study of Academicians in Private Higher

Learning Institutions in Malaysia. International Journal

of Business and Social Science, 3, 8, pp. 83-91.

3. Luxmi & Punia, B.K (2005). Organizational culture in

service sector an exploration, Delhi Business Review Vol.

6, 13,2, pp. 45-51.

4. Mohamed, S. & Anisa, H (2012). Relationship between

Organisational commitment and Organisational

Citizenship Behaviour, IUP Journal of Organizational

Behavior, 11(3), pp. 7-22.

5. Marinova, S. (2005). An organizational culture perspective

on role emergence and role enactment. Retrieved from

www.drum.lib.umd.edu.

6. Mohammad, J, & Mehrabi F, (2014). The Investigating of

Relationship between Organisational Culture and

Organisational Citizenship Behavior, 5(2014), The IUP

Journal of organisational Behavior 4, pp.106-108.

7. Mohanty J & Rath B.P (2012). Influence of Organization

culture on Organisational Citizenship Behaviour. Global

Journal of Business Research, 6,1, pp. 65-76.

8. Nawaser, K, Ahmadi M, (2015). Organisational

Citizenship Behavior and Bank Profitability: Examining

Relationships in an Iranian Bank, Asian Social Science,11

(12), pp. 11-24.

9. Purnama, C. (2013). Influence Analysis of Organisational

Culture, Organisational Commitment, Job Satisfaction and

Organisational Citizenship Behavior (OCB) Toward

Improved Organisational Performance, International

Journal of Business, Humanities and Technology, 3(5),

pp. 86-100.

10. Racelis, A.D. (2010).The relationship between

organisational culture and organisational performance in

the Philippine banks, Social Science Diliman ,vol.6 (2),

pp. 29-49.

11. Sarafraz, S.A. & Kia, A.R. (2015). Examining the

Relationship between Organisational Culture and

Organisational Citizenship Behavior in the Social Security

Branches of Khorramabad”, MAGNT Research Reports,

3(1), pp. 368-376.

12. Sofiah K. K. & Rashid, M.Z. (2012),The Mediating Effect

of Organisational Commitment in the Organisational

Culture, Leadership and Organisational Justice

Relationship with Organisational Citizenship Behavior,

International Journal of Business and Social Science, 3(8),

pp. 83-91.


ROLE OF APPRAISAL TECHNIQUES ON EMPLOYEE SATISFACTION

WITH EMPHASIS ON E-COMMERCE FIRMS

Meetali Bahl1

Rajni Yadav2

ABSTRACT

Performance appraisal is among the most critical Human Resource function that brings global success for the organization.

The current study aims to examine the relationship of employee performance appraisal system and employee satisfaction. The

research consisted of a sample of 100 employees working in e-commerce companies in Delhi-NCR. The data was collected by

convenient sampling technique with the help of adopted questionnaire. The reliability of the instruments used is reaffirmed

which is accordance with the required standards. After applying Pearson's correlation and linear regression the results show

that there is a positive relationship between employee performance appraisal system and employee satisfaction.

Keywords: Appraisal Systems, Correlation, Job Satisfaction, Performance Evaluation, Regression.

1 Assistant Professor, Gitarattan International Business School, Rohini, New Delhi. Email: [email protected] Student, Gitarattan International Business School, Rohini, New Delhi

INTRODUCTION

Electronic commerce, commonly written as e-commerce, is

the trading or facilitation of trading in products or services

using computer networks, such as the Internet. Electronic

commerce draws on technologies such as mobile commerce,

electronic funds transfer, supply chain management, Internet

marketing, online transaction processing, electronic data

interchange (EDI), inventory management systems, and

automated data collection systems. Modern electronic

commerce typically uses the World Wide Web for at least one

part of the transaction’s life cycle, although it may also use

other technologies such as e-mail.

The benefits of e-commerce include its round-the-clock

availability, the speed of access, a wider selection of goods

and services, accessibility and international reach. It’s perceived

downsides include sometimes-limited customer service, not

being able to see or touch a product prior to purchase, and the

necessitated wait time for product shipping.

LITERATURE REVIEW

Karimi, Malik and Hussain (2011) conducted a study on

examining the relationship of performance appraisal system

and employee satisfaction. Based on the responses of 53 male

& 48 female respondents the results revealed that there is a

positive and significant relationship between performance

appraisal system and their satisfaction.

Poornima and Manohar (2015) attempted to study the impact

of performance appraisal in one way or other and the same has

some impact on the satisfaction level of the employees over a

period of time. IT companies were selected based on their

revenue released by the third quarter for the year 2014. A

multiple regression analysis was used to test the hypothesis

and it was found that hypothesis being considered by the

researcher is partially accepted and partially rejected.

Abdelhadi et al (2015) conducted the study and identified that

the appraisers and appraise don’t respond favorably to

performance appraisal system unless they find it equitable. The

goal of performance appraisal (PA) is to improve employees’

contribution to organizational goals & work performance.

Employee satisfaction with the PA plays an essential role in

their long-term efficiency. A negative reaction toward the PA

can ruin the entire PA system even if it was built meticulously.

Akinbowale, Jinabhai and Lourens (2013) carried out a study

in which the investigation was focused on performance

appraisal policy & its impact on employee performance in

Guaranty Trust Bank in Nigeria. The result revealed that the

employee participation in the performance appraisal was

generally high and this increased job satisfaction & enhanced

employee performance.

Khan (2013) conducted a research to study the role of

Performance Appraisal system on employee motivation. In this

study a model had been developed in stability to assess

employee. The manager gives an employee a performance

appraisal with a view of affecting the employee’s self-

perception, and the employee’s perception of the manager’s

ability to assess performance and also helped to do the

examination that how performance appraisals affect the

employee’s future performance. The predictions of this model

were consistent with various empirical findings. These were

comprised of (a) the observation that managers tend to give

positive appraisals, (b) the finding that on average positive

appraisals motivate more than negative appraisals, and (c) the

observation that the effects of appraisals depend on the

employee’s perception of the manager’s ability to assess

performance accurately.


Moulik and Mazumdar (2012) conducted empirical study on

exploring the relationship between perceived uses of appraisals

and performance appraisal satisfaction in the Indian IT sector.

Performance appraisals provide a vehicle for managing and

developing human resources by virtue of linkages to sub

functions such as training, compensation, internal mobility

decisions and so on. Performance appraisals have been cited

to be of developmental and administrative uses.

Chandio (2014) conducted a study to investigate the employees’

job satisfaction by length of service and employment status.

The study concluded that employees have same level of job

satisfaction amongst both the groups of employee’s i.e,

permanent and casual employees by status; therefore,

employee’s status does not have any impact on the job

satisfaction of the employees of the organization. Similarly,

employee’s job satisfaction by service length groups has been

also analyzed. It was concluded from the result that service

length does not have any impact on the job satisfaction of the

employees in the organization.

Mahajan and Raheja (2014) conducted a study among

educational institutes of Jalandhar to examine the relationship

between Employees Satisfaction on Performance Appraisal

System with Fairness of the System. The findings showed that

maximum numbers of respondents (faculty members) were

satisfied with their Performance Appraisal System. The findings

also revealed that there was a positive relationship between

employees’ satisfaction on performance appraisal system with

fairness of the system.

Virani (2012) conducted an analytical study on Performance

appraisal system of ITES companies. The research reveals that

majority of respondents of the selected ITES companies are in

the agreement with their existing performance appraisal system.

Daoanis (2012) undertook a study to examine the status of

performance appraisal system of Nass Construction Company

in terms of reliability and validity, quality and effectiveness.

The result of the study showed that the performance appraisal

system of the company is in place, aligned with the vision and

mission of the company and is accurate in terms of content

and purpose. On the other hand, the results reflected that the

performance appraisal system has brought about both positive

and negative impact on the employees performance which arose

the need to revisit and redesign the appraisal system that is

aligned to its vision and mission towards the attainment of its

organizational goals.


The present study is empirical in nature and is based on primary

data of 100 respondents from e-commerce firms in Gurgaon.

A self structured questionnaire was used as the major tool for

collecting primary data. Data is analyzed through correlation

and regression for studying the relationship between

performance appraisal and employee satisfaction. Where,

performance appraisal is independent variable and employee

satisfaction is dependent variable. As far as significance of

gender on employee satisfaction is concerned, t-test is used

and for studying the significance of different age groups on

employee satisfaction, One Way Anova is used.


(a) To study the relationship between performance appraisal

and employee satisfaction in e-commerce firm.

(b) To study the difference in employee satisfaction with

respect to the gender of an employee.

(c) To study the difference in employee satisfaction among

different age groups of employees.

HYPOTHESIS

H1: There is significant impact of performance appraisal on

employee satisfaction in e-commerce firm.

H2: There is significant difference in employee satisfaction

with respect to Gender of employees.

H3: There is significant difference in employee satisfaction

with respect to Age of employees.

ANALYSIS & RESULTS

Relationship between performance appraisal and

employee satisfaction in e-commerce firm

To determine the impact of performance appraisal on the

employee satisfaction in e-commerce firms, correlation and

regression analysis was performed. Table 1 shows that

correlation coefficient between performance appraisal and

employees’ satisfaction is only 0.484. However, p value (0.00)

is less than 0.01 level of significance. Hence we conclude that

relationship between performance appraisal and employee

satisfaction is correlated significantly; though the strength of

relationship is weak as shown by R-square value of 0.235 in

Table 2.

Table 3 indicates the regression equation is:

Employee Satisfaction = 25.552 + .617 (performance

appraisal).

Since p value (0.000) of the regression model of is less than

level of significance (0.01), we conclude that impact of

performance appraisal on employee satisfaction in e-commerce

firms is statistically significant.


Table 1: Model Summary of Correlation

Performance Appraisal Employee Satisfaction

Pearson Correlation 1 .484**

Sig. (2-tailed) p value .000 Performance Appraisal

N 100 100

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

Table 2: Model Summary of Regression

R R Square Std. Error of the Estimate

.484 .235 5.12184

Table 3: Coefficients of Regression

Table 3: Coefficients of Regression


Coefficients

Model

B Std. Error Beta

t Sig.

Constant 25.552 7.483 .001 3.415 .001

Performance Appraisal .617 .113 .000 5.481 .000

Table 4: Independent Samples Test

Levene's Test for

Equality of

Variances


95% Confidence

Interval of the

Difference

F Sig. t df Sig. (2-

tailed)

Mean

Difference

Std. Error

Difference

Lower Upper

Equal Variances assumed

.426 .515 1.684 98 .095 1.94551 1.15523 -.34701 4.23803

Employee Satisfaction Equal

Variances not assumed

1.675 93.871 .097 1.94551 1.16130 -.36031 4.25134

Table 5: One Way ANOVA

Table 5: One Way ANOVA

Employee Satisfaction Sum of Squares df Mean Square F Sig.

Between Groups 351.011 4 87.753 2.772 .032

Within Groups 3007.899 95 31.662

Total 3358.910 99


Difference in Employee Satisfaction with respect to

Gender of Employees

In Table 4, the corresponding two-tailed p-values come out to

be 0.095 and 0.097 which are more than the significance level

of 0.05. Hence, it is concluded that there is no significant

relationship in Employee Satisfaction with respect to Gender.

Difference in Employee Satisfaction with respect to Age

of Employees

Table 5 shows employees’ satisfaction within different age

groups. Since the p value of 0.032 is less than the significance

level of 0.05; therefore, it is concluded that there is a difference

in employees’ satisfaction among different age groups of

employees.

CONCLUSION

There is a significant impact of the role of performance

appraisal on employee satisfaction in e-commerce firms. It is

also evident that there is no significant relationship in employee

satisfaction with respect to gender; but, there is a significant

relationship in employees’ satisfaction with respect to age.

REFERENCES

1. Akinbowale, Michael A, Jinabhai, Dinesh C. and Lourens,

Melanie E. (2013), “The Impact of Performance Appraisal

Policy on Employee Performance”, Mediterranean Journal

of Social Sciences, Vol. 4 No. 14.

2. Daoanis, Liza, Estino (2012), “Performance Appraisal

System: It’s Implication To Employee Performance”,

International Journal of Economics and Management

Sciences, Vol. 2, No. 3, pp. 55-62.

3. Haq, Sirajul and Chandio, Javed, Ahmed (2014),

“Employees Job Satisfaction: Analyzing the satisfaction

by length of Service and Employment status”, International

Journal of Management Sciences and Business Research,

Vol. 3, Issue 2.

4. Karimi, Rabia; Malik, Muhamad, Imran and Hussain,

Saddam (2011), “Examining the Relationship of

Performance Appraisal System and Employee

Satisfaction”, International Journal of Business and Social

Science, Vol. 2, No. 22.

5. Khan, Muhammad, Faseehullah (2013), “Role of

Performance Appraisal System on Employees

Motivation”, IOSR Journal of Business and Management,

Vol., Issue 4. pp 66-83.

6. Mahajan, Supriya and Raheja, Saloni (2014), “Examine

Relationship between Employees Satisfaction on

Performance Appraisal System with Fairness of the

System”, Asian J. Management 5(1), pp. 49-54.

7. Moulik, Sujoya, Ray and Mazumdar, Sitanath (2012),

“Exploring the relationship between perceived uses of

appraisals and performance appraisal satisfaction in the

Indian IT sector: an empirical study”, International Journal

of Business and Social Research (IJBSR), Vol. 2, No. 5.

8. Naji, Abdelhadi; Jamal; Mansour, Ben & Leclerc, André.

(2015), “Performance Appraisal System and Employee

Satisfaction: The role of trust towards supervisors”, Journal

of Human Resources Management and Labor Studies, Vol.

3, No. 1, pp. 40-53.

9. V. Poornima and Manohar, S. John (2015), “Performance

Appraisal System and Employee Satisfaction among its

Employees in Bangalore”, International Journal of Science

and Research (IJSR), Vol., 4 Issue 3.

10. Virani, Shreya, Rustum (2012), “An Analytical Study of

Performance Appraisal System of the Selected Information

Technology Enabled Services (ITES) Companies”,

International Journal of Multidisciplinary Research, Vol.2,

Issue 5.

Gitarattan International Business School was established in the year 2004. The Institute is affiliated to Guru Gobind Singh Indraprastha (GGSIP) University, Delhi and is approved by All India Council for Technical Education (AICTE), Ministry of HRD, Government of India. It is accredited by National Assessment & Accreditation Council (NAAC) and is ISO 9001: 2008 certified. The Institute has been awarded category 'A' by Quality Audit Cell of GGSIP University and Joint Assessment Committee of Government National Capital Territory of Delhi & GGSIP University. The Institute is conducting MBA, MBA (IB), MCA & MCA (Dual Degree) courses. The Institute aims to develop future corporate leaders in the field of management & computer science to effectively guide business enterprises and be entrepreneurs.

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