Prerana - Coimbatore · Exchange Rate and BSE Sensex Prem Anand Employee Engagement: Yamini Meduri 11 ... The study considered the demographic characteristics, sales values, export

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Prerana: Journal of Management Thought and Practice

Volume: 6 Issue: 1 March 2014

Contents

title Author(s) Page no.

A Study on Causality between Sriram and 1 Exchange Rate and BSE Sensex Prem Anand

Employee Engagement: Yamini Meduri 11 A Study in Pharmaceutical Sector

A Study focusing on determining Supriyo Patra and 23 the “Q” Scores of Bollywood celebrities Saroj Kumar Datta and their impact on Brand Awareness

Determinants of Export Performance: Satyanarayana Rentala, 35 A Comparative analysis of Byram Anand and Majid Shaban Indian Pharmaceutical and Automobile Industries

Shift Work impact among Paramedics: Rajan 49 A Comparative analysis

Managing Intangibles in Knowledge Pradeep Kumar Singh 69 Environment: Conceptual Analysis

Case Study on Strategizing RCg Ketan R. gandhi 79Wind Technologies - Beyond Boundaries

CXO Interview 87

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From the exeCutive editor

The famous quote of Tolstoy in his book War and Peace “All happy families are alike; each unhappy family is unhappy in its own way” nevertheless applies to organizations also, in the context of being contented with what and where they are now or aspiring to make the difference. Innovation is crucial and is one of the primary ways to differentiate a firm’s product from that of its competitors. In the past, many organizations were able to survive even with very limited amounts of innovation by providing quality products with incremental updates to maintain their competitiveness in the market. But the scenario has changed over the years with mushrooming events like globalization, outsourcing, increasing customer expectations, technology explosion etc., that drive innovation. Hence there is a need for organizations to shift their focus from not just delivering products to survive but focus on innovative processes and management that drive down costs, improve productivity and speedy delivery to markets which is augmented through integrated applications and practices that foster greater collaboration and information sharing among employees and customers, with an eye towards improving the bottom line through sustainability-driven innovation. The focus of sustainability-driven innovation is to identify and suggest areas in organizations where innovation could pay off well which is a daunting challenge for entrepreneurs, managers and management graduates.

It is my pleasure to place before you the first issue of the sixth volume of ‘PRERANA: Journal of Management Thought and Practice.’ The objective of PRERANA is to disseminate contemporary developments in the field of management in the form of empirical research that tests, extends or builds management theory and contributes to management practice. PRERANA encourages manuscripts that present strong empirical and theoretical contributions to the management field. Preference is given to submissions that test, extend, or build strong theoretical frameworks while empirically examining issues with high importance for management theory and practice. The journal will also enable industry in applying the most recent developments in the evolution of management thought.

PRERANA’s international and multi-disciplinary review team ensures maintenance of standards of excellence with regard to the quality of contents. The current issue publishes seven articles in the areas of Finance, Marketing, Human Resources and general Management.

Sriram and Prem Anand in their article have analyzed the relationship between Sensex returns and $ / ̀ exchange rates. Results of the study revealed that both the return series were not normally distributed and correlation between Sensex returns and exchange rate was negative and weak. granger causality test proved the unidirectional relationship between Sensex returns and exchange rate returns. Yamini Meduri in her study has attempted to identify the parameters that influence

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employee engagement and those which influence the more among employees in pharmaceutical sector. The study revealed positive correlation between engagement score and immediate superior and number of years of service, whereas negative correlation with age of the employees. The study also focused in analyzing the parameters that has high engagement.

Supriyo Patra and Saroj Kumar Datta in their study have attempted to determine the “Q” Score of selected Bollywood Celebrities in Kolkata. Results revealed that all the Bollywood celebrities selected for the study enjoyed 100% familiarity among the target audience and their “Q” score has got no role in generating Brand Recall among the target audience.

Satyanarayana Rentala, Byram Anand and Majid Shaban in their study have explored the determinants of export performance among the Indian pharmaceutical and automobile industries. The study considered the demographic characteristics, sales values, export sales, profitability and research and development (R&D) expenditures of the firms. Results revealed that export sales exhibited a strong and significant correlation with sales values and R&D expenditures in case of pharmaceutical industry and exhibited a significant correlation with profitability in case of the automobile industry.

Rajan in his study has identified and differentiated the risk factors associated with shift work and compared the impact of shift work on physical health, individual life and family life among the paramedics having different shift duty in Tirunelveli city. Result of the study revealed that shift work had an impact on physical health, individual life and family life and is highly experienced by both fixed night shift and rotating day and night shift than fixed day shift employees.

Pradeep Kumar Singh in his article has provided insight about intangible assets and the value and utility created by intangible assets compared to tangible assets. The paper also throws light on the importance and management of intangible assets in organizations. gandhi in his case study on Strategizing RCg Wind Technologies-Beyond Boundaries has discussed about an Indian company in high growth sector which is a third party service provider in wind power sector. The case portrays the scenario of the highly competitive environment that is dominated by global players, the challenges in operation, sales and marketing and the need for preparing right strategies for future success.

I thank all the authors for their contributions towards the first issue of the sixth volume of PRERANA. I look forward for novel, insightful and crafted conceptual work that challenges conventional wisdom concerning all aspects of organizations from academicians, bureaucrats and business executives for publishing in PRERANA. The focus of the articles could be on diverse aspects of management focusing on contemporary issues and future challenges.

- dr. B. sripirabaa

PRERANA: Journal of Management Thought and Practice, March 2014 1

A studY on CAusALitY BetWeen exChAnGe rAte And Bse sensex

Sriram1 and Prem Anand2

ABstrACtThe present study has analysed the relationship between Sensex returns and

$/ ̀ exchange rates. The study has employed certain statistical tools to study the behaviour of both the series. The period of study is from 10-06-2010 to 11-07-2013. The study has found that both the return series were not normally distributed. Unit Root test was applied to test for the stationarity of data and it was found to be stationary at level form itself. Correlation between sensex returns and exchange rate was found to be negative and weak. To test the causal relationship between the variables, Granger causality test was applied and it was proved that unidirectional relationship existed between Sensex returns and exchange rate returns. Sensex returns was Granger causing exchange rate returns.

introduCtionThe inter relationship between exchange rates and stock returns has been the

topic of discussion for the economists for theoretical and empirical reasons since both the factors play an important role in the development of an economy. With the advent of WTO, world trade has got a fillip and has resulted in the flow of capital across the globe which as a result has made the exchange rate as one of the determinants of business profitability and equity prices. Exchange rates directly influence the international competitiveness of companies given their impact on input and output price. The change in the exchange rates will have adverse impact on not only the multinational companies but also on the domestic companies. For instance, a currency appreciation will affect a MNC because a change in the exchange rate will result in an immediate change in value of its overseas operations and thus affects the bottom line of a company. A change in the economic value of a company’s overseas operations may influence the stock prices. Domestic companies can also be influenced by the change in the exchange rates since they may import a part of inputs and export the output.

Globalization and financial sector reforms in India have ushered in a sea change in the financial architecture of the economy. In the contemporary scenario, the activities in the financial markets and their relationships with the real sector have

1 Dr. M. Sriram, Associate Professor, Department of Management Sciences, DJ Academy for Managerial Excellence, Coimbatore- 641032. E-mail: [email protected]

2 Dr. N. Prem Anand, Professor, DJ Academy for Managerial Excellence, Coimbatore-641032. E-mail: [email protected]

2 PRERANA: Journal of Management Thought and Practice, March 2014

assumed significant importance. Since the inception of the financial sector reforms in the beginning of 1990’s through liberalisation, privatisation and globalisation, the implementation of various reform measures have brought in a dramatic change in the functioning of the financial sector of the economy. Floating exchange rates that has been implemented in India since 1991 facilitated greater volume of trade and high volatility in equity as well as Forex market thus increasing its exposure to economic and financial risks. The regulator’s decision to permit Foreign Institutional Investors to invest in stock market gave a boost to the inflow of foreign exchange and increased volatility in the stock markets.

The relationship between the two financial variables-stock returns and exchange rates became especially significant in the wake of the 1997 economic crisis in Asian countries, which caused stock prices and exchange rate to fall across Asian markets. It has been suggested that difference in expected stock returns should be related to changes in exchange rates. Moreover, in the recent years, because of increasing international diversification, cross-market return correlations, gradual abolishment of capital inflow barriers and foreign exchange restrictions or the adoption of more flexible exchange rate arrangements in emerging and transition countries, these two markets have become significantly interdependent. These changes have increased the variety of investment opportunities as well as the volatility of exchange rates and risk of investment decisions and portfolio diversification process. Altogether, the whole gamut of institutional reforms are related to globalization programme, introduction of new instruments, change in procedures, widening of network of participants call for a re-examination of the relationship between the stock market and the foreign sector of India. Correspondingly, researches are also being conducted to understand the current working of the economic and the financial system in the new scenario. Interesting results are emerging particularly for the developing countries where the markets are experiencing new relationships which were not perceived earlier.

Although, economic theory suggests that foreign exchange changes can have an important impact on the stock price by affecting cash flow, investment and profitability of firms, there is no consensus about these relationship and the empirical studies of the relationship are inconclusive (Joseph, 2002; Vygodina, 2006). The analysis of the relationship between stock exchange returns and forex returns have taken centre stage in recent days due to the easing of quantitative restrictions in the US. This has resulted in the withdrawal of funds from the capital market by the FIIs since the US market has become attractive for investment. The rupee has depreciated by almost 10% and volatility in the movements of both NSE and BSE indices has been witnessed. It is in this back drop, the study is imperative to understand the causal relationship between exchange rate returns and index returns.

Sriram and Prem Anand


oBJeCtives

The objective of the study is to analyze the relationship between index returns and exchange rate returns in India. The analysis of the index returns has been in the fore since this is the most sensitive segment of the economy and the performance of a country is reflected in the movements of its indices. The paper is an attempt to examine the causal relationship between exchange rates and index returns.

revieW oF LiterAture

Ajay et al., (1998) investigated the causal relationship for seven advanced markets from 1985 to 1991 and eight Asian emerging markets from 1987 to 1991 and supported unidirectional causality in all the advanced economies but no consistent causal relations in the emerging economies. Ajith Karnik (2000) has investigated the inter relationships between stock prices and important macro economic variables, viz., exchange rate of rupee, prime lending rate and index of industrial production and found significant association between macro economic variables and exchange rate of rupee vis a vis dollar. Nieh et al., (2001) examined the relationships stock prices and exchange rates for g-7 countries and concluded that there exist no long term equilibrium relationships for each g-7 countries.

Kim (2003) in the study showed that S&P’s common stock price is negatively related to the exchange rate. The author also studied the relationship for Pakistan, India, Bangladesh and Sri Lanka for the period 1995-2001 and proved no long run relationship between the variables. Unidirectional causality was seen running from exchange rate to stock prices only for India and Sri Lanka. Doong et al., (2005) in their study witnessed bidirectional causality in Indonesia, Korea, Malaysia and Thailand and significant negative relation between the stock returns and the contemporaneous change in the exchange rates for all countries except Thailand.

Pan et al., (2007) employed data of seven East Asian countries for the period 1988 to 1998 proving bidirectional causal relationship for Hong Kong before the Asian crisis and unidirectional causal relationship from exchange rates to stock prices for Japan, Malaysia and Thailand and from stock prices to exchange rate for Korea and Singapore. Takeshi (2008) in the study showed unidirectional causality from stock returns to FII flows in India whereas reverse causality works only post 2003. gaural Agarwal et al., (2010) in their study on the relationship between Nifty returns and dollar-rupee exchange rate used several statistical tests to study the behavior and dynamics of both the series. It was found that there was unidirectional relationship between Nifty returns and exchange rates using granger Causality test with the direction running from the former towards the latter. Hence this study was taken up to analyze the relationship between Sensex returns and $/` exchange rates during the period June 2010 to July 3013.

A Study on Causality between Exchange Rate and BSE Sensex


methodoLoGYThe study is based on the secondary data. The data for the BSE Sensex returns

was collected from the website www.bseindia.com/markets_ind and exchange rate details were collected from www.dbie.rbi.org.in. The period of study was from 10-06-2010 to 11-07-2013. This period was chosen because it is after the global crisis and when the markets started recovering. BSE Sensex was selected as the index as this stock exchange is the oldest stock exchange and consists of 30 scripts drawn from various industries.

The daily closing rates were calculated as follows-If It be the closing level of Sensex on date t and It-1 be the same for its previous

business day, i.e., omitting intervening weekend or stock exchange holidays, then the one day return on the market portfolio is calculated as:

where, ln(z) is the natural logarithm of ‘z.’Similar method was adopted for calculation of exchange rate returns.

Based on the review of literature, the following hypotheses were developed in order to study the behavior of the two variables

H1 - Index returns and exchange rate returns are not normally distributed.H2 - Unit Root exists (i.e. non stationarity) in both the seriesH3 - There exist no causality between index returns and exchange rate

returns.The following statistical tools were employed to test the above referred

hypotheses. The tests namely JB test, Correlation analysis, Unit root test and Granger Causality test were conducted using E-views software (version 7). Brief explanations about various statistical tools are given below;normality test: The Jarque-Bera (JB) test (Gujarati, 2003) is used to test whether stock returns and exchange rates individually follow the normal probability distribution. The JB test of normality is an asymptotic, or large-sample, test. This test computes the skewness and kurtosis measures and uses the following test statistic:

JB = n [S2 /6 + (K-3)2 /24]Where n = sample size, S = skewness coefficient, and K = kurtosis coefficient.

For a normally distributed variable, S = 0 and K = 3. Therefore, the JB test of normality is a test of the joint hypothesis that S and K are 0 and 3 respectively.

To analyse the pattern of distribution of data, skewness and kurtosis have been calculated. Zero skewness implies symmetry in the distribution whereas kurtosis indicates the extent to which probability is concentrated in the centre and



especially at the tail of the distribution. Kurtosis measures the peakedness of a distribution relative to the normal distribution. A distribution with equal kurtosis as normal distribution is called ‘mesokurtic;’ a distribution with small tails is called ‘platykurtic’ and a distribution with a large tail is called ‘leptokurtic.’unit root test (stationarity test): Empirical work based on time series data assumes that the underlying time series is stationary. Broadly speaking a data series is said to be stationary if its mean and variance are constant (non-changing) over time and the value of covariance between two time periods depends only on the distance or lag between the two time periods and not on the actual time at which the covariance is computed (Gujarati, 2003). A unit root test has been applied to check whether a series is stationary or not. Stationarity condition has been tested using Augmented Dickey Fuller (ADF).Augmented dickey–Fuller (AdF) test: Augmented Dickey-Fuller (ADF) test has been carried out which is the modified version of Dickey-Fuller (DF) test. ADF makes a parametric correction in the original DF test for higher-order correlation by assuming that the series follows an AR (p) process. The ADF approach controls for higher-order correlation by adding lagged difference terms of the dependent variable to the right-hand side of the regression. The Augmented Dickey-Fuller test specification used here is as follows:

Yt = b0 + β∆ Yt-1 + μ1 ∆Yt-1 + μ2 ∆Yt-2 +….. + μp ∆Yt-p + etYt represents time series to be tested, b0 is the intercept term, β is the coefficient

of interest in the unit root test, μ1 is the parameter of the augmented lagged first difference of Yt to represent the pth-order autoregressive process, and et is the white noise error term.Granger Causality test: According to the concept of Granger’s causality test (1969, 1988), a time series xt granger-causes another time series yt if series yt can be predicted with better accuracy by using past values of xt rather than by not doing so, other information is being identical. If it can be shown, usually through a series of F-tests and considering AIC on lagged values of xt (and with lagged values of yt also known), that those xt values provide statistically significant information about future values of yt time series then xt is said to granger-cause yt i.e. xt can be used to forecast yt. The pre-condition for applying granger Causality test is to ascertain the stationarity of the variables in the pair. Engle and Granger (1987) show that if two non-stationary variables are co-integrated, a vector auto-regression in the first differences is unspecified. If the variables are co-integrated, an error-correcting model must be constructed. In the present case, the variables are not co-integrated; therefore, Bivariate Granger causality test is applied at the first difference of the variables. The second requirement for the Granger Causality test is to find out the appropriate lag length for each pair of variables. For this purpose, we used the vector auto regression (VAR) lag order selection method available in E-views.



This technique uses six criteria namely log likelihood value (log L), sequential modified likelihood ratio (LR) test statistic, final prediction error (F & E), AKaike information criterion (AIC), Schwarz information criterion (SC) and Hannan–Quin information criterion (HQ) for choosing the optimal lag length. Among these six criteria, all except the LR statistics are monotonically minimizing functions of lag length and the choice of optimum lag length is at the minimum of the respective function and is denoted as a * associated with it. Since the time series of exchange rates is stationary or I(0) from the ADF test, the Granger Causality test is performed as follows:

∆Nt = α1+ β11∆Nt-1+ β 12∆Nt-2+...+ β 1n∆Nt-n+ γ11F-1+ 1 γ 2Ft-2+...+ γ 1nFt-n+1,tFt = α 2+ β 21Ft-1+ β 22Ft-2+...+ β2nFt-n+ γ 21∆Nt-1+ γ 22∆Nt-2+...+ γ 2n∆Nt-n+Є2,t

Where n is a suitably chosen positive integer; β j and γ j, j = 0, 1… k are parameters and α’s; are constant; and ut‘s are disturbance terms with zero means and finite variances.

(∆Nt is the first difference at time t of Sensex where the series is non-stationary.)

AnALYsis And disCussionFigure 1 shows the descriptive statistics of exchange rate returns for the

period selected for the study. The adjacent to the descriptive statistics shows the pattern of exchange rate returns in chart form. It can be seen that the returns vary from -0.026915 to 0.019406 thereby stating that there is wide fluctuation in the daily returns of the exchange rate returns. The mean return for the entire period is 0.000313 which is close to zero. Skewness is positive (0.027109) indicating a relatively long right tail compared to the left one. Kurtosis is 4.333587 which is slightly in excess of 3 indicating heavy tails and the distribution is leptokurtic. The findings are similar to the existing literature and with a high Jarque-Bera statistic, it can be confirmed that the returns series is not normally distributed.

0

40

80

120

160

200

-0.02 -0.01 0.00 0.01 0.02

Series: EX_RETURNSSample 6/11/2010 7/10/2013Observations 750

Mean 0.000313Median 0.000340Maximum 0.019406Minimum -0.026915Std. Dev. 0.005599Skewness 0.027109Kurtosis 4.333587

Jarque-Bera 55.66859Probability 0.000000

Figure 1: Descriptive Statistics-Exchange Rate



0

10

20

30

40

50

60

70

80

90

-0.0375 -0.0250 -0.0125 0.0000 0.0125 0.0250

Series: SENSEX_RETURNSSample 6/11/2010 6/10/2013Observations 750

Mean 0.000134Median 0.000152Maximum 0.034569Minimum -0.043029Std. Dev. 0.010623Skewness 0.033944Kurtosis 3.542593

Jarque-Bera 9.344236Probability 0.009352

Figure 2: Descriptive Statistics-Sensex

Figure 2 shows the descriptive statistics of Sensex returns for the period selected for the study. The adjacent to the descriptive statistics shows the pattern of Sensex returns during the period of study in chart form. It can be seen that the returns vary from -0.043209 to 0.034569 thereby stating that there is wide fluctuation in the daily returns of the Sensex. The mean return for the entire period is 0.000134 which is close to zero. Skewness is positive (0.033944) indicating a relatively long right tail compared to the left one. Kurtosis (3.542593) which is slightly in excess of 3 indicates heavy tails and the distribution is leptokurtic and with a high Jarque-Bera statistic, it can be confirmed that the returns series is not normally distributed.

Table 1: Results of ADF Test-Exchange Rate and Sensex

Exchange Rate Sensex

t-Statistic Prob.* t-Statistic Prob.*

Augmented Dickey-Fuller test statistic - 14.24048 0.0000

- 17.04751 0.0000

Test critical values

1% level-

3.438996-

3.438948

5% level-

2.865246-

2.865225

10% level-

2.568799-

2.568788

*MacKinnon (1996) one-sided p-values

Augmented Dickey Fuller test was applied to check the stationarity of the time series data. The results are shown in Table 1 for Exchange Rate Returns and Sensex. The results show that the ADF statistics for Exchange Rates (-14.24048) falls behind the critical values even at 1% level of significance (-3.438996); thereby leading to the rejection of the hypothesis of unit root in the exchange rate series.

The results show that the ADF statistics for Sensex returns (-17.04751) also falls behind the critical values at 1% level of significance (-3.43898); thereby leading to the rejection of the hypothesis of unit root in the Sensex returns series.



Since both the data sets are stationary at level form, Johansen Co-integration test cannot be applied to the variables to determine long term relationship between the variables. The correlation test was conducted between stock returns and exchange rates. This is a basic test applied to identify the existence of interdependency among the variables.

Table 2: Correlation Coefficient Matrix

Exchange Rate Returns Sensex Returns

Exchange Rate Returns 1.000000 -0.269025

Sensex Returns -0.269025 1.000000

Table 2 shows the correlation coefficients between stock returns and exchange rate returns. It is observed that the correlation value is (-0.26905) which indicates negative correlation between the two series. Thus it may be concluded that the two series are weakly correlated and there is some interdependency between them. To explore the direction of influence Granger Causality test was performed.

Table 3: Results of granger Causality Test

Null Hypothesis Obs F-Statistic Prob.

Sensex Returns does not granger Cause Exchange Rate Returns 723 18.7704 1.E-08

Exchange Rate Returns does not granger Cause Sensex Returns 1.13280 0.3227

Table 4: Inference from granger Causality Test

Dependent variable: Exchange Rate Returns

Excluded Chi-sq df Prob.

Sensex Returns 37.54071 2 0.0000

All 37.54071 2 0.0000

Dependent variable: Sensex Returns

Excluded Chi-sq df Prob.

Exchange Rate Returns 2.265604 2 0.3221

All 2.265604 2 0.3221

granger Causality test is performed to capture the degree and the direction of long term relationship between sensex returns and exchange rate returns. Table 3 shows pair wise granger Causality test. It can be seen that the null hypothesis ‘Sensex Returns does not Granger Cause Exchange Rate Returns’ can certainly be rejected as the F statistic 18.7704 is statistically significant and falls behind the critical value. However, the null hypothesis ‘Exchange Rate Returns does not



Granger Cause Sensex Returns’ certainly cannot be rejected. Therefore, it can be said that Sensex returns Granger cause Exchange Rate Returns. This can be confirmed from Table 4. The results show that Sensex Returns granger cause Exchange Rate returns as the chi-square value of 37.54071 is statistically significant (probability value 0.00). Exchange Rate Returns does not Granger cause Sensex Returns as the chi-square value of 2.265604 is not statistically significant (probability value 0.3221) and hence the result is unidirectional causality running from Sensex Returns to Exchange Rate Returns.

ConCLusion This paper has empirically examined the relationship between the Sensex

Returns and Exchange Rate Returns in terms of interdependency and causality. The study concludes that the data for both the variables are not normally distributed and application of Jarque-Bera test confirms the results. Subsequently, stationarity of the both the data sets were checked with ADF test and the results showed stationarity at level forms for both the series. The correlation coefficient computed for both the variables indicated negative correlation and the relationship among the variables was found to be weak. To determine the direction of influence between the two variables, granger Causality test was applied and it was proved that unidirectional causality was running from Sensex returns to exchange rate returns and an increase in the returns of Sensex caused a decline in the exchange rate returns but the reverse was found not to be true.

reFerenCesAggarwal, R. (2003). Exchange rate and stock prices: A study of the US capital markets under floating exchange rates. Akron Business and Economic Review, 12, 7-12.

Agarwal, G., Srivatsav Kumar., Srivastava, Ankita. (2010). A study of Exchange rate movement and Stock market volatility. International Journal of Business and Management, 5, 62-68.

Ajayi, R. A., Friedman, J., and Mehdian, S. M. (1998). On the relationship between stock returns and exchangerates: Test of granger causality. Global Finance Journal, 9 (2), 241-251.

Chakrabarti, R. (2001). FII Flows to India: Nature and Causes. Money and Finance, 2(7).

Doong, S. C., Yang, S. Y., and Wang, A. T. (2005). The Emerging Relationship and Pricing of Stocks and Exchange Rates: Empirical Evidence from Asian Emerging Markets. Journal of American Academy of Business, Cambridge, 7(1), 118-123.

Gujarati, D. N. (2003). Basic Econometrics. Mcgraw Hill, India.

Kurihara, Y. (2006). The Relationship between Exchange Rate and Stock Prices during the Quantitative Easing policy in Japan. International Journal of Business, 11(4), 375-386.

Morley, B., and Pentecost, E. (2000). Common Trends and Cycles in G-7 Countries Exchange Rates and Stock Prices. Applied Economic Letters, 7, 7-10.

Nieh, C. C., and Lee, C. F. (2001). Dynamic relationship between stock prices and exchange rates for g-7 countries. The Quarterly Review of Economics and Finance, 41, 477-490.



Najang, and Seifert, B. (1992). Volatility of exchange rates, interest rates, and stock returns. Journal of Multinational Financial Management, 2, 1-19.

Vygodina, A. V. (2006). Effects of size and international exposure of the US firms on the realtionship between stock prices and exchange rates. Global Finance Journal, 17, 214-223.



emPLoYee enGAGement: A studY in PhArmACeutiCAL seCtor

Yamini Meduri1

ABstrACtMore than ever, organizations today agree that focus on people is turning

equally important as improving quality processes. Hence, the concept of employee engagement has become an area of importance. The current study aims at understanding the different parameters that influence employee engagement and which of these influences more. The study used a structured questionnaire and collected the data in March-May 2013. The paper tested the engagement of employees in the pharmaceutical sector with random sample of 158 employees by administering the questionnaire. The data was processed using Microsoft Excel and SPSS Version 16 and the results were analyzed. The study revealed that there is a positive correlation between immediate superior and the engagement score. It highlighted that engagement is negatively correlated with age of the employee but positively correlated with the number of years of service put in by the employee in the present organization. Though the analysis showed that there is an association between gender and the engagement score, not very significant difference was evident. The paper also analyzed which of the parameters had a higher engagement and discussed the strategies to engage the knowledge workforce.

introduCtionThe globalization of the economies, the internationalization of markets and

the continuous technological advancements have transformed the manufacturing economy to service economy, from product to process, from quantity to quality, from product oriented to people oriented leading to cut throat competition requiring highly competent workforce to achieve organizational effectiveness by aligning them with the organizational strategy. It is important that the organization creates an environment for not only the success of the organization but also for the development of the employees.

With high end technology sophistication and increase in the knowledge workforce, the expectations of operational autonomy, job satisfaction and status are on the higher note. Managing this workforce is a challenge to the management. With quality processes taken care of by practices like Total Quality Management (TQM), the focus is now shifted to employees’ job satisfaction, commitment and passion towards the organization. Hence, the concept of employee engagement has become a hot topic among today’s organizations.

1 Ms. Yamini Meduri, Research Associate, Vignana Jyothi Institute of Management, Vignana Jyothi Nagar, Bachupally, Kukatpally (via), Hyderabad-500090. E-mail: [email protected]


Kahn (1990) defined employee engagement as “expressing themselves physically, cognitively and emotionally for effective role performance.” The cognitive aspect is about the belief of the employees towards the organization, leaders and the working conditions while the emotional aspect is the way the employees feel about the same. The physical aspect is the level of physical involvement an employee shows for the effective performance in achieving the goals. Thus, Kahn (1990) believes that optimal performance can be achieved only when the employee is cognitively, physically and emotionally connected to the organization.

PhArmACeutiCAL seCtor in indiAThe Indian pharmaceutical industry today is in the front rank of India’s

science-based industries with wide ranging capabilities in the complex field of drug manufacturing and technology. A highly organized sector, the Indian Pharmaceutical industry is estimated to be worth $4.5billion, growing at about 8-9% annually. It is highly fragmented with more than 20,000 registered units. It meets around 70% of the country’s demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectables. There are approximately 250 large units and about 8000 small scale units which form the core of the Pharma industry in India. In terms of global market, India currently holds a 3.2% share (Planning Commission Report, 2012).

The Pharma industry in India produces around 20-24% of the global generic drugs. It is one of the biggest producers of the Active Pharmaceutical ingredients (API) in the International arena. The Indian Pharma sector leads science based industries in the country which has the capacity and technology pertaining to complex drug manufacturing (Planning Commission Report, 2012).

The growth has challenged the availability of skilled labor market that can withstand the changing competitive scenario. After information technology, pharmaceutical sector faces the highest rate of attrition, around 30% annually (Dhothre, 2010). Retaining talent is always the most important agenda of any developing organizations and the whole pharmaceutical sector is no different. While good compensation packages can be a hygiene factor, today’s employees need further more. They are looking at building a psychological relationship with their place of work.

need And oBJeCtives oF the studYThe competitive environment and highly competent workforce has compelled

the organizations to concentrate on employee engagement. Research has shown that “an engaged employees exhibits a level of commitment and involvement towards their organization and its values. An engaged employee is aware of the business and work with the colleagues to improve job performance for the benefit of the

Yamini Meduri


organization” (Nitin, 2005). Hence, this study was carried out with the employees of pharmaceutical sector to understand the engagement levels of the employees in various organizations in the sector.The main objectives of the study are illustrated as follows:

1. To understand the influence of the different attributes on the engagement2. To understand which of the attributes influence engagement more

LiterAture revieWHR professionals agree that organizational performance depends on how

the employees feel about the organization and how they feel are treated in the organization. Also, most of the practitioners agree that when the employee is psychologically connected to the organization, job performance is optimum and hence, the organizational performance. When Kahn (1990) first defined employee engagement, he pointed out that an employee who is cognitively, emotionally and physically satisfied with the organization, shall provide long term results and effective performance. Gibbons (2006) defined “employee engagement as a heightened emotional and intellectual connection that the employees have for their organization, manager, or co-workers that, in turn, influence them to apply additional effort to their work.”

At times, satisfaction and engagement are used synonymously but they are microscopically different. If the employees are satisfied, they feel good and happy but if the employee is engaged, they support the organization with improving performance. The Towers Perrin’s Global Workforce Study, published in October 2008, found that highly engaged employees do make a meaningful contribution to the organizational performance results. This is backed by the Towers Perrin-ISR engagement report, published in 2007, which found that organizations with highest percentage of highly engaged employees increased operating margins by 3.74% and net profit margins by 2.06%. A meta-analysis of studies, by Harter et al., (2002), using gallop Q-12 of almost 8000 business units of 36 companies revealed that the levels of employee engagement are positively related to business-unit performance. Adding, Bakker and Schaufeli (2008) underlined that the emerging concept of employee engagement contributes to positive organizational behavior and hence to the satisfied productivity improving the quality performance.

In regards to the human resource base, the direct employment in the pharmaceutical industry has increased from about 6.9 lakh in 2006 to 8 lakh in 2008 with 20% of this concentrated in research and testing. It is estimated that human resource requirement by 2020 shall reach 21.5 lakhs. However, after Information Technology, pharmaceutical industry is facing highest rate of attrition in India. While the global attrition rate of this fast growing knowledge sector is around 10-12%, it is around 30-35% in India, according to a survey by Interlink Marketing

Employee Engagement: A Study in Pharmaceutical Sector


Consultancy. Dhotre (2010) points out and Smarta (2012) supports, that higher attrition rates are seen in the junior and the middle management level and also suggests that creating an organizational environment that enables better employee engagement will let the companies retain its best talent.

With robust increase in pharmaceutical knowledge workforce, employee retention and talent management have become integral for sustaining development and growth in the industry. Ramadevi (2009) underlined that an engaged employee stays with the organization and contributes in a meaningful way. She also pointed out that the companies need to ensure that they acknowledge the role of the manager in retaining the employees. According to her, a highly engaged workforce is the sign of a healthy organization, whatever its size, geographic location and economic sector. Schneider et al., (2009) emphasized that employee engagement relate significantly to the financial performance of the organization and developing a focused engagement model may be quite useful in relation to organizational outcomes. Research confirms that employee engagement leads to higher financial performance, higher customer satisfaction and higher employee retention.

Findings from “Employee Engagement: Maximizing Organizational Performance” and “global Benchmarking Study” by Right Management-A manpower company (2009) in 15 countries with 28,810 employees reveal that employee engagement is one of the prime driver of better organizational performance. The study by Right Management (2009) underlined that employee engagement is directly related to organizational financial performance, customer satisfaction and employees’ intention to stay. Also, out of the 15 countries in which the study was carried out, India reported high levels of engagement i.e., 45% followed by US (44%) and New Zealand (43%). This study also revealed that highly engaged work groups showed 44% high in retention, 33% more profitable, 50% more productive and 56% higher customer loyalty. Also, Right Management’s “global Benchmarking Study” pointed out that it is not necessary that employees who are satisfied about their job alone contribute to employee engagement and hence, organizational performance. Employees’ satisfaction about the organization also contributes to employee engagement. It is indispensable that management has the information about how much the employees are aligned towards their jobs and the organization as a whole. This is backed by Thomas Perrin’s Global Workforce Study (2007 and 2008) confirming that the topmost engagement driver of any organization is senior management sincerely being interested in the employee well-being. The study defined employee well-being as the combination of employee’s physical, psychological and social health.

FACtors LeAdinG to emPLoYee enGAGementIt is time and again proved that there are certain factors that contribute to

the employee engagement and so are tested in our study with employees in the

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pharmaceutical sector. The employee engagement model of Burke (1991), listed the six most influencing components as

1. Work2. Team Work3. Opportunities4. Rewards and Recognition5. Communication6. Immediate Superior7. Work Life Balance8. Quality of Life

The people performance assessment systems have proved time and again that, those employees who are well informed about the job or their responsibilities are better performers than their counterparts. Anthony (1978) proved that 64% of the performance related problems are a result of the lack of understanding of the employees about their roles and responsibilities. Hence, understanding how engaged the employees are about their work is important as it shall result in the better performance individuals and thus, the organization. In the modern day organizations, where all employees collectively are working in teams, it is a ground necessity that the team climate is positive and enhances the work engagement of the team members. Albrecht (2012) stated that the organizational, team and job level factors interrelate to influence the engagement, well-being and the extra-role behavior of the employees in an organization. Work team effectiveness also plays a prominent role in the engagement of an employee.

The newer generations of workforce today are looking for continuously challenging work tasks that allows them to learn and use different skills thereby reducing monotony. Herzberg (1996) proposed that opportunities for advancement are a key motivator and Moynihan and Pandey (2007) backed it through their study which proved that employees who value advancement opportunities will have higher levels of work motivation. Employees who perceive that they are contributing to meaningful work will foster work motivation. It is widely acknowledged that employees continue to perform better when their contribution to the organization is properly recognized and rewarded. Swaha and Preetha (2009) underlined that rewards act as the “catalyst” for improved performance and better productivity resulting in a greater proportion of engaged employees.

Castellano (no date) emphasized that when employees feel that they are being treated fairly and a good communication channel in an organization, they exhibit organizational citizenship behavior and hence, grow as high performing individuals. Baumruk et al., (2006) outlined that proper communication channels are a part of employee engagement and defined it as a “frequent and schedule interaction and sharing of information, feedback and ideas; listen understand



and respond appropriately.” The first point is the communication channel which the employee continually interacts with is the immediate superior. Saks and Alan (2006) outlined that psychological safety of the employees stems from the amount of care and support the employees perceives as provided by their organizations and their immediate superior. Shuck et al., (2011) also highlighted that an employee’s manager plays a critical role in developing engagement at an organizational level.

methodoLoGYThe study aims to understand the level of employee engagement and identify

the key attributes among different levels of employees of different organizations in the pharmaceutical sector. All attributes were measured at the individual level. The study used both primary and secondary data. Primary data was collected from employees from the pharmaceutical sector through a questionnaire and secondary data was collected from annual industry reports, research journals, national survey reports, scholarly articles etc. The questionnaire was so designed to grade the responses based on the level of agreement. A 5-point Likert scale was used (from strongly disagree to strongly agree). The Cronbach’s alpha of the questionnaire was 0.94 confirming the reliability as “excellent.” A random sample of 158 employees from the pharmaceutical sector was selected through convenient random sampling and the questionnaire was administered. The respondents were asked to rate the eight attributes based on their level of agreement. Percentage contribution of each factor to the total cumulative score of all the respondents for all the factors was calculated which eventually gives the weight of each factor leading to employee engagement. The data collected was processed through SPSS Version 16.

AnALYsis And FindinGsOut of the 158 respondents, 120(76%) were male and 38(24%) were female.

60% of the respondents were of age between 25-30years while 23% between 20-25 and 17% above 30 years. Of these 76% were Post graduates and 24% were Under Graduates. Majority of the respondents i.e., 60 (38%) had 3-6 years of experience in their current organization while 15% had between 6-9 years and 8% above 9 years of experience.

The data collected was processed through SPSS Version 16. The chi-square test for association between gender and employee engagement score (table 1) accepted the alternate hypothesis which states that “there is an association between gender and engagement of employees.” The Lambda (table 2) and the Cramer’s V value (table 3) were 0.474 and 0.759 respectively.

Table 1: Chi-Square Test (Gender and Employee Engagement)

Value Df Asymp. Sig. (2-sided)

Pearson Chi-Square 91.080a 41 0.000Likelihood Ratio 104.421 41 0.000Linear-by-Linear Association 0.365 1 0.546

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Table 2: Directional Measures (Gender and Employee Engagement)

Value Asymp. Std. Errora Approx. Tb

Approx. Sig.

Lambda

Symmetric 0.128 0.034 3.525 0.000

gender Dependent 0.474 0.108 3.289 0.001Employee Engagement Dependent 0.040 0.016 2.497 0.013

Table 3: Symmetric Measures (Gender and Employee Engagement)

Value Approx. Sig.

Phi 0.759 0.000

Cramer’s V 0.759 0.000

Having understood that there is an association between gender of the employee and the engagement score, the mean of the groups was identified. The mean score of the entire sample was 125.05, which denoted that the employees of the sample were engaged workforce out of which male respondents’ score was 125.04 and 123.08 was of the female respondents. The numbers highlighted that though there is an association defined between gender and engagement scores, the influence is not very significant.

When engagement score was correlated to the independent variables such as age and experience in the present organization, the results were astonishing. Age of the employee showed a negative correlation while the experience in present organization was positively correlated. Hence, we can understand that “as the age of the workforce increases, the engagement decreases but with increase in number of years of service in the present organization, better engaged are the employees.”

Table 4: Correlations (Age and Employee Engagement)

Employee Engagement Age

Employee EngagementPearson Correlation 1 -0.045Sig. (2-tailed) 0.579

AgePearson Correlation -.045 1Sig. (2-tailed) .579

It is not the age that connects the employee to the organization but the number of years of service put in by the employees improves engagement. Hence, it is imperative for the organizations to work towards not only attracting the best talent but also to retain the existing talent. As the literature already shows that engagement leads to improved operational and financial performance, organizations definitely should do everything possible to retain the engaged workforce.



Table 5: Correlations (Experience and Employee Engagement)

Employee Engagement Experience

Employee EngagementPearson Correlation 1 0.075Sig. (2-tailed) 0.352

ExperiencePearson Correlation 0.075 1Sig. (2-tailed) 0.352

From the highlights of Shuck et al., (2011), “employee’s manager plays a critical role in developing engagement at an organizational level”, it was also attempted to study the relation between the satisfaction about the immediate superior and the engagement score. Testing the hypothesis revealed that there is a definite association (Table 6 & 7) and a positive correlation (Table 8) between the immediate superior and the engagement of the employees.

Table 6: Chi-Square Tests (Immediate superior and Employee Engagement)

Value Df Asymp. Sig. (2-sided)Pearson Chi-Square 1.233E2a 4 0.000Likelihood Ratio 126.977 4 0.000Linear-by-Linear Association 85.763 1 0.000

Table 7: Symmetric Measures (Immediate superior and Average Engagement)

Value Approx. Sig.Phi 0.883 0.000Cramer’s V 0.625 0.000

Table 8: Correlations (Immediate superior and Average Engagement)

Immediate Superior Average Engagement ScoreImmediate Superior Pearson Correlation 1 0.739**

Sig. (2-tailed) 0.000Average Engagement Score Pearson Correlation 0.739** 1

Sig. (2-tailed) .000**. Correlation is significant at the 0.01 level (2-tailed).

The interpersonal relationship between the immediate superior and the employee highly influences employee engagement (table 7). Organizations should focus on developing the interpersonal communication in every team so as to not only improve the performance of the team and organizations, but also to build a happily engaged workforce.

imPLiCAtionsRight Management Study (2008) underlined the fact that employee engagement

and the financial performance are positively correlated. An organization that contains a good percentage of highly engaged employees is at benefit compared

Yamini Meduri


to the counterparts. Study of employee engagement could help organizations also understand if their HR practices, engagement activities, behavioral training, transparency policies etc., are contributing to their success or not.

Many studies, including this, have always used structured surveys or questionnaires to measure engagement. A further study on engagement practices specific to organization might help this field of study a far more interesting area. No doubt the organizations today are ready to spend more each year on engagement but a proper audit of return of investment is necessary to understand the impact. It is necessary for the organizations to assess whether their HR policies and practices are engaging their workforce and also the return on investment in the engagement activities.

In view of the businesses today, as the focus is shifting from quantity to quality, it is important to improve the quality of the human resource function in every organization as it is proved time and again that HR function impacts the operational and financial performance both directly and indirectly.

sCoPe For Further studYThe area of employee engagement is enormous and is open for a lot of study

and learning. There is a lot of scope to study the engagement practices specific to various sectors and check for any sector specific differences. Also the audit for engagement activities is very much in need so as to understand if they are meeting the basic objectives of including such activities. Specific to the pharmaceutical sector, an in-depth study and analysis of the engagement practices and activities of its organizations is recommended so as to foster its contribution to the growth of economy at large.

ConCLusionEmployee engagement is the area of interest for organizations in the

pharmaceutical industry given the demand and supply of competent human resources in this sector. The study has facilitated the understanding of the influencers of employee engagement which shall add to the existing body of academic literature. Also, to the organizations, the current study opens the specific areas which they are required to focus on to build an engaged competent workforce. Literature showed that there are various factors that influence employee engagement and the current study highlighted that there is a definite association between gender, relationship with immediate superior, number of years of service of the employee influence the engagement level of employees. Further study to test the influence of independent variables such as income range, educational qualifications, etc. might also be conducted.



Measurement without action can do no good to any organization. Simply surveying for the current levels of engagement leads it to no improvement but it might create a ripple of negative perception of employees feeling that they are not being heard. The real challenge lies in being able to act and ensure that engagement action is embedded in the organizational culture. Taking into consideration the nature of work in the pharmaceutical sector, the available labor market and the rising attrition, the need for focusing on employee engagement is very high. Continuous evaluation of how well the employee are connected to the organization and how engaged they are adds to the overall organizational performance.

reFerenCesAlbrecht, S. L. (2012). The influence of job, team and organizational level resources on employee well-being, engagement, commitment and extra-role performance. International Journal of Manpower, 33(7), 840-853.

Anthony D (1978), Role Clarity and Organizational Level. Journal of Management, 4(2), 81-90

Bakker, A. B., and Schaufeli, W. B. (2008). Positive organizational behavior: Engaged employees in flourishing organizations. Journal of Organizational Behavior, 29(2), 147

Baumruk., Gorman Jr, and Gorman, R. E. (2006). Why managers are crucial to increasing engagement. Strategic HR Review, 5(2), 24-27

Bhattacharya, S., and Mukherjee, P. (2009). Rewards as a key to employee engagement: A comparative study on I.T. professionals. ASBM Journal of Management, 2(1), 160-175

Burke, R. J. (1991). Early work and career experiences of female and male managers and professionals: Reasons for optimism? Revue Canadienne Des Sciences De l’Administration, 8(4), 224-230

Castellano, W. (no date), A New Framework of Employee Engagement, Centre for Human Resource Strategy, Rutgers, The State University of New Jersy

Dhotre .A (2010), Attrition in Pharmaceutial Industry: Human Resource Management’s Role and Strategy. International Research Journal, 1(11).

Gallop Consulting (2008), Employee Engagement: What’s your engagement ratio?, www.gallop.com

Gibbons, J. M. (2006) Employee Engagement: A Review of Current Research and its Implications, New York, The Conference Board, New York.

Harter, J. K., Schmidt, F. L., and Hayes, T. L. (2002). Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of Applied Psychology, 87(2), 268-279

Kahn, W. A. (1990). Psychological conditions of personal engagement and disengagement at work. Academy of Management Journal, 33(4), 692

Mastri, A. I. (2007). The effect of work/life balance policies on employee retention and profitability. (Order No. 3267577, Stanford University). ProQuest Dissertations and Theses, 118-n/a

Moynihan, D. P., and Pandey, S. K. (2007). Finding workable levers over work motivation: Comparing job satisfaction, job involvement, and organizational commitment. Administration & Society, 39(7), 803-816,818-832

Nitin, V. (2005). Employee Engagement-Working Paper, SIES College of Management Studies-Working Paper Series, WPS05.

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Planning Commission Report (2012). Pharmaceutical Sector, 12th Five Year Plan, India

Rama Devi, V. (2009). Employee engagement is a two-way street. Human Resource Management International Digest, 17(2), 3-4.

Right Management (2009). Employee Engagement: Maximizing Organizational Performance

Right Management (2009). Global Benchmarking Study.

Saks, A. M. (2006). Antecedents and consequences of employee engagement. Journal of Managerial Psychology, 21(7), 600

Schneider, B., Macey, W. H., Barbera, K. M., and Martin, N. (2009). Driving customer satisfaction and financial success through employee engagement. People and Strategy, 32(2), 22-27

Shuck, M. B., Rocco, T. S., and Albornoz, C. A. (2011). Exploring employee engagement from the employee perspective: Implications for HRD. Journal of European Industrial Training, 35(4), 300-325

Smarta (2012), Restoring professional pride to medical selling, Interlink Insight, 11(1), 2-6

Thomas Perrin’s Global Workforce Study Report, October, 2008

Thomas Perrin’s-ISR Engagement Report, June 2007




A studY FoCusinG on determininG the “Q” sCores oF BoLLYWood CeLeBrities And their imPACt on

BrAnd AWArenessSupriyo Patra1 and Saroj Kumar Datta2

ABstrACt

Branding in some form or the other has been around for centuries. Creating brand awareness involves giving the product an identity by linking brand elements to a product category and associated purchase and consumption or usage situations. In Indian context it has been a common phenomenon among advertisers to hire Bollywood celebrities for their brand endorsement.

The focus of this study is to determine the “Q” score (based on the familiarity and popularity) of the selected Bollywood celebrities and highlight the different dimension of challenges encountered by marketers in selecting a celebrity. Secondly prominent models are presented based on a secondary research for selecting an appropriate celebrity and finally an empirical study is conducted by applying cluster sampling method with a questionnaire in Kolkata to show the effect of “Q” score and Number of brands endorsed by a celebrity on their Brand recall generation score. The findings show that all the Bollywood celebrities are enjoying 100% familiarity among the target audience and their “Q” score has got no role in generating Brand Recall among the target audience.

introduCtionCelebrity endorsement is an expensive as well as a very challenging proposition.

It’s a subject that never fails to stir debate. In India now it has become a common phenomenon among advertisers and advertising agencies to use Indian Celebrities for promoting their brands. Celebrities are considered as ‘any individual who enjoys public recognition and who uses this recognition on behalf of a consumer good by appearing with it in an advertisement’ (McCracken 1989). It is essential for companies engaged in international marketing to carefully analyze the major environmental factors of each market in which they compete, including economic, demographic, cultural and political/legal variables. These factors are important in evaluating the potential of each country as well as designing and implementing a marketing and promotional strategy. Many companies in the United States and Western Europe have recognized that their domestic markets offer them limited

1 Mr. Supriyo Patra, Assistant Professor in Management, Department of Business Administration, ST. Xavier’s College, 30, Mother Teresa Sarani, Kolkata -700016. Email- [email protected], [email protected], Mobile Number: 9831196475

2 Dr. Saroj Kumar Datta, Dean, VIT Business School, VIT University, Vellore – 632 014. E-mail: [email protected]


opportunities for expansion because of slow population growth, saturated markets, intense competition and/or unfavorable marketing environment.

One of the major developments in the business world during the decade of the 90’s was the Globalization of markets. The emergence of a largely borderless world has created a new reality for all types of companies. Products and services developed in one country quickly find their way to other countries where they are finding encouraging acceptance. Consumers around the world wear Nike shoes, eat at McDonald’s, shave with Gillette razors, use Apple and Dell computers, drink Coca-Cola and Pepsi, talk on mobile phones made by Nokia Samsung and Motorola and drive Ford, Honda etc. Most European nations are relatively small in size and without going for foreign markets they would not have the economies of scale to compete against larger US and Japanese counterpart. Swiss based Nestle and Netherlands based Unilever is among two of world’s largest consumer product companies because they have learned the art of marketing their brands to consumers in countries around the world.

Two of the world’s major marketers of cellular telephones are from Scandinavian countries; Nokia is based in Finland and Ericsson is located in Sweden. At present companies are also pursuing international markets because of the opportunities they offer for growth and profits. Globalization has spread its arms far and wide and developing economies like India is also touched by it and is experiencing its impact. Diversity in every respect, be it in terms of landscape, the Himalayas in the north, the back waters of Kerala in the south or the desert of Rajasthan in the west to the Bay of Bengal in the east or in terms of culture prevailing in these areas, food habits and dress sense of the people makes our motherland India unique and we can boast of ‘unity among diversity.’ Targeting the Indian population is a challenging proposition for marketers keeping the above diversity in mind.

The celebrity endorsement started gaining prominence in India since 1980. As per reports available based on a study conducted by AdEx India a division of TAM Media research, Celebrity Endorsement Advertising volume witnessed a growth by 26% in January-June 2013 in comparison with January-June 2012. From the same study it is evident that the Hindi Film Stars (HFS), actors and actresses from Bollywood, Mumbai captured 80% of Celebrity Advertising in terms of Ad Volume in January-June 2013 followed by Sports Celebrities (11%), TV Actors (5%) and Actresses (4%).

In this study the term “Celebrity” will encompass a variety of endorsements including those in explicit mode ‘I endorse this product’, the implicit mode ‘I use this product’, the imperative mode ‘You should use this product’ and the co present mode ‘the celebrity appears with the product’ (Mc Cracken 1989). In the Indian context it is evident that the Hindi Film Stars (HFS), actors and actresses from the Hindi Film Industry, Bollywood in Mumbai are the most sought after celebrities among advertisers as brand endorser.

Supriyo Patra and Saroj Kumar Datta


Celebrities are expected to have the following type of association with the customers of a brand:

YY Psycho graphic Connect: Stars are loved and adored by their fans and advertisers use stars to capitalize on these feelings to sway the fans towards their brand.

YY Demographic Connect: Different stars appeal differently to various demographic segments (age, gender, income group, occupation etc.).

YY Mass Appeal: Some stars have a universal appeal to generate interest among the masses.

Hindi Film Stars earn enormous amount of money through brand endorsements. Most of the leading film stars from Bollywood are endorsing not just one but multiple brands in different product category and globalization has drawn major players from world over to explore the vast Indian market. It is indeed a huge challenge for advertisers to select an appropriate celebrity for their brand building purpose. Therefore under the present scenario in Indian context it is essential to determine the “Q” score (based on familiarity and popularity) of the Bollywood celebrities and examine the relationship of “Q” score on the Brand Awareness-recall score of the celebrities.

oBJeCtivesThe study was conducted with the Hindi Film Stars (HFS) from Bollywood

Mumbai and has tried to address the following objectives

YY To determine the “Q” Score of the Bollywood celebrities and the different dimension of challenges encountered by marketers in their endeavor to use Indian celebrities for brand endorsement purpose.

YY To present the various models for hiring an appropriate celebrity.YY To conduct an empirical study to show the impact of “Q” score on Brand

recall generation capacity of the Bollywood celebrities.

LiterAture revieWThe phenomenon of celebrity endorsement has attracted a lot of attention

from researchers from across the globe. The phenomenon has been researched from different dimension including selection of celebrities (Banyte, 2011), effect of celebrity endorsement on brand awareness, attitude towards the advertisement, and attitude towards the brand and purchase intention (Agrawal, 1995; Rajeswari, 2010; Balakrishnan, 2011), celebrity endorsement and its impact on sales (Jain, 2011) single vs. multiple products and multiple celebrity endorsement (Hyun Um, 2008). Focusing on the research objectives this study concentrated on reviewing works on celebrity selection and effect on brand awareness-recall.

A Study focusing on determining the “Q” Scores of Bollywood Celebrities and their impact on Brand Awareness


According to Keller (2007), branding has been around for centuries as a means to distinguish the goods of one producer from those of another. In the words of Keller (2007), brand awareness consists of brand recognition and brand recall performance. Brand recall relates to consumers’ ability to retrieve the brand from memory when given a relevant cue. According to Keller (2007) in unaided recall consumer recall the brand unaidedly where as in aided recall various types of cues are presented to help the consumer recall the brand.

Celebrity selection models

Based on review of existing literature in the field of celebrity endorsement, the study identified prominent models in the field of celebrity selection namely the Source Credibility Model (Hovland, 1953; Ohanian, 1990); Source Attractiveness Model (McGuire, 1985; Ohanian, 1990); Match Up Hypothesis (Kamins, 1990; Till and Busler, 1998); Meaning Transfer Model (McCracken, 1989). Although performer ‘Q’-ratings have been commercially available to evaluate entertainment celebrities (Finkle, 1992; Belch and Belch, 2001; Shimp, 2003) and Sport ‘Q’-ratings have been commercially available for the rating of sport celebrities in the United States, it’s application in Indian Context to select and determine the ranking of Indian Celebrities is not much evident in the existing literature. This is identified as an important research gap.

A study conducted with Lithuanian sports celebrity in non-sport product advertising (Banyte et al., 2011) presented various models in celebrity selection in a table form as presented below.

Table1: Models for selection of a celebrity endorser

Authors Model Description

Ohanian (1991), Johansson & Sparredal (2002), Ericsson & Hakansson (2005), Clow, James, Kranenburg & Berry (2006)

The Source Credibility Model

Selection of the celebrity endorser depends on his/her Credibility that can be explained by expertise and trustworthiness.

Tellis (1998), Johansson & Sparredal (2002), Ericsson & Hakansson (2005)

The Source Attractiveness Model

Suggests evaluating the attractiveness of the celebrity which depends on three attributes: similarity, familiarity and liking.

Belch & Belch (2001), Ericsson & Hakansson (2005), Shimp (2007) Q - Ratings Q- Rating of a celebrity is calculated based

on his/her popularity and familiarity.

Shimp (2000), Bergstrom & Skarfstad (2004), Ericsson & Hakansson (2005)

The TEARS model

Says that when selecting an endorser, two general attributes are the most important: credibility, which depends on trustworthiness and expertise; and attractiveness, which consists of three related ideas: physical attractiveness, respect and similarity.



Authors Model Description

Shimp (2000), Bergstrom & Skarfstad (2004), Ericsson & Hakansson (2005)

The No TEARS model

Selection of celebrity endorser depends on his/her credibility, attractiveness, and matchup between celebrity and audience/brand, and the cost of the celebrity. It also suggests paying attention to how easy or difficult is to work with the celebrity, how many other brands the celebrity is endorsing and to consider the likelihood that the celebrity will get into trouble after an endorsement is established.

Miciak & Shanklin (1994), Osorio (2002), Ericsson & Hakansson (2005)

The FREDD Principle Selection of celebrity endorser should refer to such attributes as familiarity, relevance, esteem, differentiation and deportment.

Source: Banyte et al., (2011)

BrAnd reCALLThe effect of celebrity endorsement on brand awareness-recall has been

explored by researchers from different perspective. A celebrity was better than other endorsers in enhancing brand name recall (Friedman and Friedman 1979). It is also evident from existing literature that a celebrity was better in enhancing brand name recall than a non-celebrity (Petty et al., 1983). A physically attractive celebrity paired with an attractiveness-related product could enhance brand name recall (Kahle and Homer 1985). Misra and Beatty (1990) also showed that celebrity/product congruency is better in enhancing brand name recall than an incongruent or irrelevant celebrity.

However different findings emerged from a study conducted by Costanzo and Goodnight (2005). The results presented in their study, however, found that a celebrity recognized in a magazine advertisement did not increase consumer recall of the brand endorsed by the celebrity for both professional athlete celebrities and other entertainment celebrities who are not professional athletes (Costanzo and Goodnight 2005). It was also found that a sample Q-score had no effect on the number of correctly identified celebrities or the celebrity by brand/company connections (Costanzo and Goodnight 2005). Celebrity endorsement enhances product information and creates awareness among consumers. It helps them to recall the brands of the durable products (Balakrishnan and Kumar 2011).

From review of existing literature it is seen that contradictory findings emerged regarding the effect of celebrity endorsement on brand recall. Therefore it becomes relevant to conduct the study in Indian context with Indian celebrities. Based on a focused literature review and keeping the objectives of the study in mind the following hypothesis was developed.

H0: Brand Recall Score of the Hindi Film Stars is not related to their “Q” score or Number of Brands they are endorsing.



methodoLoGYIn the first part of the study 10 Hindi Film Stars (HFS) from Bollywood were

selected and the different brands endorsed by each of these 10 Indian celebrities were tracked from advertisements featuring in television and newspapers during the study period, September 2012 to March 2013. Thereafter, Cluster sampling technique was applied to conduct quantitative research that is non-experimental in nature and primary data was collected with the help of survey method. The cross sectional research design was adopted and the target population was defined in terms of elements-male and female above 18 years in Kolkata city. The sample size was arrived at 400 for the study keeping in mind the availability of time, resources, and sample size used in similar studies. The sample size was also selected keeping in mind 95% confidence level.

The questionnaire was designed keeping in mind the broad study objectives. The first question was prepared to ascertain the familiarity of the Hindi Film Stars (HFS). The second question was aimed at determining the popularity of a celebrity. A celebrity who is rated as “One of my Favourite” by a respondent is said to be popular with that respondent for the purpose of finding his/her ‘Q’ score. ‘Q’ score is obtained as a ratio of popularity % by familiarity % of a celebrity (Finkle, 1992; Belch and Belch, 2001; Shimp, 2003). The next two questions were asked to find out the brand recall score of the Hindi Film Stars (HFS). The actual number of correct brands unaidedly recalled against a celebrity is noted for calculating the unaided brand recall score of that celebrity. Similarly the actual number of correct brands aidedly recalled against a celebrity is noted for calculating the Aided Brand Recall score of that celebrity.

Pearson’s bivariate correlation was used keeping the research objectives in mind to measure the relationship between ‘Q’ score of the Hindi Film Stars (HFS), and their unaided brand recall score, aided brand recall score. Regression analysis was conducted for the Hindi Film Stars (HFS) to first assess the relationship between the dependent variable unaided brand recall score and the independent variables namely ‘Q’ score and Number of brands endorsed by the celebrities.

AnALYsis And disCussion

Keeping the first study objective in mind an in-depth review of existing literature was conducted and it was found that selecting the right and appropriate celebrity for brand endorsement is really a challenging proposition. The various dimensions of challenges faced by the advertiser and their advertising agencies regarding celebrity selection in India may encompass the following aspects:

YY Celebrity’s fit with the brand image YY Celebrity target audience cultural match



YY Celebrity’s familiarity among the target audienceYY Celebrity’s popularity among target audienceYY Cost associated with getting a celebrityYY Celebrity’s past endorsement history

In Indian cultural context identifying the cultural parameters in respect to differences in languages of people of different region, lifestyle variations between people of different region, value systems, norms and customs followed by the people over the years and ethics and moral standards are to be appreciated and given due importance while developing a communication strategy. Focusing on the second study objective it is suggested that advertisers and advertising agencies can reflect upon the models discussed under Celebrity Selection Models in literature review section before hiring a celebrity for their brand endorsement purpose.

Regarding the final study objective the ‘Q’ score of 10 selected Hindi Film Stars was determined. Amir Khan is having the highest ‘Q’ score of 57, followed by Amitabh Bachchan with a ‘Q’ score of 55 and Shah Rukh Khan comes next with a ‘Q’ score of 45.5 followed by others. Saif Ali Khan is having the lowest ‘Q’ score (table 2). Thereafter the unaided and aided brand recall score of the 10 selected Indian celebrities determined among the respondents are presented in the table below.

Table 2: ‘Q’ score and Brand Recall Score of the Hindi Film Stars

SNo Hindi Film Stars Numberof Brand Endorsed

“Q” Score Unaided Brand Recall Score

Aided Brand Recall Score

1 Amitabh Bachchan 11 55 532 2196

2 Shah Rukh Khan 14 45.5 560 2770

3 Amir Khan 6 57 412 1012

4 Saif Ali Khan 7 5 324 1064

5 Ranbir Kapoor 5 20.9 402 718

6 Salman Khan 2 11 102 172

7 Aishwarya Rai Bachchan 3 27.5 398 580

8 Katrina Kaif 5 23.5 364 786

9 Kareena Kapoor 4 22 302 534

10 Priyanka Chopra 6 24.5 322 658

Source: The researchers’ survey

Positive significant correlation existed between ‘Q’ score and Unaided Brand Recall Score was 0.734 (p=0.016) and between ‘Q’ score and Aided Brand Recall Score was 0.646 (p=0.044) (table 3 and 4).



Table 3: Correlation between “Q” score and Unaided Brand Recall Score

Q Score Unaided Brand Recall Score

Q Score

Pearson Correlation 1 0.734(*)

Sig. (2-tailed) 0.016

Unaided Brand Recall Score

Pearson Correlation 0.734(*) 1


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

Table 4: Correlation between “Q” score and Aided Brand Recall Score

Q Score Aided Brand Recall Score

Q Score

Pearson Correlation 1 0.646(*)


Aided Brand Recall Score

Pearson Correlation 0.646(*) 1


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

The regression analysis was also conducted to find the effect of ‘Q’ score and number of brands endorsed by the Hindi Film Stars (HFS) on their Unaided Brand Recall score (table 5). The Adjusted R Square value was 0.679. The two independent variables in the model are predicting 67.9% of the variation in the dependent variable. It is clearly evident that the standardized coefficient (Beta) for ‘Q’ score is 0.398 and is not significant at 5% level but the beta value for Number of Brand Endorsed is 0.570 is significant at 5% levels.

Table 5: Results of Regression Analysis on Unaided Brand Recall Score

Model R R Square Adjusted R SquareStd. Error

of the Estimate

1 0.866(a) 0.750 0.679 72.37414

Predictors: (Constant), Number of Brands Endorsed, Q Score

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.Collinearity Statistics

B Std. Error Beta Tolerance VIF

Constant 162.177 51.177 3.169 0.016

Q Score 2.882 1.693 0.398 1.703 0.132 0.653 1.531

Number of Brands Endorsed

19.918 8.172 0.570 2.437 0.045 0.653 1.531

Dependant Variable: Unaided Brand Recall Score



The second regression analysis was conducted to find the effect of ‘Q’ score and Number of Brands endorsed by the Hindi Film Stars (HFS) on their Aided Brand Recall score (table 6). The Adjusted R Square value was 0.963. The two independent variables in the model are predicting 96.3% of the variation in the dependent variable. It is found that the standardized coefficient (Beta) for ‘Q’ score is 0.104 and is not significant at 5% level but the beta value for Number of Brand Endorsed is 0.921 and is significant at 1% levels.

Table 6: Results of Regression analysis on Aided Brand Recall Score

Model R R Square Adjusted R Square Std. Error of the Estimate

1 0.985(a) 0.951 0.963 155.91374

Predictors: (Constant), Number of Brands Endorsed, Q Score

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

Collinearity Statistics

B Std. Error Beta Tolerance VIF

Constant -371.545 110.249 -3.370 0.012

Q Score 4.762 3.647 0.104 1.306 0.233 0.653 1.531

Number of Brands Endorsed

203.419 17.605 0.921 11.554 0.000 0.653 1.531

Dependant Variable: Aided Brand Recall Score

Therefore, based on the findings the Null Hypothesis is accepted and the finding is that “Q” score of the Hindi Film Stars (HFS) has got no role in generating brand recall among the target audience.

ConCLusionCelebrity endorsement is an expensive proposition and the challenging aspect

of selecting an appropriate Indian celebrity for brand endorsement purpose has become a cause of concern for advertisers. The different dimension of challenges involved in celebrity selection as evident in the result section of this paper should be given due consideration. The concept of ‘Q’ score is widely used in the United States for ascertaining the familiarity and popularity of celebrities among the target audience. The study seems to be a pioneering work in the sense that it has attempted to show the application of “Q” score technique in the Indian context with Indian celebrities among the respondents of Kolkata belonging to different demographic profile. Moreover the study also shows that ‘Q’ score of the Hindi Film Stars (HFS) has got no role in generating brand recall among the respondents in Kolkata which is a modest attempt to add to the existing body of knowledge in the field of celebrity endorsement.



In Indian cultural context advertisers should take note of the fact that the only familiarity and popularity of the Bollywood celebrities are not good enough in generating brand recall among the target audience and there got to be some other important aspect that are essential for generating brand recall in today’s highly competitive market environment. Since the study was conducted with 10 Indian celebrities this might be a limitation and only Hindi Film Stars (HFS) were considered but other Indian celebrities like television actor and actresses and other sports celebrities were not considered. The topic being an interesting hence further research work could be carried out in Kolkata and other parts of the country, including other celebrities.

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determinAnts oF exPort PerFormAnCe: A ComPArAtive AnALYsis oF indiAn PhArmACeutiCAL

And AutomoBiLe industriesSatyanarayana Rentala1, Byram Anand2 and Majid Shaban3

ABstrACtWith globalization of markets and the advent of multilateral trade agreements,

foreign markets have become increasingly viable and provide natural opportunities for growth-oriented domestic companies in India. Growth through export sales is increasingly seen as one route to corporate growth for the firm. Exporting as a means to corporate growth is particularly appropriate for manufacturers of industrial goods, where international cultural differences are not likely to deter foreign sales (as is the case with many consumer goods). In this context, this study attempts to explore the export marketing scenario of two knowledge and technology-intensive industries in India: Pharmaceuticals and Automobiles. This study explores the determinants of export performance as applied in the context of Indian pharmaceutical and automobile industries. Among many determinants of export performance examined in various earlier studies, the study considered the demographic characteristics, sales values, export sales, profitability and research and development (R&D) expenditures of the firms. The study analyzed the association of exports with the other variables using multiple regression analysis.

The findings of this study have elicited a mixed response. Export sales have exhibited a strong and significant correlation with sales values and R&D expenditures in case of pharmaceutical industry and exhibited a significant correlation with profitability in case of the automobile industry.

introduCtionEmerging markets are progressively establishing themselves as the growth

engines of the global economic development (Berrill and Mannella, 2013). In the new millennium, developing countries like India have witnessed fastest growth among various markets across the globe, be it for manufacturing products or services. Export is a significant constituent of global trade and the role of exports to the growth of any economy has been empirically verified by researchers at different points of time (Lim and Ho, 2013). Exporting activities give firms in emerging countries like India, an opportunity to understand innovative avenues to develop 1 Mr. Satyanarayana Rentala, Doctoral Scholar, Department of Management, Pondicherry University,

Karaikal – 609 605. E-mail: [email protected]; Mobile: +91 90428 764232 Dr. Byram Anand, Assistant Professor, Department of Management, Pondicherry University,

Karaikal – 609 6053 Mr. Majid Shaban, Doctoral Scholar, Department of Commerce, Pondicherry University, Karaikal –

609 605


their products and improve production processes (Parameswaran, 2009). Despite the increasing significance of foreign direct investment, firms in many emerging economies persist to depend on export performance for entering into global markets (Singh, 2009).

As per WTO data for the year ending 2012, India’s export share in global trade is 1.60% and import share is 2.63% (in merchandise trade). India’s export share is 3.23% and import share is 3.07% in commercial services trade at the end of 2012. Nearly 60% of India’s exports come from manufacturing sector while more than 40% of India’s imports are accounted by fuel imports. Major Indian exports include petroleum products, gems and jewel products, transportation equipment (automobiles and auto components), machinery, drugs and pharmaceuticals among other categories.

It is thus very pertinent to understand the issues affecting the export performance of various Indian industries. Hence, this study attempts to explore the determinants of export performance of two important Indian manufacturing industries: Pharmaceuticals and Automobiles. These two industries are chosen for the study since they feature among the top five exporting industries for Indian economy.

overvieW oF indiAn PhArmACeutiCAL And AutomoBiLe exPorts

India is one of the fastest-growing pharmaceutical markets in the world and has established itself as a global manufacturing and research hub. A large raw material base and the availability of a skilled workforce give the industry a definite competitive advantage. The basic strength of Indian pharmaceutical industry is its export potential (Kodgule, 2012). Indian pharmaceutical companies have an opportunity to capitalize on the export opportunities in regulated and semi-regulated markets across the globe. In terms of value, pharmaceutical products exports have increased at a CAgR of 26.1% to US $ 10.1 billion during 2006-13. During the same period, pharmaceutical products imports rose at a CAgR of 25.4% to US $ 1.8 billion as can be observed from Table 1.

Table 1: India’s Pharmaceutical Exports and Imports Trends

Year 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Exports US $ billions 2.4 3.2 4.2 5.1 5.2 6.7 8.5 10.1

Imports US $ billions 0.4 0.6 0.7 0.9 1.1 1.2 1.7 1.8

Source: http://www.ibef.org/download/pharmaceuticals-august-2013.pdf

Satyanarayana Rentala, Byram Anand and Majid Shaban


Another industry, which exhibits promising potential for exports, is the Indian automobile and auto components industry. Table 2 gives an account of the export trends for individual automobile categories. It can be observed that Two-wheelers and Passenger vehicles have shown the highest export growth during the period 2006-13. India is thus poised to be a global supplier of automobiles in the years to come. Along with the automobile industry, the auto components industry in India shows tremendous potential owing to the increase in demand for Indian automobiles.

Table 2: Export Trends for Individual Vehicle Categories (in 000’s)

Year Passenger Vehicles Commercial Vehicles Three-Wheelers Two-Wheelers

2006-07 198.5 49.5 143.9 619.6

2007-08 218.4 59.0 141.2 819.7

2008-09 335.7 42.6 148.1 1004.2

2009-10 446.1 45.0 173.2 1140.1

2010-11 444.3 74.0 270.0 1531.6

2011-12 507.3 92.7 362.9 1947.2

2012-13 554.7 79.9 303.1 1960.9

CAgR 18.7 8.3 13.2 21.2

Source: http://www.siamindia.com/scripts/export-trend.aspx accessed on February 18, 2014

Table 3 gives an overview of the export potential of the Indian auto components industry. It can be observed that in 2012-13 that nearly 25% of exports are contributed by auto components industry. This trend is likely to continue in the future owing to growing demand of Indian automobiles in the global markets.

Table 3: Export Trends for Indian Auto Components Industry

Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Annual Sales (US $ billions) 15 26.5 23 30.1 39.9 42.4 40.6

Exports (US $ billions) 2.7 3.8 4 3.4 5.2 8.5 9.3

Source: http://acma.in/pdf/Industry-Statistics_10062013.pdf accessed on February 18, 2014

LiterAture revieW

Serra et al., (2012) studied the various factors influencing the propensity to export among UK and Portuguese textile firms. The fundamental research questions revolved around finding the demographic characteristics of the firm that are associated with stronger export propensity. The study concluded that there is a strong association between demographic characteristics and export performance.

Determinants of Export Performance: A Comparative Analysis of Indian Pharmaceutical and Automobile Industries


Banerji (2012) studied the export trends of Indian pharmaceutical and automobile industries. Correlation between auto component exports and automobile exports and R&D expenditures and pharmaceutical exports was also studied. The study concluded that there is a strong association between R&D expenditure and filing of new patents.

Saranga (2007) studied the relationships between R&D expenditure and export performance of Indian pharmaceutical companies. The study reported that low R&D expenditures resulted in low export performance. The study analysed the inter-relationships between variables like profit margins, total sales (firm size), export sales and R&D investments.

Diamantopoulos and Kakkos (2007) developed an assessment performance measurement framework to understand firm’s export performance among firms belonging to various industries in UK. A performance measurement matrix was designed using various variables like export sales levels, export market share, export sales intensity, export sales growth, change in export market share and change in export sales intensity.

Calantone et al., (2006) reported the results of a cross-country (United States, Korea and Japan) study on the influence of internal and external firm factors on international product adaptation strategy and export performance. It was concluded that the greater the export dependence of a firm the greater is the product adaptation strategy.

Sousa (2004) presented an evaluation of empirical research in literature regarding export performance measurement. The literature review reported the studies that used the size of the firm as an independent variable and most studies focused on the export performance of small to medium-sized firms.

Leonidou et al., (2002) investigated the marketing strategy determinants of export performance through a meta-analysis study. It was concluded that, in general, there appears to be a strong association between export marketing strategy and export performance measures. Literature review of the previous studies indicates that demographic characteristics of a firm had a significant impact on export performance of firms.

Francis and Collins-Dodd (2000) studied the impact of firm’s export orientation on the export performance with respect to high-tech small and medium enterprises in Canada. The study concluded that export intensity, export sales, export intensity growth and export gross margin profitability had a significant relationship with export performance.

Hoang (1998) studied the relationships between firm characteristics, international marketing strategies and export performance of firms in New Zealand. Firm characteristics, in this study, were referred to as the demographics of a firm. It



was reported that among the variables that characterize a firm, firm size has received the maximum attention.

Katsikeas et al., (1997) studied the perceived export success factors of small and medium-sized Canadian firms. The study concluded that a firms’ successful export activity is associated with respect to different exporter categories in terms of degree of internationalization, company size and product type.

Katsikeas and Morgan (1994) studied the differences in perceptions of export problems based on firm size and export market experience. It was noted that there is some consensus that larger firms possess more resources and achieve higher levels of economies of scale. Cavusgil and Zou (1994) studied the marketing strategy-performance relationship with respect to export ventures among firms belonging to various industries in USA. A comprehensive set of potential determinants of export market performance was considered and the study concluded that export marketing strategy, firm’s international competence, and managerial commitment are the key determinants of export performance.

Cooper and Kleinschmidt (1985) studied the impact of export strategy on export sales performance among high-technology electronic firms in Canada. It was observed that export performance has been traditionally measured by a single variable, namely export sales as a percent of total corporate sales, called export intensity.

Many of the studies were conducted mainly in the context of United States and European countries, though some studies were done on firms in Asia. Very few studies have been reported in the context of emerging economies, especially with reference to India. Hence this study attempts to examine the determinants of export performance in Indian context. Due to their knowledge and technology-intensive nature, the study focuses on pharmaceutical and automobiles industries in India.

oBJeCtives oF the studYThe broad objectives of this study are

YY to identify the various determinants of export performanceYY to analyze the export performance of Indian pharmaceutical and

automobile companies YY to recognize the inter-relationships between various demographic

variables

methodoLoGYThe list of BSE-500 index companies is considered for analysis using

PROWESS – a Centre for Monitoring Indian Economy (CMIE) database. All the index companies have been categorized into various industries. It is observed that



37 companies belong to the healthcare industry and 23 companies belong to the automobile industry (including auto-components manufacturing companies).

Among the companies belonging to the healthcare industry, only those companies engaged in pharmaceutical product exports have been considered and this resulted in elimination of two companies from the list of 37 companies since they belong to the hospital industry (Apollo Hospitals and Fortis Healthcare). From the remaining list of companies, all the multinational pharmaceutical companies have been excluded from the analysis since this study is limited only to the analysis of export performance of Indian pharmaceutical companies. A final sample of 23 companies is considered for the analysis taking the data availability into consideration. Similarly, from the list of 23 companies, the final sample size considered for the automobile industry was 17. Data has been analyzed using descriptive statistics and compounded annual growth rates (CAGR).

In addition, two regression models have been separately framed for the study of pharmaceutical and automobile industries.

model 1: Exp. = α + β1 Sales + β2 PAT + β3 RD + ε (Pharmaceutical Industry)

model 2: Exp. = α + β1 Sales + β2 PAT + β3 RD + ε (Automobile Industry)

vAriABLe seLeCtion The dependent variable considered for the study was export sales and the

independent variables were firm size, profit-after-tax and R&D expenditure. The final analysis was undertaken by analyzing the total sales, export sales (Cooper and Kleinschmidt, 1985; Katsikeas, Deng and Wortzel, 1997; Hoang, 1998; Sarnga, 2007; Banerji, 2012); research and development expenditure (R&D) (Saranga, 2007; Banerji, 2012) and profit-after-tax (Saranga, 2007) for the five year period starting from 2007-08 till 2011-12. Analysis of automobile companies was also undertaken by analyzing the total sales, export sales, research and development expenditure (R&D) and profit-after-tax for the same period.

AnALYsis And disCussionIt can be seen from Table 4 that, except for two companies, glenmark

Pharmaceuticals and Orchid Pharmaceuticals all the other companies have shown a very healthy export growth rate. Out of all the companies included in the study, ten companies have grown at a rate more than the industry growth of 17.2% in terms of exports sales. When we consider the size of the firms in terms of the sales values, only one company Piramal Enterprises has shown a negative growth rate. This can be attributed to the fact that during the period considered for the analysis, the pharmaceutical formulations business of Piramal Enterprises was bought out by Abbot India Limited.



Thirteen companies have shown a higher growth rate in sales than the industry growth rate of 12.6%. When we consider the profit-after-tax (PAT) variable, the industry has de-grown by 5%. This is due to the fact that large corporations like Ranbaxy Labs, Aurobindo Pharma, and Dabur etc., have undergone financial restructuring due to their mergers/acquisitions by multinational pharmaceutical companies. All the companies except two companies Claris Life Sciences and Strides Arco Lab have shown a growth in the R&D expenditure over the five year period. In general it can be observed that all the pharmaceutical companies have increased their R&D expenditures to increase their domestic and export sales.

Table 4: Pharmaceutical Industry – CAGR (2007-08 to 2011-12)

Company Exports Sales PAT R&D Expenditure

Aurobindo Pharma Ltd 21.6 16.1 26.6 9.0

Biocon Ltd 8.7 14.6 -12.5 21.2

Cadila Healthcare Ltd 32.8 10.6 29.2 27.6

Cipla Ltd 15.1 13.3 12.5 10.6

Claris Lifesciences Ltd 15.5 4.3 -2.0 -29.4

Dabur India Ltd 15.5 15.6 10.0 39.0

Divi’s Laboratories Ltd 13.7 15.5 11.5 14.1

Dr Reddy’s Laboratories Ltd 21.0 17.0 17.7 17.1

Elder Pharmaceuticals Ltd 4.7 15.1 4.8 14.5

FDC Ltd 21.0 7.8 19.2 15.5

glenmark Pharmaceuticals Ltd -5.5 3.8 -9.1 10.7

IPCA Laboratories Ltd 27.2 20.8 18.7 46.8

J B Chemicals and Pharmaceuticals Ltd 1.0 3.7 87.8 22.1

Jubilant Life Sciences Ltd 12.2 5.5 -10.6 18.0

Natco Pharma Ltd 17.8 16.5 11.6 11.1

Orchid Chemicals and Pharmaceuticals Ltd -4.3 8.8 1.1 9.4

Piramal Enterprises Ltd 9.5 -12.7 -18.9 60.8

Ranbaxy Laboratories Ltd 21.1 20.3 22.7 2.3

Strides Arcolab Ltd 13.8 16.1 165.2 -16.3

Sun Pharmaceutical Ltd 16.1 0.5 17.5 8.7

Torrent Pharmaceuticals Ltd 35.9 20.1 18.9 7.6

Unichem Laboratories Ltd 19.3 8.0 1.5 16.5

Wockhardt Ltd 35.1 22.3 -3.7 5.9

Total Industry 17.2 12.6 -5.0 13.4

Source: Authors’ calculations based on Prowess Database



Based on the data presented in Table 5, it can be observed that all the automobile and auto components companies have shown a healthy growth in exports except Eicher Motors. Six companies; Bajaj Auto; Hero Motors; Maruti Suzuki; TVS Motors; Amara Raja Batteries and Wabco India have posted an export growth rate higher than the industry average growth rate of 22.5%. All the companies except Eicher Motors have shown a healthy growth rates in sales. Seven companies; Bajaj Auto; Escorts Limited; Hero Motors; Mahindra and Mahindra; TVS Motors; FAG Bearings and Motherson Sumi have grown at a higher rate than the industry growth rate of 17.6%. When we consider the PAT variable, except Tata Motors and Maruti Suzuki, all the other companies have posted a positive growth rate. This could be due to large investments in R&D expenditure by Tata Motors and Maruti Suzuki. As can be seen from the R&D expenditure data, excepting Eicher Motors and Amara Raja Batteries, all the other companies have invested considerably in the R&D during the period considered for the study.

Table 5: Automobile Industry – CAGR (2007-08 – 2011-12)

Company Exports Sales PAT R&D Expenditure

Ashok Leyland Ltd 19.7 11.4 4.8 24.2

Bajaj Auto Ltd 33.2 20.2 41.2 12.7

Eicher Motors Ltd -28.2 -26.4 18.6 -28.5

Escorts Ltd 8.7 18.6 55.6 28.4

Hero Motocorp Ltd 25.3 19.5 25.2 26.0

Mahindra and Mahindra Ltd 22.1 27.5 27.1 24.5

Maruti Suzuki India Ltd 49.4 16.5 -1.4 55.3

T V S Motor Co Ltd 36.2 20.4 66.8 14.0

Tata Motors Ltd 7.2 16.2 -11.5 77.4

Amara Raja Batteries Ltd 30.5 17.5 22.9 -4.3

Bharat Forge Ltd 16.2 13.0 7.3 4.3

Bosch Ltd 11.3 15.7 16.5 17.4

Exide Industries Ltd 8.0 11.9 16.5 13.7

F A g Bearings India Ltd 15.0 17.8 22.0 18.9

Motherson Sumi Systems Ltd 18.2 26.3 25.4 53.2

Sundram Fasteners Ltd 17.2 14.2 12.8 42.6

Wabco India Ltd 66.5 15.6 21.7 0.9

Total Industry 22.5 17.6 14.6 38.4Source: Authors’ calculations based on Prowess Database

Table 6 gives an account of the descriptive statistics of the variables considered for the study for Indian pharmaceutical and automobile industries.



Table 6: Descriptive Statistics – Pharmaceuticals and Automobile Industries

Pharmaceutical Industry Automobile and Auto component Industry

Mean Standard Deviation Minimum Maximum Mean Standard

Deviation Minimum Maximum

Exports 9491.7 10644.6 144.5 54114.8 9155.5 12374.3 186.3 64506.2

Sales 19773.6 16106.2 2379.0 76671.7 98433.0 124624.7 4114.2 591991.7

PAT 3854.5 12763.7 -30517.3 128969.1 6991.2 8529.9 118.7 33397.3

R&D 1001.5 1325.2 7.5 6221.0 870.7 1955.3 2.1 13711.6

Export intensity is an important variable in the demographic profile of the companies when we analyze the export performance. It can be seen from Table 7, that almost all the companies in the pharmaceutical industry are highly dependent on export sales which determines their firm size. It can be seen that the average export intensity of all the sample firms considered for the study is 53% in 2011-12, which indicates that growth in exports is a critical determinant to the overall sales performance of all the firms.

Table 7: Export Intensity – Pharmaceutical Industry

Company 2007-08 2008-09 2009-10 2010-11 2011-12

Aurobindo Pharma Ltd 55.6 60.5 62.9 63.8 66.8

Biocon Ltd 52.8 49.3 40.5 32.8 42.6

Cadila Healthcare Ltd 24.8 36.1 48.9 51.3 51.6

Cipla Ltd 48.9 51.7 51.1 52.5 52.2

Claris Lifesciences Ltd 27.8 35.5 46.2 47.5 41.9

Dabur India Ltd 4.4 4.5 4.3 4.0 4.4

Divi’s Laboratories Ltd 91.9 91.7 88.5 88.9 86.4

Dr Reddy’s Laboratories Ltd 62.5 63.8 61.7 63.5 71.4

Elder Pharmaceuticals Ltd 4.1 2.3 2.5 2.7 2.8

FDC Ltd 7.5 8.5 8.8 9.4 11.8

glenmark Pharmaceuticals Ltd 48.1 23.7 25.6 24.7 33.1

IPCA Laboratories Ltd 46.1 49.1 48.2 50.9 56.7

J B Chem and Pharma Ltd 55.2 64.2 60.9 60.3 49.6

Jubilant Life Sciences Ltd 38.8 42.2 43.3 49.7 49.7

Natco Pharma Ltd 39.1 38.1 30.8 36.8 40.8

Orchid Chem and Pharma Ltd 80.7 77.5 77.6 43.2 48.4

Piramal Enterprises Ltd 22.7 23.8 13.6 51.8 56.0



Company 2007-08 2008-09 2009-10 2010-11 2011-12

Ranbaxy Laboratories Ltd 68.8 67.5 59.6 62.0 70.6

Strides Arcolab Ltd 77.6 74.9 69.6 62.1 71.6

Sun Pharmaceutical Inds Ltd 33.2 28.7 44.9 44.7 59.0

Torrent Pharmaceuticals Ltd 22.2 27.8 30.7 32.9 36.4

Unichem Laboratories Ltd 18.6 20.6 17.8 18.9 27.7

Wockhardt Ltd 31.7 36.0 36.6 38.4 47.1

Industry Total 45.1 46.2 45.5 48.1 53.0

In comparison to the pharmaceutical industry, the average export intensity of all the automobile and auto components firms considered for the study is only 10% in 2011-12. This indicates that there is scope for the automobile firms to expand into foreign markets, thereby increasing their export intensity. The future potential of the global automobile markets coupled with the potential for exports of auto components, automobile industry can be expected to increase its export intensity in the near future. As can be seen from Table 8, Bajaj Auto, Bharat Forge and Sundaram Fasteners have recorded an export intensity of more than 20% as against an industry average of 10%.

Table 8: Export Intensity – Automobile Industry

Company 2007-08 2008-09 2009-10 2010-11 2011-12

Ashok Leyland Ltd 8.2 12.6 7.5 8.9 11.0

Bajaj Auto Ltd 20.9 27.5 26.2 25.7 31.5

Eicher Motors Ltd 6.7 6.7 7.4 7.1 6.1

Escorts Ltd 5.0 7.1 2.3 6.6 3.5

Hero Motocorp Ltd 1.9 1.7 1.9 2.1 2.3

Mahindra and Mahindra Ltd 6.1 4.3 3.5 4.1 5.1

Maruti Suzuki India Ltd 3.5 6.4 14.1 8.6 9.4

T V S Motor Co Ltd 8.8 12.7 11.2 12.6 14.4

Tata Motors Ltd 8.5 8.2 5.0 6.6 6.1

Amara Raja Batteries Ltd 2.9 2.8 3.1 4.3 4.5

Bharat Forge Ltd 40.1 46.6 36.2 39.0 44.9

Bosch Ltd 13.9 13.3 11.5 11.8 12.0

Exide Industries Ltd 3.8 2.8 2.4 2.8 3.3

F A g Bearings India Ltd 12.4 13.5 6.4 8.9 11.2

Motherson Sumi Systems Ltd 16.0 15.6 11.2 8.4 12.3

Sundram Fasteners Ltd 25.3 31.2 23.4 24.6 28.1



Wabco India Ltd 2.9 6.8 8.2 11.5 12.5

Industry Total 8.5 9.5 9.1 9.0 10.0

Tables 9 and 10 present the regression results of Model 1 and Model 2 of Pharmaceutical industry and Automobile industry respectively. The results of pharmaceutical industry reveals that export sales have a significant and positive association with sales and research and development expenses but show no statistical significance with PAT whereas in case of automobile industry it shows statistical significance and positive association with PAT but not with sales and research and development expenses.

Table 9: Regression Results of Pharmaceutical Industry

Model 1: Exports = -1445.893 + 0.410 Sales + -0.023 PAT + 2.913 RD + ε

Coefficients t Stat P-value

Intercept -1445.893 -2.484 0.014

Sales 0.410 11.124 0.000**

PAT -0.023 -0.848 0.398

RD 2.913 6.495 0.000**

Notes: **significant at α = 0.01 level; Adjusted R2= 0.876; F-value = 269.501

Table 10: Regression Results of Automobile IndustryModel 2: Exports = -1288.462 + 0.032 Sales + 0.625 PAT + 0.399 RD + ε

Coefficients t Stat P-value

Intercept -1288.462 1.080 0.283

Sales 0.032 1.732 0.087

PAT 0.625 3.210 0.002**

RD 0.399 0.502 0.617Notes: ** significant at α = 0.01 level; Adjusted R2= 0.547; F-value = 34.793

ConCLusionResearch on firm characteristics and performance in export markets provides a

significant potential for research in the context of emerging economies. The findings of such studies can be of significance to both public and private sector administrators concerned with the future export development and success. Understanding the various factors that affect the export performance of various industries can be a guiding principle for exporters. Various determinants like research and development expenditures, capital intensity of firms, import of technology etc., can prove to be valuable indicators of export performance.

The findings of this study corroborate the findings of the previous studies where results were obtained in different industry and country contexts. Banerji (2012)



reported a positive and significant association of R&D expenditure on export sales for pharmaceutical industry in India which is validated by the results of this study. Hoang (1998) reported a positive significant relationship of export performance of firms with size of the firm and R&D expenditures in New Zealand. Serra et al., (2012) reported a positive and significant relationship between export sales and size of the firm among textile firms in Portugal but not among firms in UK. The findings of this research, in tune with the earlier studies, indicate a strong association of size of the firm and R&D expenditures in Indian pharmaceutical industry while profitability exhibited no impact. But in case of Indian automobile industry, only profitability exhibited a significant impact and not the size of the firm and R&D expenditures.

Results of this study can be used to further explore the influence of other demographic non-demographic variables that affect the export performance. Future studies can investigate the impact of R&D expenditure on the number of patents obtained by pharmaceutical and automobile companies and explore the managerial and other organizational characteristics that affect the export performance of the firms.

reFerenCesBanerji, A. (2012). A selective study of exports of manufactured goods from India: Auto parts and pharmaceuticals. Journal of International Business Research, 11(2), 89–118.

Berrill, J. and Mannella, G. (2013). Are firms from developed markets more international than firms from emerging markets? Research in International Business and Finance, 27(1), 147–161. doi:10.1016/j.ribaf.2012.04.002

Calantone, R. J., Kim, D., Schmidt, J. B. and Cavusgil, S. T. (2006). The influence of internal and external firm factors on international product adaptation strategy and export performance: A three-country comparison. Journal of Business Research, 59, 176–185. doi:10.1016/j.jbusres.2005.05.001

Cavusgil, S. T., and Zou, S. (1994). Marketing strategy-performance relationship: An investigation of the empirical link in export market ventures. Journal of Marketing, 58(1), 1–21.

Cooper, R. G. and Kleinschmidt, E. J. (1985). The impact of export strategy on export performance. Journal of International Business Studies, 16(1), 37–55.

Diamantopoulos, A. and Kakkos, N. (2007). Managerial assessments of export performance: Conceptual framework and empirical illustration. Journal of International Marketing, 15(3), 1–31.

Francis, J. and Collins-Dodd, C. (2000). The impact of firms’ export orientation on the export performance of high-tech small and medium-sized enterprises. Journal of International Marketing, 8(3), 84–103. doi:10.1509/jimk.8.3.84.19631

Hoang, B. P. (1998). A Causal study of relationships between firm characteristics, international marketing strategies and export performance. MIR: Management International Review, 38, 73–93.

Katsikeas, C. S., and Morgan, R. E. (1994). Differences in perceptions of exporting problems based on firm size and export market experience. European Journal of Marketing, 28(5), 17–35. doi:10.1108/03090569410062014



Katsikeas, C. S., Deng, S. L., and Wortzel, L. H. (1997). Perceived export success factors of small and medium-sized Canadian firms. Journal of International Marketing, 5(4), 53–72.

Kodgule, M. M. (2012). Growth of Indian pharmaceutical industry: Impact of Indian, US and European patent laws and regulatory requirements. Pharma Times, 44(07), 45–49.

Leonidou, L. C., Katsikeas, C. S., and Samiee, S. (2002). Marketing strategy determinants of export performance: a meta-analysis. Journal of Business Research, 55, 51–67.

Lim, S. Y. and Ho, C. M. (2013). Nonlinearity in ASEAN-5 export-led growth model: Empirical evidence from nonparametric approach. Economic Modelling, 32, 136–145. doi:10.1016/j.econmod.2013.01.044

Parameswaran, M. (2009). International trade, R and D spillovers and productivity: Evidence from Indian manufacturing industry. Journal of Development Studies, 45(8), 1249–1266. doi:10.1080/00220380902862911

Saranga, H. (2007). Multiple objective data envelopment analysis as applied to the Indian Pharmaceutical Industry. Journal of the Operational Research Society, 58(11), 1480–1493. doi:10.1057/palgrave.jors.2602280

Serra, F., Pointon, J. and Abdou, H. (2012). Factors influencing the propensity to export: A study of UK and Portuguese textile firms. International Business Review, 21(2), 210–224. doi:10.1016/j.ibusrev.2011.02.006

Sousa, C. M. P. (2004). Export performance measurement: An evaluation of the empirical research in the literature. Academy of Marketing Science Review, (09), 1–23.




shiFt WorK imPACt AmonG PArAmediCs: A ComPArAtive AnALYsis

Rajan1

ABstrACt The objectives of this survey based descriptive research is to identify and

differentiate the risk factors associated with shift work, to compare the impact of shift work on physical health, individual life and family life and to investigate and differentiate the extent of perception towards the impact of shift work of the paramedics having different shift duty. The paramedics namely nurses, pharmacists, laboratory technicians and radiographers have been focused in the study. The study has sampled 90 paramedical employees (30 respondents from fixed day shift, 30 respondents from fixed night shift and 30 respondents from rotating day and night shift duties) from private multi speciality hospitals in Tirunelveli city, Tamilnadu using both convenient and judgement sampling techniques. Weighted average analysis has been carried out to examine the risk factors associated with shift work, impact of shift work on physical health, individual life and family life of paramedics. Mean, standard deviation and coefficient of variation have been applied to compare the impact of shift work and extent of perception towards impact of shift work. The result of the study shows that risk factors associated with shift work, impact of shift work on physical health, individual life and family life is highly experienced by both fixed night shift and rotating day and night shift than fixed day shift employees.

introduCtionShift work is an increasingly common form of work organization and today

an increasing number of workers do shift and night work as part of their work contract. Around one fifth of workers are engaged in some kind of shift work (Harrington, 2001). It remains socially patterned with a higher prevalence amongst lower socio-economic groups (Ormond, 2004). There are a number of reasons for this and they include economies of continuous production, business needs, the need to provide a 24 hour commercial or emergency service, work life balance, technological advances, changes in the economy, emergence of 24 hour societies and globalization (Beatson, 1995; Rajaratna and Arendt, 2001). Shift and night work are common in sectors such as emergency services (e.g. ambulance, fire, hospital, police, prisons), security services, utility services (e.g. electricity, gas, water), production (e.g. chemicals, pharmaceuticals, manufacturing), leisure and entertainment activities (e.g. bars, hotels, concerts, discos), night work to ensure

1 Dr. D. Rajan, Faculty in Management Studies, Madurai Kamaraj University, Madurai, Tamilnadu, India. E-mail: [email protected], Mobile Number: +919688122549


early next day service delivery (e.g. post, couriers, transport), night work to ensure early next day product delivery (e.g. bakery, newspapers), work across different international time zones (e.g. call centers, finance) and changing retail customer preferences (e.g. supermarkets, garages) (Health and Safety Authority, 2012).

Shift work continues to be common amongst health care and emergency services personnel, with up to 50% of hospital staff working on shifts (Wilson, 2002). The paramedic discipline forms part of a dynamic health system in India. Paramedics are a group of individuals who contribute to a major role in the diagnostics, medical and surgical care of the health care industry. They perform a number of activities which are vital for medical and surgical care of the patients. Pre and post operative care of the patients (Nursing), supplying medicines and surgical materials (Pharmacy), blood, sputum urine and other body’s fluid investigations (Laboratory) and bones and internal organs diagnosis (Radiology) are some of the important activities performed by the paramedical departments. All the employees working in these paramedical departments are shift based since all these activities are required in round the clock manner and they are interrelated and interdependent in the patient care activities. Shift work system has both positive and negative effects. On positive side, it provides good opportunities for unmarried employees and employees who are undergoing refresh courses, part time studies and distance education courses. On the contrary, it affects some employee groups in a number of ways. If taken married employee groups as example, shift work especially fixed night shift and irregular rotation type of day and night shift impairs their family life in such a way that it does not allow them to spend sufficient time with their family members, take care of their children’s studies and so on.

Tirunelveli city, the capital of Tirunelveli District has attained a profound development in the health care sector in the past few years. The numbers of hospitals, diagnostic centers and pharmaceutical institutes have increased a lot. But, still two shift work system and 12 hours duty, poor HR practice, lack of training and development and poor concentration on employees’ welfare facilities and their career development are seen in almost all hospitals. Hence, the present study is undertaken with the objectives of identifying the risk factors associated with the shift work, and its impact on physical health, individual life and family life of the paramedics in Tirunelveli city.

stAtement oF the ProBLemIndividual satisfaction in life, work life balance and good health are essential

for all kind of occupations in order to bring forth productive contribution towards organization. Shift work is essential and unavoidable in hospital as patients are in need of round a clock service. It is important to follow fair and equality in shift system. Hospitals are allocating fixed day shift or fixed night shift for the

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employees who are favor to the managers or hospital management. This kind of activity compels particular employees to look after the shift duty to manage their shift and make them dissatisfied in their work. Although, rotation type of shift work is common among hospital employees, when it is performed with long working hours (12 hours duty) and unfair manner (e.g., long night shift, long day shift, inadequate intervals between two shifts) it affects their health and causes disorders such as sleeplessness, fatigue, indigestion, constipation and abdominal pain, hypertension, diabetes mellitus etc. Moreover, this kind of disparity and unfair treatment of the management will also affect their job satisfaction, commitment, involvement, morale, individual life and family life. Eventually, these negative effects will then reflect on organizational functions also. It will bring about absenteeism, decreased job performance and high employee turnover on employee side and also it will affect patient’s satisfaction, safety, recruitment costs, administrative problems and image of the organization. Hence, it is essential to analyze the impact of various shifts on health, individual life and family life of the paramedics and to take necessary steps to regularize the shift system of paramedics by means of regulating discrepancies in the shift work system. Hence, the study is undertaken in this study area.

sCoPe oF the studY The study has focused paramedics working in three shift duty namely fixed day

shift, fixed night shift and rotating day and night shift. Four paramedical departments namely nursing, pharmacy, laboratory and radiology (Imaging) have been covered in this study. From these four departments qualified nurses (Diploma in General Nursing and Midwifery and Bachelor of Science in Nursing), pharmacists (Diploma in Pharmacy and Bachelor of Pharmacy), radiographers (Diploma in Medical Radiographic Technology and Bachelor of Science in Radiographic Technology) and laboratory technicians (Diploma in Medical Laboratory Technology, both 1 year and 2 year courses) have been covered.

siGniFiCAnCe oF the studYThe result of the study will be useful for hospital management and other similar

organizations which follow shift work system to understand about difficulties faced by the paramedics having different shift works in terms of their physical health, individual life and family life. This will, in turn, make them to realize the disparities on management side in allocating shift work and give them opportunity to take necessary steps either to eliminate or correct the irregular, unhealthy and other discrepancy in the shift system which is being followed. The factors discussed in this study and the suggestions provided in this research work will be helpful for the paramedics to know about the risk factors involved in their job and develop the coping strategies to manage the shift related issues in terms of health, individual life and family life. This research work will be the source of secondary data for future research work.

Shift Work Impact among Paramedics: A Comparative Analysis


reseArCh oBJeCtivesThe following objectives have been framed to guide the study.

YY To identify and differentiate the risk factors associated with shift work of the paramedics

YY To compare the impact of shift work on physical health, individual life and family life of the paramedics having different shift duty

YY To investigate and differentiate the extent of perception towards impact of shift work on physical health, individual life and family life of paramedics of various shift work

YY To offer suitable suggestions to overcome the shift work related issues

revieW oF LiterAture Shift work can be described as an arrangement of working hours that uses

two or more teams to cover the time needed for production (Harma, 1993). It can also be defined as any regular employment which is taken outside the 7:00 am and 6:00 pm interval (Monk and Folkard, 1992). It comprises work patterns that extend beyond the conventional 8-hour daytime work day. The term night shift can be defined as work performed after 6pm and before 6am the next day, therefore, the activity at night will be out of phase with the circadian body temperature and other coupled rhythms.

Today, shift work is regarded as a significant occupational stressor which can have marked negative effects on both health and well-being (Tuschsen, 1993; Bohle 1997; Smith et al., 2000). It is also purported to act as an oxidative stressor, which is particularly relevant to the pathogenesis of cardiovascular disorders (Sharifian et al., 2001). In addition, as individual biological rhythms, re-entrain to a time shift at different rates, each time the work schedule rotates, for a period of time after the time shift, the circadian system will be in a desynchronized state. This disorientation can lead health, psychosocial effect such as feeling of fatigue and disorientation (Abdalkader and Hayajneh, 2008).

Rajan and Chandrasekaran (2013) identified the risk factors associated with work shift and examined its impact on physical health, individual life and family life of the paramedics. The results of the study showed that two shifts work system with 12 hours duty is followed in the study area. Tiredness, drowsiness and sleepiness, difficulty in initiating and maintaining sleeping are the foremost impact of shift work on physical health of paramedics. Work life imbalance and developing stress are the foremost impact of work shift on individual life. Difficulty in child care and lack of time to spend with children and other family members is the foremost impact of work shift on family life of paramedics. Hypotheses of the study have proved that demographic variables, age and marital status of the paramedics have

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no significant relationship with risk factors associated with shift work and impacts of shift work on physical health, individual life and family life of the paramedics.

Stimpfel et al., (2012) investigated the relationship between hospital nurses’ shift length and three nurses’ outcomes namely burnout, job dissatisfaction and intention to leave the job from a sample of 22,275 registered nurses. The result of the study showed that 65 percent of nurses worked shifts of 12-13 hours, 26% percent worked shifts of 8-9 hours and the remaining nurses worked shift of either 10-11 hours or more than 13 hours. Nurses working shifts of 12 hours or longer were higher in teaching and high technology hospitals. Nurses working in ICU were more likely than medical or surgical reported being satisfied with scheduling practices at their hospital. The percentages of nurses reporting burnout and an intention to leave the job increased incrementally as shift length increased. The percentage of nurses who were dissatisfied with the job was similar for nurses working the most common shift lengths, 8-9 hours and 12-13 hours, but it was higher for nurses working shifts of 10-11 hours and more than 13 hours. Increase in shift length was associated with significant increases in the odds of burnout, job dissatisfaction and intention to leave the job. The odds of burnout and job dissatisfaction were up to two and a half times higher for nurses who worked longer shifts than nurses who worked shifts of 8-9 hours. Compared to nurses who worked shifts of 8-9 hours, nurses who worked shift of 10-11 hours had a greater likelihood of being burned out, being dissatisfied with the job and intending to leave the job. The odds of these unfavourable outcomes were highest for nurses who worked shifts of more than 13 hours. The study also found that nurses’ shift length was significantly associated with patient satisfaction. Increases in the proportion of nurses working shifts of more than 13 hours were associated with increase in patient dissatisfaction. Having higher proportions of nurses working shorter shifts 8-9 hours of 10-11 hours resulted in decrease in patient dissatisfaction.

Garg (2012) undertook the research with the objectives of synthesizing the association of shift work with major vascular events as reported in the literature. The study assessed three variables namely myocardial infarction, ischemic stroke and coronary events and results revealed that shift work status was associated with an increased risk of the three variables considered for the study. The study also explained that shift work is associated with neoplasia, increased risk of breast cancer among female military employees working night shifts. The study suggested that shift workers should be educated about cardiovascular symptoms in an effort to foretell or avert the earliest clinical manifestation of the disease.

Eberly and Harvey Feldman (2010) examined the impact of shift work on obesity in the General Population and showed that late shift workers (evening and night shifts) experienced more weight gain than did day workers since beginning their respective shifts. Night workers reported an increase in food intake, later lost



daily meal times, more and longer naps and less exercise, all of which may have contributed to their greater weight gain. Safianopoulos et al., (2010) reviewed the number of research articles related to the shift work and reported that shift work affect the quantity and quality of sleep on pre hospital emergency providers. Shift work not only affects physical well being but also affects psychological state of mind, clinical judgment, decision making responsibilities and their driving leading to personal unsafely.

Allard dembe, (2009) compared the rates, typologies, costs, and disability time of injuries for various hospital worker occupations by day, evening, and night shift and found that relative to day shift workers, the risk of sustaining an occupational injury was greater for evening shift workers and night shift workers. The risk of injuries due to violence was also found to substantially increase for workers on the evening shift and night shift. Workers on the night shift took about a week longer in disability leave for injuries compared to the overall average. Evening and night shift hospital employees were found to be at greater risk of sustaining an occupational injury than day shift workers, with those on the night shift reporting injuries of the greatest severity as measured by disability leave.

Zhao Isabella (2009) analyzed the associations between shift work and work related injuries among health care workers and examined the association of shift work with blood or body fluid exposure, musculoskeletal disorders and motor vehicle crashes. The results showed that there was a significant relationship between work shift and occupational accidents such as drug administration errors, incorrect operations of medical equipment, errors in patient identification and needle stick injuries. Night or split or irregular shift work was not significantly associated with needle stick injuries. Working long hours (more than 12 hours) were significantly associated with musculoskeletal disorders of neck, shoulder and back. The results of musculoskeletal disorders in the neck and shoulder were not statistically significant. Nurses working rotating day or evening shift experienced more severe gastrointestinal and musculoskeletal symptoms when compared with others. Evening and night shift employees were found to be at greater risk of sustaining an occupational injury compared to day shift workers and it had been acknowledged that there was a higher number of motor vehicle crashes and near crashes while driving home after a night shift compared with other shifts. Night shift workers were significantly more likely to report difficult performing routine orders.

Williams Cara (2008) assessed the impact of work schedules and demographic and socio economic variables on work life balance and role overload for men and women. Time use patterns are slightly different among shift workers. Virtually all shift workers spent less time with their spouse than those who worked a regular day schedule. Shift workers were significantly more likely to be dissatisfied with their work life balance than regular day workers. They were also more likely to suffer

Rajan


from role overload. Those working on call or other shifts had significantly higher levels of dissatisfaction with work life balance than day workers and they were more likely to worry about not spending enough time with family. Shift workers are more likely to feel that they have too much to do and not enough time. The study concluded that satisfaction with work life balance and role overload are related not only to workers’ schedule but also to complex interaction of hours worked, self perception and general feeling of well being.

Conway (2008) studied the effect of shift work, age and work stress among health care workers from a sample of 1842 hospital workers in Northern Italy. The study evaluated both day workers and rotating shift workers (nights included). The study found that shift work was associated with poor sleep, poor work ability and job dissatisfaction. Work stress was the risk factor with the highest relevance for poor health. Ageing was associated with lower physical health. Shift work with nights and high work stress significantly interacted in increasing the risk for poor sleep.

Reeves et al., (2004) investigated the effect of shift work on food intake and eating patterns in order to assess the impact of this on health from a sample of 36 shift workers. The results explained that night workers did not eat more than day workers, but ate smaller meals and snacks over a greater time frame. Night-shift workers revealed significant differences in food intake patterns on work and rest days, while day workers did not. Because shift work is a factor in the timing of food consumption, and typically there is a lack of good food facilities at night, it is suggested that this has the potential to cause difficulties in the establishment of healthy eating patterns. The study suggested the employers to review the food and dining facilities available for night staff to maximize healthy eating options.

It is clear from above literature review that the study which was undertaken earlier in the study area terms of shift work of paramedics has covered only night shift workers and it has not focused day shift and rotating day and night shift workers. The present research has also focused on day shift and rotating type of day and night shift along with night shift.

reseArCh methodoLoGYThis survey based research work is descriptive in nature. The sample for

this research were paramedical employees. A total of 90 paramedical employees (30 respondents from fixed day shift, 30 respondents from fixed night shift and 30 respondents from rotating day and night shift duties) have been sampled from private multi specialty hospitals using both convenient and judgment sampling techniques. Primary data was collected by survey method using self-developed questionnaires which consists of three sections. Section ‘A’ deals with demographic details of the respondents, section ‘B’ consists of risk factors associated with shift



work and section ‘C’ contains the impact of shift work on physical health, individual life and family life of paramedics. Section B and C comprises items on a five point Likerts Scale ranging from Strongly Agree-5, Agree-4, No opinion-3, Disagree-2 and Strongly Disagree-1. Primary data was collected through observation and personal discussion with the respondents. Secondary data was collected from books, journals, and internet. Simple average method was applied to analyze the demographic details of the respondents, weighted average method to examine the risk factors associated with shift work, impact of shift work on physical health, individual life and family life of paramedics and mean, standard deviation and coefficient of variation to compare the impact of shift work and extent of perception towards impact of shift work.

resuLts And disCussion

Demographic profile of the respondents: 20% of the respondents are male; 71.11% of the respondents are married; 17.78% of the respondents are below 25 years of age, 37.78% are between 25 to 30 years of age, 28.89 % are between 30 to 35 years of age and 15.56% of the respondents are above 35 years of age. Nursing, pharmacy and radiography departments each comprised 25.56% of the respondents and medical laboratory 23.33% of respondents. The study sample had equal proportion of Paramedics who worked fixed day shift, fixed night shift and rotating day and night shift.

20% of the respondents hold diploma in nursing, 5.56% of the respondents hold bachelor of nursing degree, 16.67% of the respondents diploma in pharmacy, 8.89% of the respondents are bachelor of pharmacy, 14.44% of the respondents are DMLT (1 Year), 11.11% of the respondents are DMLT (2 Years), 3.33% of the respondents are B.Sc radiography, 20% of the respondents are DMRT (2 Years).

24.44% of the respondents have below 1 year of experience, 41.11% between 1and 5 years of experience, 25.56% between 5 and 10 years of experience and 8.89% of the respondents above 10 years of experience. 20% of respondents are drawing monthly salary below Rs.6000, 53.33% between Rs. 6000 to 9000, 15.56% Rs.9000 to 12000 and 11.11% above Rs. 12000.

Table 1: Risk Factors Associated with Shift Work

SNo Factors associated with Shift Work

Total Score

Fixed Day Shift Fixed Night Shift Rotating Day and Night Shift

1 Long working hours 278 278 278

2 Irregular schedule of shift 0 0 276

3Inability to leave the duty in time due to late arrival of opposite shift staff

262 266 266

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SNo Factors associated with Shift Work

Total Score

Fixed Day Shift Fixed Night Shift Rotating Day and Night Shift

4 Inequity in the allocation of shift work 260 260 262

5

Absence of seeking consent of staffs before scheduling shift work and not giving importance to the interest of the staffs in choosing their shift

0 0 264

6

Working alone at night due to poor scheduling of the manager which creates inadequate safety

0 254 254

7

Difficulty to contact the consultants or administrative staffs during emergency situations and inadequate catering facilities at night

200 249 249

8

Inadequate staff in ward and performing work additionally which has been left by opposite shift staff

210 234 234

9 Attitude of seniors to change the shift for their convenient 0 o 246

10Inadequate lighting facilities at night shift which induce head ache and eye strain

0 240 240

11Being extended the shift due to ‘leave’ or ‘absent’ of opposite shift staff

0 0 220

12

Inadequate interval (off) between two shifts and missing of properties while changing shift

0 218 226

Source: Primary Data

It could be inferred from table 1 that the factors long working hours (2 shift work system with 12 hours duty) and inability to leave the duty in time due to late arrival of opposite shift staff are equally perceived by all three kinds of shift workers. From the equal importance given to these factors it could be understood that they are dissatisfied with working hours and shift system. In view of the importance given to these factors, it could be indicated that they are in need of change in working hours and shift system.

The factors, Working alone at night due to poor scheduling of the manager which creates inadequate safety (inadequate safety), difficulty to contact the consultants or administrative staffs during emergency situations and inadequate catering facilities



at night, inadequate staff in ward and performing work additionally which has been left by opposite shift staff and inadequate lighting facilities at night shift which induce head ache and eye strain have been equally reported by both fixed night shift and rotating day and night shift employees. More importance given to these factors may be due to allotment of lack of nurses and other supportive staffs and incomplete work of other shift workers which enhance their work load. The respondents also reported that they found difficulty to contact medical personnel and administrative staffs during night shifts and food are not kept available in canteen during night shifts.

Irregular schedule of shift (e.g. too long night shift, too long day shift), inequity in the allocation of shift work (e.g. in-charge or manager being in favor of seniors or some staffs who are their relatives or friends), absence of seeking consent of staffs before scheduling shift work and not giving importance to the interest of the staffs in choosing their shift (autocratic style of in-charge in scheduling the shift), attitude of seniors to change the shift for their convenience, extending the shift due to ‘leave’ or ‘absent’ of opposite shift staff and inadequate interval (off) between two shifts and missing of properties while changing shift have been highly reported by rotating day and night shift employees than fixed day and fixed night shift employees.

Table 2: Impact of Shift Work on Physical Health

SNo Physical Health

Total Score

Fixed Day Shift

Fixed Night Shift

Rotating Day and Night Shift

1 Tiredness, drowsiness and sleepiness 180 285 285

2 Difficulty in initiating and maintaining sleeping 120 282 282

3 Inability to get up from the bed 120 265 265

4 Head ache and eye strain including migraine due to dimmed light 110 260 260

5 general body pain 200 258 258

6 Feeling worse in the morning 128 253 253

7 Loss of appetite and stomach ulcers 200 258 258

8 Indigestion, constipation and abdominal pain 120 242 242

9 Dry mouth 200 224 224

10 Sore throat and heart burn 200 223 223

11 Fatigue 190 220 220

12 Irregular menstrual 130 230 230

Source: Primary data

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It could be observed from table 2 that all factors related to physical health mentioned are equally and highly experienced by both fixed night and rotating day and night shift employees because of variation of their physiological functions during night shift.

Table 3: Impact of Shift Work on Individual life

SNo Individual Life

Total Score

Fixed Day Shift

Fixed Night Shift

Rotating Day and

Night Shift

1 Work life imbalance 160 256 258

2 Developing stress 246 252 252

3 Demotivation due to autocratic style of in-charge and seniors interruptions in changing the shift 249 249 249

4 Inability to get relaxed and switch off from the work thoughts after the work 249 249 249

5 Increased use of coffee and tea to get relaxed and to reduce stress 220 242 242

6 Depression and negative thinking 232 234 242

7 Impaired efficiency and productivity 210 226 234

8 Reduced attention and impaired performance in the work 180 224 236

9 Impairment in logical thinking and decision making and poor concentration 179 223 238

10 Job dissatisfaction and lack of interest to finish the work in time 178 218 228

11 Availing leave frequently due to tiredness and over work load 160 203 228

12 Increased risk of accident 146 195 195


It could be noted from table 3 that the factors, de-motivation due to autocratic style of in-charge and seniors’ interruptions in changing the shift and inability to get relaxed and switch off from the work thoughts after the work are equally experienced by all three shift workers. From this equal response, it could be understood that all the three kinds of shift workers are not satisfied with their manager’s leadership style and they are suffering with seniors’ interruptions in their work shift and high work load which make them not to forget the thoughts about the work after leaving the job. In light of the importance given to these factors it is an indication that they are in need of change in leadership style of their managers and continuous monitoring of seniors activities with their juniors in terms of their shift work. Factors namely developing stress, increased use of coffee and tea to get relaxed and to reduce stress and increased risk of accident are equally experienced by both fixed night and rotating day and night shift workers. They reported that they take more coffee and tea in night shift in order to postpone their sleep. Besides, as they have to be awake throughout night they develop stress which further leads to accidents.



Factors namely work life imbalance, depression and negative thinking (e.g. quarrels with co workers and blaming others), impaired efficiency and productivity, reduced attention and impaired performance in the work (e.g. committing errors in the job), impairment in logical thinking and decision making and poor concentration, job dissatisfaction and lack of interest to finish the work in time and availing leave frequently due to tiredness and over work load are highly experienced by rotating day and night shift workers than other two types of shift workers.

Table 4: Impact of Shift Work on Family Life

SNo. Family Life

Total Score

Fixed Day Shift

Fixed Night Shift

Rotating Day and Night

Shift

1 Difficulty in child care and lack of time to spend with children and other family members 220 266 266

2 Trouble helping children with their home work, meeting teachers, chaperoning school trips 220 264 264

3 Decreased alertness due to tiredness, depression and anxiety 190 262 262

4 Emotional behavior towards family members 196 258 258

5 Poor home management, feeling of isolation and avoiding or postponing the work 200 254 254

6 Refusal to comply with the interest and decisions of the family members 196 251 251

7 Inability to take part in sports groups or clubs 248 110 248

8 Lack of time to spend with friends who do not work with shift work 244 120 244

9 Inability to take the children to leisure activities such as clubs and sports 240 130 230

10 Lack of energy and less time to take part in hobbies 220 240 240

11 Alienation from family responsibilities 190 240 240

12 Less diet and poor access to whole some food 170 225 225


It could be inferred from Table 4 that difficulty in child care and lack of time to spend with children and other family members, trouble helping children with their home work, meeting teachers, chaperoning school trips, decreased alertness due to tiredness, depression and anxiety, emotional behaviour (anxiety and irritability) towards family members, poor home management, feeling of isolation and avoiding or postponing the work, refusal to comply with the interest and decisions of the family members, lack of energy and less time to take part in hobbies, alienation from family responsibilities and less diet and poor access to whole some food are equally and highly perceived by both fixed night shift and rotating day and night shift workers than fixed day shift employees. In light of the importance given to

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these factors it could be understood that their work life has majorly been occupied by night shift and hence forth their entire family life is affected.

The factors, inability to take part in sports groups or clubs because of varying shift pattern and lack of time to spend with friends who do not work with shift work are equally and highly perceived by both fixed day and rotating day and night shift employees than fixed night shift employees. The factor, inability to take the children to leisure activities such as clubs and sports is highly perceived by fixed day shift employees than other two shift employees. It may be due to long working hours of the duty and inability to leave job in time.

Table 5: Perception towards Impact of Shift Work

SNo ImpactExtent of Perception

Fixed Day Shift Fixed Night Shift Rotating ShiftLow Medium High Low Medium High Low Medium High

1 Physical Health 15 68. 33 16. 67 13.33 16. 67 70 16.33 16 67.67

2 Individual life 23.33 55 21. 67 18.33 11. 67 70 14.67 19.33 66

3 Family life 18.33 61. 67 20 11.67 20 68. 33 21.67 17 61.33

Source: Computed from primary data

Table 5 indicates that the perception towards impact of shift work on physical health, individual life and family life of employees is at medium level among fixed day shift employees, whereas the impact is high among both fixed night and rotating day and night shift employees.

Table 6: Comparative Analysis of Impact of Shift Work

SNo ImpactFixed Day Shift Fixed Night Shift Rotating Shift

Mean SD CV Mean SD CV Mean SD CV1 Physical Health 22.73 3.57 15.71 20.89 4.73 22.64 19.28 4.26 22.102 Individual life 21.36 5.54 25.94 20.73 4.82 23.25 19.16 4.24 22.133 Family life 20.97 5.03 23.99 19.37 4.53 23.39 18.23 3.22 17.66

Source: Computed from primary data

It is evident from Table 6 that the impact of shift work on physical health stands first among all kind of shift work employees, individual life and family life are next in line among all three kinds of shift work employees.

disCussionThe results of the present research has indicated that fixed night and rotating

day and night shift workers show irritation and angry with members. This finding go in par with the study of Costa, (1996) and Staines and Pleck (1984) who highlighted that shift work affects the psychological and emotional wellbeing of employees, with serious consequences for family life. In the present study, the respondents of night and rotating day and night shift has indicated that they were not able to look



after their children and they show irritation among family members. These results are similar with the study of Demerouti et al., (2004) who indicated that the work family conflicts associated with afternoon or evening shifts arise because workers have to neglect the key family responsibilities that typically occur after school and in the early evening. The same findings also go in line with the study of Yeung et al., (2001) who observed that shift workers often are unavailable for the range of parenting activities that typically occur during the evening and afternoon, such as personal care activities (grooming, medical appointments, meal preparation), play and companionship activities, achievement-related activities (homework, reading, educational lessons), and extracurricular activities (sports, scouting, religious classes, music lessons).

The present study has indicated that both fixed night shift and rotating day and night shift are prone to accidents because of the lack of sleep. This finding provide support for the evidence of National Transportation Safety Commission which reported that in each year 100,000 of the accidents were occurring and these were due to driver fatigue and rotating shift workers (Sorenson, 1999). The same finding is also corroborated with the study of Scott, et al., (2007) who found that nurses reported drowsy in driving after working, especially when sleep duration was shortened; with those on night shifts more severely affected. These results are in line with those of Crofts (1999), Steele (1999), Akerstedt (2005), Barger (2005) and Santhi (2007), and their productivity is also likely to be affected.

The present study has highlighted that paramedics working in fixed night shift and rotation type of day and night shift develop more stress. This finding go in par with the study of Dorrian et al., (2006) who reported that nurses on night shifts had high levels of stress, physical exhaustion, and mental exhaustion. The result of the present study also highlights night shift workers find sleeplessness. This finding is consistent with the study of gold, et al., (1992) who indicated that one of the consequences of working long shifts or working nights can be a decrease in the total amount of sleep for an individual. Many who work night shifts report that their total sleep is five or six hours. Irritability and anxiety are found among night and rotating shift workers, which are in line with the results of the study by Puca (1996) who noticed that shift work negatively affects quality of life and it also indicated that shift workers in general experienced higher levels of anxiety and irritability and demonstrated a greater tendency to ignore stress than did day workers.

The results of the present study such as poor sleep, use of excessive tea coffee to postpone the sleep, job dissatisfaction, disruption of physical health, family life and fatigue are in line with the study of Smith et al., (1995); and effects on health such as loss of appetite, abdominal pain and constipation resemble with the study of Angersbach (1980) who showed that approximately 50% of permanent night-shift workers have appetite disturbances or gastrointestinal problems. Findings such as

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less diet and poor access to whole some food provide support from the study by LaDou (1982) who addressed that shift work causes difficulty of obtaining nutritious meals and the lack of a customary social environment for food consumption, sleep disturbances.

The present study has identified that drowsiness is highly experienced by shift work. This finding go in par with the study of Scott (2007) who revealed that night-shift working nurses experience at least one episode of drowsiness while commuting to home. The result of the current study such as impaired performance, poor concentration, poor alertness are in line with the study of Dijk (1992) and Walker (2005) who reported that memory consolidation, learning, alertness, and performance are severely affected by sleep deprivation, impaired performance, even in the absence of circadian misalignment, and studies by Alapin (2000); Rajaratnam (2001); and Reimer (2003) revealed that work shift has detrimental effects on memory, impedes concentration, and impairs learning and work performance, regardless of its etiology.

The present study indicated that due to shift work and long working hours the paramedics find difficulty to spend sufficient time with family members, take care of their children and balance their work and family life. These results are corroborated with the study of William (2008) who pointed out that shift workers are not able to spend enough time with family or friends and women in general had a higher incidence of work-life imbalance. They spend very less time with their children and spouse than day workers. The present research explains that long working hours affects the health, individual life and family life of paramedics which correlates with the findings of the study of Smith (2005) which shows that extent and nature of working time raises a number of implications both for behavior and occupational health. The results such as impaired performance and reduced attention are consistent with the study of Rogers et al., (2004) who revealed that the risks of making an error were significantly increased when work shifts were longer than twelve hours, when nurses worked overtime, or when they worked more than forty hours per week.

suGGestions The following suggestions are given by the researcher based on findings of the study.

YY The hospital management should take necessary steps to convert 2 shifts work system into 3 shifts with 8 hours duty as long working hours consumes more energy and it does not allow them to concentrate in their family life. The shift system and working hours should be in par with government hospitals (3 shift system with 8 hours duty).



YY The allocation of shift should be done fairly and the consent of the staff may be obtained to know their interest and their personal and family commitment. The shift change and rotation of ward should not be done autocratically. All staffs should be treated equally in terms of scheduling and changing the shift. Higher officers like directors, doctors, administrators and managers should avoid involving in shift allocation especially fixed day and fixed night shifts for employees who are in favor to them.

YY Shift staff should be strictly instructed to complete the shift work before leaving the duty. Adequate rest break should be given between two shifts. Adequate manpower should be appointed in accordance with the patient ratio in order to reduce work load.

YY Adequate communication facilities should be established and strengthened in order to contact physicians and administrative staffs during night shift in case of crisis situations. The lighting and ventilation facilities should be strengthened in order to protect the eye and respiration. Catering facilities should be created for night shift workers

YY It is encouraged to adjust to the household routing where possible and talk with family members ahead of time about problems that result from shift work and look for solution. Life partner or children can be given opportunity to give their suggestion about how to fit with their activities. Health education should be provided in order to balance both work and family life. It is recommended to arrange with friends to swap child minding duties on work days.

LimitAtions oF the studYThe sample size is limited Tirunelveli city only and it has not covered entire

district. Hence the result of the study cannot be extended to the entire district or other districts and to the entire paramedical groups. The present research has studied the variables namely risk factors associated with shift work on physical health, individual life and family life. Other variables such as mental health, job satisfaction, organizational commitment, morale and quality of work life have not been studied in the present study.

ConCLusionThis present research identified and differentiated the risk factors associated

with shift work, compared the impact of shift work on physical health, individual life and family life and investigated and differentiated the perception towards the impact of shift work of the paramedics having different shift duty. The result of the study has shown that risk factors associated with shift work, impact of shift work on

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physical health, individual life and family life is highly experienced by both fixed night shift and rotating day and night shift than fixed day shift employees. It is important for hospital management to concentrate on health, individual and family life of the employees as it decides their productivity, commitment, involvement in patient care as well as growth of the organization. As shift work is unavoidable in health service, it is also the responsibility of hospital management to make healthy and fair shift schedule so as to protect their health and satisfy their individual life as well as family life.

Present study provides number of directions for future research. Future study can be undertaken covering entire district with a large number of sample. Other variables such as organizational commitment, morale, job satisfaction, quality of work life and mental health could be included in the study. The risk factors of shift work and it impact on paramedics of private hospitals can be compared with paramedics of government hospitals.

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mAnAGinG intAnGiBLes in KnoWLedGe environment: ConCePtuAL AnALYsis

Pradeep Kumar Singh1

ABstrACtIn the current knowledge economy, intangible assets create more utility and

value than the tangible assets. It is a unique asset which sometimes, we cannot see, cannot touch, but its impact is more in value creation and profit generation. In the current competitive environment Indian corporates are focusing on value creation rather than volume. Value creation takes place through innovations, research and development, brand building, relationships and networks–all are intangibles. But, today in the knowledge era it is well accepted that intangible assets are the key drivers of the organizations. The intangible assets such as brand, patents, franchises, software, research program, ideas, and expertise are having major role in the modern era. Management of intangibles is important because in most of the corporate their capital structure is in the form of; Financial capital, Manufactured capital, Human capital, Intellectual capital, Natural capital, and Social capital. Out of these capitals, financial capital, and manufactured capital are directly reported in financial statements but other capitals are not a part of financial statements which leads an unrealistic presentation of financial statements towards various stakeholders in 21st century. Keeping this background this paper analyzes the conceptual framework of intangibles, importance, management of intangibles, current status of intangibles in India and issues related to management of intangibles.

introduCtion In the current knowledge economy, intangible assets create more utility and

value than the tangible assets such as land and building and plant and machinery etc. It is a unique asset which sometimes, we cannot see, cannot touch, but its impact is more in value creation and profit generation. An intangible asset is a claim to future benefits that does not have a physical (e.g. building or equipment) or financial (e.g. stock or bond) embodiment (Lev, 2001). For example, patents, brand names, and unique organizational infrastructures that generate cost savings for companies can be defined as an intangible asset. As defined by The Institute of Chartered Accountant of India (ICAI, 2010) “An identifiable non-monetary asset without physical substance held for use in the production or supply of goods or services, for rental to others, or for administrative purposes.”1Dr. Pradeep Kumar Singh, Assistant Professor, Department of Commerce, Mahatma gandhi

government Arts College, Chalakkara, P.O. New Mahe, Mahe-673311. E-mail: [email protected], [email protected]. Mobile No: 09847629082, 09037588125


In current competitive environment Indian corporates are focusing on value creation rather than volume. Value creation takes place through innovations, research and development, brand building, relationships and networks–all are intangibles. There is growing acceptance within financial accounting circles that modern companies may well have substantial value resting primarily in intangible assets. According to global Intangible Tracker 2007 about 65% of the total value of firms in the world are in the form of intangible assets with India being in third place. It is evident that many companies in India have huge intangibles, but management and reporting is ineffective.

During the last two decades there has been a progressive movement into a knowledge-based, fast changing, technology intensive economy in which investments in human resources, information technology, research and development, and advertising have become essential in order to strengthen the firm’s competitive position and ensure its future viability. But, today in the knowledge era it is well accepted that intangible assets are the key drivers of the organizations. The intangible assets such as brand, patents, franchises, software, research program, ideas, and expertise are having major role in the modern era.

sinGiFnCAnCe oF intAnGiBLes mAnAGement The intangible assets play a vital role in determining the true value of a company

in knowledge economy. The investors attach greater significance to such assets in evaluating their investment in different companies. Due to growth of service sector and information technology especially in the last two decades, intangible assets are important in innovative business environment. Success of a company depends upon the value creation and value creation is associated with innovations, research and developments, brand building, relationship and networks. All these factors are directly or indirectly in the form of intangibles. There are various types of intangible assets such as market related intangibles, customers related IA, artistic related IA, contract related IA and technology related IA etc., all these are important in the business as per their nature of work, which helps to create market share and enhance profitability. Some important research studies also highlight the importance of intangibles in modern era.

Goishy (2008) pointed out the need and valuation of intangible assets because; now a day’s knowledge and intangible assets are supreme as compared to other tangible assets. He had focused on the enterprise assets and contribution of intangible assets in the total value of business of Infosys, Dabur, HUL, glaxo, and Ranbaxy. These are the companies in which contribution of intangible assets are between 70% to 90% of the total value of enterprise. Bhasin Madan (2007) focused on intellectual capital (IC) reporting by Indian firms. He observed that intellectual capital reporting has been receiving increasing attention from accountants’ in recent

Pradeep Kumar Singh


years. Since this concept is a new, it is yet to be fully incorporated in financial accounting reports. At present very few companies are making IC related discloser on voluntary basis. He observed that if IC information’s are not provided, it may adversely influence the decision making process of shareholders.

Chakraborty (2005) focused on the different aspects of intangible value and their impact on corporation’s value creation. He explains economic value addition, total shareholders returns, brand value of pharmaceuticals company on creation of intangible assets. He stressed that intangible assets accounting and reporting is very important for shareholders value creation. Shital (2005) stated that in the age of information and knowledge intangible assets have become the key value drivers. He provides a simple model to help management, stakeholders, investors and other analyst of the financial reports to value intangible assets. He also discussed case studies to show that the market is unable to value intangible assets appropriately, leading to the firm being either overvalued or undervalued.

Management of intangibles is important because in most of the corporates their capital structure is in the form of; Financial capital, Manufactured capital, Human capital, Intellectual capital, Natural capital, and Social capital. Out of these capitals, financial capital, and manufactured capital are directly reported in financial statements but other capitals (major part of capital and value creation activities) are not a part of financial statements which leads an unrealistic presentation of financial statements towards various stakeholders.

trAditionAL ACCountinG And intAnGiBLesTraditional accounting and reporting practices had not encouraged corporate’s

to manage and disclose information related to intangibles in the current environment. Therefore, current practices of management of intangibles are irrelevant because, conventional financial statements have not been useful in the global transition towards a knowledge driven economy. Discloser of information for intangible assets requires the development of a theoretical basis upon which recognition and measurement criteria may be set.

There are several studies conducted by the researchers abroad regarding the relevance of disclosure and reporting of intangible assets in the financial statements. Lajilil and Zeghal (2005) suggested that; companies disclosing human capital information, such as labor costs, command higher equity market values in general. There may be market opportunities for firms with valuable human capital to differentiate themselves from their competitors which would encourage human capital discloser practices. According to Hirschey, Richardson and Scholz (2001) the importance of non financial information to investors is widely recognized. Companies should provide footnote discloser of patent quality information. It is necessary to mandate additional disclosers of patents quality as long as independent

Managing Intangibles in Knowledge Environment: Conceptual Analysis


sources of such data remain widely available to investors. According to Amir and Lev (1996), traditional accounting information lacks value relevance in today’s fast changing, technology based industries. Hence in the current markets measures such as penetration or potential number of customers, the proxies for intangibles are fundamentals determinants of the corporate value in such industries.

On the other hand there is increasing awareness among the investors about information provided by companies in their financial reports. They need significantly qualitative nature of financial reporting because of relevancy, faithful representation, comparability and understandability. At India level qualitative nature of reporting is affected by factors such as; capital market pressure, product market, labor market, corporate governance laws and voluntary reporting practice by the industries. Similarly reporting and discloser framework based on the requirement such as internal reporting and external reporting practices.

Kinds oF intAnGiBLe Assets According to Bontis’s (2000) classifications, intellectual capital can be divided

into three categories:

Human capital Structural capital Relational capital

Knowledge, competence, skill and experience of the employeesTrainingNetworks

Organizational processDatabase and softwareManual and trademarksLaboratories and market intelligenceAssembled work force-the relationship with business and its employees training, employees contractsLeadershipOrganizational capacity, for saleable innovationsOrganizational learning capacityLeaseholds and franchisesPatents and mineral rights

Customer relationshipCustomers loyalty and satisfactionDistribution relationship and agreementsRelationship with partners and other stakeholders

Human Capital consists of the people working for the company. Human capital is defined as the knowledge that employees take with them when they leave the firm. It includes the knowledge, skills, innovation capacity, creativity, know-how, previous experiences, team work capacity, and employees’ flexibility, motivation, learning capacity, loyalty, formal training and education. Human capital is often recognized as one of the largest and most important intangible asset in an organization.

Structural Capital is defined as the knowledge that stays within the firm at the end of the working day. Structural capital is often referred to as what is left when the employees go home at night and is considered the “hard” assets of the firm. It consists of the supporting resources and infrastructure of a firm and includes all

Pradeep Kumar Singh


the assets found in the financial statement of a firm, such as cash and equivalents, property, buildings, and equipment. Structural capital is again divided into parts namely internal structure and external structure. Internal structural includes patents, process, technology, research and development activities, culture, concept, models and computer and administrative system. External structure includes brand names, trademarks, reputation and image etc.

Relational Capital is defined as all resources linked to the external relationship of the firm, with customer’s suppliers or R&D partners. It includes part of human and structural capital involved with the company’s relations with the stakeholders such as investors, creditors, customer suppliers etc. plus the perception about the company. Relational capital comprises not only customer relations but also the organization’s external relationships with its network of suppliers, as well as its network of strategic partners and stakeholders. The value of such assets is primarily influenced by the firm’s reputation. In measuring relational capital, the challenge remains in quantifying the strength and loyalty of customer satisfaction, longevity, and price sensitivity (Zambon, 2002).

Enterprise

Tangible Capital Intellectual Capital Financial Capital

Human Capital

Knowledge, Skills, experience and abilities of the

employees

Organizational Capital

The R&D activities, the organizational routines,

procedures, systems, databases and intellectual

property rights of the company

Relational Capital

All resources linked to the external

relationships of the firm, with customers,

suppliers, R&D partners

Source: Ahmed Bounfour (2005): “Modeling and Reporting Intangibles in the Knowledge Economy A European Perspective”, pp 30.

PAttern oF intAnGiBLes mAnAGementMost of the Indian companies are managing intangible assets in the form of

additional information other than financial statements. Some important forms of intangible assets are as follows:



YY human resource valuation: They provide information about total number of human resources, their valuation and per human resource value etc, for the benefits of various stakeholders

YY value-added statement: They provide information through value addition for the company and their disbursement for the various stakeholders such as employees, capital providers, to the government, and for the development of their own business by way of reinvestment.

YY Brand valuation: The provide information about the brand value and valuation methodology, because within the intangible assets, brand is one of the important assets which attract customers and generates additional revenue at national and international level.

YY economic value-Added (evA®) statement: EVA is another way for the reporting of intangible assets. If the firm is in a position to generate economic value added, it indicates that they are generating additional money for the shareholders; otherwise they are destroying the precious wealth of the shareholders.

YY Balance sheet (including intangible Assets): Now a day’s most of the companies are also publishing additional balance sheet along with the intangible assets just for showing the real wealth created by the company and real position of the company after incorporation of the intangible assets along with the tangible assets.

YY intangible assets score sheet: This is the new way of reporting for the intangible assets. Most of the Indian companies (especially in IT sector) are collecting information about the internal and external structure of the company, their different methodologies, consistency of clients, repeat orders, employee’s index based on education and qualifications etc. They are providing the intangible assets score sheet for the benefit of the various stakeholders to know the real earning and managerial capacity of the company.

mAnAGement oF intAnGiBLes Similar to other assets, intangible assets have a life cycle, which requires to

be managed to achieve its optimum utilization. There are three different origins of the intellectual capital management movement: The first was in Japan with the ground breaking work of Hiroyuki Itarni (1980), who studied the effect of intangible assets on the management of Japanese corporations. The second was the work of a disparate set of economists (Penrose, Rumelt, Wemerfelt, David Teece, 1986) seeking a different view or theory of the firm. Finally, there was a group of work

Pradeep Kumar Singh


consisting of authors such as Sveiby (1997) from Sweden who addressed the human capital dimension of intellectual capital.

In India, the framework for management of intangible assets rests on the following four key components as suggested by Singh Arpinder (2009)

YY Policies which denote an entity’s commitments to formal management process covering all business areas.

YY Procedure which provide the mechanism for implementing the policies.YY People needed for a successful rollout of policies and procedures. People

within the entity need to be educated about the purpose and significance of the policies and procedures by communicating relevant issues and providing necessary training.

YY Technology acts as an enabler. It can be used as a means of automating the management process and monitoring the assets usage.

It is around this framework that best practices concept and policies have been designed to mange and protect certain intangibles assets critical to business of various entities.

Current stAtus oF intAnGiBLes mAnAGementAs per the analysis of accounting standard for intangibles, IFRS and annual

reports of the various companies, the following is the current status of the intangibles in India:

YY Only purchased intangibles can be reported in financial statements under the head of fixed assets.

YY Self generated intangibles cannot be recognized and reported in the financial statements. Some companies are using voluntary reporting method as supplement statement for self generated intangibles.

YY Depreciation is permissible at 25% on the acquisition value of the intangibles after 1.04.1998.

YY There is no clear provision for depreciation on certain known intangible assets such as, goodwill, employees’ contracts, vendor/customer contracts, distributorship rights, non-compete rights, customer lists, service process flows, knowledge databases, brands, etc.

YY Research expenses cannot be capitalized as intangibles but certain development expenditure can be capitalized as intangibles for reporting point of view.

YY Intangibles that are not recognized as an asset such as customer base, customer service capability, presence in geographic markets or locations, non-union status or strong labor relations, ongoing training or recruiting



programs, outstanding credit ratings and access to capital markets, and favorable government relations etc.

YY Intangibles that are not recognized in the financial statements and highly innovative companies where intangibles play a significant role have much greater difficulty in attracting investors and banks.

ALternAtive rePortinG methodAlternative reporting and disclosure for intangible assets are essential

because traditional reporting practices are not sufficient to fully disclose the value and information related to intangibles. In recent times many companies have voluntarily started reporting of intangibles in their annual statement/reports for the benefit of various stakeholders. Investors all over the world are demanding more reliable and relevant information on companies’ financial performance, as well as more transparent information on corporate value including intangibles. Due to the current harmonization initiatives it is essential to understand the current reporting practices of emerging market companies related to IA. At present there are many alternative reporting methods in practice such as, EVA (Economic Value Added), Human Resource Accounting (HRA), The Intangible Assets Monitor, The Skandia Navigator, The Balanced Scorecard etc. These methods are most recognized methods for intangibles reporting and disclosure. Few Indian companies namely BHEL, Infosys, Hero Motors, HUL, Marico, Dr Reddy’s etc. are providing information about EVA and HRA in their financial statement as voluntary reporting practices.

issues in mAnAGement oF intAnGiBLesThe management of intangibles is difficult due to the following reasons:YY Companies have less control over intangibles due to unstable nature,

which causes higher risk. YY If a company fails; its intangible assets cannot be sold off easily like the

tangible assets. This is the problem related to realization of intangibles.YY There is no effective market for intangibles, because of different and

unique nature.YY Management has no incentive to share the information about intangibles.

Sharing the information would further complicate investor relations. YY Intangible assets essentially represent the secret of a business enterprise.

If, the company shares those secrets with the investors (and with the competitors), it could enhance the competition level or decreases their monopoly in the market.

YY Intangibles by its very nature are unique assets and high degrees of illiquidity are attached to the assets.

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YY Non-availability of market benchmarks for accounting and valuation.

intAnGiBLes mAnAGement-trends oF indiAn ComPAnies

After the analysis of the contents of annual reports and other information related to management of intangibles, the following trends are observed:

YY Many industries such as FMCg, Banking etc. are having effective intangibles, but their monitoring system is not appropriate, hence the intangibles are out of the records and financial reporting system.

YY Most of the Indian companies implemented the system for monitoring of intangible assets in the last 3-5 years. Only few companies such as Infosys are following a monitoring system which is as old as 10 years.

YY Many Indian companies are disclosing the information related to intangibles in their annual reports under the accounting polices and annexure.

YY Human Resource Accounting, Economic Value Added, Value Added Reporting are the most common and popular methods adopted to disclose and report the intangibles.

YY Technical know-how, Trademarks and Application Software’s are the highly preferred intangible assets by the Indian companies to be disclosed as additional information in financial statements.

YY Customer’s relationship, Order backlogs, Supplier relationship, Non-compete fees are the subsequent preferences of the Indian corporates as intangibles.

YY Indian corporates are not ready to disclose information about some secret intangibles such as; organization structure, organizational culture, companies’ strategies, process and procedures in their financial statements due to competitive advantages over competitors and secret nature of such information’s.

YY Many effective intangible assets are not reported and disclosed by the Indian corporate’s due to limitations under AS-26 (value of self generated assets are zero they are not a part of financial statement).

ConCLusionInformation about intangible assets is very useful for various stakeholders to

know the earning potential of the company and contribution of intangible assets in the era of knowledge economy. As the contribution of service and knowledge oriented industry is increasing in our economy (52% of GDP) intangible assets are having a greater importance in earnings as well as wealth creation for the shareholders.



But unfortunately current accounting and reporting practices does not cover up all the intangible assets in financial statement. There are many effective intangible assets which are not recognized by the firm in the current definition and practice due to unstable nature and continuous changes in their structure. Shareholders and investors are away from the real potential of the firm other than tangible assets. Hence, we strongly need an effective system of management of intangible assets. The alternative or supplement disclosure of these intangibles along with the annual published accounts will definitely attract public interest and act as a confidence building measure in the corporate world.

reFerenCesAmir, E. and Lev, B. (1996).Value-relevance of non-financial information: the wireless communications industry. Journal of Accounting and Economics, 22, 3–30.

Bhasin, Madan (2007). Intangible capital reporting: Challenges of standardization and Harmonization. The Chartered Accountant, 55(12), 1842-1858.

Bontis, N. (2000). Assessing knowledge assets: a review of the models used to measure intellectual capital. Framework Paper 00-01, Queen’s School of Business, http://www.business.queensu.ca/kbe.

Chakraborty, P.K. (2005). Intangible accounting practices: A case study of Dr. Reddy’s laboratories ltd. The Management Accountant, 40(5), 362-365.

Chander, Subhash and Mehra, Vishakha (2010). Impact of corporate attributes on intangible assets discloser: Evidence from Indian companies. Indian Accounting Review, 14(2), 35-56.

Choudhary, Jyotirmayee and Mishra B.B. (2010). Role of HR architecture on intellectual capital. Vision, 14(1&2), 35-44.

Jhunjhunwala Shital (2005). Does the market understand Intangibles? The Chartered Accountant, 54 (1),123-127.

Joishy N. Gurudutt (2008). Valuation for intangible assets. The Chartered Accountant, 56(8), 1291-1298.

Lajili, K. and Zéghal, D. (2005). Labor cost voluntary disclosures and firm equity values: Is human capital information value-relevant? Journal of International Accounting, Auditing and Taxation, 14,121–138,

Lev, B. (2001). Intangibles: Management, Measurement, and Reporting, Washington, D C: The Bookings Institution

Singh Aripnder (2009). Intangible assets –An advent to internal audit. The Chartered Accountant. 58(6), 924-928

Singh, Pradeep Kumar (2010). Reporting and discloser model for intangible assets. The Chartered Secretary, 40 (6), 809-820.

Sveiby, K. E. (1997). The new organizational wealth: managing and measuring knowledge-based assets. Berrett-Koehler Publishers, Inc., San Francisco.

Zambon, S. (2002). Accounting, Intangibles and Intellectual Capital: an overview of the issues and some considerations. WP4: Accounting, Audit, and Financial Analysis in the New Economy, University of Ferrara.

Pradeep Kumar Singh


CAse studY on strAteGiZinG rCG Wind teChnoLoGies- BeYond BoundAries

Ketan R. gandhi1

ABstrACt

RCG wind technologies, as third party service provider in wind power sector has to develop comprehensive business strategy to achieve future financial goals. Founders of the firm faces dilemma about which geography they should venture in to, which service products/services out of service portfolios it should promote, which customer segment they should target (B2B or B2C), who the real competitors will be, what should be its pricing strategies, what should be manpower hiring plan, what should be their strategies for learning of acquire knowhow about technologies and machines which they will serve in future and many other business planning, environment, market, customer, revenue etc. challenges. This case can be used in “Service Marketing”, “Service Operation”, “Strategic Management” courses in graduate and post graduate business management programs. This case is about an Indian company in high growth sector, highly competitive environment dominated by global players, faces several challenges in operation, sales and marketing etc., and has to quickly prepare right strategies for future success. This is a comprehensive case with analytic and strategic issues for students to assume role of protagonist and develop strategies.

introduCtion

Mr. g. Rameshchandra, President and CEO of RCg Wind Technologies, Rajkot, India based third party wind farm O&M service firm has returned from a customer meeting from Pune. He looked back from 2006 to today’s meeting, when he and other entrepreneurs started the firm successfully even though there were many start-up challenges, wondering whether he should continue his efforts to change third party O&M market scenario in India and adopt aggressive approach to expand business in India or should focus establishing operations in other developed countries. If founder team decides to focus and expand in local market, he wondered what would be best way forward. Most recently under his leadership, company has got a contract of maintenance from Bangladesh also. As he prepares his presentation for founding team, he wondered what should be his recommendations.

1 Ketan R. gandhi, Sr. Principal Consultant and President, Kgguruji Consulting and Services, Kgguruji Consulting and Services, g1-702, Jasminium, Magarpatta City, Hadapsar, Pune Solapur Road, Pune – 411028. E-mail: [email protected], Mobile Number: 9860687770


indiAn Wind turBine industrY And Future outLooKIndia is the 5th largest in installed capacity of wind turbine with 12000 MW

(World wide 1,75,000 MW installed till 2010). Wind power installations have been growing in India since 1985 and the globe at CAGR 25%+. Vision 2020 of several countries also indicates that future for wind sector will be very good, estimated by wind energy associations 10,00,000 MW more wind turbines will be installed in next decade globally. In India, 15000 MW more is expected in next decade as capacity addition to increase total installed capacity to around 30000 MW, even a moderate growth is considered.

Established turbine manufacturers (OEMs) like Suzlon, Vestas RRB, Enercon India, Vestas India holds more than 80% market share of total installed capacity in India. There are more than 15 other wind energy OEMs either working at medium scale or new entrant diversified industry groups (Reliance Energy, Inox Group etc) trying to establish their operations to participate in growing future local market.

historY oF rCG Wind teChnoLoGies

RCG Wind Technologies (RCGWT) is an organization formed by a team of young professionals having expertise in the wind industry for more than a decade and with a burning desire to develop a company to provide world class service for this growing industry. Founders worked for the industry giants like VESTAS (Formerly NEG Micon), SUZLON, RRB Energy and trained at Denmark, Sweden, Netherlands and India joined hands together to offer services to wind farm project developers, manufacturers, end customer/wind farm owners to facilitate maximizing their ROI.

RCgWT has thoroughly analyzed the requirements of the manufacturers and turbine owners; problems faced by them and finally understood how they could be solved by scientific approach and adopting quality standards. It has the optimum blend of talents in the areas of assembly, erection, Operation and Maintenance, trouble shooting, Technical Auditing and Failure Analysis. Started in 2006 with 10 people, company has reached head count to 160+ (90% engineers, 10% support staff).

rCGWt’s vision And mission

RCGWT’s vision is to achieve Numero Uno position in the International Wind turbine service sector”. “Focus on good Quality and it will take care of everything” is one line mission that firm offers to help customers for maximizing ROI. By offering a quality service to their customers they try to achieve a WIN-WIN situation where both RCGWT and the customers are mutually benefited.

Ketan R. gandhi


rCGWt’s strAteGY And serviCes oFFerinGsThe major problem faced by the Indian wind farm developers/OEMs/owners

is wide gap between the expected and actual generation due to break downs and failures, burgeoning O&M costs, Increased Vulnerability to Grid fluctuations, which all do not augur well for the growth of this industry. RCgWT concentrated on Quality service, scientific approach in solving the problems, thorough Root Cause analysis (RCA) to avoid the failure in future, system standardization through accreditations like ISO 9001:2000 and ultimately reduce the total Project/O&M cost thereby increasing the ROI for the customer - which all would definitely help the total Industry to reach NEW growth levels. Current services offerings are

YY Erection and commissioning of wind turbinesYY Operation and Maintenance of wind farmsYY Technical Audits and Failure Cause Investigation

ereCtion oF Wind turBinesWind turbine OEMs outsource erection activities to independent third party

contractors, who provide manpower, hire cranes and other equipments required for project execution. It is highly competitive business and tens of contractors are active in all geographies, as any good contractor with experience in installation of wind turbine can get erection contracts at lower rates. OEMs are looking at new companies who can take-up erection assignments at lower rates to reduce their cost and are flexible in meeting tight schedules. One or two skilled supervisor with a group of semi-skilled/un-skilled people can undertake erection work by hiring a crane from third party crane companies. Contracts are awarded for fixed number of turbines for a fixed project schedule. Market leader OEMs can also sign long term rate contract if they wish to retain contractors. Commissioning is generally undertaken by engineers of OEM companies themselves.

oPerAtion And mAintenAnCe OEMs operate and maintain turbines during warranty period. Post warranty

period OEMs present option to owners/investors whether they wish to enter long term service contract with OEM or they wish to maintain/service turbines on their own with help of third party service providers. Though O&M is the most vital tool which determines the fate of the Wind Energy Generators/Wind Turbines (WEG/WTG), this has been ignored by most of the WEG Owners due to lack of awareness, know-how and information, and training by OEMs who supplied wind turbines, which has ultimately resulted in substandard generation, more failures, and reduced life and unstable returns if owners take over O&M activities and has not engaged OEMs or third party service companies.

Case Study on Strategizing RCg Wind Technologies - Beyond Boundaries


RCGWT has focused O&M as the key activity in service Portfolio and have invested best in resources with an aim of optimizing the performance of the WEgs and thereby maximizing the Return on Investment. RCgWT received requests to take over service of turbines installed during 1995-2005 period are area not being supported by OEMs due to either OEMs stopped their wind business, became bankrupt, or turbines supplied by foreign company which no longer operates in India. Owners who purchased turbines from local companies have received good O&M services by OEMs themselves with in and out of warranty period.

Within 4 years, the company has created a niche in this key activity and earned reputation among owners and OEMs. Success in O&M activities require in-depth and thorough knowledge about wind turbines, their key components, engineering practices and required highly specialized, trained and skilled manpower. Not many companies are offering third party O&M services in the market and that too for wide range of wind turbines (of different OEM make with different technologies). The primary aim of wind farm operations and maintenance is to minimize the production costs per unit of energy generated over the life of the asset. Broadly, this is achieved by:

YY minimize operational and maintenance costsYY improve turbine performance/yieldYY lower insurance riskYY protect assets

It is normal practice for the OEMs to provide a warranty for duration between two and five years. This warranty will often cover lost revenue, including downtime to correct faults, and a test of the power curve of the turbine. For modern wind farms WEg availability, particularly for new models, can be lower than expected in the early years of operation due to break downs. During the first year of operation of a turbine some ‘teething’ problems are usually experienced. For new products this is very common, as OEMs gain more experience through increase of usage, these problems are resolved and availability of machines rises.

OEMs require a typical crew of two people for every 20 to 30 wind turbines in a wind farm for normal operation and maintenance activities. For Scheduled maintenance or break down maintenance, manpower from central pool is deputed as per need. For smaller wind farms there may not be a dedicated O&M crew but arrangements are made for regular visits from a district/regional team located near to such smaller farms. Typical routine maintenance time for a modern wind turbine is 50 hours per year. Repair time for breakdowns depends on type of failure, availability of spares, tools and cranes.

Scheduled wind turbine maintenance is usually conducted two to three times a year, requiring 12 to 18 hours of downtime for each outage. generally, only a few

Ketan R. gandhi


turbines in a wind farm are down at one time. Usually the only time an entire facility is brought off-line intentionally is for substation maintenance, which typically takes about 12 hours and occurs twice a year during low production periods.

teChniCAL Audits And FAiLure CAuse investiGAtionWhen OEM or turbine owners require an outside agency to carry out technical

audit, either at pre-commissioning or post commissioning stage as per contracts or to find out condition of wear and tear of critical equipments, third party service providers may be hired. Sometime, critical faults are also required to be investigated by third party service companies which have expertise.

Customer ProFiLeRCGWT serves 200 turbines (out of 15000+) turbines installed in India for one

year O&M contract (excluding supply of parts). Out of 12000 MW wind turbines, approximately 10000 MW are being operated and maintained by OEMs themselves. 1000 MW turbines are maintained by turbine owners themselves and 1000 MW turbines are maintained by third party service providers. At present turbines which are outsourced to third party in India are due to OEM’s exorbitant price for annual O&M contracts or few OEM companies that no longer exist in the market and there is no one to take care of those turbines. In other countries (developed countries like USA and Europe) more than 90% turbine’s O&M services are outsourced to third party.

rCGWt diFFerentiAtorsCustomer friendly approach, dedicated service teams, committed team of

experts, diligent care for customer needs, flexibility and meticulous use of technology and systems are key differentiators of RCGEWT. It is the only ISO certified service firm following standard processes to maintain service quality standards.

GLoBAL sCenArio Unlike traditional electricity generation plants, the O&M of a wind farm is

often outsourced to a third party. This is particularly true given that many wind farm owners are investment consortiums, who have no intention of taking a hands-on approach to managing the operation of their wind farm. If the owner views the wind farm asset purely as an investment, he may wish to see no more than a monthly production, budget, income and expense statement. Owners who have a more substantial portfolio of generation facilities (Iberdrola, Spain) may take on the day to day management themselves, and engage assistance for specialized services only.



Worldwide more than 80% turbines are outsourced to third party service providers. As it is not economical to set-up O&M teams in developed countries due to high salary and wages of employees and other reasons, general trend is to outsource O&M. Number of third party developers and service companies have started their operation for wind business and have grown very fast. Third party service companies are well-established in all of the major markets, and it is likely that this element of the industry will develop very much along the lines associated with other power plant maintenance. However, Indian market is completely different than global markets. In India most of the wind turbines are maintained by OEMs themselves through their subsidiary companies or separate O&M division.

mArKet siZe And tYPe oF ContrACtsTwo types of O&M arrangements are offered. (1) Comprehensive O&M–

turbine operation, maintenance, shutdowns, replacement of component failures etc. everything is covered in price per MW (2) Scheduled maintenance–turbine is serviced at regular interval and consumables like oil and grease are replaced. All component failures, stoppages are attended on call basis. A comprehensive O&M cost in India is in the range of Rs. 10 to 12 Lakh/MW and hence 12000 MW in O&M is approximately a Rs. 1200 Crores business/year. RCGWT’s turnover has increased from Rs. 16 lakh in first year to 1.8 crores in 2010. Most of the revenues of RCGWT are from three activities, (a) comprehensive maintenance of Vestas RRB make 225 kW and 500 kW turbines (b) erection of wind turbines of new wind turbine OEMs and foreign companies who don’t have local teams (c) scheduled maintenance services of different OEMs including 1.25 MW turbines of market leader Suzlon, Southern India sites. Scheduled maintenance contracts are based on man days supplied to OEMs. A team of 6 engineers can carry out scheduled maintenance of 4 turbines. Per turbine scheduled maintenance rate is in the rage of Rs. 6 to 8 thousand (this includes manpower, their local travel, lodging, boarding, insurance and also any consumables that are replaced.) For yearly O&M service contracts (excluding replacement material supplied) is in the range of Rs. 1 to 2 lakh per turbine in MW class (Rs. 45 thousand to 1 Lakh for kw class turbines, which includes manpower for scheduled and break down maintenance, local travel, cost of consumables, lodging, boarding, telephone charges etc.). Erection contracts are fixed on lump sum rates.

ChALLenGes in third PArtY o&m serviCes In India, wind turbine OEMs are interested to perform O&M on their supplied

turbines to get benefit of sustained revenue for 20 years. OEMs don’t wish third party service provider to share their O&M business. If any owners/customers don’t renew O&M contracts with OEM, either customer or third party service provider

Ketan R. gandhi


will have to take care about scheduled and break down maintenance without any support from OEMs. In such situation OEM’s support in proprietary replacement spares supply or solving critical faults through systematic troubleshooting will not be available or may be at unbelievable (sometime unreasonable) high price. Availability of spares, their delivery lead time and price of replacement spares, if turbines are not under OEM’s O&M contracts are among biggest challenge to third party service providers and end customers of wind turbines.

Most of OEMs don’t share their turbine’s know how of equipments, components, troubleshooting, as it might lead to loosing future O&M service revenues. If third party service providers like RCgWT has to commit equal or better services than OEMs, getting know how of different wind turbine technologies, equipments and proprietary software is very important. Control system software for wind turbine is totally controlled by OEMs due to safety and intellectual property reasons and also to gain control on future changes. By offering turbine optimization through software upgrades and modifications OEMs generates revenue.

If third party service provider undertakes comprehensive contracts, it will be huge financial risk to them, if any pre-mature component fails. OEMs can undertake comprehensive contracts as risk of component failures is shared among hundreds of installations. Due to above reasons, end customers, turbine owners and third party service providers feel that Indian market for O&M of wind turbines may not competitive. However, recently OEMs have started outsourcing part of their O&M activities to third party service provider to cut down their increasing cost of set-up, manpower etc. Wind turbine owners wishes that the market becomes competitive, annual expenses on O&M of turbines go down, so their ROI enhances. Turbine owners indicate that they are crippled by order delays with component providers who are scrambling to meet demand, lack of O&M investment by owners not committed to the long-term life of their turbines, parts that fail after few years despite a stated life of twenty years, and more. What shall be his recommendation to founding team?

YY To focus on Indian market or to shift operation to developed countries like Europe/USA where large market (80000 MW) will be available for O&M out sourcing by 2015?

YY If they decide to focus on India market, what should be their marketing approach to increase turnover from 1.6 crores to 16 crores by 2015? How should RCGWT overcome top challenges of third party O&M services?

YY Should they depend and focus on only one OEM and become exclusive service provider or offer services to many OEMs? Which type of customers they should focus?

YY How should they obtain know how of different turbine technologies and equipments to increase their knowledge bank for future competitiveness?



YY By 2015 how many employees they should have to achieve revenue target if they expand operations in local market in O&M service contracts for customers/OEMs (60% revenue) and scheduled maintenance service contracts for OEMs (40% revenue)?

YY Other questions can be expected from other members of founding team on strategy, competitors, price, positioning, OEMs, own team and other resources that RCgWT will have to think to sustain and grow in business for which Mr. g. Rameshchandra will have to proactively think and prepare future strategy.

Ketan R. gandhi


Cxo interview

The Executive Editor of PRERANA (PRN) interviewed Mr. K. Ramasamy (KRY) Chiarman, Roots Group of Companies, Coimbatore on February 20, 2014.

PRN: Could you highlight the best management practices adopted in your company?

KrY: One of the best management practices adopted in our company is training people and once we are confident of their learning, we empower them. We give more importance to people and are more oriented towards commitment and fulfilling our promise.

PRN: What best practices of yours would you recommend to other companies?KrY: I would recommend three best practices to other companies - training people

and empowering them, giving importance to human values and keeping promise.

PRN: Have you put in practice any of the management principles, theories and concepts in your organization?

KrY: Yes, we give more importance to commitment, quality management, empowerment and human value. We insist and encourage decision making at the lowest possible level, because people at these levels experience the real situation and hence enabling fast and effective decision making. We believe in the principle “Think like a customer and act like an owner.”

PRN: Could you highlight the innovative practices adopted by your organization to gain competitive edge in the current scenario?

KrY: The innovative practices adopted in Roots are people empowerment; focus on customer satisfaction, product innovation, suggestion schemes, and encouragement of decision making and problem solving at lower levels of the hierarchy.

PRN: What measures would you suggest to companies to cope up with the increasing competitiveness to become sustainable in this globalized and dynamic environment?

KrY: Innovation is the key. Everyone must be aware of the current global scenario. They must be able to think beyond what is happening in the current scenario


in order to sustain. There should be a continuous process of generating simpler, better, efficient and cost effective production techniques. Customers always prefer quality and cost effective products. Knowledge about foreign exchange management is very important. Employee skill development at every level has to be given more importance. Employees must be given opportunities to take decisions and solve problems.

PRN: What are the new ventures you are planning in the next 2-3 years?KrY: In the last five years we have ventured in to castings, cleaning machines,

medical and aerospace equipments. Competition is high and so is the demand for these products. So, we are training our employees and using new technology in production process in order to sustain. We are planning to venture into furniture segment – ergonomic furniture, for office and public seating chairs considering the working environment. We also entered into a joint venture with Letrika Company of Slovenia to produce car starters and alternators which is likely to be introduced within 6 months. We preferred a joint venture, because we have the manufacturing strength and could produce better quality products through borrowed technology from the foreign company through a joint venture.

PRN: What talent management measures have you adopted to retain the employees?

KrY: We encourage employees to pursue higher education depending upon their educational qualification and background like diplomas, BE, ME or PhD and provide periodical training programs to fill the gap between the current and future strengths. We allow our employees to explore a lot.

PRN: Is there any difference between International business and Indian business management?

KrY: I feel that the fundamental difference between International companies and the Indian companies is the importance given to human values. The target of international companies is towards numbers. The management should ensure that the employer-employee relationship is not limited to working environment. International companies are more committed and follow effective time management which is the basic drawback of Indian companies. In the current scenario, some Indian companies have started adopting foreign culture and hence the importance given to human values is on the decline, which according to me is critical. Another major difference is that, in case of international companies, once a decision has been made


all the employees would abide to the common decision and work towards fulfilling the organizational goals, which I feel is missing among Indian companies.

PRN: How do you think management students and graduates could contribute to the SME sector in India?

KrY: Unlike large companies, SME require people with multiple level skills, who can do various kinds of jobs, because they cannot afford a single person for a single job. Companies with such kind of employees are likely to contribute phenomenally to the growth of the company. Hands-on experience is very important, because SME would generally have cash crunch and hence their focus would be on energy conservation, wastage reduction and cost minimization measures. These measures would determine the survival of SME but it may add to profit in case of large companies. Hence, management students and graduates can contribute to SME by providing the knowledge of systematic process.

PRN: According to you, what are the qualities to be nurtured among the present day youth in general and students of management in particular?

KrY: The most important quality to be nurtured among youth in general is that they should not look for short term gains. Now-a-days youth are impatient and are looking for monetary goals. Instead, they should be passionate towards their work and not towards money. This will give highest satisfaction both in work and in life. Time Management is a very important quality to be nurtured among management students. Time management can be achieved by prioritizing the work to accomplish the goals.

PRN: From the point of an entrepreneur, what skills budding entrepreneurs need to possess?

KrY: Budding entrepreneur should know what he/she should do and it should be obvious. They should be equipped with knowledge and capable of multitasking and should know how to utilize the opportunities. The most important skills to be possessed are determination, commitment and high human relations.

PRN: Considering a situation, where a new technology has been introduced abroad, as an entrepreneur, would you take an initiative to adopt that technology and introduce it in your organization or wait for another entrepreneur to take the initiative?


KrY: First, the new technology should be studied thoroughly and compared with the environment. Only if the technology is found feasible, initiative should be taken to adopt that technology in any organization. In order to be competitive in the market one should be a leader and not a follower.

PRN: In the current global scenario, big companies adopt mergers and acquisitions as a major strategy for expansion. As an entrepreneur, what are your views about mergers and acquisitions in India?

KrY: Actually, I am against mergers and acquisitions and strongly believe in an organization’s strength. For example the partnership of Chrysler and Daimler-Benz failed because of the cultural differences. Only few Indian companies have succeeded through mergers and acquisitions.

PRN: Would you recommend management students to go straight for their own venture or to gather industrial experience initially before taking up entrepreneurship?

KrY: Management students should have practical experience before starting an enterprise except those students who have entirely different ideas. There is high competition in the market and students cannot withstand in the market for long-term unless they are well prepared.

PRN: What are your views about the CSR initiatives taken by Indian organizations and in specific organizations in automobile sector?

KrY: CSR initiatives should be taken up voluntarily by the organizations. Indian organizations should adopt the philosophy of giving back to the society.

PRN: Thank you for your time Mr. Ramasamy.

PRERANA: Journal of Management Thought and Practice, March 2014

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