Advances in Management September 2012

MonthIy JournaI
September 2012 VoI. 5 (9)

GOD IS

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Govt.of India Registration No. MPENG/2008/24042 Print: ISSN No. 0974-2611; e-ISSN: 2278 - 4551
ADVANCES IN MANAGEMENT
An International Peer Reviewed Monthly J ournal dealing with all aspects of Management, Commerce and Economics
Volume No. 5 (9), Pages 1-70, September (2012)
Editor - in -Chief (Hon.)
D Dr r. . S Sh ha an nk ka ar r G Ga ar rg gh h
M. SC., Ph. D., M.B.A., LL.B., FICCE, FISBT, FISM, FICDM
Phone: +91-731-4004000 Mobile: 094250-56228
www.managein.net; www.shankargargh.net
Correspondence Address:
Advances In Management
Sector AG-80, Scheme No. 54, Vijay Nagar,
A.B. Road, Indore 452010 (M.P.), INDIA
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E-Mail: management@managein.org

Editorial:
From Cookies to Consumers to the Bottom Line; Understanding and Applying Marketing Concepts
Carpenter Shari
3-5
Research Papers:
1
Human Resource Development: A New Roadmap on Success of Industrialization Panigrahi Anita
Kumari
6-11
2 Micro Credit as a means of Socio Economic Empowerment A Survey in Andhra Pradesh Savitha B.
and J yothi P.
12-19
3 Application of Artificial Neural Networks for Sales Forecasting in an Indian Automobile
Manufacturing Company Chauhan Manish Kumar and Mittal M. L.
20-24
4 The Voyage of the Renault-Nissan Alliance: A Successful Venture Weng Marc Lim 25-29
Case Study:
5 Personality Type A as a Moderator for Relationship between Occupational Stress and Organizational
Effectiveness Mahal Prabhjot Kaur
30-35
6 Economic Problems in Micro, Small and Medium Enterprises (MSMES) in India Venkateswarlu P. and
Ravindra P.S.
36-40
7 Creation of Demand for Millet Foods A Case Study of Successful Change Management of an Innovation
Project Manikandan P.
41-49
8 Occupational Stress and its impact on QWL with specific reference to Hotel Industry Mohla Charu 50-54
9 Employees Perception on Welfare Practices- A Study of A.P. Eastern Power Distribution of AP
Limited Ramesh M.
55-60
General Article:
10 Environmental Accounting and Reporting In India: An Appraisal Sharma V.K. 61-65
Book Review:
.Steve Jobs written by Isaacson Walter Reviewed Rungta Shravan 66-67

INSTRUCTIONS TO AUTHORS: 68-69 EDITORIAL BOARD: P 2 MEMBERSHIP FORM: P 70
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CONTENTS
Advances In Management Vol. 5 (9) Sep. (2012)

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Editorial Board
Editor-in-Chief (Hon.): Shankar Gargh, Indore, INDIA
Ajax Persaud, Ottawa, Canada
Alfredo M. Bobillo, Valladolid, Spain
Arnulf D. Schircks, Zrich, Switzerland
Corrado loStorto, Naples, Italy
David Naranjo-Gil, Sevilla, Spai
Dobrai Katalin, Pecs, Hungary
Evangelos Manolas, Orestiada, Greece
Farouk Yalaoui, Troyes, France
Ferenc Farkas, Pecs, Hungary
Fotis Vouzas, Thessalonilci, Greece
Grace TR Lin, Hsinchu, Taiwan
Hui Tak-Kee, Singapore, Singapore
Imed Kacem, Troyes, France
Jamal Roudaki, Christchurch, New Zealand
Jitendra M. Mishra, Grand Rapids, USA
Joao Ferreira, Covilha, Portugal
Joel Wisner, Las Vegas, USA
John Currie, Galway, Ireland
John A. Consiglio, Msida, Malta
John R. Buffington, Colorado, USA
Jorn Stovring, Roskilde, Denmark
Laura Stefanescu, Craiova, Romania
Lucia Marchegiani, Rome, Italy
Malaya Kumar Nayak, London, UK
Manjula S. Salimath, Texas, USA
Marina Dabic, Zagreb, Croatia
Michael Harvey, Mississippi, USA
Miltiadis Boboulos, Halkida, Greece
Mosad Zineldin, Vxj, Sweden
Mu-Shang Yin, Taipei, Taiwan
Nawaz A. Hakro, Nizwa, Oman
Nicholas Odhiambo, Pretoria, S. Africa
Panagiotis Polychroniou, Patras, Greece
Paul C. Nutt, Ohio, USA
Paul D. Berger, Waltham, USA
Pedro Soto-Acosta, Murcia, Spain
Randy Drenth, Beme, Switzerland
Richard E. Kopelman, New York, USA
Richard J. Cebula, J acksonville, USA
Rodger Morrison, Montgomery, USA
Ruth Alas, Tallinn, Estonia
Shankar Chelliah, Penang, Malaysia
Shigeyuki Goto, Tokyo, Japan
Sultan M.Al-Salem, Safat, Kuwait
Wong Wai Peng, Penang, Malaysia
Yu Ming-Miin, Keelung, Taiwan
A. Suryanarayana, Hyderabad, India
Abhijit Bhattacharya, Lucknow, India
Ajeya Jha, Gangtok, India
Aryaa Jain, Indore, India
B.B. Pal, Kalyani, India
Gunjan Malhotra, Ghaziabad, India
Jagannath Patil, Bangalore, India
K.B. Nidheesh, Pondicherry, India
K.L. Padmini, Holalkere, India
L. Suganthi, Chennai, India
M.S. Pabla, J alandhar, India
Megha Jain, Indore, India
Mousumi Roy, Durgapur, India
Neera Jain, Gurgaon, India
P. Janaki Ramudu, Bangalore, India
P. Manikandan, Hyderabad, India
P. Natarajan, Pondicherry, India
Paul D. Madhale, Miraj, India
Pawan Chugan, Ahmedabad, India
Prabhat Kumar Pani, J amshedpur, India
Priyanka Bhalerao, Mumbai, India
Puja Padhi, Mumbai, India
R.D. Biradar, Nanded, India
R.K. Jena, Nagpur, India
Rajashekhar Patil, Mumbai, India
Rajesh Bhatt, Bhavnagar, India
Ranjan Chaudhuri, Mumbai, India
S. Krishnakumar, Chennai, India
S. Muralidhar, Bangalore, India
Sanjay K.Govil, Hyderabad, India
V.V. Gopal, Hyderabad, India
Vimi Jham, Ghaziabad, India
If one is interested in becoming member of our Editorial Board, he/she should send
Bio-data / CV by Email to: management@managein.org

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For me, the introduction to the power oI marketing
began with Girl Scout cookies. The quest to be the top
cookie salesperson led me sweetly into the powerIul
world oI marketing. I learned quickly the importance oI
understanding marketing concepts. I embraced the
power oI marketing myselI, as I applied Ior my Iirst job
as an oIIicial ice cream scooper at the local ice cream
parlor. I have watched marketing techniques improve
resulting in better potential Ior predicting product
success and Iailures. New marketing techniques are
based on a blend oI marketing research, theory
development and the use oI customer analytics.
Marketing is Ubiquitous: Marketing is Powerful
Marketing is all around us. II you think it that marketing
is someone else's responsibility, you have already
missed an opportunity Ior personal gain. Almost every
day we have opportunities to create a better
understanding in the eyes oI others oI what we do or
what we want; marketing. Each time we apply Ior a job
or promotion, we are attempting to market ourselves.
Remember that new idea you were attempting to
communicate to your boss? Marketing.
In years past, we were gently reminded oI products
through television commercials and radio spots. We
sang the jingles quietly in our minds and reIlected on the
sweetest oI the emotional holiday commercials we
viewed on our television sets. Fast Iorward to marketing
today and a shiIt is evident; today's marketing is
everywhere, consumers are bombarded with marketing
messages. The battle Ior the consumer's attention is
constant. We as a nation are overwhelmed with
marketing messages. To be successIul with our
marketing, we must stand out; we must better
understand and address the needs oI our consumers.
As individuals we may be in a position where we are
directly involved in marketing processes. One thing has
become clear, Ior most oI us we are marketing or being
marketed to a large percent oI the time. Through
understanding marketing we can gain a better
understanding oI marketing's power and we can develop
our personal skills in marketing ourselves. As we gain
this deeper understanding, we also gain the ability in
better use oI marketing to help our businesses become
more successIul.
Marketing begins at the Beginning
Businesses create services or products. The service or
product is then marketed to potential customers.
Marketing in its simplest Iorm is designed to help to
convey the Ieatures and beneIit oI services or products to
the intended customer. Here is where complexity enters
the equation.
At this stage, the analysis oI the intended customer
enters into the equation. Customers are individuals and
all individuals have needs; some oI which are answered
through the purchasing oI service or product. Through
marketing, businesses help to communicate to the
consumer how their products or services can Iill those
needs.
Human Needs
Maslow was one oI the originators oI human needs
theory. His original work involved the study oI human
behavior. The Ioundation oI Maslow's needs theory
posits the need itselI or recognition oI the need may be
real or may be perceived. Whether the need is perceived
or real, recognition moves us into a decision phase. In an
eIIort to understand human behavior better, researchers
have since Iurther developed Maslow's research into a
study oI consumer behavior and the development oI
customer analytics.
The decision phase is when the consumer or the
individual with a real or perceived need is most open to
the eIIects oI marketing. Remember the old adage,
'Never shop Ior groceries when you are hungry.
Applying needs theory to the hunger scenario; when you
are hungry, you have a need Ior Iood. When you are
hungry, you are searching to Iill your need Ior Iood. You
will end up with a much Iuller grocery cart as you Iill it
From Cookies to Consumers to the Bottom Line;
Understanding and Applying Marketing Concepts
Carpenter Shari
Our Guest Editor Irom College oI Business, Eastern Oregon University, One University Boulevard,
Zabel Hall 261, La Grande, OR 97850, USA
scarpenteou.edu
Vol. 5 (9) Sep. (2012)
From the Editor's Desk
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dealership with an internal checklist. SaIety number one
need, iI IulIilled, the individual can then proceed to the
other needs on their list. The more clearly the marketer
connects to those needs, the higher will be the
probability oI purchase.
The underlying connection to concept oI marketing is
that customers purchase because oI a need. The
marketers who most clearly or directly communicate
their product's ability to Iill that need will gain the most
consumers. Marketers do not create needs. Humans are
in a constant state oI having needs and needing
IulIillment oI those needs. Needs will always exist;
rarely are human completely satiated and entirely
content. Marketers communicate their products ability
to Iill needs at the right time and in the right place and
consumers purchase.
Successful Marketing
Bloomberg, Mayor oI New York and well known
Iinancial analyst states that we have moved Irom 'a
society oI want to a society oI need. Bloomberg also
notes that consumers have become more practical and
deliberate in their purchases; not just buying to buy.
Tough economic times have shiIted the way people
spend their money. Purchase should become more
detailed. In order Ior marketing to be successIul, it must
shiIt as well. This change in our value system reinIorces
the need Ior marketers to be savvy in their product
description and marketing messages. There must be an
intimate connection to individual needs.
In order Ior a product to be successIul, it must not only
Iill the customer's needs, but the product must compare
to the perceived value the customer has in mind Ior that
product. Perceived value is the perception that a product
or service reIlects an adequate balance oI tangible and
intangible beneIits connected to the price oI the product.
Value perception is aIIected by price, quality and
service. Value is also connected to the perceived time
involved to actually purchase the product. Congruence
with the value perception oI a product creates repeat
purchase. Incongruence creates a lack oI repeat
purchase and buyer discontent.
Holistic Marketing as an Organization's Culture
'Marketing isn't just somebody's responsibility:
marketing is everybody's responsibility, said Jack
Welch, CEO, 1981 2001, General Electric Co. As
mentioned earlier, the imperative is that Ior
organizations to be successIul, they must understand
marketing. Under-standing consumers and targeting
with Iood to Iill your need.
Let us look deeper into the mechanics oI human needs.
Maslow's Hierarchy oI Needs model is a pyramid that
reIlects the need stages through which a human
progresses. Needs are connected to deIiciencies.
Maslowposits that the lowest level oI human need must
be IulIilled prior to an individual progressing to the next
higher level oI need. For example iI an individual is
hungry, that is the need driving his actions. II an
individual does not Ieel saIe, the rationale is that he is
not concerned with the next higher level oI social
belongingness until he Iills the deIiciency needs oI
saIety and so on up the hierarchy oI needs. The
marketer's ability to direct you or another consumer to
the product is a direct result oI successIul marketing. II
the marketer convinces the hungry consumer, their
product will satiate their hunger need, the hungry
consumer buys their products and the need is Iilled up.
CustomerAnalytics: Quantifying Needs
QuantiIying demographic characteristics and other
behavioral attributes allows marketers to build a model
through which they can Iilter consumer populations;
distilling down to a model consumer Ior their product.
Using those analytics, we can Iilter out those consumers
that do not have like characteristics, leaving only those
potential consumers having the best characteristic
match to our potential model consumer. The
identiIication oI consumers with the highest probability
oI purchase helps marketers to better direct their
messages; thereby increasing the probability oI
purchases resulting in less wasted ad dollars,
ReIlecting back to Maslow's Needs theory, let us apply it
to the marketing oI an automobile. Let us assume we
developed a model consumer using consumer analytics
that details the characteristics and needs oI consumers
that purchase Volvos. Our research concluded the
typical Volvo consumers have a high need Ior saIety.
Volvo automobiles have a reputation Ior saIety
reinIorced through their marketing. Volvo Iills the
consumer's need Ior saIety.
Volvos' primary marketing message communicates to
their potential customers (those with a high deIiciency
need Ior saIety), their need is satiated by buying a Volvo.
The secondary marketing message would be directed to
address additional needs reIlected in the psychographic
proIile oI the customers, Ior example social or esteem
needs. 'Buy a Volvo and be a part oI the in crowd,
sounds simple, but imagine each individual comes to the
Vol. 5 (9) Sep. (2012)
marketing to their needs is only part oI the greater
marketing challenge that organizations must embrace.
Holistic marketing is deIined as the understanding that
every individual in an organization is involved in the
marketing. The concept oI holistic marketing is an
overall company orientation all Iunctions oI the
company should reIlect an understanding oI marketing
in the way they complete their tasks. All staII, all
management, Irom top to bottom should understand
marketing concepts. From an organizational culture
standpoint, the value oI their customers must be
embraced. Care and respect Ior customers must be at the
heart oI all operations; the underpinnings oI all
organizational operations.
CustomerCare: Employee Concern
Customer driven companies are constantly Iocused on
satisIying the needs oI their customers; they reIlect care
and concern Ior the customer. SatisIying customers
helps to IulIill the mission oI a marketing driven
organization. The underlying mission oI overall care Ior
customers helps to create a caring culture maniIested in
care Ior employees. Truly successIul companies are
constantly balancing customer care with employee
concern.
By embracing holistic marketing organizations will not
only produce products or services that Iill customers'
needs; they will also address the needs oI their
employees. Holistic marketing organizations nurture a
culture oI caring. Happy employees result in happier
customers. From a holistic marketing perspective, we
reIlect happy employees will more positively market a
company's products than unhappy employees.
II everyone in the organization is Iocused on marketing
and in eIIect supporting a positive reIlection oI the
organization and its related products or services, the net
eIIect will be more successIul marketing, leading to
greater organizational success.
UnIortunately, it is easy to Iorget that 'everyone in an
organization is involved in marketing and has the
opportunity to inIluence customer decision making.
InIluence or motivation to purchase can come Irom a
happy employee and can create a happy customer.
Marketing: The Bottom-line
The diIIerence between organizational success and
Iailure can sometimes be simple as developing a clear
understanding oI the power oI marketing. SuccessIully
analyzing your consumer and understanding their needs
helps marketers to direct the right products to the right
consumer at the right time; increasing the potential Ior
sales and decreasing the potential Ior wasted marketing
dollars.
Better understanding the power oI marketing also helps
organization to value each employee as a potential
marketer. By valuing employees the organization
creates a positive culture that becomes a strong
marketing tool. Employees think highly oI the
organization and as a result constantly are marketing its
products and services.
We all market and we are all constantly marketed to. By
understanding marketing we can use it to create both
personal and organizational success.
Vol. 5 (9) Sep. (2012)
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Human Resource Development:

A New Roadmap on Success of Industrialization
Panigrahi Anita Kumari
Department of Humanities, Gandhi Academy of Technology and Engineering, Berhampur, Odisha, INDIA
panigrahi.anita@gmail.com
Abstract
HRD has emerged as an important concept in India as
in other parts of the developing and developed world
and is seen as an important strategy of facilitating
sustainable development of industries. It promotes
human resources through education, training,
employment creation, population, health . . . all of
which form the basis for enhancing and utilizing their
skills, knowledge and productive capacity as well as to
set up the goal of an organization. Everything
production, management, marketing, sales, research
and development etc. may be more productive, if people
are sufficiently motivated, trained, informed, managed,
utilized and empowered. By applying a well-ordered
and professional HRD approach to work in the
protected areas field, the skills, knowledge and attitudes
of park personnel will be enriched and this overall
quality of work performed will improve. Thus, HRD
provides the essential tools needed to manage and
operate an industry in an effective way. Nowadays it is
one of the accepted key towards a developed and
industrialized society.
Keywords: HRD, Industrialization, Industrialized society.
Introduction
To cope with the fast changing environment, organizations
need to review their HRD approaches continuously. HRD is
neither a concept nor a tool, but an approach using different
personnel systems, depending upon the needs and priorities of
the industries. Industries need to be dynamic and growth-
oriented to sustain in the competitive environment. This is
possible only through the competence of the human
resources. At the industry level, human resource development
is not only essential but critical to a companys survival.
There is an intrinsic impermanence in modern industry,
where market and technology are so volatile that failure to
proactive to change and be innovative will result in a
company driven out of business. A company that is short on
capital can borrow money but a company that is short of the
required human resources has little chances of survival either
in the short or long term perspectives. Realistic plans for the
development and utilization of human resources are made
after consideration of the external and internal factors
affecting the personnel objectives of each industry and
organizational unit. It is becoming apparent that without a
measure of industrialization, the economic growth of any
country will be stunted.
The industrialization strategy that a country pursues should
take into account the macroeconomic framework within
which industries have to operate. The orientation of
macroeconomic policies determines the direction and even
the type of industries that spring up and thrive. In addition, a
country has to operate within the global environment, which
will dictate the kind of trade, investment and industrialization
pattern that enables it to survive. The underlying philosophy
was to use industrialization as a means of promoting
economic growth, creating employment and eradicating
poverty. But the fulfillments of industrialization visions share
a common motivation and reflect a fundamental commitment
to promoting the wellbeing and dignity of individuals in
society.
Industrialized countries like J apan, Switzerland and South
Korea have emerged from limited natural endowments. They
have no minerals and the climate, land structure and soil are
not conductive to agriculture. Yet, these countries have
achieved spectacular economic growth on the strength and
ingenuity of their human resources. On the other hand, there
are countries well endowed with natural resources such as
minerals or oil that have failed to capitalize on their given
wealth. They remain observes, not partaking in the
exploitation of their resources. They choose by their own
default to remain on the fringes of progress. They are content
to oscillate between developing and under developed status,
dependent on foreign technology and expertise to exploit
their dwindling resources. These countries have failed to
develop effectively their human resources, to capitalize on
their natural wealth and to steer their own destiny. Thus,
prospects and growth, productivity and profitability-of-an
organization depends maximum on effective utilization of
human resources employed in the effort of achieving
company objectives. The achievement of an organization can
be seen as a result of cooperation and hard work at all the
levels of functioning of an organization.
Evolution of human resource development: The origin of
HRD was suggested to have started in the USA during the
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advent of the Industrial Revolution in 1800s. But some

writers argued that the roots of HRD emerged in 1913 when
Ford Motor started training its workers to produce mass
production in the assembly line. However, a significant
historical event was suggested during the outbreak of World
War Two in the 1940s as it was during this period that
workers were trained to produce warships, machinery and
other military equipments and armaments.
5
Blake
2
argued that
HRD could have started a century later, in the early 1930s
and its roots emerged from the concept of organization
development (OD). On the other hand, Stead and Lee
15
,
contested that the historical starting point of HRD was during
the 1950s and 1960s when theories on employees
developmental process was popularized and published by
organizational psychologists such as Argyris
1
, McGregor
13
,
Likert
10
and Herzberg
8
.
Hence, Stead and Lee
15
believed that the development of
human resources in an organization far encompasses merely
training but also motivation and development as suggested
by organizational psychologists.
2
This was supported by other
writers. Desimone et al
5
said that during 1960s and 1970s,
professional trainers realized that their role extended far
beyond classroom training and they were also required to
coach and counsel employees. Realizing, this extended role,
Nadler
16
introduced the term HRD in 1970s and was placed
under the big structure of human resources with the function
of selection and development of employees under the term
HRD.
2

Subsequently, in early 1980s, the term HRD was approved by
the American Society for Training and Development (ASTD)
because they believed that training and development
competencies expanded to include interpersonal skills such as
coaching, group process facilitation and problem solving.
And by then, organizations realized that human resources are
important assets and emphasis was placed in investing in
training and education for performance improvement to
increase productivity and business success.
5

In the UK, Harrison
7
argued that the historical development
of HRD is more fragmented compared to the US. The history
of HRD in UK was suggested to have started during World
War Two in which training was the symbiotic term.
Similarly to the USA, during this period, training was the
term because workers were trained in the production and
manufacturing sector as well as becoming soldiers. The
emergence of HRD began in early 1980s when the
manufacturing industry was hit by a recession and a strategy
was required to overcome the crises especially in
multinational companies. Companies began to realize that
human resource is an important asset and started developing
their employees particularly to improve their performance
and develop or enhance their skills to increase productivity.
Since then, HRD is considered as an important business
strategy and processes
7
but viewpoints of HRD as a strategy
for business success were argued by writers such as Garavan,
Costine and Heraty.
6

In Malaysia, HRD could have started as early as 1980s. The
historical development and emergence of HRD in Malaysia
lacked empirical evidence, the development of HRD during
this period was not very clear and focused. HRD may have
started when the Commonwealth Countries Secretariat began
developing the Human Resources Development Group
(HRDG) in 1983 with the intention to assist the ASEAN
countries in developing its human resources.
3, 4
In 1984, the
ASEAN countries, including Malaysia being part of the
ASEAN Pacific Rim commenced their proposals in providing
assistance in developing human resources particularly, in
education, training and skills development for new
technology.
3
It may be argued that the emergence of HRD
could have started during the mid 1970s when the
Government began developing the Bumiputras in businesses
to improve economic disparities
11
or it may have started like
the UK, during the economic recession in 1985 as it was
during this period that the Government began its aggressive
drive towards manufacturing and industrialization.
12

However, clear evidence was seen when the Government of
Malaysia began to include HRD strategies in the countrys
development plans and policies in 1991 in the Second Outline
Perspective Plan (OPP2) and the Sixth Malaysia Plan (6MP).
One of the main thrusts of these plans is to become a fully
industrialized nation with skilled and knowledge-based
workforce by year 2020.
12
Nevertheless, it could be argued
that HRD could have started even before Malaysias
independence, when workers migrated from India to work in
the tin-ore mining fields and oil palm plantations.
The human resource development in India is of recent origin
and the terms gained currency only in the early seventies. In
the opinion of Nadler
14
, the term HRD was first applied in
1968 in George Washington University. It was used in Miami
at the conference of American Society for Training and
Development in 1969. According to Nadler
14
, the term was
gaining more acceptances during the mid- 1970s, but many
used it as a more alternative term than Training &
Development. In the opinion of some management
professionals, J apan is the first country to begin with HRD
practices. Better People, not merely better technology, is
the surest way to a Better Society, is the most popular
belief in J apan. The term was first used in India in 1972 by
the State Bank of India. By the late seventies and early
eighties this professional outlook on HRD caught on to a few
PSUs, namely BHEL, MUL, SAIL, IA, AI and IOC. L & T
and TISCO were the first two organizations in the private
sector to begin with HRD.
(8)
When we trace the concept tract of HRD, the theme of HRD

is interestingly observed about the occurrence of during
different periods and different places. Economics Adam
Smith, Karl Mark and a host of classical and modern of
Human resources focused on labor and skill development.
Even though there is a lot of controversies in the parameter
regarding the quality of human resources in a country
preferred by the world organization, such as World Bank etc.
These parameters have been accepted based on the validity.
Linking Industrialization with Human Resource
Development
The important relationship between the quality of human
resource and the well-being of a nation has been repeatedly
proved through examples from the past and present. Based on
what transpired during the past 30 years, it is apparent that
the next 30 years will witness more rapid and volatile
changes in the industrial sector. To minimize ant dislocation
from the changes that are impacting externally, it is essential
that strategic plans for HRD, with systematic links among the
players and the constituents involved, be developed. Periodic
review and fine tuning of the goals and the operational plans
of HRD are essential to ensure relevance and to avoid
wastage of resources which may disrupt the industrialization
goals. The concept of HRD is therefore a substantive and
complex field. It embraces three levels of strategic planning
and analysis of which are, the aggregate, sectoral and the
industry level.
The primary objective of HRD is the effective utilization of
scarce or abundant talent in the interest of both broad and
specific national objectives as well as the objectives of
industry, business and individual employee. In its broadest
sense, it is the development of plans of action to meet the
manpower requirements in anticipation of the changing
conditions of the social, economic, industrial and business
environment. Thus, Human resource development is itself
critical to the sustainability of the industrialization process.
Human Resources has grown as an industry to include experts
in the field of Organizational Development, Change
Management, Continuous Process Improvement, as well as
those who gain impressive training and enjoy significant
tenure in Benefits Administration, Recruiting, Policy
Analysis and Training.
In planning for HRD, particularly for skill and expertise that
require long gestation periods, changes in technology for
targeted industries need to be monitored closely. This role
known as boundary spanning is vital as changes in
technology and market structure have far reaching
implications on human resource requirements and job
behavior. The followings are some of the pertinent changes in
the global trend that must be taken into consideration in
planning for HRD in industries, either in short term or long
term perspectives:
Compared to the 70s and 80s, the next three decades will
witness a formidable technological explosion facilitated
by the advance of information technology, modern
medicine and biotechnology. The technological
explosion may render most scientists technically
obsolete. It is highly probable that they would lack the
latest skills and knowledge in their own fields, if they are
not constantly kept abreast of the elements taking place.
The next thirty years will also witness a tremendous
communication explosion with faster and shortened
distances for travel. There will be a substantial increase
in productivity for those nations that have the capacity of
changes in the relevant fields to acquire relevant
knowledge and new technology.
New knowledge and technology will affect power
relationships and facilitate decentralization in
government or in industry.
Economic activities will be more global than they are
today. This would mean that ownership of firms would
be very much internationalized.
There will be a tremendous expansion of the service
sector, in particular the information related industry.
Information replaces energy as the main transforming
resource. It adds value to products and services by
increasing the efficiency of labour, materials and capital
used
An effective and realistic HRD plan must be able to absorb
the shocks and ride with the rapid changes taking place.
The Challenges of Industrialization to Human
Resource Development
Human resource development (HRD) has been an important
area of research practice. The purpose of HRD policy is the
development of Human Resources. Todays increasing
complex and volatile business environment characterized by
globalization, liberalization and the transnational invasion
ensures that managing would not be the same again. As we
are in 21st century, competitiveness in global market place
presents the ultimate challenge to policy makers, business
leaders and entrepreneurs in any industry. From this body of
work a number of major challenges have emerged. The
challenge of industrialization is to build synergy and
strengthen linkages between industrialization and human
resources so that the two are mutually reinforcing. Companies
need to be proactive to foresee the challenges that its
functions face as a result in order to harness the opportunities
that future has to offer. The challenges of industrialization to
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human resource development include:

Competing in a Global Economy: As companies compete
increasingly, in a global economy many are introducing new
technologies that require better educated and trained
workers. In fact, in the United States today, over one-half of
all jobs require education beyond high school. Thus,
successful organizations must hire employees with the
knowledge to compete in an increasingly sophisticated
market. Competing in the global economy requires more than
educating and training workers to meet new challenges. In
addition to retraining the workforce, successful companies
will institute quality improvement processes and introduce
change efforts. The workforce must learn cultural sensitivity
to better communicate and conduct business among different
cultures and in other countries. Developing manages into
global leaders has been identified as a major challenge for
organizations.

The need for Lifelong Learning: Given the rapid changes
that all organizations face, it is clear that employees must
continue the learning process throughout their careers in
order to meet these challenges. This need for lifelong learning
will require organizations to make an ongoing investment in
HRD. Thus, it is a challenge to HRD professionals to provide
full range of learning opportunities for all kind of employees.
Lifelong learning can mean different things to different
employees. For example, for semi-skilled workers, it may
involve more rudimentary skills training to help them build
their competencies. To professional employees, this learning
may mean taking advantage of continuing education
opportunities. This is particularly important for certified
professionals who are required to complete a certain number
of continuing education courses to maintain their
certification. To managers, lifelong learning may include
attending management seminars that address new
management approach.
Technological Changes: Recent spurt in computerization
and technological upgradation is, on the one hand,
streamlining process and paper work and increasing quality,
service and speed and on the other hand making several jobs
obsolescent. Many companies which realize that they are not
adding value in all functional areas are increasingly
outsourcing all but the most critical functions. With the
advancement in telecommunications, employees can now
work in their homes. Tele work, as it is called, has freed them
from the trouble and inconvenience of travelling over long
distances. Companies can also save on office space and
overhead expenses. These changes may make workers
redundant at some places. The redundant workers everywhere
need to be rehabilitated through training. The change has to
be brought about with a human face. At this point, the HRD
manger has a critical role to play.
Upgrading Employee Skills in the Service Sector : With
changes in technology, the skill and knowledge components
of the human resource have to be constantly upgraded,
otherwise the assimilation or absorption process is weakened.
The Technology Atlas (United Nations Economic Social
Commission for Asia and PacificUNESCAP) defines
various stages of sophistication of increasing human abilities
starting from operating, setting up, repairing and reproducing
to adapting, improving and innovating abilities.
16
As a
developing country Pakistan needs to industrialize further, the
size and contribution to output and employment of the service
sector will need to increase. ILO
9
paper cites that
liberalization will also increasingly affect the service sector.
The development and the productivity of the service sector
will become more important. Service industries which are not
exposed to international competitiveness, tend to have lower
productivity with reference to both quantity and quality
which also appear to be a big reflection of the need of world
level HRD practices. Developing countries will need to pay
greater attention to the development of the service sector and
the raising of its productivity, through healthy HRD practices.
The major ingredient in service quality is attitude, knowledge
and skills of workers. The upgrading of service skills is an
issue for many developing countries which lack a solid
educational ground. Training programmes should be tailored
to enhance the capacity of the workforce in terms of above
quoted qualities.
Increasing Workforce Diversity: The workforce has
become increasingly more diverse and this trend towards
diversity will continue.

This includes increasing diversity
along racial, ethnic and gender lines, as well as an increasing
percentage of the workforce that is over age fifty-five.

Effectively managing diversity has been identified as one of
five distinguishing features of organization that make it onto
Fortune magazines list of 100 best companies.

Diversity
issues have several implications for HRD professionals. First,
organizations need to address racial, ethnic and other
prejudices that may persist, as well as cultural insensitivity
and language differences. Second, with the increasing
numbers of women in the workforce, organizations should
continue to provide developmental opportunities that will
prepare women for advancement into the senior ranks and
provide safeguards against sexual harassment. Third, the
aging of the workforce highlights the importance of creating
HRD programs that recognize and address the learning
related needs of both younger and older workers. Diversity
can be a catalyst for improved organizational performance
though this is far from a sure thing.
Work force empowerment: For the corporate democracy to
become a reality, many companies are now vesting their
employees with greater authority, expanding their job titles
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and increasing their accountability. In a country where the

benevolent autocrat has been overwhelmingly preferred
style, real empowerment of the work force is going to pose a
big challenge for the HRD manager.
More research in HRD: Continuous research is needed to
discover new HRD methods and interventions. This is
possible only when there are HRD-oriented organizations to
pool and share their experiences in diverse areas.
Nowadays companies are facing daunting challenges in
hiring, training and retaining people. Globalization has
increased the demand for talent everywhere. So, it is our
conviction that a human resource development system has to
capture the workers imagination, so as to optimize their
strengths and energy systems (Physical, mental and
emotional) to make them capable of creative responses to
complex industrial situations. The challenges of HRD would
be to create an environment of resilience which can
accommodate and assimilate successfully changes in
technologies, policies, methods etc. so as to reorient culture
by getting individuals, teams and collectivities to feel a sense
of belonging, commitment and mobilization to welcome
change in the interest of organizational transformation.
Opportunities of Industrialization to Human resource
Development: Rapid industrialization also offers various
opportunities to employees of the organization because
Human Resource development is a key factor for new
technology advancement and industrialization. In order to
achieve the goal of optimization of resources, the
organization should give in positive work environment as
well as working opportunities. Organizations have many
opportunities for human resources or employee development,
both within and outside of the workplace. Some of the
opportunities are narrated below:
Increase in employment opportunities: Massive
industrialization provides employment opportunities on
massive basis. Massive industrialization means establish-
ment of more infrastructure facilities, which will in turn
lead to more employment. It will also lead to research
facilities and innovation of new products. Industrialists
will employ more capital equipment and labour for the
manufacture of new products.
Increase in living standard: Higher employment level,
higher income level and greater variety of products mean
higher living standard. More industrialization will also
provide greater stimulus to outputs and stability to the
economy.
Performance Appraisal: It is used as a mechanism to
understand the difficulties/weaknesses of the
subordinates and help/encourage them remove all these
and realize these. Other objective is to identify strength
and weaknesses of the subordinates too and to provide a
positive environment and help them to understand their
positive attitudes.
Career Planning: In HRD, corporate strategies and
business expansion plans should not be kept secret. Long
term plans of the organization should be made
transparent to employees. Most individuals want to know
their career growth and other possibilities. Hence the
managers should transform the organization plans to the
employees, thus making way for the employees to plan
their growth possibilities accordingly.
Training: The training is directly linked with the career
growth and appraisal of the employees as such.
Employees are given the job training as well as off the
job training.
Potential Appraisal and Development: The capabilities
should be developed within the employees to grow
/perform new roles and responsibilities by themselves
continuously. A dynamic and growing organization
needs to continually review its structure and systems,
creating new roles and assigning new responsibilities.
Rewards: Rewarding employees is a significant part of
HRD. By this the organization helps in motivating and
recognizing the employee talents as such. It also helps in
communicating the values of the organization also.
Employee Welfare: HRD systems focus on employee
welfare and quality of work life by continually
examining employee needs and meeting them to the
extent possible.
Conclusion
To meet industrialization program, HRD is still a very
fragmented and imprecise activity. Its 'fuzziness' becomes
aggravated when one is focusing on a moving and dynamic
environment. A clear forecasting format on manpower
requirements, utilized at the macro and micro levels is vitally
needed. Precise demand patterns at the micro level and fine
tuned according to specific industries and jobs must be
undertaken. Each industry's growth rates in short and medium
terms need to be worked out not just for the purpose of
capital formation but also for HRD. A well thought out and
well-run HRD plan will achieve measurable positive
outcomes for the company.
Current patterns of HRD appear to be aggregative, static and
often 'off tangent' to economic and industry trends. The
policy impetus through incentives and venture capitals given
to small and medium scale industries has not been adequately
matched by HRD. While the Government provides the
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necessary infrastructure and climate for the growth of small

and medium scale industries, the absence of a sufficient
number of entrepreneurs hampers the smooth take-off of the
industrialization plan. Thus, industrialization and economic
growth depend principally on the development of people of
their potentials, skills capabilities, resourcefulness and
commitment. Planning and investment in HRD is vital in
sustaining growth and maintaining social and economic
change.
References
1. Argyris C., Understanding Organizational Behavior, Dorsey
Press, Homewood, IL (1960)
2. Blake R. R., Memories of HRD, Training and Development,
49 (3), 22-28 (1995)
3. HashimF. Y., Commonwealth Report (1989) in Pembangunan
Sumber Manusia di Malaysia: Cabaran abad ke-21. Kuala Lumpur,
Universiti Teknologi Malaysia (2000)
4. Commonwealth Secretariat Foundation for the Future: Human
Resource Development, Report of the Commonwealth Working
Group on Human Resource Development Strategies, London (1993)
5. Desimone R.L., Werner J.M. and Harris D.M., Human
Resource Development, 3rd ed., Orlando, Harcourt College
Publishers (2002)
6. Garavan T.N., Costine P. and Heraty N., The emergence of
strategic human resource development, Journal of European
Industrial Training, 19 (10), 4-10 (1995)
7. Harrison R., Employee Development, 2
nd
ed., London, Institute
of Personnel and Development (2000)
8. Herzberg F., The Motivation-Hygiene Concept and Problems,
of Manpower, Personnel Administration, 27, 2-7 (1959)
9. ILO, Human Resource Development in Asia and the Pacific in
the 21
st
Century - Issues and Challenges for Employers and their
Organizations, ILO Workshop on Employers Organizations in Asia
Pacific in the Twenty First Century, Turin, Italy (1997)
10. Likert R., New Patterns of Management, McGraw-Hill (1961)
11. Malaysia, Government First Outline Perspective Plan, 1971-
1990, National Printing Department (1971)
12. Kuala Lumpur Malaysia, Government Second Outline
Perspective Plan, 1991-2000, National Printing Department, Kuala
Lumpur (1991)
13. McGregor D., The Human Side of the Enterprise, New York,
McGraw-Hill Inc., (1960)
14. Nadler L., The Hand Book of Human Resource Development,
New York, J ohn Wiley and Sons (1984)
15. Stead V. and Lee M., Inter-cultural perspectives on HRD, In
Stewart J . and McGoldrick J ., eds., Human Resource Development:
Perspectives, Strategies and Practice, London, Prentice Hall (1996)
16. Virman B.R., Managing people in organizations: The
challenges of change, India, New Delhi, Response Books, Sage
Publications (1999).
(Received 14
th
March 2012, accepted 10
th
J uly 2012)


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Micro Credit as a means of Socio Economic Empowerment
A Survey in Andhra Pradesh
Savitha B.* and Jyothi P.
School of Management Studies, Hyderabad Central University, Gachibowli, Hyderabad 500 046 (A.P), INDIA
*savithas1604@gmail.com
Abstract
The provision of credit to the poor and underprivileged
sections of the society is an important aspect of the
larger mandate of social banking today. In India, the
institutional credit delivery system of banks has been
aptly complemented by the growth of self-help savings
and credit groups. This has resulted in bringing
together the banking system and the poor for mutual
benefit. Irrespective of the model of credit delivery, the
availability of loans often brings about a change in the
household welfare of the borrowers and makes a
significant impact on their empowerment and socio
economic status. The present article which is based on
an empirical study of responses from a survey
conducted in a district of Andhra Pradesh provides an
insight into how the availability of credit and
membership in Self help groups brought about a change
in the socio economic status of the borrowers thereby
contributing to their empowerment.
Keywords: Micro credit, Self help groups, Socio economic
empowerment.
Introduction
Micro-Credit to the poor often works on the assumption that
availability of finance will enable them to come out of the
vicious circle of poverty. However when micro credit results
in bringing about the habit of savings for future needs, it will
augur a sense of social and economic security in the
borrowers. Micro- credit as a tool for development can be
successful when it is able to combine the advantages of
access to credit and financial sustainability.
Micro-credit has emerged as an important tool for
development and poverty alleviation as it promises delivery
of higher incomes and growth in assets for the poor by
promoting micro enterprises. Micro-credit providers can
bring about a change in the lives of borrowers when they
focus on poverty alleviation by including livelihood
promotion, women empowerment, development of peoples
organizations and conducive institutional environment as
their core values. Micro-enterprises that are promoted by
individuals often face difficulties due to their inability to
spread the risk of borrowings.
*Author for Correspondence
As collective ownership of micro-enterprises mitigates the
borrowing risk, it leads to the emergence and popularity of
Self help groups in our country. The self help group is usually
formed with the help of an external agency usually a Non
governmental organization. It consists of upto 20 women
members who undertake mutual savings and credit. When
they are successful, they approach an external agency which
may be a bank or a micro finance institution to provide them
additional capital to facilitate on lending to the group
members. In India, the institutional credit delivery system of
banks has been aptly complemented by the growth of self-
help savings and credit groups. This has resulted in bringing
together the banking system and the poor for mutual benefit.
Self Help Groups (SHG) play a vital role in the delivery of
micro-financial services. Their members take decisions
together on their savings, interest rates, provision of loans and
their recovery. This helps them to develop the right set of
attitudes and skills required for their sustenance. Members of
these groups also learn to mobilize resources, build linkages
which form the basis for their socio economic empowerment.
Irrespective of the model of credit delivery, the availability of
loans often brings about a change in the household welfare of
the borrowers and makes a significant impact on their
empowerment and socio economic status. The results of the
study provide an insight into how the availability of credit
and membership in Self help groups brought about a change
in the socio economic status of the borrowers thereby
contributing to their empowerment.
Empowerment refers to control over resources and decisions.
Empowering the poor requires removal of all barriers which
stops them from taking actions that will result in improving
their welfare and limiting their choices. Any form of
institutional reform that will result in empowerment of the
poor will have to include access to information, informed
participation, political and administrative accountability and
improvement in ability of people to work together. The Self
help group movement was started in Andhra Pradesh to give
women greater access and control over resources, increase
their income, develop linkages between SHGs and lending
institutions, providing greater access to health care and
education thereby leading to their social empowerment.
Membership of women in Self help groups engenders in them
a sense of self confidence and raises their level of awareness.
The solidarity and strength that they obtain from being
together with other women facing similar circumstances
serves as a powerful factor which empowers them.

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Review of Literature
Review of literature on micro-credit provides an
understanding on how it has enabled delivery of financial
services at a scale through appropriate mechanisms thereby
reaching out to the poor. Fisher and Sriram
5
in their research
suggested that micro-credit can be successful when it
combines outreach and sustainability. The micro credit
movement has brought about womens empowerment and
social change in India. Some studies in Bangladesh of the
clients of BRAC (Bangladesh Rural Advancement
Committee) showed that clients who were part of the micro
credit programme for more than four years had witnessed
significant rise in their household incomes and assets.
Morduch
13
argues that micro credit is based on principles of
peer selection, peer review and dynamic incentives. Group
lending provides a distinct advantage over individual lending
as it improves repayment rates, allowing lower interest rates
and raising social welfare.
Namboodiri and Shiyani
4
observed strengths of SHG lending.
Siebel and Dave
18
found that the effectiveness of group
lending in Self Help Groups resulted in lesser number of non
performing loans. Puhazhendhi and Satya Sai
16
in their
research study found that SHGs have been instrumental in
economic and social empowerment of the rural poor. This
provided the incentive to take successive loans. The role of
Micro credit as a tool to foster economic and social
empowerment among women has been a subject of research
over the years. Successful efforts to empower poor people
will mean increasing their freedom of choice and action in
different contexts which include access to information,
inclusion and participation.
3

There is no single definition of womens empowerment in the
literature. Empowerment is variously conceptualized as a
process, an end-state, and a capacity.
1, 8-11
The majority of
efforts to measure womens economic empowerment
programmes focuses primarily on quantitative outcomes -
such as increased access to credit or increased business
revenue.
Studies by Rahman
17
, Pitt and Khander
15
and Hashemi,
Schuler and Riley
6
have found positive results for women
empowerment in a micro credit program in Bangladesh.
Approaches to measuring womens empowerment generally
involve defining what is meant by empowerment and
identifying the different elements which make up this
definition. The elements of empowerment are: resources,
agency and achievements
8
; control over resources and
agency
9
; agency and opportunity structure
1
; agency;
structures and relations; assets, knowledge, will and
capacity.
2
In most cases, these elements are then broken down
into sub-dimensions with associated indicators and sources of
measurement.
A review of theories and strategies to foster women's
empowerment in the development context by Malhotra
10

defined empowerment as the ability of people to make
strategic choices in areas that affect their lives. Pitt et al
15

found that the view that womens participation in micro credit
programmes helps to increase womens empowerment by
establishing a baseline of women's assets, knowledge, will
and capacity. Mayoux et al
12
emphasized the importance of
studying the differential impacts of various types of financial
products and service delivery, and their influence on women
empowerment. J upp et al
7
developed a participatory approach
to measuring empowerment at the project level in
Bangladesh.
The growth of Self help groups in India and provision of
micro credit to them by banks and microfinance institutions
has resulted in improving their participation in society and in
governance. The review of literature throws light on the fact
that programmes that aim at empowering women need to
measure the improvement in the ability of women to make
decisions. Their access to credit, finances, property, nutrition,
education health care and improvement in social status and
participation in governance also need to be measured.
Hypotheses
Hypotheses were developed to judge the relationship between
loan use and its impact on income and financial independence
of the borrowers.
1. There is no significant relationship between receipt of
loan and change in overall household income.
2. There is no significant relationship between loan use for
income generating activity and financial independence of
the borrowers.
3. There is no significant relationship between training and
its impact on way of life of the borrowers.
Methodology
Sample: The sample consisted of 200 respondents. Primary
data have been collected using convenient sampling method.
The sample consisted of 200 SHG members in Rangareddy
district of Andhra Pradesh.
Demographic profile of sample: The respondents were
women in the age group of 20 years to 60 years. Sample
consists of both married and unmarried women. A
questionnaire was specially designed for the purpose of
collecting information. The questionnaire was translated into
the local language to elicit information and data from the
respondents.
Scoring: The responses were coded and subjected to SPSS
analysis.
Findings: Hypotheses developed were tested using chi square
test. The results are as follows:

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Table I
Hypotheses Results
NULL HYPOTHESES
SIGNIFICANCE P
VALUE
RESULTS
H1: There is no significant relationship between receipt of loan and change in
overall household income.
0.000 Rejected
H2: There is no significant relationship between loan use for income generating
activity and financial independence of borrowers
0.000 Rejected
H3: There is no significant relationship between training and its impact on way of
life of borrowers
0.000 Rejected
*chi square statistic significant at 0.05 level
The Chi-square statistic was found to be significant at the
0.05 level and hence the null hypotheses were rejected
thereby establishing that there is significant relationship
between receipt of loan and change in overall household
income. The test results also show that the use of loan for
income generating activity has a positive impact on financial
independence. Borrowers felt that when loans are used for
income generating activities rather than for consumption, it
makes them feel financially independent.
The borrowers used the loan for income generating activities
such as agriculture (43%), setting up small business such as
grocery stores (12%), tea stalls (10%), animal husbandry
(9%), tailoring shop (7%), flower (8%) and fruit shops (11%).
The study indicates that when loans are used for Income
generating activities, it helps in earning profits which
becomes the main source of income for the borrowers.
Borrowers took decisions relating to the use of loans for
income generating activities, spending on food, clothing and
payment of school fees for childrens education. Ability to
contribute to decisions relating to household with control
over financial resources made them feel financially
independent. Those respondents who attended the training
programs felt a positive impact on their life which gave them
the confidence to set up their own small business units.
Training programmes attended included those on tailoring,
hand and machine embroidery.
Factors influencing Social Empowerment
SHG members often make use of loan facilities from their
groups, banks and MFIs. These loans affect various aspects
of social empowerment of these members. It has been thought
that it is apt to explore these factors that affect their social
empowerment. A structured questionnaire was distributed to
the SHG members. The sample consists of 200 SHG
members of Rangareddy district. The questionnaire contained
7 variables influencing the social empowerment. The
variables were measured using a five-point Likert Scale. The
opinion of respondents is taken on a scale of 1-5 with 1
being the least important and 5 being most important. The
variables affecting the social empowerment mentioned in the
questionnaire are as follows:
Table II
Variables Affecting The Social Empowerment
S. N. Variables
1 Comparison with others
2 Change in food
3 Effect on person
4 Effect on welfare on household
5 Dependency on husband
6 Contribution to family budget decisions
7 Ability to prepare for emergencies
Source: Primary data
Factor analysis is a data reduction statistical technique that
allows simplifying the correlational relationships between a
number of continuous variables. The study is intended to
explore the important factors affecting social empowerment
of SHG members. Principal Component Analysis is used,
since it is an exploratory factor analysis. To test the
acceptability of data, the following steps were taken:
The correlation matrices were computed. It revealed that
there is enough correlation to go ahead for factor
analysis.
Kaiser-Meyer-Olkin Measure of Sampling Adequacy for
individual variance is studied. The test result is as
follows:
Table III
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of
Sampling Adequacy
.817
Bartlett's Test of
Sphericity
Approx. Chi-Square 1373.016
Df 21
Sig. .000

It found sufficient correlation for all the variables/attributes.
A measure which is more than 0.8, is considered

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meritorious and is acceptable. The measure of sampling
adequacy is found to be 0.817. It indicates that the sample is
good enough for sampling. The overall significance of
correlation matrices is tested with Bartlett's Test of Sphericity
providing support for the validity of the factor analysis of the
data set as shown in table III. Principal Component Analysis
is employed for extracting the data which allowed
determining the factor underlying the relationships between a
number of variables.

Table IV
Total Variance Explained
Component Initial Eigen values Extraction Sums of Squared Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulati
ve %
Total
% of
Variance
Cumulative
%
Total
% of
Varianc
e
Cumulati
ve %
1 4.961 70.871 70.871 4.961 70.871 70.871 3.159 45.122 45.122
2 1.014 14.479 85.350 1.014 14.479 85.350 2.816 40.228 85.350
3 .339 4.848 90.198
4 .277 3.951 94.149
5 .192 2.750 96.899
6 .152 2.165 99.064
7 .066 .936 100.000
Extraction Method: Principal Component Analysis

Total variance explained suggests that it extracts one factor
which accounts for 85.35 percent of the variance of the
relationship between variables/attributes. The criteria for
extracting initial factors are Eigen value of over 1. A total of
two factors are extracted with a total variance explained being
85.356%.
Rotation is necessary when extraction technique suggests that
there are two or more factors. The rotation of factors is
designed to give an idea of how the factors initially extracted
differ from each other and to provide a clear picture of which
item loads on which factor. There are only 2 factors, each
having Eigen value exceeding 1 (details as shown in table
IV). Varimax rotation is applied for the selected 7 variables.
The numbers in each column are the factor loadings for each
factor, roughly the equivalent of the correlation between a
particular item and the factor.
Varimax rotated factor analytic results for factors affecting
the social empowerment of SHG members. The factor
loadings of the 7 variables are observed and clubbed into 2
factors. The major factors influencing are depicted in figure
1.

Fig 1: Factors influencing the social empowerment of SHG members
From the above chart, it is clear that Household Welfare and
Social Status together influence Social Empowerment. The
detailed explanation on the factors affecting the Social
Empowerment as identified by the factor analysis is given
below:
Factor 1: Household Welfare
It is the most vital factor which explains 70.87 percent of
variation. The household welfare is the most important factor
and it has three loads to this factor: Ability to prepare for
Sudden Expenses/Emergencies (0.849), Ability to Contribute
to Family Budget Decisions (0.830) and Effect on Welfare of
household after the loan (0.825).
Factor 2: Social status
This factor has three variables which have 14.479 percent of
variation. The factors - Change in food since receipt of loan
(0.909), Effect on person (0.886) and comparison with

Factors Influencing
Social Empowerment
Household
Welfare
Social
Status

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others in your area (0.867) are the important concerns for the
SHG members which increase their social empowerment.
Thus the factor analysis proves that the most important
factors that contribute to social empowerment are variables
that directly impact household welfare of borrowers and their
social status.
On the same lines a factor analysis was conducted to establish
the factors that impact the socio economic status of members
after they have joined Self help groups. The Cronbachs
alpha, (Table VI) which determines the internal consistency
of the scale is .686. Kaiser-Meyer-Olkin Measure of
Sampling Adequacy (Table VII) for individual variance is
0.732 .The value is considered to be a middling value and
indicates that the sample is considered good.
The total variance explained (Table VIII) suggests that it
extracts one factor which accounts for 67.589 percent of the
variance of the relationship between the variables. The
criteria for extraction of initial factors are Eigen value of over
one. A total of six factors were extracted with the total
variance explained being 67.589 percent.
Varimax rotation has been applied as there are more than two
factors for the selected nineteen variables (Table IX). The
numbers in each column are the factor loadings for each
factor, roughly the equivalent of correlation between a
particular item and the factor. The factor loadings of the
nineteen variables are observed and grouped into six factors.
Figure 2 explains that access to credit and health services,
social recognition, development awareness, individual
growth, income and decision making and mobility are the
factors which influence the socio economic status of the SHG
members. The various factors have been explained as
follows:

Table V
Rotated Component Matrix (A)
Component
1 2
Dependency on Husband -.866
Ability to prepare for Sudden
Expenses/Emergencies
.849 .349
Ability to contribute to Family Budget
Decisions
.830 .398
Effect on Welfare of household after the
loan
.825 .364
Change in food since receipt of loan .909
Effect on person .351 .886
Comparison with others in your area .329 .867
Extraction Method: Principal Component Analysis; Rotation
Method: Varimax with Kaiser Normalization; Rotation converged in
3 iterations.

Fig. 2: Factors influencing the socio economic status
Factors
influencing
SocioEconomic
Status
1.
Accessto
Creditand
Health
Services
2.
Social
Recognition
3.
Development
Awareness
4.
Individual
Growth
5.
Individual
Income
6.
Mobility

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Table VI
Reliability Statistics
Cronbach's Alpha N of Items
.686 19

Table VII
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy
.732
Bartlett's Test of
Sphericity
Approx. Chi-
Square
1711.936
Df 171
Sig. .000

Table VIII
Total Variance Explained
Component Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Varianc
e
Cumulativ
e %
Total
% of
Variance
Cumulative % Total
% of
Varianc
e
Cumulati
ve %
1 4.702 24.745 24.745 4.702 24.745 24.745 3.905 20.551 20.551
2 2.984 15.705 40.450 2.984 15.705 40.450 2.590 13.629 34.181
3 1.606 8.455 48.905 1.606 8.455 48.905 1.989 10.470 44.650
4 1.416 7.453 56.358 1.416 7.453 56.358 1.965 10.344 54.995
5 1.100 5.791 62.149 1.100 5.791 62.149 1.216 6.402 61.396
6 1.034 5.440 67.589 1.034 5.440 67.589 1.177 6.192 67.589
7 .982 5.168 72.757
8 .860 4.524 77.281
9 .793 4.171 81.452
10 .635 3.341 84.793
11 .556 2.925 87.718
12 .500 2.630 90.348
13 .448 2.358 92.706
14 .369 1.940 94.646
15 .323 1.700 96.347
16 .269 1.416 97.763
17 .208 1.093 98.855
18 .146 .769 99.624
19 .071 .376 100.000
Extraction Method: Principal Component Analysis.


(18)

Table IX
Rotated Component Matrix (A)
Component
1 2 3 4 5 6
Access to sanitation .938
Access to immunization .912
Access to health services .843
Access to credit sources .778
Skills .563 -.373
Recognition in community .908
Recognition in family .840
Interaction with outsiders .740 .327
Literacy .558 .447
Nutrition awareness .405 .698
Girl child awareness .637 .340
Voicing concern .627
Family planning awareness .601 .463
Asset building .791
Family income .650
Health awareness .469 .437 -.485
Individual income .860
Decision making related to child .436 .392
Mobility -.812
Extraction Method: Principal Component Analysis: Rotation Method: Varimax with Kaiser Normalization; Rotation converged in 7 iterations.

1. Access to credit and health services: It is the most
important factor which explains 24.745 percent of the
variation. Access to Credit and Health Services is the
most important factor and has 5 loadings, namely, access
to sanitation (0.938), access to immunization (0.912),
access to health services (0843), access to credit sources
(0.778), skills (0.563) signifying that they are key
influencers of the socio economic status.
2. Social recognition: This factor has four variables which
account for 15.705 percent of the variation. Recognition
in community (0.908), recognition in family (0.840),
ability to interact with outsiders (0.740) and literacy
(0.558) are considered to be the variables which impact
the social status of the members.
3. Development awareness: This factor has four variables
and accounts for 8.455 percent of the variation. Nutrition
awareness (0.698), girl child development awareness
(0.637), voicing concern (0.627) and family planning
awareness (0.601) are the key variables which contribute
to betterment of health and well being of individual and
families.
4. Individual growth: It has five variables which account
for 7.453 percent of the variation. Asset building (0.791),
family income (0.650), literacy (0.447) are some of the
key variables which contribute to individual growth.
Health awareness (-0.485) seems to have an inverse
relationship with the other factors.
5. Individual Income: This factor accounts for 5.791
percent of the variation. Growth in individual income
(0.860) will definitely improve the socio economic
status.
6. Mobility: This factor accounts for 5.44 percent of the
variation although it has an inverse (-0.812) relationship
with other factors. Increase in mobility is not considered
as a major contributor to the betterment of the socio
economic status.
Findings and Conclusion
1. There is significant relationship between receipt of loan

(19)

and change in overall household income.
2. There is significant relationship between use of loan for
income generating activity and financial independence of
borrowers.
3. There is significant relationship between training and its
impact of life of respondents
4. The factor analysis established:
a) Two factors namely household welfare and social
status as key influencers of social empowerment.
b) Six factors namely Access to credit and health
services, Social recognition, Development awareness,
Individual growth, Individual Income, Mobility as
influencers of socioeconomic status.
Micro credit when invested in an income- generating activity
or productive assets leads to improvement in income levels of
the SHG members. Profits from the enterprise provides
increased income and a general strengthening of income
sources. The study proves that SHGs have facilitated better
interaction of its members with the external environment and
have promoted a larger consciousness and awareness of the
world. SHG members keep their own accounts and are able to
engender in themselves a sense of financial discipline as peer
pressure ensures timely repayment and end use of micro
credit.
References
1. Alsop R., Power, Rights and Poverty: Concepts and
Connections, a working meeting sponsored by DFID and the World
Bank (2004)
2. Charlier S. and Caubergs L., The Women Empowerment
Approach: a methodological Guide, Commission on Women and
Development, Brussels (2007)
3. Narayan Deepa, ed., Empowerment and Poverty Reduction: A
Source Book, The World Bank, W.D.C. and Ibid (2002)
4. Djankov S., Miranda P., Seira E. and Sharma S., Who are the
Unbanked?, World Bank Policy Research Working Paper 4647,
World Bank, Washington, D.C. (2008)
5. Thomas Fisher and SriramM.S., Beyond Micro-Credit Putting
development Back into Micro-Finance, Oxfam, Oxford, U.K in
association with New Economics Foundation, London, Vistaar
Publications (Sage), New Delhi (2002)
6. Hashemi S., Schuler M.S.R. and Riley A.P., Rural Credit
Programmes and Women Empowerment in Bangladesh, World
Development, 24 (4), 635-653 (1996)
7. J upp D, Ibn Ali S and Barahona C., Measuring Empowerment?
Ask Them Quantifying qualitative outcomes from peoples own
analysis, Sida, Sweden (2010)
8. Kabeer Naila, Conflict over Credit: Reevaluating the
Empowerment Potential of Loans to Women in Rural Bangladesh,
World Development, 29 (1), 63-84 (2001)
9. Malhotra A., Measuring Womens empowerment, unpublished
background paper for workshop on poverty and gender, New
perspectives (2002)
10. Malhotra Anju, Measuring Womens Empowerment as a
Variable in International Development, World Bank, Gender and
Development Group, Washington DC (2002)
11. Martinez E., The Courage to Change: Confronting the limits and
unleashing the potential of CAREs programming for women,
Synthesis Report: Phase 2, CARE International Strategic Impact
Inquiry on Womens Empowerment, CARE International (2006)
12. Mayoux.L. and Hart L., Gender and Rural Microfinance :
Reaching and Empowering Women, A guide for Practioners, IFAD
Rome (2009)
13. Morduch Jonanthan, The microfinance promise, Journal of
Economic Literature, 37, December,1569-1614 (1999)
14. Namboodiri N.V. and Shiyani R.L., Potential role of Self Help
Groups in Rural financial deepening, Indian Journal of Agricultural
Economics, 56 (3), J uly-Sept, 401-409 (2001)
15. Pitt M. and Khander S., Household and Intra Household
Impacts of the Grameen Bank and similar targeted credit
programmes in Bangladesh (1995)
16. Puhazhendhi V. and Satya Sai K.J .S., Economic and Social
Empowerment of Rural Poor through Self Help Groups, Indian
Journal of Agricultural Economics, 56 (3) J uly-Sept, 450-451
(2001)
17. Rahman R.I., Impact of Grameen Bank on the situation of Poor
Rural Women, Grameen Evaluation Project, Bangladesh Institute of
Development Studies BIDS, Working Paper No. 1, Dhaka (1986)
18. Siebel Hans and Dave Harish Kumar, Commercial aspects of
SHG Banking in India, NABARD (2002).
(Received 14
th
May 2012, accepted 12
th
August 2012).

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Application of Artificial Neural Networks for Sales Forecasting in

an Indian Automobile Manufacturing Company
Chauhan Manish Kumar
1
and Mittal M. L.
2*

1. Mechanical Engineering Department, Krishna Institute of Management and Technology, Moradabad (UP), INDIA
2. Mechanical Engineering Department, Malaviya National Institute of Technology, Jaipur (Rajasthan), INDIA
*
mlmitttal.mnit@gmail.com
Abstract
Sales forecasts are essential part of any business as
planning such as facility planning, human resource
planning, manufacturing planning and scheduling, and
planning of sales promotions are driven by it.
Traditionally, time series analysis was used as a tool for
sales forecasting which suffers from limitations such as
efforts needed for analysis and the accuracy of the
resulting forecasts. Recently, Artificial Neural Networks
(ANNs) have been developed for a variety of
applications in engineering and management. Sales
forecasting is one such application where ANNs have
been successfully applied. This study reports the
application of ANN in an Indian auto manufacturer for
sales forecasting. The results are compared with the
time series models.
Keywords: Sales Forecasts, Artificial Neural Networks,
Automobile Industry.
Introduction
Forecasting in general is prediction of some future event.
Businesses use a variety of forecasts such as forecast of
technology, economy and sales of product or service.
Forecast of sales drive many important planning decisions in
manufacturing organizations. Typical decisions include
number and capacities of the facilities, hiring of personnel,
required inventory levels, quantity and timing of
purchasing/production, distribution network and transporta-
tion. The accuracy of sales forecasts thus becomes primary
condition for effective management of operations in the
manufacturing organization. Although having accurate
forecasts has never been easy, it has become more difficult in
recent years due to increased uncertainty, complexity of
business and reduced product life cycle.
Owing to its importance, the researchers had put lot of efforts
towards development of better methods of forecasting. These
methods are broadly classified as Qualitative and Quantitative
methods. Qualitative methods are used when either no past
data is available or the planning horizon is too long.
Quantitative methods, on the other hand, are used when
sufficient past data is available and the planning horizon is
relatively short.
Traditionally, statistical methods have been used for
quantitative forecasting which are usually divided into time
series analysis and causal models. In time series analysis we
try to separate the underlying patterns (constant, trend,
seasonality and cycle) in the past sales data and use different
techniques to build a model to forecast the future sales.
Averaging, time series decomposition, regression analysis,
exponential smoothing or a combination of these are used in
time series analysis. In causal models it is assumed that the
sale of certain product is function of some other variable/s
and the job of the forecaster is to identify that relationship
using statistical technique such as regression. The details of
the above techniques can be found in any elementary text
such as Henke and Wichern
2
. Irrespective of the technique the
statistical methods are model based which are more difficult
to develop, mostly based on assumptions of linearity and are
unable to learn from experience.
During last three decades, a large variety of Artificial Neural
Networks (ANNs) have been developed for a number of
applications such as pattern recognition, nonlinear
optimization and forecasting. ANN have also been used for a
large number of business problems also. Some of the early
business applications are reviewed by Wilson and Sarda
5
and
forecasting application by Zhang et al.
6
One of the important
applications of ANN is in the area of sales forecasting. This
study reports application of ANN for sales forecasting in a
leading Indian two wheeler manufacturing Company.
An Overview of Artificial Neural Networks
Artificial Neural Networks are inspired by biological neural
networks of human brain having important characteristics
such as parallelism, learning and generalization ability and
associative storage of information. The first mathematical
model of a neuron was proposed by McCulloch and Pitts
3
in
1943. In this model of neuron (perceptron) a weighted sum of
m input signals x
j
, j=1,...,m was computed and the output was
forced to 1 if the sum was pre-decided threshold value (U);
0 otherwise. This model of neuron though paved the way of
ANN, had many limitations for its use in practice. Since 1943
researchers had put lot of efforts towards development of
varieties of ANNs with their real life applications in areas
such as optimization, pattern recognition and forecasting etc.
Detailed description of the ANN techniques can be seen in
Anderson
1
.
An ANN essentially is a weighted directed graph in which
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nodes represent artificial neurons and directed edges (with

weights) are connections between the neurons. Depending
upon the presence or absence of loops in the network ANNs
are broadly classified into feed-forward and recurrent
networks respectively. Single layer perceptron, Multilayer
perceptron and Radial bias function nets are examples of feed
forward networks and Competitive networks, Kohonons self
organizing maps, Hopfields networks and ART networks are
some the recurrent networks.
Learning or training is an important trait of the ANN.
Learning essentially is adjustment of connection weights and
network so that it can perform its intended task. There are
mainly two types of learning: supervised and unsupervised. In
supervised learning, there is an output associated with every
input pattern. Weights are adjusted to get output from the
network as close as possible to the known output. In un-
supervised learning no correct output is provided for the
given input pattern. In this situation the learning takes place
by identifying the underlying structure or pattern in the data.
Hybrid learning combines supervised and un-supervised
learning. Multilayer Feed-forward Networks (MFN) along
with supervised learning are mostly used for forecasting
applications.
Multilayer Feed-forward Networks
Basic Multilayer Feed-forward Network: Multilayer Feed-
forward networks are probably the most used models of ANN
along with the back propagation learning. A multilayer feed-
forward network consists of an input layer, an output layer
and a number of hidden layers. Figure 1 shows a feed-
forward network with one hidden layer.
Each connection (arrow) has an associated weight and each
neuron has an associated transfer function. The sum of the
weighted inputs at each neuron forms an input to the transfer
function f ( ) of the neuron. The behavior of an ANN depends
on the weights and the transfer function used. Three transfer
functions: linear, threshold and sigmoid are commonly used
for ANNs.
Design of Feed-forward ANN: The design of ANN is an
important part of building an effective ANN. One part of the
network design is deciding the number of layers in the
network and number of neurons in each of the layers. The
numbers of neurons in the input and output layers are based
on the number of inputs and outputs respectively. The
number of hidden layers can be one or more. One hidden
layer, however, is sufficient in most of the situations. Number
of neurons in the hidden layer may vary from one to any
number which is to be decided on the basis of the efficacy of
the model.
If the number of neurons in a layer is too small, the outputs
will not be able to fit all the data points causing under fitting.
On the other hand, if number of neurons is too large,
oscillations may occur between data points causing over
fitting. The number of neurons in the hidden layer needs to be
decided by trial and error method. The inputs needs to be
coded which could be binary number or real number
depending on the problem. Another important element of
design of an ANN is the type/s of transfer function/s to be
used for the neurons in the model. Similar to deciding the
number of neurons in the hidden layer the transfer function
needs to be decided by trial and error method.
Training of Feed-forward ANN: Training of ANN consists
of adjusting the connection weights of the network so that it
can perform the intended function. Back-propagation
algorithm
4
is the most used algorithm for training MFFN
which is based on the calculation of the change in the error
(difference between the desired output and the actual output)
as each weight is increased or decreased slightly. This
essentially involves two phases. In the first phase the input
signal is propagated in forward direction in the network and
error is determined. In the second phase parameters (weights)
of the network are adjusted to minimize the error.
The Case
Data Collection: The first and foremost step of the model
building is collection of appropriate data. The quality,
availability, reliability and relevance of the data used to
develop and run the Artificial Neural Network system are
critical to its success. For implementation of Artificial Neural
Networks for sales forecasting in the case company, the
monthly sales data for last ten years starting January 2001 to
December 2010 were collected. The sales considered in this
study were for the total number of motorcycles across all
types of the models (aggregate sales). This ten years monthly
sales data are shown in table 1.
Design and training of ANN: As discussed above, selection
of an appropriate ANN architecture is the key to successful
forecasting and it involves deciding number of layers and
number of neurons in each of them. For the current
application one hidden layer is considered in addition to input
and output layers. The input layer consists of six neurons (one
for each of the factors considered important for forecasting)
and the out layer consist of one neuron representing the
forecast. The factors included in the model along with their
coding are as below:
a. Festivals: Festivals are an integrated part of the Indian
culture and considered to affect the sales of two
wheelers. During Deepawali and Navratra, the sales of
vehicles in general is very high and thus the sales of the
motorcycles. The month of Navratra is coded as 2,
Deepawali as 1 and other months are coded as 0.
b. Season: The weather seasons in a year have been found
to affect the sales of motorcycles in India. For example
the sale during rainy seasons is generally very low. Four
seasons are considered in this study. Three main seasons
are rain, winter, summer while spring and autumn put
(22)
together in forth season. The rainy months are coded as

0 winter as 1, summer as 2 and spring and autumn
as 3.
c. General economic condition: The third factor affecting
the sales of the motorcycles is the market condition. The
recession period is coded as 0, good economic
condition as 2 and normal condition as 1. This is the
general factor which affects the sales of all costly
products.
d. New model launch: It has been found that launching of
the new models of motorcycle by the company affects
the sales and thus considered in the model. The month in
which a new model has been launched is coded as 1
and otherwise 0.
e. Marriage season: In India many people purchase
motorcycles at the time of marriages which take place
during certain months of the year. During these months,
sales of the motorcycles are generally higher than non-
marriage period. Non marriage months are coded as 0
while marriage months are coded as 1.
f. Month: The last factor considered in the model is the
month of the year. The months are coded from 1-12 with
January 1 and December as 12.
There is no easy way to determine the number of neurons in
the hidden layer except trial and error. There are two methods
prevalent for this: forward and backward. In forward
(backward) selection we start with smaller (large) and
increase (decrease) in steps recording performance at each
step. The optimum number of neurons can be then selected.
In the current study 8 neurons were found to be optimum.
The next step in the architecture of this Artificial Neural
Network is the selection of the transfer functions. Based on
trial and error method Tansig function (tansig(n) = 2/(1+exp(-
2*n))-1) was found to be suitable for hidden neurons and
Logsig function (logsig(n) = 1/(1 + exp(-n)) for output layer.
An important aspect of ANN modeling is identification of the
data points for training validation and test sets. In the current
study the first 70% (January 2001 to December 2007) of the
data points are considered for training. Training of the
network is performed over 1000 epochs. The performance of
the training with respect to number of epochs is shown in
figure 2.
Results and Discussion
After training of the network it was used to forecast sales for
the whole period (Jan 2001 to Dec 2012). The forecasts are
compared with the actual sales and MAPE (Mean Absolute
Percent Error) and MSE (Mean Squared Error) are
determined. MAPE and MSE are found to be 6.31 and 3.53
E+08 respectively.
In order to evaluate the performance of the proposed ANN,
forecasts were also generated using the traditional time series
analysis. The time series model was developed using the
feature expert modeler available in the SPSS 16.0. This
feature provides the most appropriate model for the given
time series data. The time series model was fitted using 100%
of the data (Jan 2001 to Dec 2010).
The expert modeler found Winters additive model with the
parameters as: Alpha (level) =0.196; Beta (trend) =0.001; and
Gamma (season) = 0.001 as the most appropriate model for
the data. With this fitted model MAPE and MSE were found
to be 15.32 and 1.06 E+09 respectively. This show that
proposed ANN provides better forecasts than the traditional
time series analysis. The sales forecasts are also plotted
against actual sales over with entire period given in figure 3.
Conclusion
Artificial Neural Networks are model free techniques that are
capable of learning by examples. These have been
successfully applied to a wide variety of engineering and
managerial applications. Sales forecasting is one such
application. Here a case study is reported in which multilayer
feed forward neural networks have been applied for
forecasting of sales in a leading two wheeler manufacturer in
India. A number of factors that are specific to Indian
conditions are considered in developing the ANN.
Performance of the proposed ANN is evaluated by comparing
the forecasts with the actual sales which give MAPE and
MSE as 6.31 and 3.53 E+08 respectively. The proposed
forecasting system is also found to be superior than a time
series model (Winters additive model which is found to be
most appropriate for the data).
References
1. Anderson J. A., Introduction to Neural Networks, MIT Press,
Cambridge, MA (1995)
2. Henke J. and Wichern D.W., Business Forecasting, Pearson
Prentice Hall, New Delhi (2007)
3. McCulloch W. S. and Pitts W., A Logical Calculus of Ideas
Immanent in Nervous Activity, Bull. Mathematical Bio-physics, 5,
115-133 (1943)
4. Werbos P. J., Beyond regression: New tools for prediction and
analysis in the behavioral sciences, Ph.D. Thesis, Harvard
University, Cambridge, MA (1974)
5. Wilson R. and Sharda R., Neural networks, OR/MS Today,
Operational Research Society, Computers and Operations Research,
August, 3642 (1992)
6. Zhang G., Patuwo B. E. and Hu M. Y., Forecasting with artificial
neural networks: The state of the art, International Journal of
Forecasting, 14 (1), 35-62 (1998).

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Table 1
Ten years aggregate monthly sale of motorcycles
MONTH 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
JANUARY 67,432 58,454 83,821 101276 143023 132456 237163 224734 243098 276376
FEBRUARY 72,461 81,327 98,056 122481 156476 139076 189367 245431 265431 287245
MARCH 98,267 101032 87,578 187592 185612 198521 289291 320594 325628 372156
APRIL 105345 118671 95,634 132621 173714 202591 292392 316561 323543 387521
MAY 115178 107491 110163 150042 192417 192472 285109 312317 305245 382201
JUNE 94,234 84,012 67,592 101438 145698 176431 212621 307,261 299256 356356
JULY 78,465 72,982 52,841 162511 134623 178921 246342 306254 287653 355635
AUGUST 67,231 78,267 57,830 110721 131056 212025 240875 305576 285983 312387
SEPTEMBER 102345 99,319 102921 224291 312512 298297 314567 385262 378543 382067
OCTOBER 156545 123498 169045 296494 356265 361167 365022 398458 425541 456742
NOVEMBER 122546 111067 123151 258623 276034 291201 288027 401345 412371 434367
DECEMBER 112324 187521 156481 241371 245629 252462 240532 385521 398045 312276
Fig. 1: Typical multilayer feed-forward network with one hidden layer

1
m
2
.
.
.
.
.
.
3
Inputlayer Outputlayer Hiddenlayer
X
1
X
2
X
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X
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1
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.
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Fig. 2: Performance of ANN during training

Fig. 3: Plot of actual and forecasted sale of the motorcycles by proposed ANN and Winters additive model

(Received 16
th
April 2012, accepted 20
th
July 2012)
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The Voyage of the Renault-Nissan Alliance:
A Successful Venture
Weng Marc Lim
School of Business, Monash University, Caulfield East Vic 3145, AUSTRALIA
lim.weng.marc@monash.edu

Abstract
The purpose of this paper is to examine the voyage of
the Renault-Nissan alliance being a successful venture.
Three cores are: The Backfire of the Alliance
Proclamation; The Sagacity behind the Renault-Nissan
Alliance; and The Recipe for Renault-Nissan Alliance
Success. The first core attempts to find out the reasons
of various stakeholders in regards to their disapproving
stances towards the strategic alliance formation.
Subsequently, the second core attempts to find out the
rationale of Renault and Nissan desire to form a
strategic alliance. Among the rationales were the
complementary strong market presence, skills and
technologies of both parties. Finally, the third core
section seeks to study the key challenges face by
Nissans COO Carlos Ghosn and what steps he took
to overcome those challenges.
Keywords: Renault, Nissan Alliance, Ghosn, Venture,
Voyage, Success.
Introduction
There were three key challenges: constructing an efficient
and effective organizational communication, rectifying
incompetent and uncompetitive cultures, and mounting a
sustainable challenge in the global market. In response to
that, Ghosn had taken steps to overcome those challenges:
boundary-spanning leadership, company-wide building
blocks, introduction of communication rituals, supporting
company-wide business initiatives and cross-boundary
rotations. Organizations planning to follow the footsteps of
the Renault-Nissan alliance should be ready to accept the
associated risk. Also, this case is rather contradictory to
several management theories on strategic alliance formation.
This is an exceptional case which is able to counter the much
proven prevailing theories. Four short recommendations for
the Renault-Nissan alliance were suggested relating to the
reviewing and reinventing of strategies, monitoring of
organizational progress, consistency of transparency and
importance of organizational history.
The formation of a cross-continental merger between two
famous companies one French, the other J apanese: Renault
and Nissan, took place in March 1999. Both were in a
derailing situation Renault had a highly publicized failure
with Volvo and is now taking on an owner of US$ 20 billion
worth of debts in the verge of bankruptcy.
7
Subsequently,
various international business media and market analysts
greeted the alliance announcement with unanimous
pessimism as a sign of disapproval.
6
However, 5 years later,
the universally written off alliance emerges as the biggest
return on investment in the history of the automotive
industry.
10
Consequently, the inquisitiveness of this
extraordinary revelation initiates the report to examine the
voyage of the Renault-Nissan alliance being a successful
venture.
The purpose of this paper is: to identify the reasons on why
various stakeholders condemned the Renault-Nissan alliance,
to understand Renault and Nissans rationale to form a
strategic alliance, to examine the key challenges obstructing
the implementation of a successful Renault-Nissan alliance,
and to study what steps have been taken to overcome the
threat poised by the key challenges. The paper typically
derives three distinct cores in accordance with the
examination analysis: The Backfire of the Alliance
Proclamation; The Sagacity behind the Renault-Nissan
Alliance; and The Recipe for Renault-Nissan Alliance
Success Key Challenges and Walk-The-Talk.
Discussion
The Backfire of the Alliance Proclamation: Following the
announcement of the Renault-Nissan alliance in March 1999,
various individuals and organizations have been unanimous
in their disapproval of the alliance. In their eyes, the two were
looked at as ill-suited bedfellows.
Much has been made of the culture clash between the two
companies as it became their mainstream of disapproval.
General Motors vice chairman Bob Lutz had condemned
the merger as his managerial experience in the automotive
industry indicated that the alliance was destined for failure
and typically, those taking place across such distant and
distinctive national cultures Renault and Nissan
6
.
Relationally, the incompatible strategic goals and objectives
would further create an in-synergy situation - both Nissan and
Renault were of nationalistic and patriotic characteristics at
their core and each deemed its way as the right way of
performing a particular something management cadre.
6
In
the context of the managerial theoretical world, culture is
more often seen by various management gurus as a source of
conflict rather than of synergy.
12, 15
Hofstede
15
further
suggested that the cultural differences are often a disaster and
at best, a nuisance.
In addition, the alliance was rather seen as an ownership
disadvantage situation for Renault. The 36.6 percent stake

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held by Renault in Nissan was rather seen as a weak minority
shareholding Renault could not become the real boss and
instead of setting some firm directions, they had to
negotiate.
6, 19
In other words, it was not in the preferable way
in which the Lutz had foreseen in contrast to the mirror of the
above event Renault being the real boss by having a 51
percent stake even if it meant having to assume Nissans debt
on its balance sheet. Thus, dealings with proprietary
technology or competitively sensitive information would be
highly controlled by Nissan. Consequently, Renault would
not be able to transfer the valuable ideas and practices of
Nissan as promptly as they wanted into its own operations.
Astonishingly, Renault and Nissan themselves were in a
contrary position. Renaults sales were highly concentrated
with 84.5 percent being in Western Europe alone and in
comparison with other major manufacturers, especially its
European rival Volkswagen, Renault was in an extremely
parochial compass and perhaps, vulnerable to a predator
when the automotive industry was globalizing rapidly.
7, 8, 22
In
contrast, Nissan had a problem with its senior managers
bureaucratic and conservative approach as there was little
emphasis on profit, contributing to its debt mountain more
comparable to that of a medium-sized developing country
US$ 20 billion.
6, 16
Subsequently, both companies were seen
to have a lack of mutual understanding as they had no history
of working together.
17
Consequently, the alleged unanimous
pessimisms suggested the stakeholders doubt of Renault and
Nissans current skills, products and markets as being able to
complement each other.
The Sagacity behind the Renault-Nissan Alliance:
Generally, the rationality of every merger often entails the
potentialities in future market development and access to a
variety of technologies.
3, 7
This was rather obvious from the
outset in the case of Renault-Nissan the alliance provided
complementary geographical scope and skills.
Renault had a strong market presence in Europe and Latin
America whereas Nissan was buoyant in J apan, North
America and Asia. In Renaults point of view, the alliance
would allow them to expand beyond its European and Latin
American base in order to maintain its competitive survival in
the long term - reduce its industrial concentration in the
European market.
22
Thus, to be credible in a global context,
Renault required a presence in North American and Asia
Pacific markets.
7
However, such an expansion could not take
effect without a partner as the cost was rather too expensive
and out of the budget. An American partnership was out of
the question as Ford, General Motors and Daimler-Chrysler
were trying to assimilate their recent marriages with other
European automotive firms. As the attention turned to J apan,
Nissan was apparently alone in the market.
16

Other J apanese automotive manufacturers such as Subaru and
Isuzu were under the influence of General Motors whereas
Mazda was already under Fords auspices. Ultimately, Nissan
who provided the opportunity of penetrating into new
targeted markets was an obvious strategic partner to Renault.
On the other hand, Nissans perspective was that the alliance
would in turn bring benefits in terms of increasing its global
market presence - penetrating into untapped European
markets.
20
This would further allow Nissan to utilize their
half-idle manufacturing platforms as they would be able to
increase production due to the opportunities for potential
customers demands in the larger market.
In addition, Renault and Nissans combined technological
strengths and expertise would undeniably be of mutual
benefit to both parties Renault presented a considerable
amount of quality ranging from expertise in research and
development to a flair for marketing and concept design,
whereas Nissan itself was an engineering powerhouse.
6, 7

These distinctive skills and assets brought by both parties into
the venture would undeniably reduce the potentialities of
direct competition in both the end products and markets, and
contribute to mutual success in the former and latter areas.
Relationally, Renaults Safrance which had proved a singular
disappointment would be rejuvenated with the engineering
and technological enhancement provided by Nissan.
7, 22

Additionally, Renaults product range would further benefit
from the complementation of Nissans reputation in pickups
and off-road vehicles as well as their top-of-the range models,
such as Rouge and Infinite, whereas Nissan would be able to
take advantage of Renaults marketing expertise to boost its
currently stale sales growth.
22

Hence, the forming of the alliance is rather sensible as both
Renault and Nissan could take advantage of each others
complementary geographical scope, skills and expertise to
generate future mutual success.
The Recipe for the Renault-Nissan Alliance
Success

Key Challenges: Success does not fall right in front of the
doorstep. Several key challenges have been faced by Carlos
Ghosn, COO of Nissan, in order to successfully implement
the Renault-Nissan alliance in mid 1999.
Key Challenge No.1-Constructing an Efficient and
Effective Organisational Communication
The differing country of origin in which Renault and Nissan
came from, poised a barrier of communication between the
two companies. In terms of language spoken, Nissans and
Renaults organizational members used the J apanese and
French language respectively (Central Intelligence Agency).
4

Hence, Ghosn is faced with the challenge in overcoming the
potential threat of communication breakdown due to the
differing use of languages. In simple terms, it is impossible
for a chicken and a duck simply to communicate.

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In addition, Ghosn is faced with several cultural problems in
creating an efficient and effective organizational
communication in J apan. First, he would have to face the trap
of the high context culture as J apanese tend to have a hidden
meaning in what they said.
6
In illustration, J apanese might
say yes, but actually what they meant is no. Therefore,
Ghosn faced a challenge to instill an approach of total clarity
and open communication within Nissan. Secondly, Ghosn is
faced with a situation in which Nissan has a compartmenta-
lized culture which limits the flow of communication. In his
observation, people in Nissan were not really talking to one
another.
6
Rather, they tend to focus more on the formal
organizational structure communication only among the
same hierarchy level. Therefore, Ghosn faced the challenge in
implementing the effective complementary formal and
informal communication in Nissan to overcome the autocratic
system and high power distance culture in the J apanese
organization.
2, 6

Key Challenge No. 2-Rectifying Incompetent and Un-
competitive Cultures
In 1999, several Nissan practices were identified by Ghosn as
incompetent and uncompetitive. Firstly, the keiretsu system
was criticised by Ghosn as its intrinsic lack of flexibility
loyalty to their large chain of suppliers and paying at cost
disadvantage prices, was proving to be one of its most serious
shortcomings in the modern global economy.
5, 6
Secondly,
there was a boundary of age and seniority in Nissan. Ghosn
implicated that this practice had no motivating factor as every
employee would be acquainted with rewards and promotions
in a matter of time.
6, 7
Thus, Ghosn had to deal with the
challenge poised by these incompetent and uncompetitive
practices.
Key Challenge No.3-Mounting a Sustainable Challenge in
the Global Market
As both companies were previously in a derailing state, it
became a challenge to Ghosn to revitalize the companies into
a highly competitive organization in the global market. The
failure of some Renaults automotive models and their over
concentration on sales region becomes one problem for
Ghosn.
16
On the other hand, Nissans senior managers
bureaucratic and conservative approach becomes another
problem as this was the cause to their amazing US$ 20 billion
of debt, leading to a brink of complete financial and market
collapse!
6

Walk-The-Talk
In the battle to overcome the key challenges, Ghosn has made
his mark by developing and implementing several strategies
and practices. In turn, this would allow the Renault-Nissan
alliance to achieve a sustainable level of competitive
performance.
Boundary-Spanning Leadership: As a start, Ghosn had
opted to create a context and space for both companies to
come together.
1, 6
This was seen as early as in the time of his
COO appointment Ghosn handpicked 17 French executives
from Renault to form a boundary-spanning leadership team
with the combined reduced group of Nissans executives.
6

Furthermore, his leadership had encouraged non-pre-existing
mental models, cultural prejudices, or preconceptions in his
attempts to bridge both parties with the understanding and
acceptance of cultural differences to enable seeding for
innovations instead of seeding for dissention.
6, 24

Company-Wide Building Blocks: Next, Ghosns effort of
implementing company-wide building blocks mirrored his
desire to overcome the first key challenge - constructing an
efficient and effective organisational communication. Firstly,
Ghosn lay down the use of a common language or lingua
franca English, throughout both organisations.
6, 9
This
decision was also backed up with intensive language courses
for all the companys employees, regardless of level.
6, 21
In
turn, this helped Nissans collaboration in cross-functional
and cross-company teams effectively, with executives of
different functions and nationalities from both companies
working together to achieving exigent business objectives -
such as reducing automotive debts in the next three years.
Ultimately, successful knowledge interaction between the two
companies was achieved. Secondly, Ghosn encouraged
certain common positive traits among employees - such as
walk-the-talk behaviour, especially among those assuming
leadership roles.
6
His idea here was to reduce the effect of the
high context culture as to ensure that words said should
correspond with their actions.
Introduction of Communication Rituals: In addition,
Ghosn
11
had employed several communication rituals to
further response to the first key challenge. First, he implied
an extreme transparent, open, precise and factual
communications both within Nissan and with its stakeholders
Ghosn practice the invitation of the media to Nissans
annual shareholder meetings and gave them complete
freedom to report what they saw.
6
In addition, total clarity
was also strongly emphasised.
21
As a result, open
communication was achieved as younger generation J apanese
managers became more approachable and perfectly
understood one another and the organization had maximum
light as the organizational environment became much
clearer.
13
Consequently, the success of making these practices
alive was also a result from Ghosns company-wide building
block encouraging leaders to walk-the-talk.
6
Sub-
sequently, certain practices became powerful and visible
rituals as a leader, Ghosn would make surprise visits to
Nissans research facilities and production plants and
establish communication with all lines of employees.
However, a compartmentalized culture was still present. In
response to this, Ghosn
11
regarded the cross-functional teams
highly in turning the prevailing culture into a more open spirit
that fostered cross-boundary communications.
6
Consequently,

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Ghosn replaced the companys divisional presidencies in
North America and Europe with four cross-functional
management teams that met monthly.
11

Supporting Company-Wide Business Initiatives: To mount
a sustainable challenge in the global market, Ghosn
11

introduced the company-wide business initiative Nissans
Revival Plan (NRP), which had clear quantitative and
qualitative targets requiring total involvement in order to
attain positive outcoming effects on Nissans component
areas.
6
In the beginning, some main strategic goals were
announced at the Tokyo Motor Show.
6, 23
Various members
of the society had turned a deaf ear to the unveiled plan.
However, Nissan not only achieved its goals, but also
exceeded every expectations of each goal.
Behind this success were the nine cross-functional teams
composing of both top-down and bottom-up approach,
established by Ghosn
11
as a result from the social initiation
stages of the alliance.
6, 10, 11
This allowed Ghosn to utilize the
human resources to design the NRP without resorting to
outsiders such as consultants.
In addition, a strong emphasis was put on product
development in order to overcome the challenges.
6
Various
researchers and Ghosn
10, 11
realized the importance of
gathering an essential pool of expertise in which directions
were given to the dedicated cross-functional teams in order to
engage in effective and sustainable product develop-
ment.
6, 7, 11
To restore allure to Nissans tarnished brand
image vis--vis the customers, Shiro Nakamura, Isuzus star
designer, was recruited.
6
An increased allocation of R and D
investments was also made - from 3.7 percent of sales in
1998 to 5 percent. Also, a rose in the recruitment budget took
place to employ 1000 new engineers for various product
development projects.
Besides that, a larger global market share was also an
important revitalization factor.
12
Ghosn approved a US$ 930
million new assembly plant in central Mississippi to supply
the key U.S. market and a US$ 300million investment to
produce new Nissan car models in Brazil.
6
As a result, the
former approval had led to a representation of one-third in
Nissans sales starting form 2003.
By now, Nissan was already braking and accelerating hard at
the same time. However, an incompetent and uncompetitive
culture was still present the keiretsu system.
6, 19
In response
to this, Ghosn revealed that maintaining keiretsu was not
among the companys objectives. Instead, the system would
rather be on the basis of a cost/benefit analysis.
10

Consequently, it became the objective to free all-capital
resources from non-strategic, non-core assets and to invest
more in their core business while at the same time
significantly reducing their debt.
6

Finally, Ghosn made the company-wide business initiatives
to run at a continuous level.
7
In 2001, Nissan launched 180
business initiative, but it was met before schedule.
6

Consequently, Ghosn started to publicize Value Up
another business initiative, but this time, to instill Nissan and
Renaults brand and product portfolio into higher value-added
items in the consumers minds.
Cross-Boundary Rotations: In order to break boundaries,
rotate key executives around and create a truly global
leadership cadre inside the company, Ghosn employed
effective personnel and career growth policies.
1
According to
J ackson, Hollmann, and Gallan
18
, these policies form an
effective motivational factor and commonly lead to an
increase in employee performance levels. Thus, to support
this, a new global promotion and compensation system based
on employees profit contribution was presented. Sub-
sequently, this allows the rectification of an incompetent and
uncompetitive culture - breaking the old tradition of
unmotivational incentives based on seniority.
11
However,
there was a need to prepare the mindsets and attitudes of its
employees in order to maintain stability and reduce the effect
of any culture shock.
6, 18
Consequently, those who were
resisting to changes have one year to change their attitude.
11

Another showcase of the policies benefit was a high-profile
female J apanese executive was hired to head Nissans
communication department.
6, 23
She became the first woman
ever to lead a function within a company. Instantly, she
grabbed widespread attention from the media. This event
challenged J apans excessive point of masculinity which was
ranked the second highest 95, as compared to other
countries.
15
This was further supported by Herbig and
J acobs
14
saying that J apans extreme position on masculinity
suggests that in no other country is the sex role separation as
strict as in J apan. However, the ripened effects of these
policies were rather successful as the Renault-Nissan alliance
became so successful and profitable, making it as the fifth
largest car manufacturer in the automakers league.
6

Conclusion
The declaratory surprise of the Renault-Nissan alliance would
probably be predicted as a corporate disaster story without an
examination of the extraordinary revelation voyage of the two
companies. As we have studied the overall aspects of the
alliance, it has been seen that the Renault-Nissan alliance was
exactly the opposite. Although we have seen various
backfires from the alliance proclamation, the sagacity behind
the Renault-Nissan alliance provided a real justified rationale
on why the alliance is formed.
Conclusively, this marriage is rather in an odd situation as
managerial theories on successful steps in forming a strategic
alliance are not precisely followed but rather, it has countered
much of the prevailing theories not forming a common
culture did not prevent a strong common glue between
Renault and Nissan. Furthermore, past experiences of
renowned corporate figures were also put to the sword in this
case. Hence, this case would be considered as an exceptional

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case. Consequently, organizations planning to follow the
footsteps of Renault and Nissan would have to adopt a highly
risky position until this kind of voyage becomes rather
common and further proven in the business world.
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November 8 (1999)
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Harvard Business Review, 3-11, J anuary (2002)
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Information Technology and People, 10 (2), 132-146 (1997)
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transparence simpse, Le Figaro Enterprises, 28-29, J uly 2 (2001)
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the J apanese Innovative Processes, Cross Cultural Management: An
International Journal, 5 (3), 195-237 (1998)
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Behaviours, Institutions, and Organizations Across Nations, 2
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ed.,
UK, Sage Publications (2001)
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18-29, November (1999)
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December (1999)
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development programs for the sales force, Journal of Business and
Industrial Marketing, 21 (5), 291-299 (2006)
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his MO, the China challenge and his delicate future Upfront,
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(Received 23
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J uly 2012)

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Case Study:
Personality Type A as a Moderator for Relationship between
Occupational Stress and Organizational Effectiveness
Mahal Prabhjot Kaur
Rayat- Bahra Institute of Management, Punjab Technical University, Jalandhar. INDIA
prabhjotkaurmahal@gmail.com

Abstract
The Indian corporate society is presently experiencing
an accelerated change in economy, social structure and
family structure. Due to that the most of the employees
are mainly spending their time on the job related work
purposes resulting in ignoring the stress influencing
their work and life. Now a days people are more
worrying about their outcome of work that can even
affect the way they are being treated in their
organization. This has resulted in a renewed focus on
HR strategies that can ensure organizational effective-
ness as well reduction of occupational stress. This is
possible only when the employees working in the
organization possess a personality to reduce the stress
as well as to increase the organizational effectiveness.
The present study was performed on a sample of 400
employees belonging to service sector. The major
objective of the study was to analyze moderating effect
of Personality Type A on the relationship between
occupational stress and organizational effectiveness.
Moderated regression was conducted to find the results.
It was found that occupational stress was negatively
related to the organizational effectiveness and
Personality Type A moderated occupational stress and
organizational effectiveness.
Keywords: Call Centre Employees, Occupational Stress,
Organizational Effectiveness, Personality Type A.
Introduction
The complexity and competitiveness of today's business
environment requires companies to continuously raise the bar
on their effectiveness, because top performance increasingly
demands excellence in all areas, including leadership,
productivity and adaptation to change, process improvement
and capability enhancement (knowledge, skills, abilities and
competencies). There is no doubt that organizational
effectiveness is only way to lead business success.
Organizational effectiveness is considered as important for
the survival and growth of the organization.
Organizational effectiveness can be understood as the process
of developing capabilities necessary for achieving the goals
and objectives of the organization. In order to be effective
organizations need to re-examine their objectives, methods
and systems as well as the basic beliefs, assumptions and
values that shape these objectives, methods and system.
Consequently, employees may need to be re-educated, de-
skilled and re-skilled.
Effectiveness of the organization depends upon the learning
and the personality attributes of the individual. This directly
or indirectly affects the performance or productivity of the
employee. Yeung and Berman
32
described that HR practices
of the organization are the main predictor of the organization
effectiveness, it is also seen that individual behavior such as
commitment, involvement and extra role activity as
manifested by organizational culture behavior and high
performance work system, also contributes towards enhanced
organizational performance.
21

Increasing competition, globalization of companies and
business and the continuous change in market and technology
enabled the companies to think about different ways and
strategies to gain competitive edge in the market place. The
answer lies in upgrading the competitiveness of the
organization by increasing the effectiveness. Organizational
effectiveness has been defined from different perspectives
over the years and there have been number of attempts to
arrive at a single definition of this very important variable.
Occupational stress research in organizations in general and
executive stress in particular is a topic of discussion with
academicians and management practitioners whereas
stressors refer to an employees physiological or physical
response to stress.
10
A number of studies have been
conducted which identify various organizational and work
related stressors.
4, 11, 26
Researches have shown that Personal-
ity Type A and Negative Affectivity have been found to play
a part in the stress experienced.
22, 31
The main aim is to check
that whether Personality Type A serves as a moderator in
seeing the effect of occupational stress on organizational
effectiveness or not?
Type A Personality Bahaviour as a moderating
Variable
In 1950s two cardiologists in San Francisco, Rosenman and
Friedman, embarked on a systematic program of research on
this aggressive, striving disposition, they called it the
Personality Type A pattern, as this research was different
from traditional epidemiological studies by considering
socio-economic and psycho-social factors, rather than
physiological factors alone. These studies established the
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Type A Personality as a consistent syndrome of behaviors

representing a stress-coping strategy employed by certain
susceptible individuals in response to challenging environ-
mental stimuli.
3, 25

Type-A refers to an overall style of behavior that is observed
in persons who are excessively time conscious, competitive,
ambitious, hard working and confident, they race with time,
work fast, impatient, angry, talk fast; try to do several things
at once. Since they cannot bear to wait, they tend to interrupt
the conversation; they try to lead all of their interpersonal
interactions. Type As use quantity (Money, achievements,
responsibilities etc.) as an indication of their success and they
value quantity rather than quality.
2, 20
They are highly
competitive.
14, 23
The people experience stress; however, they
are less panicky when they face challenges and threats, are
considered as a Type B Personality Behavior. Moreover, they
differ from the Type-As in terms of their blood pressure and
other biochemical reactions.
9
Researchers have shown that all
individuals are likely to lie on a normally distributed
continuum, ranging from extreme Type A behavior through
to extreme Type B behavior.
29

Although this may lead to enhanced performance in
situations, where Type As face moderate levels of stress,
prolonged exposure to a salient and uncontrollable stressor is
likely to lead to decrements in task performance as Type As
exhibit learned helplessness.
15
The personality traits type A
behaviours are associated with higher perceived levels of
stress originating from work place dimensions. Researchers
have indicated that in order to motivate highly competitive,
achievement-orientated Type A individuals, organizations
and supervisors should consider taking steps to increase their
perceived control. Such steps might include reducing role
ambiguity and role conflict, anticipatively setting goals with
these individuals, placing them in relatively autonomous jobs
and providing them with tasks in which they have a high
degree of control over work scheduling and work methods.
Spector
30
demonstrates that personality type is an important
explanatory variable in understanding the human behavior at
the workplace. Researchers found results that are consistent
with the conclusion that employees whose personality
temperaments match those of their organizational
requirement, achieve high goals. According to Jung theory
13
,
the difference in personality is due to the way we take
information and make decisions.
6
Each personality type
involves a combination of the preferences identified above.
Finding generally suggested that Type A Personality Pattern
people tend to be less satisfied with their job as compared to
Type B Personality Pattern employees, initiating more stress,
perceive less control and tend to favour short term job tenure.
Control theory, developed by Glass
7, 8
, is considered as a "the
most systematic approach to the understanding of Type A
Personality Behavior".
16
The theory suggests that Type As is
motivated by a strong desire to control their environment.
People, events and situations that are perceived to threaten
the Type A's sense of control are likely to rouse the Type A
behavior characteristic of these individuals. However, in the
face of prolonged exposure to a salient and uncontrollable
stressor, Type As have been found to demonstrate a
propensity to suspend all efforts directed toward regaining
control. This, Glass
7, 8
claims, is an example of learned
helplessness
27
or "hyporeactivity" in the face of an
uncontrollable stressor.
Kirkaldy et al
15
examined that the impact of Type A
Personality Behaviour is associated with greater stress, low
Job Satisfaction and poor physical and mental health as
compared to the type B personality. The researchers found
that unlike Type Bs, Type-A
3
are success oriented, assume
extra responsibilities and perceive events as more stressful,
experience panic reactions very often, have a hard time to
concentrate on their work, exhibit aggressive behaviors in
interpersonal interactions and consequently experience de-
creased performance and decreased job satisfaction.
1, 12, 13, 19

It was also observed that Type As became increasingly
annoyed and frustrated throughout the study and that Type As
blamed their continued failure on their perceived stupidity
and lack of ability. According to the researchers, these factors
combined to lead Type As to learned helplessness, i.e., giving
up and acting helpless as problem-focused strategies have
been positively associated with job satisfaction.
17

Accordingly, the following hypotheses, stated in alternative
form, were investigated:
Occupational stress is negatively related to organiza-
tional effectiveness.
Type A Personality Behavior moderates the effect of
occupational stress on Organizational effectiveness.
Research Methodology
Selection of sample: Stratified random sampling method was
used to draw a sample of 400 managers working in the
service sector, comprised of 75 employees from banking
sector, 100 healthcare industry and 50 from call centre
industry, 75 from insurance sector and 50 from education
sector and 50 from IT sector. However, in order to have a
nationally representative sample, executives were selected
from organizations having an all-India presence, across all the
four regions, viz., north, south, east and west. For sampling of
executives from manufacturing and service industry
representing public and private sectors, a list of companies
having an all-India base was prepared. The management of
the company was approached personally, with prior appoint-
ment, to brief them about the objectives and scope of the
study and the value of their association with it. After
explaining and answering queries, if any, the permission for
data collection from their companies was sought. The
companies identified an executive, generally an HR
executive, to provide a complete list of middle and senior
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level executives working in various functional departments of

the organization. Random sampling method was used to
identify executives from the list who would form a part of the
sample from a particular company.
Research Tools
Occupational Stress Index: Srivastava and Singh
Occupational Stress Index (SSOCI) has been used to measure
the twelve type of occupational stress. In the current study,
the instrument has been slightly modified. Questions that
were irrelevant for the targeted different service based
companies in India were dropped from the questionnaire and
the questions those were relevant for the study were added.
The remaining 46- item instrument used a 5-point Likert scale
to measure the perceptions of subordinates regarding how
much of occupational stress was possessed by them. The
main components of the Occupational Stress Index were Role
Overload, Role Ambiguity, Role Conflict, Group and
Political Pressure, Responsibility for Persons, Under
Participation, Powerlessness, Poor Peer relations, Intrinsic
Impoverishment, Low Status, Strenuous Working Environ-
ment and Profitability. A higher score indicates a high
occupational stress base of a CCR.
Type A Personality Inventory (TAPI): This scale was
developed by Pearson. The TAPI has 40 statements in 20
categories. In the statement 20 items pertain to Type A and
20 Items pertain to Type B personality. A seven scale is used
in scoring responses. The scale has high reliability and
validity. The three dimensions of the scale were: Personality
Type A, Personality Type B and Personality Type (A-B). Out
of the above mentioned dimensions only one dimension viz.
Personality Type A was found to be significant.
Organizational Effectiveness: The scale developed by
Deftuar consists of 46 items, which describes organizational
effectiveness incorporating 9 dimensions- Organizational
attachment, Job involvement, Self Control, Legitimatization,
Organizational Commitment, Innovation, Consensus and
Satisfaction of organizational effectiveness. A five point
Likert rating scale was used to get the response. A high score
on the scale indicates high organizational effectiveness. The
scale is reported to have satisfactory reliability as well as
validity. In the present study, instead of taking 9 factors
separately, overall organizational effectiveness was taken into
account. Overall effectiveness was found to be significant on
factor analysis (=.92).
Data Collection
Data were collected through personal survey from the sample
of employees from the service sector. A set of research tools
mentioned above was handed over to each executive in a
group setting in face to face situation. The respondents were
explained the objectives and the scope of the study and the
value of their genuine responses in making it successful.
Their informed consent was sought and they were given
standardized instructions before the collection of data.
Table 2 provides descriptive information concerning the
variables of interest in the current study. As reported in this
table, the mean score of the occupational stress ranges from
4.86 to 14.88 respectively. the mean scores for the Type A
personality Behaviour is 100.73 suggesting that the sample
employees are somewhat more Type A oriented than Type B,
also statistically significantly different from the scale
midpoint of 70.
Intercorrelations between study variables are provided in
table 4. Both dependent variablesOrganizational Effective-
ness and Occupational Stress are negatively associated with
Type A Personality Behaviour. From the correlation model, it
can be observed that Role ambiguity (-.25), Role conflict
(-.24), Group and political pressure (-.204), Responsibility for
persons (-197), Under participation (-.2*), Powerlessness
(-.197), Poor peer relations (-.198), Low status (-.233),
Intrinsic impoverishment (-.232*), Unprofitable (-.214), TAP
(-.270), Organizational Effectiveness (-.213) have a
significant effect on 0.01 and 0.05 level.
As shown in the table 3, when the 12 occupational stress
variables were entered into regression analysis in the first
step, the coefficient of determination (R2) was found to be
0.794 indicating that 79.4% of organizational effectiveness is
explained by independent variables. In table No. 4, to test
whether Type A Personality Behaviour serves as an
independent variable, the R2 decreased to 52. 6%. This R2 is
significant. This implies that Personality Type A is negatively
associated with organizational effectiveness. The F-statistics
is significant (p=.000) suggesting that the proposed model is
adequate.
To examine the moderating effects of Personality Type A, a
third regression model was developed by adding the
interaction terms. As shown in table 3, the R2 increases of
54.2% are significant. This means that Personality Type A
did serve as a moderator in seeing the effect of occupational
stress on organizational effectiveness. Thus, our second
hypothesis is also proved.
Interpretation and Discussion
Analysis of the sample data confirmed the hypotheses that
elements of occupational stress are inversely related to both
overall Personality Type A and organizational effectiveness.
The study comprised a service sector investigate found a
significant negative association between occupational stress
and organizational effectiveness, but failed to find a
significant association between occupational stress,
Personality Type A and organizational effectiveness on the
basis of gender, geographical location and the age. With
respect to the latter relationship, future research could attempt
to determine whether the inconsistent results between the
current studies are a consequence of differences in
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geographical location, geographical location and the age in

the call centre employees.
The hypothesized moderating effect of the Personality Type
A on the relationships between the elements of Occupational
stress and Organizational effectiveness was borne out by the
sample data. The possibility that, in general, organizational
stress in the environment of the call centre does reach the
effect levels necessary to induce learned helplessness in Type
As is completely ruled out. In this study, there was little
evidence that call centre executives, in general, perceived
occupational stress in their work environment. The study
reveals that employee who is able to solve the problem in a
positive way is considered as a more efficient employee for
the organization as compared to those who are not able to
solve the problem in a calm way. The present research
supports that personality Type A has shown inclination
toward occupational stress, anxiety and other occupational
health outcomes in different areas of psychology and these
factors may contribute to feeling of Organizational
effectiveness. Researchers have discussed that employees
with Type A Personality are more likely to experience a high
level of stress but Personality Type B employees are to be
less vulnerable to stress and are less likely to perceive certain
events as stressful.
The second hypothesis that Personality Type A moderates the
effect of occupational stress on Organizational effectiveness
is also proved by our study. In our words, when Personality
Type A acted as a moderator, the impact that stress had on
effectiveness was increased to some extent. Employees, who
have Personality Type A, perceive occupational stress in a
harmful way adversely affecting the effectiveness of the
organization. The current study supports that organizational
effectiveness not only depends upon the resources and the
ability of the organization to meet the objectives but also on
the efficiency upon the human being.
Many researchers argue that Personality Type A is a
significant predictor of occupational stress and organizational
effectiveness. Researches indicate that an employee with
Personality Type A suffers more occupational stress and
consequently less organizational effectiveness.
Conclusion
From the above, it can be said that Personality Type A, which
represents an important personality dimension, is associated
with organizational effectiveness. As predicated, personality
type A employees provide high organizational effectiveness.
In order to increase the organization effectiveness, employees
should try to work in a stress less environment. The findings
of the study are significant for the HR managers. The current
study supports that it is essential to find out the possibility of
the accessible employees for higher level jobs on the basis of
their personality, so that career plans can be set. The current
study supports the HR practitioners to provide the supportive
working environment to the Type A personality employees so
that a cordial relationship between management and the
employees can be maintained in order to increase the
effectiveness of the organization.
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Table 1
Items, Means, Standard Deviations and Cronbach Alpha of Independent and Dependent Variables
Variables Maximum Minimum Mean S.D.
Role overload 4 20 10.9 3.76 0.92
Role ambiguity 4 20 9.15 2.56 0.89
Role conflict 2 12 4.96 1.7 0.87
Group and political pressure 5 25 9.8 3.20 0.78
Responsibility for persons 2 10 4.78 1.63 .092
Under participation 7 35 14.24 4.8 0.74
Powerlessness 3 15 7.04 2.62 0.83
Poor peer relations 5 25 13.95 5.12 0.79
Strenuous working environment 4 20 10.96 3.8 0.86
Low status 2 10 4.9 1.7 0.76
Intrinsic impoverishment 6 30 14.88 5.04 0.79
Unprofitable 2 10 4.86 1.59 .084
Personality Type A 20 140 100.73 16.83 0.82
Organisational effectiveness 46 230 226.46 76.62 0.92

Table 2
Pearson Intercorrelation among the Type A Personality, Occupational Stress
and Organizational Effectiveness
Vari. 1 2 3 4 5 6 7 8 9 10 11 12 13 14
1 1 -.25* -.24* -.204* -.197* -.2* -.197* -.198* 1** -.233* -.232* -.214* -.270** -.213*
2 1 .552** .514** .461** .486** .482** .514** -.247* .554** .548** .445** -.122 .585**
3 1 .926** .898** .883** .877** .867** -.236* .998** .944** .863** .198* .972**
4 1 .954** .936** .923** .909** -.204* .924** .864** .878** .218* .892**
5 1 .983** .971** .963** -.197* .899** .841** .838** .201* .862**
6 1 .992** .983** -.2** .884** .824** .818** .228* .845**
7 1 .989** -.197* .878** .814** .811** .234* .841**
8 1 -.198* .868** .80** .791** .182 .841**
9 1 -.233* -.232* -.214* -.270** -.213*
10 1 .946** .861** .199* .970**
11 1 .799** .155 .910**
12 1 .204* .826**
13 1 .128
14 1
* Correlation is significant at the 0.05 level (2-tailed) ** Correlation is significant at the 0.01 level (2-tailed)
{1= Role overload, 2= Role ambiguity, 3= Role conflict, 4= Group and political pressure, 5= Responsibility for persons, 6= under
participation, 7= Powerlessness, 8= Poor peer relations, 9= Strenuous working environment, 10= Low status, 11= Intrinsic
impoverishment, 12=Unprofitable, 13= TAP, 14= Organizational Effectiveness}.
Table 3
Moderated Regression result of Occupational stress regressed on organizational effectiveness
Variable Df1 Df2 F R square Beta Sig.
Occupational stress 1 98 378.71 .794 2.54 .000**
** Correlation is significant at the 0.01 level
Table 4
Moderated Regression result of Occupational stress regressed on Type A Personality
Variable Df1 Df2 F R square Beta Sig.
Occupational stress 1 98 9.630 .526 .982 .000**
** Correlation is significant at the 0.01 level
(35)
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(Received 17
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February 2012, accepted 10
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June 2012)


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Case Study:
Economic Problems in Micro, Small and
Medium Enterprises (MSMES) in India
Venkateswarlu P.
1
* and Ravindra P.S.
2

1. Department of Commerce & Management Studies, Andhra University, Visakhapatnam, Andhra Pradesh, INDIA
2. Miracle School of Management, Miracle City, Bhogapuram, Vizianagaram (Dist.) 535216 (A.P.), INDIA
*po_venkat@yahoo.com
Abstract
Globally, there is an increased recognition of the
important role played by micro, small and medium
enterprises (MSMEs) in the economic development of a
country. Similarly, in the South Asia region, MSMEs
are the main engines behind the economic growth. In
particular, MSMEs are one of the biggest contributors
to GDP, employment and play a core role in the supply
chain of large businesses. One of the major problems
faced by MSMEs in South Asian countries is lack of
finance to advance business growth. MSMEs lack setup
capital, liquid capital, working capital and investment
capital to survive and grow in a dynamic and predatory
competitive business environment. MSMEs heavily
depend on the financial institutions such as banks,
credit corporations and development banks for the
supply of finance to meet their daily financial needs.
Keywords: MSMEs, Post Crisis, Economic problems, Public
Policy, Development Banks, Regulatory Policies, India.
Introduction
MSMEs in the manufacturing sector of India are mainly
export oriented and include industries such as textiles,
garments, footwear, sugar, food processing, beverages
(including mineral water) and wood based industries. The
government has provided tax concessions to some selected
manufacturing sectors in recognition of the importance of this
sector to Indias economy. Manufacturing sector has been one
of the major contributors to GDP, employment and foreign
exchange earnings. Particularly, the MSMEs in the
manufacturing sector of India have made remarkable
contribution in economic growth, employment, innovation,
competition and poverty reduction. Financing the MSMEs is
one of the major problems faced by contemporary
owners/mangers of MSMEs in the manufacturing sector of
India.
4

Owners/managers in the manufacturing sector are faced with
a range of financial problems; namely, inability to obtain
external financing; inability to obtain internal financing;
insufficient capital, start-up costs; expensive raw materials;
high wholesale price; large losses due to scrap rate, sabotage,
breakage and crime; decline in sales volume; bad debts and
write offs; heavy equipment and maintenance costs;
government tax, VAT and customs duty; heavy advertising
and promotional costs; payroll, rent and utilities;
transportation and petrol costs; high interest rates on loans;
ability to meet financial obligation; training and development
costs; insurance costs and delay in account receivables
payment.
6

Overview of MSMEs in the Manufacturing
Sector of India
Indias economy is principally resource oriented although the
size of the manufacturing sector has increased over the recent
years. The manufacturing sector of India includes the
manufacture of items such as textiles, garments, footwear,
sugar, food processing, beverages (including mineral water)
and wood based industries. Initially, manufacturing basically
involved agricultural products such as sugar and timber.
Since 1986 the production of garment has increased
tremendously due to the introduction of tax exemptions for
factories exporting 70% of their annual production
8
.
Manufacturing sector contributes to the GDP, creates
employment and generates foreign exchange earnings. GDP
from the manufacturing sector increased from around 12% in
the late 1980s to about 15% in 1990s.
3
According to the
Employment Survey Report (2009) there were a total of
22,599 wage earners and 2,412 salary earners employed in
the manufacturing sector of India.
Literature Review
The issue of small business finance has been receiving
increasing attention over the recent decade in the extant
literature. There have been studies on various branches of
small businesses: two of these branches are namely financial
management practices of small businesses and implications
of financial management strategies on the survival and
growth of small businesses have been polarized by Berger
and Udell
2
. Contemporary studies have tested the hypotheses
for financial variables for other developing countries. There
have been numerous studies that analyze the economic
problems affecting the growth and survival of MSMEs. These
studies are both quantitative and qualitative in nature.
This study underscored eleven economic problems that affect
the survival of the MSMEs; namely, inability to obtain
outside financing; insufficient capital; heavy operating
expenses; poor money management; large losses due to

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crime; meeting the payroll; inability to obtain trade credit;

insufficient profit; ability to meet financial obligations; health
insurance costs and cost of workers compensation.
Thevaruban
11
examined small scale industries and its
financial problems in Sri Lanka. He underscored that MSMEs
of small scale industries in Sri Lanka find it extremely
difficult to get outside credit because the cash inflow and
savings of the MSMEs in the small scale sector is
significantly low
5
. Hence, bank and non bank financial
institutions do not emphasize much on credit lending for the
development of the MSMEs in the small scale sector in Sri
Lanka.
The definition of MSMEs varies from country to country
1
.
The Commonwealth Secretariats definitions of MSMEs for
small states were used for tabulating and analyzing the size
distribution of the sample. In particular, businesses with
turnover (TO) of less than 100,000 (TO 100,000) were
considered as micro, more than or equal to 100,000 to less
than or equal to 200,000 (100,000 TO 200,000) were
tagged as small and more than or equal to 200,000 to less
than or equal to 500,000 (200,000 TO 500,000) were
regarded as medium. The present study consists of both
primary data and secondary data. After conducting the
literature review, a self administered questionnaire was
designed and delivered to the owners/mangers of MSMEs in
the manufacturing sector of India. Self responsibility was
taken in the delivery and assortment of the questionnaire
because the response rate seems higher than it is for straight
forward mail surveys.
The owners/mangers were asked to use their experiences in
their business to rate the questions on a five point Likert scale
where (1) signified not important and (5) signified extremely
important. The questionnaire was developed using the
previous questionnaires developed by Reynolds
10
for his
studies. The questionnaires used for these studies were further
modified to reflect the India context. The questionnaire was
pre-tested with 20 owners/managers of MSMEs. The
owners/managers comments were gathered and the questions
were revised accordingly. The revised version of the
questionnaire was delivered to 300 owners/managers of
MSMEs in India.
Apparently, out of the 300 questionnaires distributed, 207 (69
per cent) owners/managers returned the questionnaires. Table
1 shows the sample distribution of the owner managers of the
MSMEs. The demographic indicators considered were
gender, social group, age and working experience. Out of the
207 owners/managers there were 164 (79.2%) males and 43
(20.8%) females. Of the 207 owners/managers to the social
group item, 30 (14.5%) were Scheduled castes, 148 (71.5%)
were Scheduled tribes, 22 (10.6%) were Backward class and
7 (3.4%) were Others. The distribution of the age item is as
follows; 2 (1%) were less that 20 years, 51 (24.6%) were
between 20-30 years of age, 59 (28.5%) were between 31-40
years and 95 (45.91%) were more than 40 years old. A vast
majority of the owners/managers working experience
concentrated between 5-10 years (77 owners/managers;
37.2%) followed by 11-15 years (57 owners/managers;
27.5%), less than 5 years (34 owners/managers; 16.4%), 16-
20 years (28 owners/managers; 13.5%) and more than 21
years (11 owners/managers; 5.3%). The secondary data were
collected from the annual reports of Reserve Bank of India.
Analysis and Discussion
The mean scores are sub-divided according to the size of the
business to get a broad understanding of how each of the
economic problems affects the MSMEs in the manufacturing
sector of India. Table 2 shows that factors with high mean
values are foremost economic problems facing MSMEs.
These economic problems are as follows: namely; inability to
obtain external financing; inability to obtain internal
financing; insufficient capital, start-up costs; expensive raw
materials; high wholesale price; large losses due to scrap rate,
sabotage, breakage and crime; decline in sales volume; bad
debts and write offs; heavy equipment and maintenance costs;
government tax, VAT. and customs duty; payroll, rent and
utilities; transportation and petrol costs; high interest rates on
loans; ability to meet financial obligation; insurance costs and
delay in account receivables payment. Economic problems
which are of less significance to the owners/managers, are
heavy advertising and promotional costs; and training and
development costs.
During the start-up stage of a MSME, the owners/managers
will have to depend on both formal and informal channels of
financing
12
. MSMEs are faced with heavy start-up costs
(MB=4.07; SB=4.97; ME=4.92) because they need to secure
enough finance for purchase of assets and meeting daily
operational expenses
7
. This outcome is clearly evident with
the high rating for expensive raw materials (MB=4.88;
SB=4.94; ME=4.88), high wholesale price (MB=4.81;
SB=4.88; ME=4.92), payroll rent and utilities (MB=4.09;
SB=4.97; ME=4.77) and transportation and payroll costs
(MB=4.02; SB=4.78; ME=4.92). Notably, the need for
finance by the MSMEs fluctuates due to the MSMEs age of
maturity in the pecuniary life cycle. Owners/managers of
MSMEs will distinctively rely on internal and external
sources of funds to finance their businesses. MSMEs in the
manufacturing sector of India find that debt financing is
necessary. Particularly, internal sources of finance for the
owners/managers of MSMEs include personal savings and
borrowings from family and friends. When the internal
financing is insufficient, then the owners/managers of
MSMEs will resort to external sources of funds. The external
sources of financing for owners/managers in the
manufacturing sector of India include banks, business
suppliers and asset based lenders.

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Essentially, it is difficult for the owners/managers in the

manufacturing sector of India to secure loan as banks and
other commercial lenders are charging high interest rates on
MSME loans. Table 3 shows interest rates on MSME loans
provided by banks in India.
Table 3 shows that ANZ is charging 10.95% on MSME
loans, Westpac Banking Corporation is charging 9.99%,
Baroda is charging 10% to 11% and FDB has various
schemes for MSMEs and it charges interest according to each
of the schemes. The high responses for interest rates on loans
from the owners/managers are clearly evident of the
economic problems that the manufacturing sector is currently
facing ((MB=4.86; SB=4.76; ME=4.88).
In 2009, Indias economy contracted by an estimate of 2.5%.
Apparently, a contraction in the economy has resulted in
declining ability of the MSME to obtain internal (MB=4.74;
SB=4.79; ME=4.73) and external (MB=4.83; SB=4.91;
ME=4.77) financing, diminishing sales volume (MB=4.86;
SB=4.64; ME=4.96), insufficient working capital (MB=4.93;
SB=4.87; ME=4.96), increase in bad debts and write offs
(MB=4.74; SB=4.82; ME=4.88), delays in accounts
receivables payments (MB=4.98; SB=4.88; ME=4.69) and
declining debt to equity ratio (MB=4.91; SB=4.97;
ME=4.84).
Government financial regulation on MSMEs has significantly
disadvantaged the MSMEs as compared to its large
counterparts. Specifically, the financial regulations imposed
on MSMEs such as government tax, VAT and customs duty
have various implications on the success and survival of
small business. More importantly, government has provided
enormous tax breaks to large employers who operate in tax
free jurisdictions- tax free zones. Owners/managers of
MSMEs in the manufacturing sector of India usually have the
political clout to enjoy such tax free advantages however, the
idea of MSMEs tax free zones have not yet been
implemented in India. Currently, the owners/managers of the
manufacturing sector are charged 31% income tax on their
profits and 12.5% VAT. This is clearly evident from high
rating for responses for government income tax, VAT and
customs duty from owners/mangers from the manufacturing
sector of India (MB=4.98; SB=4.96; ME=4.58).
MSMEs in the manufacturing sector of India are handicapped
with low echelon of process automation and elevated cost of
importing better technology. The imported technologies and
the software solutions are not customized and further the cost
of customization is exorbitant. More importantly, the
maintenance is expensive and time consuming. In particular,
the manufacturing sector in India is also faced with large
losses due to scrap rate, damage, breakage and crime.
Simultaneously, the MSMEs have to develop an insurance
plan for their business. MSMEs in the manufacturing sector
of India often insure for property and liability insurance. Of
greater significance is the fact that having a property and
liability insurance cover for MSMEs helps in securing good
customers. This is clearly evident from high responses from
owners/managers for heavy equipment and maintenance costs
(MB=3.93; SB=4.48; ME=4.81), large losses due to scrap
rate, sabotage, breakage and crime (MB=3.70; SB=3.94;
ME=3.77) and insurance costs (MB=2.95; SB=3.27;
ME=3.81). Apparently, the low means for heavy advertising
and promotional costs (MB=2.09; SB=2.24; ME=2.58) and
training and development costs (MB=2.07; SB=2.28;
ME=2.38) indicate that MSMEs primary goal is to survive in
contracting economic environment of India.
Recommendations
1. Minimum Government Regulation and tax: Notably,
one of the serious complaints from MSME owners/managers
is the impact of regulation on MSMEs and particularly the
disproportionate impact of government regulations on
MSMEs in India. The disproportionate impact of the
government regulation and taxation system hinders the
growth and survival of MSMEs in India and might otherwise
drive out some of these MSMEs who make substantial
contribution to the economy
9
. Essentially, from the public
policy perspective, both the direct cost of regulation and the
cost of compliance of the regulation should be reduced.
2. Better Access to Finance: Importantly, commercial
markets work extremely well in providing financial services
to the MSMEs. Apart from the obvious banking services,
more specialist services such as term loans, factoring, invoice
financing, leasing and venture capital are offered by firms
which rigorously compete with each other to maximize their
profits. Also part of this competition, MSMEs find it difficult
to compete with its large counterparts and access the services
on offer. This constrains their growth and survival. It is
essential for policy makers to recognize that there need to be
cohesive and precise public policy targeted for MSMEs that
will ensure that MSMEs are well protected in this dynamic
and competitive environment. This recognizes the need for
extensive range of diverse and well targeted programmes
such as loan guarantee programmes; regulating the interest
rate charged on MSME loans by the commercial markets;
establishment of well established venture capital market;
establishment of markets for private placements and initial
public offerings of varying sizes; government sponsored
programs for delivering credit and equity funds of small
business units; creating good awareness on the financial
programs available to small businesses and ensuring that
MSMEs keep proper financial records.
3. Proper Cash and Credit Management Practices: MSME
owners/managers need to realize that the real success of the
business is based on their ability to keep close control over
cash flows, avoiding holding excessive stocks and collecting
debts on time. Many MSMEs in India have failed because the
owners/managers focused more on technical matters and
forgot about cash flows. MSMEs still believe that delivering

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a quality service ensures timely payment however, owners

and managers of MSMEs in India need to recognize that they
need to do something positive to ensure timely payment from
debtors. Owners/managers of MSMEs have to ensure that
they send timely invoices to their customers. Overdue credit
accounts avert further sales to the slow paying customer. This
overdue account ties up sellers working capital and can also
lead to losses from bad debts. There are four key items which
the MSMEs need to tightly manage i.e. annual profit growth
percentage, to equal or exceed sales growth percentage; cash
flow effectiveness to minimize external debt; efficient use of
assets that is as slim as possible to achieve sales and interest
avoidance since the cost is a drain in profits.

Table 1
Demographic Characteristics of the owners/managers
Demographic
Characteristics
Demographic Variables Micro Business
(MB) N=67
Small Business
(SB) N=69
Medium Enterprises
(ME) N=71
Total
N=207
No % No % No % No %
Gender Male 49 73.1 52 75.4 63 88.7 164 79.2
Female 18 26.9 17 24.6 8 11.3 43 20.8
Civilization
Scheduled Caste 16 23.9 4 5.8 10 14.1 30 14.5
Scheduled Tribes 36 53.7 65 94.2 47 66.2 148 71.5
Backward class 10 14.9 0 0.0 12 16.9 22 10.6
Others 5 7.5 0 0.0 2 2.8 7 3.4
Age
Less than 20 Years 0 0.0 0 0.0 2 2.8 2 1.0
20 30 Years 15 22.4 6 8.7 30 42.3 51 24.6
31 40 Years 24 35.8 9 13.0 26 36.6 59 28.5
More than 40 Years 28 41.8 54 78.3 13 18.3 95 45.9
Working
Experience
Less than 5 Years 10 14.9 4 5.8 20 28.2 34 16.4
5 10 Years 29 43.3 10 14.5 38 53.5 77 37.2
11 15 Years 15 22.4 34 49.3 8 11.3 57 27.5
16 20 Years 10 14.9 15 21.7 3 4.2 28 13.5
More than 21 Years 3 4.5 6 8.7 2 2.8 11 5.3
Sources: Primary data
Table 2
Simple statistics of the Economic Problems facing owners/managers
Economic problems Micro
Business
MB
Small
Business
SB
Medium
Enterprise
MB
Min Max
F1 Liability to obtain external financing 4.83 4.91 4.77 1.00 5.00
F2 Inability to obtain internal financing 4.74 4.79 4.73 1.00 5.00
F3 Insufficient working capital 4.93 4.87 4.96 1.00 5.00
F4 Start-up costs 4.07 4.97 4.92 1.00 5.00
F5 Expensive raw materials 4.88 4.94 4.88 1.00 5.00
F6 High wholesale price 4.81 4.88 4.92 1.00 5.00
F7 Large losses due to scrap rate, breakage and crime 3.70 3.94 3.77 1.00 5.00
F8 Decline in sales volume 4.86 4.64 4.96 1.00 5.00
F9 Bad debts and written off 4.74 4.82 4.88 1.00 5.00
F10 Heavy equipment maintenance costs 3.93 4.48 4.81 1.00 5.00
F11 Government tax, VAT and customs duty 4.98 4.76 4.58 1.00 5.00
F12 Heavy advertising and promotional costs 2.09 2024 2.58 1.00 5.00
F13 Payroll, rent and amenities 4.09 4.97 4.77 1.00 5.00
F14 Transportation and petrol costs 4.02 4.78 4.92 1.00 5.00
F15 High interest rates on loans 4.86 4.76 4.88 1.00 5.00
F16 Ability to meet financial obligations 4.91 4.97 4.84 1.00 5.00
F17 Training and development costs 2.07 2.27 2.38 1.00 5.00
F18 Insurance costs 2.95 3.27 3.81 1.00 5.00
F19 Delays in account receivables payment 4.98 4.88 4.69 1.00 5.00
Sources: Primary data

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Table 3
Interest Rates on MSME loans Provided by Banks in India
Bank Type of MSME Loan Limits Interest Rate on MSME loans
p.a.
ANZ India MSME loans - 10.95%
FDB Micro Credit Scheme - 6.5%
Agri Finance Scheme - 7.5%
Focus sector loans less than 25,00,000 <25,00,000 8.6% - 9.6%
Micro loans and SME loans in:
Wholesale, retail, hotels & restaurants
Transport, communication & storage
Professional & business services
- 8.6% - 9.6%
Westpac Banking
Corporation
MSME loans - 9.99%
Baroda Commercial loans
25,00,000 -
1,00,00,000
10%
<25,00,000 11%
(Source: Reserve Bank of India reports)

Conclusion
This study analyzed the importance of nineteen economic
problems facing owners/managers of MSMEs. Economic
problems of great concern to owners/mangers of MSMEs are
as follows: namely; inability to obtain external financing;
inability to obtain internal financing; insufficient capital,
start-up costs; expensive raw materials; high wholesale price;
large losses due to scrap rate, sabotage, breakage and crime;
decline in sales volume; bad debts and write offs; heavy
equipment and maintenance costs; government tax, VAT and
customs duty; payroll, rent and utilities; transportation and
petrol costs; high interest rates on loans; ability to meet
financial obligation; insurance costs and delay in account
receivables payment. Economic problems which are of less
significance to the owners/managers are heavy advertising
and promotional costs; and training and development costs.
References
1. Abdullah and Baker M.I.B., eds., Small and Medium
Enterprises in Asian Pacific Countries, New York, Nova Science
Publishers (2005)
2. Berger A.N. and Udell G.F., Small Business Credit Availability
and Relationship Lending: The Importance of Bank Organizational
Structure, The Economic Journal, 112, 477 (2002)
3. Chand G., Overview of Current Economic Conditions in India,
Pacific Educational Resources India Ltd. India, Suva (2004)
4. Datta D., Small Business Finance: Implications of Delay in
Formal Sector, International Journal of Economics and Finance, 2
(4), 25-31 (2010)
5. Ganesan S., Management of Small Construction Firms: A Case
Study of Sri Lanka,Singapore, Hong Kong, Thailand, the Philippines
and Japan, Japan, Asian Productivity Organisation (1982)
6. Laxmi M. N. and Kumar S., Industrial Development, New
Delhi, Discovery Publishing House (1999)
7. Levy B., Berry A. and Nugent J.B., Fulfilling the Export
Potential of Small and Medium Firms, Kluwer Academic
Publishers, USA (1999)
8. Narayan P.K. and Prasad B.C., Indias Sugar, Tourism and
Garment Industries: A Survey of Performance, Problems and
Potentials, Journal of Indian Studies, 1(1) (2003)
9. Price J., Understand Your Accounts: A Guide to Small
Business Finance, 4th Ed., London, Kogan Page Limited (1999)
10. Reynolds R., The Status of Microenterprise Programs,
International Advances in Economic Research, 4(3) (1998)
11. Thevaruban J.S., Small Scale Industries and its Financial
Problems in Sri Lanka, Journal of Asia Entrepreneurship and
Sustainability, I, 66-74 (2009)
12. Yusuf A., Critical Success Factors for Small Business:
Perceptions of South Asian Entrepreneurs, Journal of Small
Business Management, 33(2) (1995).
(Received 13
th
February 2012, accepted 20th June 2012).


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Case Study:
Creation of Demand for Millet Foods
A Case Study of Successful Change Management of an
Innovation Project
Manikandan P.
Division of Human Resource Management, National Academy of Agricultural Research Management,
Rajendranagar, Hyderabad 500 030, INDIA
manik@naarm.ernet.in

Abstract
With globalization challenges and the increased
competition and accountability issues that the
agricultural research organizations face, there is a
definite need for bringing about innovation in the
research agenda. The present study describes the
success achieved in one of the innovation projects in
India aimed at creating increased demand for sorghum.
Appropriate Change management model was developed
to understand the success of this project, more
specifically the project and HR-related issues. The
model emphasizes the need to take into account six
important factors viz. definition of challenge, strength
and supporting factors, planning and design of change
activities, system/structure/culture, stakeholder interests
and leadership.
The important role of the leader in ensuring that
conducive micro-level systems, structures, processes
and culture within a given macro system are put in
place for ensuring success of innovation is also
highlighted through this case study. The success
achieved through this project also reinforces the
principles of systemic and continuous innovation. The
study brings out the fact that though change initiatives
were not planned and implemented keeping any model
in consideration, successful change efforts could be
effectively described through an appropriate model. The
model developed and described for change management
here, if considered during the planning of any change
initiative, would definitely help enhance the effective-
ness and success of change and development efforts for
any organization.
Keywords: Change management, Change model, India,
innovation, Millet foods, Sorghum.
Introduction
Agriculture and agri-business climate are getting more and
more diverse, complex and challenging today than ever
before. Facing them necessitates changes and interventions of
an economic, social, environmental and technological nature.
It is a proven fact that technological innovations account for
an average 30% to 40% of changes in agricultural production.
That technological innovation is associated with the processes
of change at the individual, team and organizational level is
well documented. There is, therefore, a definite need to foster
institutional change that enhances innovation in agriculture,
thereby enhancing the contribution of research to agricultural
development.
Notwithstanding the fact that the share of the agricultural
sector in Indian economy is shrinking, agriculture continues
to be the major livelihood for nearly 60% of the labour force.
Agricultural research in India has generated outstanding
productivity increases in the past and shall continue to play
an important role in supporting rural livelihood and in
accelerating rural growth. In order to facilitate an accelerated
and sustainable transformation of Indian agriculture, National
Agricultural Innovation Project (NAIP) was initiated with a
view to support the development and implementation of
agricultural innovations through collaboration among
farmers, private sector, civil society and public sector
organizations (http://www.naip.icar.org.in/). The project is
essentially aligned towards the goals addressed in Indias
National Policy on Agriculture which places high priority on
raising agricultural productivity as a means to achieve
agricultural growth and to reduce rural poverty. A number of
innovative projects was initiated across various agricultural
research institutions in the country to facilitate transition from
research to innovation.
As a part of the main focus under NAIP, a project on creation
of demand for millet foods through PCS (Production
consumption system) value chain was undertaken in one of
the research institutes under the Indian Council of
Agricultural Research (http://www.icar.org.in/). The major
goal of this project was to create a demand for millets through
interventions by addressing all issues from farm production to
consumption through innovative coalition building of all
concerned stakeholders in value-chain, for higher incomes to
farmers and greater values to the consumers. This is one of
the successful projects, implemented under NAIP, which

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employed innovative approaches and change strategies to
create demand for millet foods (more specifically sorghum).
The success of this project indicates that the project has been
well planned, designed and implemented to meet its goal of
bringing about change in sorghum production-consumption
system. However, in defining the success of any project, a lot
of ideas, processes and approaches go along with it, which
are not only project-related, but are also HR-related. These
aspects, though may remain below the surface, contribute
significantly to the greater success of the project. The success
factors of this project were analyzed under the framework of
change management concepts and change management
models. The study, incidentally, highlights the importance of
application of change models to understand the success of
any change and innovation project.
Methodology
The information related to the project was collected through
personal discussion with the leader and members of the
project team. During the personal interview, information
related to the project, innovative approaches tried, difficulties
faced and other related issues were collected. Interview was
also held with the Director of the institute who held the
leadership position.
Literature information on change management was collected
to understand different models of change management. In
order to present the success of this project, out of the various
models scanned through literature, Cornell Change Model
was adapted, modified and used in this study. Factors of
successful change in the sorghum value-chain were analyzed
with this developed model of change to bring out meaningful
information and inferences. Though the project is on millet
crops, the present paper focuses only on the research
component on sorghum, as this was the major focus in the
project.
Results and Discussion
Organizational innovation has been defined as the adoption of
an idea or behaviour that is new to the organization.
4, 6

J aramillo et al
9
described organizational innovation as the
introduction of changes in organizational structure,
implementation of advanced managerial techniques and
implementation of changes. Kustoff
11
indicated that
organizational innovation refers to the new ways by which
work can be organized and accomplished within an
organization which would encourage and promote
competitive advantage. How organizations and individuals
effectively manage work processes constitute the core of
organizational innovation, which stems from the need to
improve or change a product, process, technology, or service.
It is obvious that all innovations revolve around change;
however, all changes are not necessarily innovative.
While studying the success of the project considered for the
present study, it was realized that the core principles of
change management, as indicated by Kustoff
11
, were put into
practice which facilitated successful innovation. The three
core principles behind successful change management
include:
Cross functional team building such as public-private
partnership while discouraging silo building.
Independent, creative thinking to see things from a new
perspective and putting oneself outside of the parameters
of a job function.
Risk taking by employees while lessening the status quo.
In this project on sorghum, it was clear that the project
members focused on out-of-box thinking to creatively apply
personal knowledge to organizational challenges.
Change Management Model
The change management model, specifically developed for
the present study, adapting Cornell change model, is
presented in figure 1. For any change initiative to be
successful, six important factors need to be taken into
consideration. These are definition of challenge that
necessitates change initiative, strength and supporting factors
for change, planning and design of change activities, support
of structure/system/culture and the stakeholder interests
which become the driving force. Leadership, which is
considered as synonymous to change in organizations,
provides the necessary strength and support for these five
factors and therefore forms the core of successful change, as
is evident in the model. Each of these factors is described
with reference to the project under study to understand how
they worked well for the project. It is to be realized that while
planning and implementing this project, the above factors
were not explicitly identified and taken into consideration.
However, in achieving the goals of any change venture, these
factors do fall in place and contribute to the success and quite
often, without people consciously planning for these factors
and incorporating them. If any of them fall short during the
implementation the extent of success of the project would
definitely be reduced. While analyzing the success of the
present project, this has become obvious.
Definition of Challenge
The initial demand for a change often lies in understanding
and defining the existing situation which is perhaps
threatening and demanding and the need for a preferred
solution to the challenge. An environmental scan would lead
to identification of the available opportunities. Taken
together, this history and contextual awareness would provide
the starting point for further analysis and planning. Scan, pan
and plan are the three important activities in this stage; scan
the environment, pan the collected information to identify
potential opportunities and plan for change. Some of the
questions that might help in defining this step include:

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What were things like, before?
How wide and deep is the problem?
What negative outcomes are being experienced?
What are the presumed or alleged causes?
Does the situation need attention?
How would the peer pressure be handled?
How has the organization responded so far?
Some of the negative outcomes of sorghum scenario and the
presumed/alleged causes are presented in table 1. The
information in table 1 clearly indicates that if proper planning
and design of change activities are not initiated to revive a
demand for sorghum through value addition in the PCS value
chain, there is a possibility that this crop may suffer a huge
set back in terms production, productivity and its contribution
to the food basket.
Strength and Supporting Factors
Given the background of the challenging contextual situation,
the next step in the change management process would be to
understand the strength and supporting factors which
necessitate planning for change and innovation to help
overcome the challenges. Some of the probing questions that
would help in defining this step include:
What are the general strengths of the current situation?
Does the current strength contribute to a significant
proportion of the overall macro scenario?
What opportunities exist to lend support to the change
plan?
Some of the strengths and supporting factors for increasing
the demand for sorghum are presented in table 2. It is obvious
from the table that sorghum, which is a staple and sustenance
food for disadvantaged group, providing nutritious and
healthy food, needs to be focused through innovative
approaches of value addition along the production-
consumption continuum to enhance its demand.
Planning and Design of Change Activities
Planning and design of change activities could be a difficult
process, which could be daunting while being unpredictable
too. Leaders are often bogged down with issues like where to
begin, what to take into account, how to overcome resistance
and how to ensure that the changes made would be
successful. Emotional attachment to the felt-need for change
would help in effectively planning and designing the needed
activities for change. Some of the strategies that would help
organizational leaders to contribute to the success of this
phase include the following (http://foh.dhhs.gov/whatwedo/
Training/planning.asp):
Assessing and identifying areas for improvement.
Determining as to how current systems could be changed
to support the planning and design of change activities.
Gathering information from key stakeholders and
devising change strategies to meet the stakeholders
interest.
Table 3 presents the various activities that were planned and
designed for promoting the demand for sorghum. These
innovative approaches definitely contributed to significant
improvements in the demand for sorghum.
Structure/System/Culture
One of the initial steps to be taken by the leader of an
organization while contemplating for change is to assess the
internal environment in terms of the structure, system and
culture and plan for making necessary changes in them that
would support the change and innovation approaches. In fact,
sky is the limit for creating micro-level structures, systems
and culture within a macro system for ensuring success of
change and innovation. In fact, in this stage we can realize
that almost all the seven components of change as postulated
in McKinsey 7-S Model of Change, viz. structure, system,
style, staff, skills, strategy and shared values are given
attention in some form or the other. The extent to which this
particular factor is effectively incorporated in the change plan
initiative heavily depends on the effectiveness of the leader
and leadership, therefore, forms the foundation for the
success of change plan, as is evident in the model presented
in the figure.
A number of innovative changes were brought about in the
structure/system/culture of the institute to motivate the
scientists to contribute to the super-ordinate goal of
enhancing the demand for sorghum along the production-
consumption value chain. Some of the innovative approaches
adopted by the Director (leader) of the institute that are worth
emulating and trying by others include the following.
One of the maxims followed at 3M is: Listen to anybody
with an idea and encourage experimentation if you put
fences around people, you wind up with sheep. Reducing
the curtains and barriers between people to promote a
fence-less culture is, therefore, very important. Making
people in the project to sit together at different times to
metamorphose the group into a team by forced interaction
had helped in a great way to promote innovation in this
project.
Allowing people to let out tension would relieve them of
the pent-up feelings, thereby making them ready to
contribute to the goal is another important strategy. In the
change management literature, it is well documented that
the leader should create a social structure for people to
interact to reduce resistance to change efforts. This fact

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has been well incorporated into the culture and system of
the institute under study. The Director of the institute
created a social structure wherein every Friday people
were facilitated to meet in a social setting and also created
a social place for tea for the scientists, who had informal
interaction during these social settings to develop
fraternity and team cohesiveness.
You show concern to me and I would definitely show
concern to you is the philosophy that was followed by
the Director of the institute, who encouraged people to
have free tea/coffee at any time through the vending
machines established at different points in the institute and
allowing them to take curry leaf from the institute for use
in their dietary preparation. Potable water being a short-
supply in the city, the Director allowed the scientists and
other members of the institute to carry purified drinking
water from the institute. The benefits that accrued to the
institute far outweighed the cost incurred in these
approaches.
Developing job description for every individual and
meeting people in their place to sort out issues are other
important approaches followed by the leader of the
institute.
The leader of the institute in which the project had
operated exercised, in practice, the principle of MBWA
(Management by walking around), which saved time of
the leader and others for focusing on the core activities.
One of the very interesting approaches, which became the
culture of the institute with time, was the ear-marking of
institute quiet hours. Every day, between 0900 hrs and
1100 hrs, institute quiet hours were observed very
rigidly by everyone, during which time no one is expected
to move out of their seat or place of work and is not
expected to indulge in any activity other than the priority
work of the day (except in extra-ordinary situations). This
was a forced practice to start with, but with time this
culture was well- accepted and adopted by every member
of the institute. In fact, when the author, during the
process of this case study development, made a call to one
of the members of the project team and wanted to fix an
appointment with him for a discussion at 1030 hrs, the
project member was quite prompt to indicate that the
author should come only after 1100 hrs and not before.
Such was the success of the leader of the institute who
was able to create certain culture and system within the
institute to ensure single-minded focus among the
members to support him in the realization of the goal of
promoting the demand for sorghum.
It is not uncommon for people to put the blame on the system
and its procedures for any failure to act innovatively. The
institute under study is one of the component institutes under
a major organization in India. Creating micro-level systems
and culture within a given institute is an innovative approach
to promote change and this message has been clearly brought
out in this case study. The institutes signature line was
refuse to be ordinary. All these strategies helped in
developing, among the members, a sense of commitment and
concern for the institute.
Stakeholder interests
Lack of stakeholder management is one of the major reasons
for the failure of change ventures. Stakeholder interests
become all the more important in development-oriented
projects, which involve multiple stakeholders. A number of
issues related to stakeholders and stakeholder interests that
need consideration include the following three important ones
(http://changingminds.org/disciplines/change_management/st
akeholder_change/stakeholder_change.htm):
What types of stakeholders need to be considered and
what type of wants and interests of them would be met?
Knowing and managing the allies with the stakeholders
to elicit the needed support from them.
How to resist/manage external pressures and top
management interventions in collaborating with
stakeholders?
Mapping of the stakeholders and working on the interest-
influence grid of the stakeholders.
Table 4 presents the interests of the stakeholders for
promoting the demand for sorghum. In fact, all the interests
listed in the table were adequately taken into consideration
while developing diverse food products from sorghum. As
indicated earlier, food preparation with sorghum is difficult,
time-consuming and it demands a lot of effort, practice and
patience on the part of people involved in it. Keeping these in
view, the project attempted to rope in big partners to support
them in developing value-added products and ready-to-eat
food products of sorghum. Some of the partners involved in
supporting the goal of the project are indicated in table 5 and
the various sorghum products that were made and
successfully sold through various retail outlets are presented
in table 6. All the three principles of successful change
management documented by Kustoff
11
are obvious in the
innovative approaches adopted by the project team members
in developing new products through alliances with big
partners.
Leadership
As pointed by Steve J obs, innovation distinguishes between
a leader and a follower, no change could be successful if the
leader is not passionate about it and is not emotionally
attached to it. The project under this case study achieved over
70 per cent revival in creating demand for sorghum and its
products, as compared to the situation earlier and as per the
perception of the project team. A study conducted by the

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Kellogg Graduate School of Management shows that the best
30 per cent of successful innovation firms have a success rate
of 80 per cent. In the light of this, it can be concluded that the
70 per cent success achieved in this project clearly points out
that the Director of the institute, under whose leadership this
project was envisaged and executed, was an innovative,
effective and a successful change leader. Literature points
out
2, 12
the characteristics of passionate people (table 7). All
the characteristics listed in the table apply well to the Director
of the institute who was passionate enough to bring about
change and who adopted innovative approaches to enhance
the demand for sorghum. It goes without saying that people
with passion would automatically tend to be innovative.
Continuous Innovation
That innovation is no longer a luxury but holds the key to the
survival of an organization is well documented. In fact, this
innovative project on sorghum is one of the contributing
factors for strengthening the survival of this crop, which
otherwise would have met with mixed reactions from diverse
actors in the national agricultural innovation system. J ust as
we talk about continuous learning for individuals and
organizations, continuous innovation is the key for the
survival of business endeavours. Eight change strategies are
indicated for continuous innovation.
10
This is presented in
figure 2.
In this project under case study, changes in both product and
market elements were appropriately integrated. The various
new products developed through this project are already
indicated in table 6. Some of the changes attempted in the
marketing elements for promoting demand for sorghum
products included the following:
i) segmenting market and focusing on specific sorghum
product for specific market; this was accomplished by
developing intelligent market awareness and making trials for
sale of specific sorghum products;
ii) targeting on big retailers in the society and selling new
sorghum products through their outlets consumers have a
tendency to accept any new product if it is sold in the big
retail stores. This consumer behaviour was very well cashed
in increasing the sale and in creating more demand for
sorghum products;
iii) an innovative approach of earmarking a mobile van
named J owar rath (sorghum on wheels), which was sent
from place to place and from institution to institution to sell
the various new products of sorghum developed through this
project.
iv) products were developed for niche market and for non-
conventional sorghum consuming areas;
v) branding strategy was adopted to brand all the developed
new and innovative products of sorghum as health foods.
Appropriate institutional arrangements were made and
coalition built with the needed agencies to get the branding
done successfully;
vi) confidence of farmers was increased through coalition
with reliable big companies and entrepreneurs, who had
established good credibility with the farmers;
vii) self-help groups (SHGs) were involved in supporting the
development and sale of sorghum products.
With all these approaches, the project was able to
successfully incorporate four of the innovative strategies and
approaches viz. re-launch, conspicuous technological
substitution, tangible repositioning and neo-innovation in its
venture to enhance the demand for sorghum, as indicated in
figure 2. Re-launch indicates that both the product and other
marketing elements are changed. Conspicuous technological
substitution indicates a major technological change
accompanied by heavy promotional and other marketing mix
changes to stimulate awareness and trial. Tangible
repositioning indicates that both the product and the target
market are changed. Neo innovation brings out fundamental
changes in the technology of the product.
Fingar
5
pointed out six important ingredients for systemic
approach to innovation. They are strategy, process,
technology, product, marketing and organizational
ingredients. In the analysis of the sorghum case study, it is
obvious that all these six ingredients were very well focused
to bring about change and innovation for increasing the
demand for sorghum. The project under the present case
study, thus, represents the successful incorporation of
systemic as well as continuous innovation principles in
achieving the goals.
Conclusion and Implications of the Study
Research and innovation have to be married appropriately in
order to encourage a more innovation-friendly environment
throughout the organization. In the pursuit of innovation, as
pointed out by Aust
1
it is to be realized that innovation is not
a race where everyone and every organization runs the same
course. In fact, in such a race being first does not mean being
the winner. To be a winner and to bring out success in change
and innovation ventures, an organization and more
importantly its leader, need to understand that the
organization should pick up only those races which it is best
equipped to win. In the success achieved through the
innovative approaches of the sorghum project, it is clear that
the institute did run only those races which were best suited
for it.
In the successful implementation of this project, no doubt,
certain difficulties were encountered, which brought out some
lessons. These lessons learnt would provide meaningful
implications for those who would like to involve inter-
institutional collaboration for bringing about change and

(46)

innovation. Some of the implications from this study are:
Inter-institutional collaboration is good and is essential
for innovation projects; it works well with some and does
not click with others. Care, therefore, needs to be
exercised in selecting the right partners, right at the
planning and initiation stage of the project. Realistic
assessment of the attitude of partnership institutions
would help in establishing successful coalitions.
Involving big entrepreneurs and companies having grass-
root connection with farmers would be worthwhile, as
they can help building network and in establishing trust
with farmers; again, partnership of public research
institute with private companies makes it trustworthy.
Notwithstanding the fact that communication
technologies do reduce the physical distance, it is
worthwhile developing partnerships only with
institutions, companies and entrepreneurs in the same
locality than involving people/institutions that are in far
off places, since distance leads to difficulty, disjointed
efforts and delay. During the execution of this sorghum
project, this fact was well realized and the partnership of
a distance place had to be abandoned in the middle.
Some institutions are more bothered about the system
and the procedures; coalitions with such institutions do
not work, as it very often leads to conflicts of various
kinds. Institutional leaders who would go for out-of-box
thinking and who are venturesome to take risk would
only be able to provide coalition partnerships.
Developing micro-level systems, procedures and culture
within a given institute that would support innovative
approaches go a long way in establishing effective inter-
institutional collaboration.
While forming coalition, one may have to look for
institutions which match with their speed and
enthusiasm.
Conscious incorporation of principles of systemic and
continuous innovation would lead to definite success of
innovation approaches in agriculture.
It is important that organizations should just not innovate
for the sake of innovating, but should innovate where it
counts, which has truly been done in the present study.

Fig. 1: Change Management Model Developed

Fig. 2: Continuous innovation strategies

Strengths and
Supporting Factors
Defini tion of Challenge

Planning and Design
of Change Acti vities
Stakeholder
Interests
Leadership
System/Structure/Cul ture
Strengths and
Supporting Factors
Defini tion of Challenge

Planning and Design
of Change Acti vities
Stakeholder
Interests
Leadership
System/Structure/Cul ture

No change No change
Remix
Marketing
new product/
market
segment
No change Facelift
Technology
change
Facelift
Re-
merchandizing
Re-launch
Intangible
repositioning
Tangible
repositioning
Neo-
innovation
Inconspicuous
technological
substitution
Conspicuous
technological
substitution
No change No change
Remix
Marketing
new product/
market
segment
No change Facelift
Technology
change
Facelift
Re-
merchandizing
Re-launch
Intangible
repositioning
Tangible
repositioning
Neo-
innovation
Inconspicuous
technological
substitution
Conspicuous
technological
substitution

(47)

Table 1
Definition of challenge
Negative outcomes Presumed/Alleged Causes
Food security the whole of
cereals not being represented;
proportion of sorghum
declining
Poor status attached to the crop
Crop diversification leading to decline in sorghum cultivation
Other competing grains
Unorganized market for sorghum
Non-remunerative prices for sorghum
Loss of area under sorghum

Some areas being relegated to fodder sorghum
Grain mould problem in kharif sorghum leading to diversion for non-
food use
Diverted for preparation of potable alcohol
Stiff competition for this crop
Decline in consumption;
Lessening demand for direct
consumption

Change in consumption pattern
Shift in consumption, mainly due to Govt. PDS (Public Distribution
System) policy sorghum not a substantial part of PDS
Gluten in sorghum an inconvenience factor coming in the way of food
preparation using sorghum.

Table 2
Strengths and supporting factors for sorghum
Sorghum occupies about 10% of Indias total food basket
Sorghum is grown in areas which are generally marginal for cultivating other crops
It sustains poor and disadvantaged people
It is highly nutritious
It contributes to the health food due to protein, fibre, minerals, vitamins, etc.
Grains of sorghum can be stored for a long time.

Table 3
Planning and design of change activities
Market can be segmented to look for more options
Developing specific product for specific end-user; shifting research focus accordingly
Developing strategic alliances with partners
Efforts to bring in bigger industries to develop processed food and to increase outlets for sale
Developing a sound marketing channel
Introducing sorghum products in mid-day meal scheme operated by the Government
Focusing on genotype improvement/appropriate breeding approaches for specific uses
Identification of strategic locations for sale of value added products
Nutritional enhancement of sorghum
Establishing and ensuring a feedback loop for adding value to sorghum products.

Table 4
Stakeholder interests
Stakeholders look for opportunities to make business and more business
They would like to make a premium, in case they would like to support any effort
With the changed life-style, they would like to invest more in ready-to-eat-food
They look for value addition to sorghum products to create demand for the same among consumers
They would also like to meet a range of choice of customers
Stakeholders rely heavily on advertisement and propaganda.

(48)

Table 5
Partners involved in sorghum-products development and in demand creation
Partners Focus Areas
A public conglomerate agri-business
company

Marketing
Grass-root level interaction
Developing network for promoting demand for
sorghum and its products
Web-based initiative to provide efficient supply chain
and to add value
Institute for nutrition research

Nutritional evaluation sorghum and sorghum products
Clinical trials
Agricultural university Post-harvest technology
Entrepreneurs

Branding
Machines for developing processed foods
Preparation of multi-grain flour
Industries Providing machines for product development
Certification agency For certification of developed products.

Table 6
Sorghum products made
Extruded products (pasta, vermicelli, etc.)
Upma rava
*

Sorghum flakes
Chudwa
*

Sorghum-based multi-grain flour
**

Diabetic sorghum
Sweet and salt biscuits
Sweets
Chakkalu
***

Murukulu
***

Bread
*
Names of the processed products of sorghum which are used for various types of food preparations
**
Used for making rotis which forms an important item in the daily meal
***
A ready-to eat snack item.
Table 7
Characteristics of passionate people
A boon to the organization
High achievers and always remain self-driven and motivated
Goal-oriented; Involved in their work
Once they have determined their goals, they are prepared to try different approaches
For them, the method of choice is the method which will work best, not necessarily the usual method
If commonsense approach does not work, they will invent a new one
They are creative people
They are ingenious, adaptable and innovative with whatever is at hand to solve the problem to achieve
the goal
People with passion for work develop a habit of taking reasonable challenges
Their targets have moderate risks to keep the challenges alive
They are invaluable resources for any organization, whether it is an educational institution, or a research
institution, or a private/public limited company.

Acknowledgement
The author would like to thank the members of the project
team who had spared time to discuss during the development
of this case study and who shared information regarding the
project.


(49)

References
1. Aust D.N., Innovation where it counts, In George S.S., ed.,
Managing Innovation in the New Millennium, ICFAI Press,
Hyderabad, India (2004)
2. Chaudhuri Arindham, Count Your Chickens Before They Hatch,
Vikas Publishing House Private Limited, New Delhi, India (2001)
3. Damanpour F., Innovation type, radicalness and the adoption
process, Communication Research, 15 (5), 545-567(1988)
4. Damanpour F., Organizational innovation: a meta-analysis of
effects of determinants and moderators, Academy Management
Journal, 34(3), 555-590 (1991)
5. Fingar P., Extreme Competition: Innovation and the Great 21
st

Century Business Reformation, Meghan-Kiffer Press, Florida, USA
(2006)
6. Hage J. and Aiken M., Social Change in Complex Organizations,
Prentice-Hall, Englewood Cliffs, NJ , USA (1970)
7. http://changingminds.org/disciplines/change_management/stake
holder_change/stakeholder_change.htm
8. http://foh.dhhs.gov/whatwedo/Training/planning.asp Organiza-
tional planning and change
9. Jaramillo H., Lugones G. and Salazar M., Bogota Manual:
Standardisation of Indicators of Technological Innovation in Latin
American and Caribbean Countries, http://sharepoint.uis.unesco.org/
Library/Documents/Bogota%20Manual_eng.pdf (2001)
10. Krishnamacharyulu C.S.G. and Lalitha R., Innovation
Management, Himalaya Publishing House Pvt. Ltd., Mumbai, India
(2009)
11. Kustoff R. What is organizational innovation? http://
ezinearticles.com/?What-is-Organizational-Innovation?&id=
1573028, (2008)
12. Rao Lakshmi, Passion at work pays dividends,
http://www.hindu.com/edu/2005/05/16/stories/2005051607840400.h
tm, (2005).
(Received 19
th
J une 2012, accepted 10
th
August 2012)

(50)
Case Study:
Occupational Stress and its impact on QWL with specific reference
to Hotel Industry
Mohla Charu
Maharaja Agrasen Institute of Management Studies, Rohini, Delhi, INDIA
deepticharu@yahoo.co.in
Abstract
This study endeavours to draw attention to occupational
stress amongst workers in so-called low risk
industries namely the service and hospitality
industries - and to explore their perceptions of stress,
their attitudes to managing stress and their responses to
the recent inclusion of stress in the Health and Safety in
Employment Amendment Act, 2002. It is also the
intention to broaden the scope of analysis by
investigating a range of employment factors such as
heavy workloads, interpersonal relationships and
organizational factors - which can contribute to
occupational stress amongst workers. Findings indicate
that working in the hospitality industry can be stressful
and that many workers are vulnerable in terms of their
poor working conditions and low wages. Consistent
with other studies, it was also found that there was low
trade union presence and a high rate of casualization
and staff turnover. At the same time, there was a lack of
overt conict between management and workers, with
an apparent close alignment of goals between the two
parties and a style of management that could be
described as unitarist.
Keywords: Hotel Industry, Occupational stress, Hospitality,
QWL.
Introduction
There has been a rising concern on how occupational stress
can manifest itself in work-related ill health, with negative
effects on both physical and psychological well-being.
Occupational stress has been associated with reduced work
output and can contribute to increased accidents, absenteeism,
employee turnover and poor employee performances
.Moreover, it has the potential to spill over to affect
employees private life, causing marital, friendship or
community problems .These outcomes of occupational stress
can result in significant economic and social costs for both
employers and employees .
Occupational stress is becoming increasingly globalized and
affects all countries, all professions and all categories of
workers, as well as families and society in general.
1
Beehr
and Newman
3
define occupational stress as "A condition
arising from the interaction of people and their jobs and
characterized by changes within people that force them to
deviate from their normal functioning.
11

Occupational stress is defined as the feeling of a person who
is required to deviate from normal self-desired functioning in
the work place as a result of opportunities, constraints, or
demands relating to potentially important work related
results. It is generally acknowledged that occupational stress
can be a contributing factor in workplace illness and injury
rates, little is known about the extent of occupational stress in
so-called less hazardous industries that rely on emotional
labour, such as the hospitality industry. The hospitality
industry encompasses a wide variety of different types of
businesses and companies that make up the service sector of
the workforce. The burnout rate of people employed in the
hospitality industry is one of the highest.
According to the Permanent Life Situation Survey in year
2009, hotel and restaurant workers experience employee
burnout at a rate of one in seven. Although the annual study
took place in the Netherlands, the results are consistent with
other findings throughout the world. The main cause of the
high incidence of employee burnout in the hospitality
industry is chronic stress in the workplace. Contributing
factors of burnout in the hospitality industry include:
Increasing pressure and job demands that become
overwhelming, having little or no control over your work, a
work environment that is stressful, hostile or unpleasant, long
hours, often late at night, resulting in a lack of sleep or rest, a
job that is monotonous, repetitive or boring, constantly trying
to please everyone and lack of communication with co-
workers, supervisors and management and so on.
The need or requirement to work long, irregular and
unpredictable hours emerged consistently as the most
prevalent job stressor for managers in a variety of types of
hotels and locations. Managers and spouses largely agreed on
this point and entrants were well aware of these expectations.
Yet there was variability across hotel occupations in these
perceptions. For example, managers assigned to rooms and
food and beverage reported being particularly challenged by
long, nonstandard hours, including weekends and holidays.
Note, however, that these operations positions are also the
traditional routes to the top.
(51)
In contrast, managers in human resources, engineering and

accounting tended to have 8 a.m. or 9 a.m. to 5 p.m. or 6 p.m.
schedules that are probably more compatible with life off the
job, yet these positions typically are not viewed as pathways
to becoming general manager. Thus, there are clearly work
family trade-offs in each occupational category: More
upwardly mobile hotel managers must make more significant
compromises in their lives outside of work. Furthermore,
general managers also reported working relatively long hours,
yet they enjoyed considerable flexibility and control in
determining those hours, all these factors can have direct
impact on quality of work life of employees.
Quality of Work depends on the Quality of Work Life. It has
been clear that one can accomplish his mission and provide
the level of service the public demands only if we recruit and
retain the best and the brightest and provide them with a work
environment that supports them in getting their jobs done.
The phrase Quality of Work Life (QWL) has come in use
recently to evoke a broad range of working conditions and the
related aspirations and expectations of the employees. This
was first introduced in the United States in the late 1960s to
stress the prevailing poor quality of life at the work place.
Quality of work life can be realistically defined as a way of
thinking about people, work and organization.
QWL can be described as the subjectively perceived
satisfaction in ones different aspects of work life as reported
by the individual. It is an index of what people find
interesting and satisfying at their work. For this reason, one
needs to be sensitive to the factors related to performance,
recognition, work content, responsibility, promotion and pay,
organizational policies, working conditions etc. It has two
distinct elements 1) a concern for the well being as well as for
organization effectiveness; and 2) the promotion of employee
participation in important work-related problems and
decisions. Using this definition, QWL focused primarily on
the personal consequences of the work experience and how to
improve work to satisfy personal needs.
Quality of Work Life is a concern not only to improve life at
work, but also life outside work. Hence it encompasses a
wide variety of programmes and techniques that have been
developed to endeavour to reconcile the twin goals of an
individual and the organization, i.e. Quality of Life and
Organizational Growth. The Quality of Work Life has,
therefore become key area of consideration now a days. The
adverse effects of stress situation will impinge upon the
running of an organization.
Review of Literature
A study was conducted on 463 special educators and 493
general educators in Virginia. Analysis indicated that work-
related variables such as leadership support, role conflict, role
ambiguity and stress, are better predictors of commitment and
job satisfaction than are demographic variables. Findings
were similar for general and special educators.
A study was conducted by Hart
5
to understand what are the
positive and negative work experiences reported by teachers
and how do these contribute to their quality of work life?
Structural equation analyses was conducted on questionnaire
data obtained from 1,539 Victorian primary and secondary
school teachers, as part of the evaluation of three
organizational health programs. Drawing on Perceived
Quality of Life research it was hypothesized that stress and
morale would be separate outcomes of positive and negative
work experiences. Results confirmed that stress and morale
operate on different dimensions. Three structural equation
models showed that positive experiences were stronger
determinants of morale than stress, whereas negative
experiences were stronger determinants of stress than morale.
Attempts have been made by Ahmad and Mehta
1
to bring
forward empirical evidence on the relationship between
Organizational Role Stress (ORS) and Perceived Quality of
Work Life (PQWL). The results indicate that all the ten
dimensions of ORS, namely inter-role distance, role
stagnation, role expectation conflict, role erosion, role
overload, role isolation, role inadequacy were negatively
correlated with the four dimensions of PQWL, namely,
influence, work amenities, job satisfaction and supervisory
behavior. Patanayak
6
has conducted a study about Role Stress
and Quality of Work Life specifically at Steel Authority of
India (Rourekela Steel Plant) and National Aluminium Co.
(NALCO) taking into account of 3 dimensions, namely type
of organization (new and old), area of work (production and
service) and the position in the Organizations hierarchy
(executive and non-executive) with regard to Organizational
Role Stress and sub scales. It explained that all the three
dimensions jointly contribute to the differential experience of
role expectation conflict as ORS variables. The major
dependent variable of the study is Quality of Work life as an
index of organizational effectiveness.
The present research is an attempt to identify the factors
leading to stress in the hotels and its impact on Quality of
Work Life. The present study was conducted on a sample of
206 associates drawn from Hospitality (Hotel) Industry out of
which 194 were males and 12 were females. For analysis
ANOVA, MANOVA and Regression Model have been used.
Analysis and Conclusion
The scrutiny of model summary for regression shows
significant impact of Organizational Stress Variables on the
Quality of Work Life at Hotel Industry. The R-square value
comes out to be R
2
=.596, p=.000 (Table 1). Table 2 shows
that the ANOVA for regression model is significant.
This means that the predicting variables are correlated with
the Quality of Work Life and accounts for 59.6% variance in
(52)
quality of work life of the associates of Hotel industry. In all

10 variables were found to be the predictors (correlates) while
1 factor i.e. Adequate Workload dropped out.. The adjusted
R-square value comes out to be Ad R
2
=.575. This means,
when applied on population these predicting variables will
account for 57.5% variance in the Quality of Work Life of
Hotel industry associates.
A scrutiny of the table of regression shows that the t values
are found to be significant for Role Clarity, t =5.60, p=.000,
Managerial Support, t =3.83, p =.000, Context Sensitive, t =
-2.67, p =.008, J ob Capability Fit, t=4.237, p =.000, Role
Autonomy, t=5.727, p=.000 and Overall Stress Score=-
3.754, p=.000 (Table 3).
The results here show that lack of role clarity, managerial
support, job capability fit and role autonomy will lead to poor
quality of work life for Hotel industry professionals. However
it is interesting to note that more context sensitivity and less
stress are contributing negatively to quality of work life. This
may be so because being context sensitive means changing
the organization to the needs of the environment and change
is always averted by the employees. They do not want to
change because it requires effort to upgrade oneself. So they
remain happy if things remain in status quo. Moreover for
lower stress contributing negatively to quality of work life, it
can be said that a certain amount of stress i.e. eustress is
required for optimum performance.
Impact of Occupational Stress on Quality Work
Life of the Male Associates
The scrutiny of model summary for regression shows
significant impact of Organizational Stress Variables on the
Quality of Work Life of Male Associates. The R-square value
comes out to be R
2
=.632, p=.000 (Table 4). Table 4a shows
that the ANOVA for regression model is significant. This
means that the predicting variables are correlated with the
Quality of Work Life and accounts for 63.2% variance in
quality of work life of the Male Associates. In all 10 variables
were found to be the predictors (correlates) while 1 factor i.e.
Role Autonomy dropped out.. The adjusted R-square value
comes out to be Ad R
2
=.619. This means, when applied on
population these predicting variables will account for 61.9%
variance in the Quality of Work Life of Male Associates.
A scrutiny of the table of regression shows that the t values
are found to be significant for Group Cohesiveness, t=-4.236,
p=.000, Role Clarity, t = -6.32, p=.000, Consistent Role
Demands, t=-2.220, p=.027, Adequate Workload, t=-7.500,
p=.000, Context Sensitive, t = -9.516, p = .000, J ob
Capability Fit, t=-4.505, p =.000 and Overall Stress Score=
9.008, p=.000 (Table 5).
The results reveal that high degree of stress will lead to poor
quality of work life for the male associates. Also
compensation, managerial support and job comfort are
insignificant for male associates to determine their quality of
work life, however group cohesiveness, role clarity,
consistent role demands, adequate workload, context
sensitivity and job capability fit are significant in determining
the quality of work life of male associates. This means that
male associates want their working environment to be
congenial, clearly defined roles, proper workload, consistent
role demands, open system organic organizational structure
and roles fitting to their capability to experience good quality
of work life.
Life of the Associates of Hotel Industry
The predicting variables account for 57.5% variance in the
Quality of Work Life of Hotel industry associates. The results
here show that lack of role clarity, managerial support, job
capability fit and role autonomy will lead to poor quality of
work life for Hotel industry professionals. However it is
interesting to note that more context sensitivity and less stress
are contributing negatively to quality of work life. This may
be so because being context sensitive means changing the
organization to the needs of the environment and change is
always averted by the employees. They do not want to change
because it requires effort to upgrade oneself. So they remain
happy if things remain in status quo. Moreover for lower
stress contributing negatively to quality of work life, it can be
said that a certain amount of stress i.e. eustress is required
for optimum performance.
Life of the Male Associates
The predicting variables account for 61.9% variance in the
Quality of Work Life of Male Associates. The results reveal
that high degree of stress will lead to poor quality of work life
for the male associates. Also compensation, managerial
support and job comfort are insignificant for male associates
to determine their quality of work life, however group
cohesiveness, role clarity, consistent role demands, adequate
workload, context sensitivity and job capability fit are
significant in determining the quality of work life of male
associates. This means that male associates want their
working environment to be congenial, clearly defined roles,
proper workload, consistent role demands, open system
organic organizational structure and roles fitting to their
capability to experience good quality of work life.
Limitations
The sample for the study is limited only to hotel industry
working in private sector. Generalizations for the other
industries and sectors would not be justified. The present
research studied the impact of Occupational Stress only on
Quality of Work Life, however there can be many other
factors which could be studied such as Employee
Engagement, Performance etc.
(53)
Table 1
Regression Model Summary for Impact of Occupational Stress Variables
on Quality of Work Life in the Hotel Industry
Model R R Square
Adjusted
R Square
Std. Error of
the Estimate
Change Statistics
R Square Change F Change df1 df2 Sig. F Change
1 .772
a
.596 .575 .25640 .596 28.714 10 195 .000
a. Predictors: (Constant), Stress Score, Context Sensitive, J ob-Capability Fit, Managerial Support, Group Cohesiveness, Fair Compensation,
Role Clarity, Consistent Role Demands, Comfortable J ob, Role Autonomy
Table 2
ANOVA for the Significance of Regression Model
Model Sum of Squares df Mean Square F Sig.
1 Regression 18.876 10 1.888 28.714 .000
a

Residual 12.819 195 .066
Total 31.695 205
a. Predictors: (Constant), Stress Score, Context Sensitive, J ob-Capability Fit, Managerial Support, Group Cohesiveness, Fair Compensation,
Role Clarity, Consistent Role Demands, Comfortable J ob, Role Autonomy; b. Dependent Variable: QWL Score
Table 3
Regression Co-efficient of Occupational Stress on Quality Work Life in Hotel Industry
Model
Unstandardized Coefficients Standardized Coefficients
t Sig. B Std. Error Beta
1 (Constant) 2.589 .249 10.390 .000
Group Cohesiveness .080 .041 .143 1.963 .051
Role Clarity .362 .065 .438 5.604 .000
Fair Compensation .011 .031 .028 .354 .724
Consistent Role Demands -.067 .044 -.113 -1.513 .132
Managerial Support .142 .037 .219 3.830 .000
Context Sensitive -.078 .029 -.176 -2.673 .008
Comfortable J ob .245 .040 .483 6.085 .000
J ob-Capability Fit .116 .027 .237 4.237 .000
Role Autonomy .316 .055 .577 5.727 .000
Stress Score -.792 .211 -.608 -3.754 .000
a. Dependent Variable: QWL Score
Table 4
Regression Model Summary for Impact of Occupational Stress Variables on
Quality Work Life of the Male Associates
Model R R Square
Adjusted R
Square
Std. Error of the
Estimate
Change Statistics
R Square
Change
F Change df1 df2
Sig. F
Change
1 .795
a
.632 .619 .30361 .632 48.434 10 282 .000

References
1. Ahmad S. and Mehta P., Role stress, Quality of Work Life and
alienation. In Pestonjee D. M. and Pareek U., eds., Studies in
organizational role stress and coping. Jaipur, New Delhi, Rawat
Publications (1997)
2. Beehr T.A., Stacy B.A., Murray M.A. and J ex S.M., Work stress
and co-worker support as predictors of individual strain and job
performance, Paper presented at the 1997 Annual meeting of the
Academy of Management, Cincinnati, OH (1997)
(54)
Table 4a
ANOVA for the Significance of Regression Model
Model Sum of Squares df Mean Square F Sig.
1 Regression 44.646 10 4.465 48.434 .000
a

Residual 25.995 282 .092
Total 70.640 292
a. Predictors: (Constant), Stress Score, Role Clarity, Context Sensitive, Managerial Support, Comfortable J ob, Fair Compensation, Adequate
Workload, J ob-Capability Fit, Group Cohesiveness, Consistent Role Demands; b. Dependent Variable: Quality Work Life Total Score
Table 4b
Regression Co-efficients of Occupational Stress on Quality Work Life of the Male Employees
Model
Unstandardized Coefficients Standardized Coefficients
T Sig. B Std. Error Beta
1 (Constant) .880 .210 4.199 .000
Group Cohesiveness -.200 .047 -.269 -4.236 .000
Role Clarity -.258 .041 -.309 -6.324 .000
Fair Compensation -.063 .031 -.132 -2.014 .055
Consistent Role Demands -.098 .044 -.160 -2.220 .027
Adequate Workload -.292 .039 -.535 -7.500 .000
Managerial Support -.048 .046 -.064 -1.048 .295
Context Sensitive -.345 .036 -.512 -9.516 .000
Comfortable J ob -.021 .034 -.030 -.615 .539
J ob-Capability Fit -.179 .040 -.275 -4.505 .000
Stress Score 2.314 .257 1.494 9.008 .000
a. Dependent Variable: Quality Work Life Total Score
Table 5
The impact of Occupational Stress on Quality of Work Life in a nutshell.
Variables of Occupational Stress Hotel Industry Associates Male Associates
Group Cohesiveness Negative
Role Clarity Negative Negative
Fair Compensation
Adequate Workload Negative
Managerial Support Negative
Context Sensitive Positive Negative
Comfortable J ob
J ob Capability Fit Negative Negative
Consistent Role Demands Negative
Role Autonomy Negative
Overall Stress Positive Negative

3. Beehr T.A. and Newman J .E., J ob stress, employee health and
organizational effectiveness: a facet analysis, model and literature
review, Personnel Psychology, winter, 665-699 (1978)
4. Goudwaard Anneke and Andries Frank, Employment status and
working conditions, European Foundation for the improvement of
Living and Working Conditions, http://www.eurofound.europa.eu/
publications/htmlfiles/efo283.htm (2006)
5. Hart P.M., Stress & morale: their independence in determining
teacher Quality of work life. Paper presented at the AARE/NZARE
1992 J oint Conference, Deakin University, Geelong, November 22
to 26 (1992)
6. Pattanayak B., Role stress and Quality of Work Life, In
Pestonjee D. M. and Pareek Udai, ed., Studies in organisational role
stress and coping, Jaipur, Rawat Publications, 97-110 (1997).
(Received 5
th
st
J uly 2012)

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Case Study:
Employees Perception on Welfare Practices-
A Study of A.P. Eastern Power Distribution of AP Limited
Ramesh M.
School of Commerce and Management, Dravidian University, Kuppam517 425, Chittoor District (Andhra Pradesh), INDIA
rameshmoturi@gmail.com
Abstract
Welfare is a corporate attitude or commitment reflected
in the expressed care for employee at all levels.
Obviously, there must be financial constraints but a
concern for welfare makes no immediate contribution to
perceived managerial priorities. An attempt is made
here to elicit the views of the respondents on the various
issues relating to the welfare practice in the EPDCL
under the study. On the basis of the results, it is
suggested that the performance of employees in any
organization depends on the policies, procedures and
welfare facilities adopted by the organization. The
organization is stretching its hands to provide full range
of welfare facilities to workers i.e. statutory and non
statutory benefits. Apart from that, facilities like
medical aid and subsidized food will improve the health
and standards of living of the workmen that may
positively affect loyalty, sincerity and commitment
which in turn will bring morale and productivity.
Keywords: Employee, Welfare practices, Perception,
APEPDCL.
Introduction
Labour Welfare in Indian Industry implies providing better
work conditions such as proper lighting, heat control,
cleanliness, low noise level drinking water and toilet
facilities, canteen, rest-rooms and health and safety measures,
reasonable hours of work and holidays and other services
such as housing, education, recreation transportation and
counseling. The need for providing such services and
facilities is the responsibility of industry, a desire for
upholding democratic values and concern employees.
Labour welfare is the voluntary efforts of the employers to
establish within the existing industrial system, working and
sometimes living and cultural conditions of the employers
beyond that which is required by law, the custom of the
industry and conditions of the market. Welfare covers the
families of workers, especially in India, where because of
strong family ties, workers well being encompasses that of
their families. Given the workers economic constraints,
probably due to large families, organizations should provide
facilities such as transport, medical aid, crches and
subsidized food required by the workers. Welfare is a
corporate attitude or commitment reflected in expressed care
for employee at all levels.
1, 2

Organizational Profile: A Birds Eye View
The AP Transco has been unbundled into a Transmission
Corporation and four distribution companies effective from
1
st
April, 2000 under the provincial second transfer scheme
notified by the State Government viz., Eastern Power
Distribution Company of AP Limited (APEPDCL), Central
Power Distribution Company of AP Limited (CPDCL),
Southern Power Distribution Company of AP Limited
(SPDCL), Northern Power Distribution Company of AP
Limited (NPDCL). The above distribution companies have
been incorporated under the Companies Act, 1956.
The Eastern Power Distribution Company of AP Limited
came into existence form April 1
st
2000 as a result of
dismantling of vertically integrated APSEB into functionally
district entities undertaking Power Generation, Transmission
and Distribution. It is initially formed as wholly owned
subsidiary of APTRANSCO from power trading activity in
strict compliance of the provisions of the Electricity Act
2003. This company is engaged in the business power
distribution and retail power supply in its designated area
covering five northeastern districts of Andhra Pradesh.
APEPDCL is responsible for undertaking distribution and
bulk supply of power in the operation circles of Srikakulam,
Visakhapatnam, Vizianiagaram, East and West Godavari
Districts and 17 divisions of coastal Andhra Pradesh.
APEPDCL supplies power to over 35.54 lakh consumers
belonging to different categories through a network
consisting of 388 substations of 33 KV level, 1457 feeders of
11 KV level and more than 76,722 distribution transformers
of different levels. The Corporate Office and Head Quarter of
APEPDCL are situated at Visakhapatnam.
Need for the study
In todays competitive environment, attracting and retaining
skilled personnel depends upon the competitive and
compensation package the company offers. Everyday
innovative, attractive compensation packages are luring the
personnel. Thus, organization needs to provide more
attractive compensation and qualitative packages to enhance
the motivation of the people. In the present competitive
business environment, the management is planning to reduce
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the welfare amount wherever possible, along with other

overheads. In this context, the researcher made an attempt
was made to know the extent of welfare practices on the basis
of respondents assessment in Eastern Power Distribution of
AP Limited under the study.
Methodology and Sampling
The study is mainly based upon primary and secondary
sources. A questionnaire has been prepared with different
questions to examine the socio-economic status and
employees opinion on welfare practices in Eastern Power
Distribution of AP Limited. A sample of 265 respondents has
been selected following stratified sampling method. The
sample consists of 75 respondents (20 percent) out of 375
employees in the category of Technical workmen, 85
respondents (5 percent) out of 1661 employees in the
category of Non-technical workmen and 105 respondents (2
percent) out of 5257 employees in the category of Operations
and Maintenance (O&M), Construction and others from
Eastern Power Distribution Company of AP Limited. The
secondary data have been collected from the records and
annual reports of Transco, Training Centers, Periodicals,
Magazines and Industry websites.
Analysis of the study
Socio Economic Characteristics of Employees: The social
base of employees is an important factor influencing the pace
of economic development. In order to build up a stable,
harmonious and productive work force for the industry in the
long run, it is essential to understand the socio-economic
background of the select organization viz. Eastern Power
Distribution Company of A.P. Limited.
Sex: In olden days, women used to attend to domestic
activities only. But now- a- days they also seek employment
at par with men. Out of the sample size of 265 respondents,
222 employees (83.78 percent) were male and 43 employees
(16.22 percent) were female respondents. Male domination is
quite describable.
Education: The level of education is an important factor in
building up strong and stable labour force needed by industry.
Hence, it is useful to understand the educational background
of employees working in EPDCL.
The study revealed that 57 employees (21.52 percent) were
graduates in technical education and 56 employees (21.13)
were general degree holders. As many as 45 employees
(16.98 percent) studied up to plus two level. 37 employees
(13.96 percent) were post graduates in technical education i.e.
M. Tech. and 28 employees (10.57 percent) were general PG
degree holders. 36 employees (13.58 percent) had education
upto only SSC. The remaining 6 employees (2.26 percent)
had professional studies like Chartered Accountancy, Institute
of Cost and Works Accountancy and Company Secretaryship.
Age Composition: Any organization big or small needs
strong, energetic and dynamic work force in the productive
age group. It is an important variable because it has direct
relation with ones mental maturity and the consequent
awareness about what is going on in the society. This analysis
is useful to estimate the number of currently working
employees in the different age groups.
The highest number of employees (35.09 percent) belongs to
40 50 years age group, one- third were found in the 30 40
years category, while 46 employees (17.36 percent) were
below 30 years. And remaining employees (14.34 percent)
are in the group of above 50 years. The average age of
employees in the study is 39.65 years.
Marital Status: Marital status of employees plays a key role
in entering into organization along with other personal
characteristics like age, education, caste etc. It denotes the
support they receive from their family members.
The study found that 206 employees (77.74 percent) were
married, 37 employees (13.96 percent) were unmarried, 14
employees (5.28 percent) were widowed and remaining 8
employees (3.02 percent) were divorced. Most of the
employees are married in the organization.
The study revealed that majority of the employees (48.67
percent) belong to Forward Castes such as Kapu, Telaga,
Balija, Brahmin, Vyasya, Kamma, Reddy etc. followed by
26.42 percent belonging to Backward Castes. 39 employees
(14.72 percent) belong to Scheduled Castes and 27 employees
(10.19 percent) belong to Scheduled Tribes. This
composition, more or less conforms to their respective shares
in the total population of the country.
Nativity: Native place of an employee has been classified
into two types - Local and Non-local. A person who is born
with in the state (Andhra Pradesh) is considered local and
born outside the state is treated as non local.
It is observed in the study that 261 respondents (98.49
percent) are from Andhra Pradesh and only 4 respondents
(1.51 percent) are from Tamil Nadu. The study also revealed
that 144 respondents (54.34 percent) hail from urban areas
and remaining 121 respondents (45.66 percent) are from
village background.
Type of Family: In urbanized India, nuclear families are
quite common while in rural India there are still joint families
and extended families. Joint family is considered to be a
characteristic of the institutional structure of Indian society.
In the Indian context, it is felt that industrialization
disintegrated the traditional system of joint family.
The study made an enquiry into this aspect and found that
majority of the respondents (55. 09 percent) belong to joint
family and 119 respondents (44. 91 percent) belong to
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nuclear family. In a society dominated by joint family system,

the rise of nuclear families can be noticed.
Annual Income: The status and standard of living of a
person is determined by the income he/she has. Generally, the
main source of income of respondents is salary. But some
employees may have other sources of income like agriculture,
house property etc.
It is observed that 71 respondents (26.79 percent) have annual
income rating between Rs. 200000 300000 followed by
20.78 percent between Rs. 100000 200000. While 47
employees (17.74 percent) have annual income upto Rs.
100000, 38 employees (14.34 percent) have annual income
that lies between Rs. 300000 400000. This is followed by
11.70 percent whose income lies between Rs. 400000
500000. The remaining respondents (9.05 percent) have an
annual income above Rs. 500000.
Respondents Assessment of Employee Welfare: The
opinions of employees have been obtained regarding various
aspects of employee welfare as shown below. Table 10
discloses the opinion of employees through their rating of
welfare as high, moderate and low. Among the total
respondents, majority (63.76 percent) rated the welfare in
their organization to be low while, nearly one third
considered this to be moderate. The high rating of welfare
was given by one-eight of the respondents.
Managements Concern for Employees Welfare
From time to time the unions in these organizations projected
the demand to increase the welfare amenities before the
managements. However, the managements delayed the
unions expected level of welfare measures with a view to
keep the burden low without giving it up altogether. In the
present conditions also, the managements are forced to
implement certain welfare as a statutory obligation and some
with a concern for employee well being.
5

Table 9 reveals the employee opinion about the labour
welfare in this organization Out of the total respondents, 7.92
percent expressed that their managements are actively
promoting labour welfare. After introduction of reforms and
its reflections on HR, the employees and their unions opined
that the managements are neglecting labour welfare, as
evidenced by 61.51 percent of the respondent employees who
held this opinion. About 30.57 percent of the respondents
pointed out that their managements were confining labour
welfare purely to legal obligation. After introduction of
reforms, the unions gained the impression that managements
are neglecting employee welfare.
Need for Modifying Welfare Legislation: Recently sea
changes have taken place in the areas of national and
international business in the context of which it is felt, that
the existing labour laws have become out dated and there is a
need to work towards flexibility. In the present study, the
researcher made an attempt to know the opinion of
respondents if there is any need to change the existing labour
laws.
Table 10 reveals the employees opinion on the need for
modifying existing welfare legislation. Out of the total
respondents, 100 percent of employees were affirmative and
wanted the decades old laws to be amended to suit the
existing conditions. This is something the organizations as
well as the government should take note of. In India, it is high
time that we have to develop comprehensive and dynamic
human resource policies at macro level. Similarly, at industry
level, the top management should be able to develop its
strategic HR policies keeping in mind the organization
survival and growth in the light of competitive environment.
7

Specific Changes in Welfare Legislation: In the present
study an attempt was made to know the employees view
about the specific modifications in the welfare legislation.
Table 11 reveals the views of the employees that the welfare
laws are to be matched to the present scenario, as felt by
60.75 percent of the total respondents. The employees (10.57
percent) also had another proposal that the existing laws be
implemented strictly by the employers. While 4.91 percent of
total respondent employees expressed the need to reduce the
rigidity of labour laws, 23.77 percent of employees expressed
that amendments to the existing labour laws have to be
brought about to increase labour welfare further. However,
the govt. business employers have to amend or make new
laws for the benefit of employers as well as employees
keeping in view the need for speedy industrialization process
in the country to keep pace with the changing industrial
trends.
8, 9

Conclusion
The main thrust of labour policy and labour laws is to change
in line with the global changes that is from welfare and
regulative orientation to develop role in market oriented
economy, from regulatory mechanization to voluntarism,
tripartism to bipartism so that the employers and employees
are themselves able to mutually decide without government
intervention.
The organization is stretching its hands to provide full range
of welfare facilities to its workers. These include medical aid,
canteen, free education, bus facilities, bonus and pension etc.
These facilities will satisfy the innate desires of the workers.
Apart from that, facilities like medical aid and subsidized
food will improve the health and standards of living of the
workmen that may positively affect loyalty, sincerity and
commitment which in turn will bring morale and
productivity.
Performance of employees in any organization depends on
the policies, procedures and welfare facilities adopted by the
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organization. The effective and efficient policies and welfare

facilities make the employee to perform the job better, which
leads to effectiveness of the organization.
The primary objective of every management is to provide
better working facilities to the employees in the interest of
obtaining speedy, safe and efficient work. The management
of the APEPDCL has been fully committed to provide a wide
range of welfare facilities both statutory and voluntary. The
APEPDCL is not merely confined to provide welfare
activities as per Factories Act, 1948. It is stretching it hands
to provide full range of amenities that may improve health
and living standards of the employees.
References
1. Aswathappa K., Human Resource and Personnel Management:
Text and Cases, Tata McGraw Hill Publishing Co.Ltd., New Delhi,
(2005)
2. Chabra T.N., Human Resource Management Concepts and
Issues, Dhanpat Rai and Co., New Delhi (2004)
3. Fredick Harison and Chooles A. Mysers, Management in the
Industrial World An International Analysis, Tata McGraw Hill
Publishing Co. Ltd. (1959)
4. Gangadhara Rao M., Subba Rao P and Rao V.S.P., Human
Resource Management in Public Sector, Himlaya Publishing
House, Mumbai (1991)
5. Gani A., Labour Management Relations, Concepts and Cases,
Deep and Deep Publishing House, New Delhi (1991)
6. J ules Backman, A Critical Review of Research and Literature
on Wages in India, Indian Journal of Industrial Relations (1965)
7. Prasanna Jackson T. and Venkatapathy R., Human Resource
Development: Attitude an Climate An Empirical Verification with
reference to various types of Organizations, SEDME, March (2000)
8. Pylee M.V and Simon George A., Industrial Relations and
Personnel Management, Vikas Publishing House Pvt. Ltd., New
Delhi (1999)
9. Tripathi, Personnel Management and Industrial Relations,
Sultan Chand and Sons, New Delhi (1996).

Table 1
Classification of Respondents by Sex
Sex No. of Respondents Percentage
Male 222 83.78
Female 43 16.22
Total 265 100.00
Table 2
Level of Education
Education Level No. of Respondents Percentage
SSC 36 13.58
Intermediate 45 16.98
Degree General
Technical
56
57
21.13
21.52
PG General
Technical
28
37
10.57
13.96
Professional 06 2.26
Total 265 100.00
Table 3
Age Composition of Respondents
Years No. of Respondents Percentage
Below 30 46 17.36
30-40 88 33.21
40-50 93 35.09
50 & above 38 14.34
Total 265 100.00
Average Age =39.65 years

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Table 4
Marital Status
Marital Status No. of Respondents Percentage
Married 206 77.74
Unmarried 37 13.96
Widowed 14 5.28
Divorced 08 3.02
Total 265 100.00

Table 5
Nativity
Native Place No. of Respondents Percentage
Village 121 45.66
Town 144 54.34
Total 265 100.00

Table 6
Type of Family
Type of Family No. of Respondents Percentage
J oint 146 55.09
Nuclear 119 44.91
Total 265 100.00

Table 7
Annual Income
Income (Rs.) No. of Respondents Percentage
Below 100000 47 17.74
100000 200000 54 20.38
200000 300000 71 26.79
300000 400000 38 14.34
400000 500000 31 11.70
Above 500000 24 9.05
Total 265 100.00

Table 8
Rating of Employee Welfare by Employees in their Organization
Rating of Employee Welfare No. of Respondents Percentage
High 15 5.67
Moderate 81 30.57
Low 169 63.76
Total 265 100.00

Table 9
Employees opinion about Managements Concern for Employee Welfare
Particulars No. of Respondents Percentage
Actively promotes employee welfare 21 7.92
Neglecting employee welfare 163 61.51
Take purely legal obligations of employee welfare 81 30.57
Total 265 100.00
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Table 10
Employees opinion on the Need for Modifying Existing Welfare Legislation
Response No. of Respondents Percentage
Yes 265 100.00
No - -
Total 265 100.00

Table 11
Employees views about how to modify the Welfare Legislation
Particulars No. of Respondents Percentage
The welfare laws to be matched to present scenario 161 60.75
All laws to be implemented strictly 28 10.57
Reduce the rigidity of existing laws 13 4.91
Amendments have to be brought about to increase labour welfare further 63 23.77
Total 265 100.00
(Received 6
th
March 2012, accepted 25
th
J uly 2012)

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General Article:
Environmental Accounting and Reporting In India: An Appraisal
Sharma V.K.
New York Institute of Technology, Bahrain Campus, BAHRAIN
vks123@gmail.com
Abstract
Earths environment is a rich heritage handed over to
us by previous generations. The present civilization is
involved in varied activities. Many of these activities
generate waste with potential constituents. The ultimate
disposal of the waste leads to environmental pollution.
One of the significant buzzwords emerging out of the
globalization and privatization paradigms has been
corporate social responsibility. Responsibility towards
environment has become one of the most crucial areas
of social responsibility. We have witnessed
environmental degradation during the recent years.
Environmental pollution is a worldwide phenomenon.
In many parts of the world, the magnitude of pollution
of environment has already reached an alarming level.
It spoils human health, reduces economic productivity
and leads to loss of amenities. Now-a-days, consumers
expect firms to meet high health and safety standards
for workers, respect human rights, protect the interests
of consumers and meet environmental standards.
Keywords: Environmental Accounting, Earth, Pollution,
Social Responsibility.
Introduction
Conceptual frame work of environment accounting may be
traced to the Rig Veda. According to Hindu Philosophy
"sky is like a father, earth is like a mother, a space as their
children". Thus, the Rig Veda ordains that environment is to
be valued like parents and loved like children. The concept of
environment accounting may be new for western accounting
thinkers.
1

Global Realizations of Environmental Pollution
Peoples all over the world became more concerned about the
quality of their environment during early fifties and sixties of
the 19
th
Century. Well-known environmental tragedies, like
the cause of mercury poisoning in J apan, severe smoke
pollution episode in London and the massive oil spill caused
by Terry Canyon accident reinforced in peoples mind the
sense that the quality of air, water and a wide range of other
natural resources was being seriously degraded. The intensity
of danger from chemicals can be gauged from the extent of
havoc caused by the accident in a pesticide factory at Bhopal
(India) on mid-night of 2-3 December 1984. The episode
killed over 3,000 people, blinded several thousand and
affected over 1,50,000 people.
This concern had been repeatedly expressed in a series of
international summits right from the sixties. Between 1968
and 1972, two international conferences met to assess the
problems of the global environment and to suggest corrective
action. For the first time the World Conference on global
environment was held in June, 1972 and it was considered the
pivotal event in the growth of the global environment
movement. It was the first occasion on which the political,
social and economic problems of the global environment
were discussed at an inter-governmental forum with a view to
taking corrective action. It aimed at creating a basis for
comprehensive consideration with the United Nations of the
problems of the human environment and focusing the
attention of governments and public opinion to various
countries on the importance of problem.
4, 9

It ultimately gave a birth to a special United Nations Agency
titled United Nations Environmental Program (UNEP). In
the mid- eighties, on the basis of changing situation and
becoming the environmental issues a world-wide
phenomenon in the developed and developing countries,
World Commission on Environment and Development
(WCED), known as BRUNTLAND COMMISSION,
headed by Norways Prime Minister, Mrs. Gro Harlem
Bruntland, was established by the UN. The Commission
published a report called Our Common Future in 1987 with
the proposed concept of Sustainable Development. The
concept received worldwide acceptance and led to the
convening of the United Nations Conference on Earth and
Development (UNCED) in Rio de J anerio, Brazil, known as
EARTH SUMMIT. In this conference, heads of different
states signed four agreed documents including the Agenda
21 which contains a checklist of dos and donts to protect
the environment throughout the next century.
12, 14

Laws for Environmental Protection in India
A number of environmental legislations have been enacted to
address the emergence of a worldwide "green movement".
The various laws have been passed in India relevant to
environmental protection (a) directly related to environment
protection and (b) indirectly related to environment
protection.
While industrial licensing has been abolished for all practical
purposes, environmental clearance from various Government
authorities has now taken the centre stage. With increasing
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global concern over the protection of the environment, India
has set up a Union Ministry of Environment with the object
of coordinating among the states and the various ministries
for the environmental protection and anti-pollution measures.
It is important to note that all new projects require
environment clearance. This clearance concerns both the
Union Ministry of Environment and Forests and the
corresponding State Govt. Department of environment.
Guidelines have been issued and all such projects are
expected to obtain environmental and anti-pollution clearance
before they are actually set up. A Central Pollution Control
Board (CPCB) has also been set up. Wherever cases of
violating of standards of water or air pollution are detected,
showcause notices are issued to industrial units to keep all
such units under constant surveillance.
Need for Environment Accounting
In recent years, the adverse environmental effect of economic
development has become a matter of great public concern all
over the world. Gradually, environment is becoming a much
more urgent economic, social and political problem. India as
well as other developing countries are facing the twin
problem of promoting economic development and protecting
the environment. A balance between development and
environmental protection is required. A careful assessment of
the benefits and costs of environmental damages is necessary
to find the tolerance limit of environmental degradation and
the required level of development. But unless the proper
accounting work is done either by the individual firm or by
the Government itself, it cannot be determined whether both
have been fulfilling their responsibilities towards the
environment. Therefore, the need of environmental
accounting has emerged. It may appear that greater attention
to environmental matters may lead to an increase in costs and
hence lower profits. Environmental costs and obligations are
significantly growing as the world is becoming more
environmentally conscious. Public corporations are being
held more responsible and accountable to the society. Many
people are willing to pay more for a product that is
environmentally friendly.
9, 10

Accountants, as the basic custodians and light bearers of
economic development, can no longer shut their eyes to the
effect of environmental issues on business management,
accounting, auditing and disclosure system. Protection of
environment and the potential involvement of accountants is
becoming a common subject of discussion among the
accountants all over the world. Now-a-days, accountants are
expected to take a proactive role in the environmental
protection process.
That is why environmental accounting and reporting thereof
is of paramount importance today. Environmental accounting
needs to work as a tool to measure the economic efficiency of
environmental conservation activities and the environmental
efficiency of the business activities of company as a whole.
The need for accounting for corporate environmental
measurement is to identify the role of accounting in
measuring economically environmental activities and taking
decisions on environment related issues. Environmental
accounting means reporting of environment specific cost such
as liability cost and waste disposal costs. It is accounting for
any costs and benefits that arise from change to a firms
products and processes where the change also involves a
change in environmental impact. Corporate enterprises are
facing the challenges to determine their true profits which are
environmentally sustainable ones. For this, companies need to
account for the environment.
7

Environmental Accounting in other Countries
One of the first countries to build environmental accounts is
Norway which began collecting data on energy sources,
fisheries, forests and minerals in the 1970s to address
resources scarcity. The Philippines began work on environ-
mental accounts in 1990. The United States has not been a
leader in the environmental accounting arena. At the start of
the Clinton administration, the Bureau of Economic Analysis
(BEA) made an attempt into environmental accounting in the
minerals sector, but this preliminary attempt became
embroiled in political controversy and faced opposition from
the minerals industry.
8

The joint workshops organized by the United Nations
Environment Program (UNEP) and the World Bank set out to
examine the feasibility of physical and monetary accounting
in the area of natural resources and the environment and to
develop alternative macro indicators of environmentally
adjusted and sustainable income and product. The Statistical
Division of the United Nations (UNSTAT) developed
methodologies for a System of Integrated Environmental and
Economic Accounting (SEEA) and issued a System of
National Accounting (SNA) handbook on Integrated
Environmental and Economic Accounting. The UN Statistical
Office (UNSO) in collaboration with Carsten Stahmer,
designed a System of Integrated Environmental and
Economic Accounting (SEEA). Under SEEA all assets have
been divided into three categories e.g. (i) produced assets (ii)
non-produced assets (iii) other non-produced environmental
assets required to be mentioned in System of National
Accounts (SNA) for SEEA.
Benefits of Environmental Accounting
The benefit of undertaking an environmental accounting
initiative is that the identification and awareness of
environment related costs would afford the company the
opportunity to find ways to reduce or avoid these costs, whilst
also improving environmental performance. Environmental
accounting is an effective tool for placing environmental
issues firmly on top managements agenda and provides
useful data to inform environmental and financial managers
for decision-making and concretely demonstrating environ-
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mental commitment to stakeholders. The benefits of
environmental accounting, including those highlighted by
Environment Protection Agency (EPA) may be enumerated
as under:
11

1. Many environmental problems can be significantly
reduced or eliminated as a result of effective decisions;
2. Environmental cost and potential savings may be
obscured in overheads or otherwise overlooked;
3. Environmental costs can be offset by generating
revenues through sale of waste or by-products or
recycling them;
4. Understanding of environmental costs can promote more
accurate costing and pricing of products;
5. Competitive advantage with customers can result from
processes, products and services which can be
demonstrated to be environmentally friendly;
6. Accounting for environmental costs and performance can
support a companys development and operation of an
overall environmental management system e.g. ISO
14001.
7. Environmental accounting would aid the discharge of the
organizations accountability and increase its
environmental transparency;
8. Because of the ethical investment movement, ethical
investors require the companies to be environmentally
friendly. Therefore, by upholding friendly image,
companies may be successful in attracting fund from
green individuals and groups; and
9. Environmental accounting consumerism movement
launched by the environmental lobby groups encourages
the consumers to purchase the environmentally friendly
products, i.e. green products. Companies, thus producing
green products may take competitive marketing
advantage by disclosing the same.
Limitations of Environmental Accounting
Environment Accounting (EA) suffers from various
limitations as follows:
1. There is no standard accounting method.
2. Comparison between two firms or countries is not
possible as the method of accounting is different.
3. Input for EA is not easily available because costs and
benefits relevant to the environment are not easily
measurable.
4. Many business and the Government organizations even
large and well managed ones do not adequately track the
use of energy and material or the cost of inefficient
materials use, waste management and related issue.
Many organizations, therefore, significantly under-
estimate the cost of poor environment performance to
their organization.
5. It mainly considers the cost internal to the company and
excludes cost to society.
6. EA is a long-term process. Therefore, to draw a
conclusion with its help is not easy.
7. EA cannot work independently. It has to be integrated
with the financial accounting, which in turn is not easy.
8. EA needs to be analyzed along with other aspects of
accounting because costs and benefits related to the
environment itself depend upon the results of the
financial accounting, management accounting, cost
accounting, tax accounting, national accounting etc.
9. The user of information contained in the EA needs
adequate knowledge of the process of EA as well as
rules and regulations prevailing in the country relating to
environmental aspects.
Indian Scenario of Environmental Accounting
and Reporting
Indian companies have faced strong international competition
over the last two decades as international competitors tried to
establish their footholds in India. These international firms
are disclosing non-financial information including
environmental information leading to an enhanced
expectation from Indian companies to act responsibly towards
the environment and be accountable to the society beyond the
traditional role of providing financial account to the
shareholders. Hence, to improve corporate image concerning
socially responsible behaviour, it was expected that an
increasing number of Indian companies would report their
environmental performance and social issues. However, a
little attention has been given to the state of environmental
reporting in India.
A study of literature and findings of research studies reveals
that in Indian perspective there is absence of physical form of
accounting or system for recognition of environmental costs
and liabilities and guidelines for costing treatments.
Voluntary disclosure is simply a statement in annual reports
about environmental protection, but there are no specific
norms or guidelines or specific provisions impending
environmental liabilities or losses. However, there is also no
requirement by the Companies Act,1956 about such reporting
requirements covering the environment cost and liabilities.
The Companies Act, 1956 requires to include in Directors
report environment related policies/ problems and annexure
showing details of energy consumption/energy conservation.
Even Accounting Standard Committees at national and
international levels have not formulated accounting standards
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for their disclosures. However, there is limited disclosure
requirement on environmental issues by listed companies as
required by Stock Exchanges. Even the Securities and
Exchange Board of India (SEBI) has not issued any specific
guidelines about the investors protection measures for the
environmental losses and liabilities. Now-a-days, companies
are concerned with the environment and making various
provisions to safeguard the environment losses and liabilities
by different provisions, but there is no systematic reporting.
Environmental Reporting Practices
Corporate environ-mental accounting and reporting is two
decades old now. Early 1990's marked the beginning of
environmental reporting by a few heavily polluting industries.
Environ-mental accounting provides a common framework
for organizations to identify and account for past, present and
future environmental costs in order to support management
decision-making, control and public disclosure. The
emergence of corporate environmental reporting (CER) in
India has been an important development, both for better
environmental management and overall corporate
governance. The primary purpose of publishing an
environmental report is to provide meaningful and useful
information to the different segments of society. As stated
below Indian companies follow diverse reporting practices
like alone environmental reporting or reporting along with the
Annual/Financial Reports, or Sustainability Reporting
including the economic, environmental and social issues:
1. As per instructions of the Environment Ministry, the
corporations are required to prepare and submit the
information relating to environment in environmental
statement. However, there are only a very few
corporations which give adequate information regard-
ing environmental issue.
2. The corporations are fully aware of the environmental
issue and the requirements of environmental reporting.
The corporate executives have also expressed their
views in favour of environment reporting by the
industries. Despite their awareness and consent over,
environmental reporting by industries is very poor and
so inadequate that very little information is found in the
annual report.
3. According to research studies, the extent to which
companies produce social information, of which
environmental information is a part and a number of
general themes that emerge there from include the
following:
(i) The proportion of companies disclosing the
information and extent of that disclosure is small.
(ii) There is some variety in disclosure over time, in
various countries and industries. Social dis-
closure in general and environmental disclosure
in particular reflects the changing business
climate and social, economic and political
environment.
(iii) Large companies are more likely to disclose
environmental information than small companies.
(iv) A very little disclosure would qualify as
information under any normal criteria and very
little of it indeed would contain numbers,
financial or otherwise.
4. Most of the companies that provide environmental
information disclose the information in descriptive
manner rather than financial type i.e. no account is
made for the degradation of natural capital when
calculating corporate profits.
Poor Disclosure of Environmental Information
In India, the level of environmental related disclosures in the
corporate annual reports, both financial and non-financial is
not encouraging. There are many reasons for poor disclosure
of environmental information in corporate annual reports.
First, neither the company law nor the accounting
standards/guidelines issued by the Institute of Chartered
Accountants of India prescribe disclosing norms for the
environment related matter in the corporate financial
statements. Secondly, the status of voluntary environmental
disclosure in the annual reports of the Indian companies is
poor. The main reason for this poor disclosure of
environmental information may be its voluntary in nature.
Thirdly, it may be due to the lack of awareness and /or
commitment on the part of the company management about
the social responsibility of the company. Fourthly, the poor
environmental performance of the company may also be
attributed to non-disclosure or less disclosure. Finally, the
poor enforcement of the Environment Protection Acts is also
partly responsible for freeing the companies from disclosure
of such information.
Conclusion
To make the environmental accounting an integral part of the
overall accounting system at corporate level, the following
suggestions are offered:
1. All the regulating bodies, accounting associations and
the Government should be careful enough and think
over different aspects seriously and make provisions for
environmental losses and making proper disclosures.
2. Attempts should be made for identification of
environmental costs and liabilities, their valuation and
measurement, introduction of new costing, appraisal of
relevant environmental factors and formulation of long
environmental accounting goals.
3. The company should formulate an environmental policy
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after study and analysis of various acts, rules and
regulations regarding environment applicable to it and
various impacts on environment due to its working.
4. List of various elements causing pollution of various
types and showing type of action taken for control over
the same should be prepared. This type of statement
should be an integral part of annual accounts.
5. Short term as well as long term environmental budget
for both revenue and capital nature should be prepared.
6. A separate statement showing investment in the various
equipments for pollution control along with benefits to
the environment from such equipment should be
prepared. Such benefits should be measured either in
quantity or money.
7. The financial or operational effect of environmental
protection measures on the capital expenditures and
earnings of the enterprise for the current period and any
specific impact on future periods should be shown.
Where it is not possible to segregate the amount relating
to environmental protection measures, this fact should
be clearly stated.
8. When the actual amount charged to operations in the
current period, together with a description of the
environmental measures to which they relate is
material, this amount may be sub-divided into the
following general ledger accounts: i) Liquid effluent
treatment. ii) Waste gas and air treatment. iii) Solid
waste treatment. iv) Analysis, control and compliance.
v) Remediation. vi) Recycling and vii) Other (for
example- accidents, safety etc.)
9. When the actual amount capitalized during the current
period, the accumulated amount capitalised to date and
the period for amortising, or writing off such amounts,
together with a description of the environmental
measures to which they relate is material, this amount
may be sub- divided into different categories. When it
is not possible to segregate the amount relating to
environmental measures, this fact should be stated.
10. Contingent liabilities arising due to environmental issue
either in the descriptive manner or quantitative manner
or both should be shown.
11. Environmental accounting should form a part of
management accounting. Therefore, environmental
management accounting information system should be
developed.
12. Environmental responsibility centres should be decided
so as to take action against defaulter managers if there
are deviations from standard pollution limits.
13. Environmental indicators should be calculated for
evaluation of environmental aspects and the same
should be disclosed properly in annual accounts.
14. Incentive and punishment policy should be linked with
environmental issue.
15. Government should make it compulsory for every
polluter to submit environmental audit report certified
by an environmental auditor.
References
1. Banerjee B., Corporate Environmental Accounting &
Reporting Practices in India, Indian Accounting Review, December,
25- 46 (2005)
2. Bebbington J., Gray R., Thomson I. and Walters D.,
"Accountants Attitudes and Environmental-sensitive Accounting",
Accounting and Business Research, 24 (94), 109-20 (1994)
3. Bojo J an, Major Karl-Goran and Unemo Lena, Environment
and Development, An Economic Approach, Kluwer Academic
Publisher, London (1990)
4. Eresi K., Environment-Information Disclosure in Annual
Reports, The Chartered Accountant, XLV (7) Jan. (1996)
5. Field Barry C., Environmental Economics- An Introduction,
McGraw Hills International Edition (1994)
6. Gray R., "Accounting and Environmentalism: An Exploration
of the Challenges of Gently Accounting for Accountability,
Transparency and Sustainability", Accounting, Organizations and
Society, 17 (5), 399-425 (1992)
7. Gupta S. K. and Mehra A., Contemporary Issues in
Accounting, Ludhiana, Kalyani Publishers (2002)
8. J awaharlal, Corporate Financial Reporting Theory and Practice,
Taxman Allied Service Pvt. Ltd., New Delhi (2003)
9. KPMG, United Nations Environment Programme, Carrots and
Sticks for Starters, Current Trends and Approaches in Voluntary and
Mandatory Standards for Sustainability Reporting (2006)
10. Chouhan Mukesh, The Chartered Accountant, November, 720-
726 (2005)
11. Paul K. C. and Pal B., Corporate Environmental Reporting in
India, Indian Accounting Review, December, 27- 45 (2001)
12. Pramanik A. K., Environmental Accounting and Reporting,
New Delhi, Deep & Deep publications Pvt. Ltd. (2002)
13. Pramanik A. K., Corporate Environmental Accounting and
Reporting: Global Scenario - XXVI All India Accounting
Conference and International Seminar, Indian Accounting
Association, December (2004)
14. United Nations, Environmental Accounting for Sustainable
Development: Note by the Secretariat, Geneva, UN
Intergovernmental Working Group of Experts on International
Standards of Accounting and Reporting (1991).
(Received 25
th
May 2012, accepted 18th J uly 2012)

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Book Review:
Steve Jobs
by
Walter Isaacson
Publishers: Simon & Schuster (USA) Little, Brown (UK) 2011
ISBN: 978-1-4087-0374-8
Reviewed by
Rungta Shravan
Associate Professor (Marketing) at N L Dalmia Institute of Management Studies
and Research, Mumbai, INDIA

The Personality
Seldom has the world witnessed a personality who has
influenced, defined, shaped and reshaped a gamut of
Industries worldwide. And seldom has a personality deviated,
criticized and had utter disregard for conventional theory and
practice of leadership. Steven Paul Jobs has been one such
individual who has had as many admirers as those who hated
him for his working style.
Walter Isaacson, the CEO of Aspen Institute, has
accomplished capturing the lives and times of historical
figures like Einstein, Benjamin Franklin and Henry Kissinger.
Being at the helm of affairs of two of world foremost media
brands like CNN and TimeMagazine, he has had one of the
best perspectives on remarkable individuals and their impact
on society at large.
In this book of Walter Isaacson titled Steve J obs, he
presents a somewhat personal and a more public account of a
man who defied conventional leadership style and created his
own road, leading him to both grief and glory in equal
measure. There are many ways to interpret (review) the book,
but as I took this journey (of reading the book) I noticed two
remarkable themes constantly appearing and re-appearing
throughout the so called only Official biography of the
maverick they fondly called Steve J obs.
The Leadership Paradigm
The first one was Steves disregard for People Management
and Soft Skills and its over rated importance in
organizations; and secondly the ability to Distort Reality
for self and other to innovative beyond the realm of
possibility.
Although the book begins and traces the birth and growing up
years of Steve J obs; it does not indicate anything the readers
have not seen or heard about other great visionaries. But what
strikes the reader is the openness of American Society with
regards to adopting practices which aim at solving both
personal and societal issues by having innovative solutions
with prejudices that exist in other cultures. Steve biological
and foster parents are an example of a society which accepts
individuality and freedom associated with it.
Inspite of being brought up by foster parents (who adopted
him) being simple, hardworking and open minded, Steve
grew up to be anything but like them. Steve has been
portrayed as an individual who was driven solely by his
talent, ego and vision. Conventional theory / literature on
management and leadership makes a successful
differentiation about what makes a good leader and Steve
(as portrayed by Walter) fails on almost every conceivable
metrics.
Steves ever evolving relationship with his parents, girl
friends, his best friend (Steve Gary Woznaik) and a daughter
out of wedlock is a clear indication of how Steve J obs never
viewed and valued them in the conventional sense. He was
never stable with his girl friend; not always loyal to his best
friend Wozniak and stayed aloof with his first daughter. Not
the kind of qualities or standards in personal life one can be
very proud of. If Philosophers (Like Plato) from earlier era
would try to define Steve Jobs based on the famous Trait
Theory, they would wonder if this man could ever achieve
anything in life.
Steves working style has been highly criticized by his own
partners, colleagues, sub-ordinates and business associates as
being rude, cruel, selfish, manipulative and self obsessed.
Steve himself at many places in the book, admitted to it
himself in some form or the other.
Steves analysis of any product, project or work fell into only
to categories; it was either a piece of crap or stunning
work; nothing in between. Steve never bothered about the
consequences of his reaction on his colleagues and sub-
ordinates. Walter suggests that Steve Jobs was known to be
highly inconsistent with his views on people and their ability.
Steves ability and tendency to identify talented people but
still crave for control was in contrary to the theory of
empowerment and trust. He could dismiss a whole years
hard work of his entire team in a moment of madness, and ask
them to re-start without any apology or feeling of remorse.
His obsession with perfection, belief in self and random
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decision drove people crazy. That can hardly be called
Inspirational Leadership.
The Traits
Steve Jobs was known to inspire people in his unique manner,
termed by his ex-colleagues as Steves Reality Distortion
field; wherein he would ask of them to do something which
was perceived to be practically impossible. But this every
same trait became a major handicap in his personal life when
he ignored the symptoms of his ill health. His friends and
family members have mentioned directly or indirectly to the
author Isaacson that Steve felt a vegan only diet who helped
him cure his cancer.
Unlike most leaders, Steves belief in the divine was
somewhat unclear and complicated. He tended to define and
re-define his perspective on the concept differently at every
stage of his life.
The book talks about Steves journey from a garage shop to a
multi billion dollar enterprise; his fallout from Apple and his
reinstatement thereafter. Throughout this Steve never once
adapted to the situation but rather created and built his
reality. Steve, it seemed never bothered or believed in
succession planning and always wanting Control over every
aspect of his work and personal life.
Steves habit of not taking bath regularly; biting his nails and
slouching during a meeting and yelling / shouting in the
meetings with his staff and board members was nothing short
of a leader who lacked tact and poise. For Steve
mannerism took a backseat with I need to make my point
taking the precedence.
Unlike conventional leaders, Steve near bothered about
mixing his criticism with praise, his belief was velvety and
polite style of management never forced change. A lot of
colleague who have had to bear his brunt admit privately that
Steves style led them to achieve the impossible.
As much as his staff and colleagues feared his eccentricity;
they all admit he had the charm, wit and intelligence that
normal people only dream of. Steve was known to mesmerize
his audience whether in the boardroom or media conferences
or his own team by scaling the level of conversation to
unbelievable proportion; making them feel as if they are part
of something extraordinary. That was Steves style of being a
Visionary.
Steves ability to comprehend, predict and define the future in
the world of technology was in stark contrast to his inability
to understand his familys need; they say he regularly slipped
into work even during long vacations and shared less than
cordial relationship with his daughters. Although he was fond
of; and spent a fair bit of time with his son Reed.
The Legacy
Steves ability as a leader to connect with other leader in the
technology industry is legendary. He was never shy of calling
up stalwarts, chairman, CEOs and MDs of global
companies to share his thoughts and give his advice.
Although those who have known or interacted with him have
they own view points, Sonys CEO once remarked about
Steve J obs as being A nightmare to work with; while Gates
in some of his comments about him have said His Working
Style is Magical.
The most impressive aspect of the book is its authenticity,
openness and unbiased perspective on the life of a legend. It
portrays his strengths and achievements with the same
aplomb as it does his weaknesses and his fallacies. The book
is inspirational, insightful and full of anecdotes; which can be
interpreted by the reader based on his stage of life, his
aspirations and his understanding of the world around him.
The review would be unfair without mentioning the fact that
Steve created products and services that re-defined industries;
the iMac, iPod, iPhone, iPad, iTunes and an animation studio
which took the movie industry to the next orbit. Mortal
beings would be happy to invent one such product in their
lifetimes, Steve jobs created half a dozen of the same. Maybe
his Reality Distortion quality and Lack of People Skills
enable him to achieve more, cover more ground and move
faster in achieving his vision/s.
The review aimed at capturing the essence of the book in
terms of a leader who defied all social and organizational
norms and rules; yet left a legacy which students, managers
and companies across the world will try to interpret, admire
and draw inspiration from.

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September 2012 VoI. 5 (9)

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advent of the Industrial Revolution in 1800s. But some

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human resource development include:

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Application of Artificial Neural Networks for Sales Forecasting in

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together in forth season. The rainy months are coded as

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Type A Personality as a consistent syndrome of behaviors

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