HSB Research Review

HSB Research Review
Vol. 2 No. 2
July - December, 2011
Regn. No. : 36595
RESEARCH PAPERS
Perceived Workplace Environment and Mental Health of Medical Professionals in
Public Hospitals
Manisha Agarwal
Occupational Stress and Job Performance
Naresh Kumar and Vandana Singh
Multivariate Profitability Analysis of Indian General Insurance Companies: A
Study of Post Reform Period
Manjit Singh and Rohit Kumar
Corporate Redress System for Insurance Consumers
Deepa Sharma
Patients Satisfaction Measurement: Hype or Hope! A Critique
Parimal H Vyas & Madhusudan N Pandya
Effectiveness of Knowledge Management Systems An Empirical Study of
Textile Industry of Punjab
Radha Kanwal Sharma and Prem Kumar
Day of the Week Effect on Stock Market Return and Volatility of India
Suman and S S Chahal
Causal Relationship Between Economic Development and General Insurance in
India
Mahesh Chand Garg
Students as Responsible Consumers Agents for Social Change
Narendra Singh and Karnika Gupta
Role of Stimulating Packages in Cognitive Development : An Empirical Study
Nidhi Singh and Usha Rani
CASE STUDY
Mahindra Renault JV : Why Its on the end of The Road
Jaskiran Arora and Umashankar Venkatesh
BOOK REVIEW
The Kite Runner
Pooja Bhagwan and Kamalpreet Kaur
HSB RESEARCH REVIEW

The Editorial Board
Patron
Dr M L Ranga, Vice-Chancellor, Guru Jambheshwar
University of Science and Technology, Hisar
Managing Editor
Prof B K Punia, Dean, Haryana School of Business,
Guru Jambheshwar University of Science and
Technology, Hisar
Editor-in-Chief
Prof S C Kundu, Director, Haryana School of Business,
Guru Jambheshwar University of Science and
Technology, Hisar
Editor
Dr Karam Pal Narwal, Associate Professor, Haryana
School of Business, Guru Jambheshwar University of
Science and Technology, Hisar
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Berne, Switzerland
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Faculty of Commerce and ManagementUniversity of
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Faculty of Commerce and ManagementGuru Nanak Dev
University, Amritsar
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Faculty of Commer ce and ManagementHimachal
Pradesh University, Shimla
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Indian Institute of Foreign Trade, New Delhi
Prof K Ramchanderan
Indian School of Business, Hyderabad
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Indian Institute of Management, Kolkata
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of Delhi, New Delhi
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Indian Institute of Management, Indore
Prof V K Nangia
Indian Institute of Technology, Rorkee
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Indian Institute of Management, Bangaluru
Prof S K Jain
Department of Management Indian Institute of
Technology, New Delhi
Prof Manoj Anand
Indian Institute of Management, Lucknow
Prof H L Verma
Haryana School of Business, Guru Jambheshwar
Prof M S Turan
Dr Mahesh Chand Garg

Dr Ved Pal Sheera

Regn. No. : HARENG/2010/36595
ISSN : 0976 - 1179
HSB Research Review

A Bi-annual Refereed Journal of Haryana School of Business
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Science& Technology Hisar, Haryana- 125001(Haryana) INDIA
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Published at
Haryana School of Business, Guru Jambheshwar University of Science& Technology Hisar,

Haryana- 125001(Haryana) INDIA
Editor
Dr. Karam Pal, Associate Professor , Haryana School of Business, Guru Jambheshwar University
of Science& Technology Hisar, Haryana- 125001(Haryana) INDIA
HSB Research Review

The Editorial
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HSB Research Review

A Bi-annual Refereed Journal of Haryana School of Business
Contents
Research Papers
PERCEIVED WORKPLACE ENVIRONMENT AND MENTAL HEALTH OF MEDICAL
PROFESSIONALS IN PUBLIC HOSPITALS
Manisha Agarwal
Page
1-10
OCCUPATIONAL STRESS AND JOB PERFORMANCE

Naresh Kumar and Vandana Singh
11-16
MULTIVARIATE PROFITABILITY ANALYSIS OF INDIAN GENERAL INSURANCE COMPANIES:

A STUDY OF POST REFORM PERIOD
Manjit Singh and Rohit Kumar
17-26
CORPORATE REDRESS SYSTEM FOR INSURANCE CONSUMERS

Deepa Sharma
27-34
PATIENTS SATISFACTION MEASUREMENT: HYPE OR HOPE! A CRITIQUE

Parimal H Vyas & Madhusudan N Pandya
35-45
EFFECTIVENESS OF KNOWLEDGE MANAGEMENT SYSTEMS AN EMPIRICAL

STUDY OF TEXTILE INDUSTRY OF PUNJAB
Radha Kanwal Sharma and Prem Kumar
46-53
DAY OF THE WEEK EFFECT ON STOCK MARKET RETURN AND VOLATILITY OF INDIA
Suman and S S Chahal
54-59
CAUSAL RELATIONSHIP BETWEEN ECONOMIC DEVELOPMENT AND GENERAL

INSURANCE IN INDIA
Mahesh Chand Garg
60-68
STUDENTS AS RESPONSIBLE CONSUMERS AGENTS FOR SOCIAL CHANGE

Narendra Singh and Karnika Gupta
69-75
ROLE OF STIMULATING PACKAGES IN COGNITIVE DEVELOPMENT: AN EMPIRICAL STUDY

Nidhi Singh and Usha Rani
76-81
CASE STUDY
MAHINDRA RENAULT JV: WHY ITS ON THE END OF THE ROAD
Jaskiran Arora and Umashankar Venkatesh
82-86
BOOK REVIEW
THE KITE RUNNER
Pooja Bhagwan and Kamalpreet Kaur
87-88
HSB Research Review
Vol. 2 No. 2
PERCEIVED
WORKPLACE
ENVIRONMENT AND
MENTAL HEALTH OF
MEDICAL
PROFESSIONALS IN
PUBLIC HOSPITALS
July-December 2011
ABSTRACT
The present study examined the relationship between the
hospital workplace environment in terms of perceived
organizational support, inter-professional support, and
participation in decision making, with the mental health of
medical professionals as indicated by reported levels of
psychological well being and psychological morbidity in
central and state level public hospitals in eastern parts of
Uttar Pradesh. Participants consisted of medical and paramedical professionals employed under the state-level
(N=50) and central-level (N=50) hospitals. Statistical
analysis of the data revealed that the state and central
level hospitals were significantly different on the
dimensions of the perceived work environment and levels
of psychological well-being and psychological morbidity
reported by the participants. Stepwise regression analysis
showed that while participation in decision making failed
to emerge as an antecedent of the mental health status of
employed medical professionals, perceived organizational
support positively predicted mental well-being among
participants working only in the state-government hospitals
and also negatively predicted psychological morbidity
among the participants working in these hospitals. In the
central-government hospitals, inter-professional support
negatively predicted psychological morbidity among the
participants. The study has important implications for Indian
hospitals which are currently facing problems of workforce
retention due to the demands placed on medical
professionals by the perceived inadequacy of the workplace
environment.
Dr Manisha Agarwal
Associate Professor, Department of Psychology,
Banaras Hindu University, Varanasi (U.P.)
E-mail : manisha12529@gmail.com
Keywords : Work place, Environment, Mental health,

Professional, Public hospital.
INTRODUCTION
The health care system in India, as in many other countries,
has undergone major technological, organizational and
financial changes during the last decades which have
resulted in fundamental changes in the work conditions of
medical professionals. Increasingly physicians are moving
to managed care and salaried practices where their autonomy
is more constrained. In such settings, management has more
responsibility for physician satisfaction, as well as for other
staff and patient care. Medical professionals are seen as
super-humans and the expectation of self-sacrificing is
higher than in other professions. On the other side, health
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HSB Research Review
Vol. 2 No. 2
July-December 2011
practices include the involvement of supervisor and

subordinate in information processing, decision making and
problem solving. Supportive leader behaviours and a
generally facilitative organizational climate may be
subsumed under a variable entitled perceived
organizational support. Eisenberger, Huntington,
Hutchison, and Sowa (1986) demonstrated that individuals
tend to form global beliefs concerning the extent to which
the organization values their contributions and cares about
their well-being (p. 504). Specifically, individuals evaluate
the behaviour of organizational agents towards them and
infer the general motive underlying that treatment, with the
categories that are considered important varying
considerably between organizations and between persons.
Some individuals might base their sense of perceived
organizational support (POS) upon such factors as the
organization members willingness to provide them with
special assistance or special equipment in order to complete
a project. Others might develop a strong sense of POS based
upon the organization members willingness to provide them
with additional opportunities for training in an area that
was of particular interest to them. Furthermore, employees
are frequently sensitive to relevant environmental and
organizational constraints that might limit the ability to
provide them with desired rewards (Eisenberger, Cummings,
Armeli, & Lynch, 1997).
policies and healthcare systems are changing rapidly and

these changes may have consequences for the mental and
affective well-being of healthcare professionals.
The rapid changes in medical practice in the past quarter
century have stimulated considerable interest in measuring
physicians perceptions and attitudes about their work
(Freeborn, 2001). Interest has increasingly been focused
on understanding the role working conditions play in terms
of serious issues facing hospitals today, including the wellbeing and retention of medical professionals (Gershon,
Stone, Zeltser, Faucett et al., 2007). Financial productivity
incentives have been introduced resulting in increased
economic efficiency but also a worsening of medical
professionals working conditions in terms of decreased
influence and autonomy (Burdi & Baker, 1999; Friedman,
1995; Williams, Konrad, Scheckler, Pathman et al., 2001).
Thus, medical professionals are becoming more
marginalized, with less power and control over their own
work situation, at the same time as external factors are
exerting a growing influence on the working conditions of
the medical professionals, and other professions are
heading for the management positions (Friedman, 1995,
Williams, Konrad, Scheckler, Pathman et al., 2001, Arnetz,
2001; Forsberg Axelsson & Arnetz, 2000).
In India the spending on health care is 6% of gross domestic
product (GDP), the state expenditure is only 0.9% of the
total spending. Thus only 17% of all health expenditure in
the country is borne by the state, and 82% comes as out of
pocket payment by the people. This makes the Indian public
health system grossly inadequate and under-funded (Goel
& Kumar, 2007). In addition to these internal conditions,
globally the health care system has also experienced an
external pressure to increase efficiency. WHO and the
International Society for Quality in Health developed five
core standards applicable to all hospitals, in accordance
with international requirements, in 2003. The standards are
mainly generic with the focus on patients, staff and the
organizational management. Standard 4 is related to
development and maintenance of conditions for the hospital
as a healthy workplace. It also states about implementations
of comprehensive human resource strategies and
participation of subordinates in decision making through
its sub standards (Goel & Kumar, 2002).
Inter professional relationships too act as social support

network and as buffer against various types of occupational
problems. A healthy relation with co-workers, supervisor
and subordinates automatically reduces work conflicts and
enhances cooperation, productivity and overall well-being
of members. It has also been pointed out that organizational
support may be an important factor for mitigating work
environment stressors (Vultee, Axelsson & Arnetz, 2007).
These conditions may be related to the work climate of
medical professionals and are logically prior to the social
psychological variables that describe the experience of
working in a particular place (West, 2001). All these factors
are also important in creating high turnover rates for medical
professionals, which may become extremely expensive for
health care systems, and undermine the wellbeing of medical
professionals (Buchbinder, Wilson, Melick & Powe, 1999,
Filipsson, 1999; Williams, Konrad, Scheckler, Pathman et
al., 2001; Misra-Herbert, Kay & Stoller, 2004). Therefore
how medical professionals perceive their quality of work
life may directly affect their potential development, their
sense of autonomy and can finally affect their mental health
and total well-being.
Several studies in western countries have described a

perceived decreasing autonomy, influence and participation
and a loss of control among the medical profession (Burdi
and Baker, 1999, Forsberg, Axelsson & Arnetz, 2001, Linzer,
Visser, Oort, Smets et al., 2001). These factors may be
important contributors to an undesirable workplace in the
hospital setting. A healthy work climate in healthcare
organizations may therefore be determined by presence of
innovative human resource management practices,
procedures to facilitate communication, conflict resolution,
organizational and co-workers support and participation in
decision making at work place. Participative management
Well-being is an important issue in every work environment,

but its importance is significantly higher in the field of
medicine as medicine is involved with critical decisions
regarding public health. Unhealthy work conditions along
with personal vulnerability most likely contribute
significantly to psychiatric morbidity in medical
professionals and thereby affect the physical and
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HSB Research Review
Vol. 2 No. 2
July-December 2011
equipment, complex hierarchies of authority and skills,

dependent and demanding patients, and patient deaths, all of
which are significant contributors to stress (Lindo, Binns,
Grenade, Jackson et al., 2006). Studies have further indicated
anxiety and depression, as sign of psychological
malfunctioning in the medical profession (Caplan, 1994, Jones
and Jonestan, 2000). Aust, Rugulies, Skakon, Scherjer et.al.
(2007) found that high levels of demands at work and
problematic interpersonal relations at work were associated
with lower self-rated mental health. Some other studies have
also shown that adverse workplace factors can increase the
risk psychological and behavioural problems in medical
professionals (DeJonge, Mulder and Nijhuis, 1999,
Bourbonnais and Mondo, 2001, Eriksen, Tambs & Knardahl,
2006).
psychological health of medical professionals in hospitals

through problems like heavy work load, professional status,
difficult relations in the work place, lack of organizational
support and problems in carrying out professional roles.
Unhealthy and stressful work environment ultimately affect
mental health in the form of psychological malfunctioning
and correlates with a greater likelihood of low self esteem,
low subjective and overall well-being among medical
professionals.
There is mounting evidence that the health and well-being
of medical professionals is decreasing, partly due to their
work situation. (Buchbinder,Wilson, Melick & Powe, 1999;
Filipsson, 1999; Johnson, 1997). This group, however, is
the most often compromised (Uncu, Bayram & Bilgel, 2006).
Changes in health policies have also contributed to an
increased level of stress among medical professionals.
Previous research has documented mortality and morbidity
in medical professionals and suggests that this group may
be at considerable risk of illness and other stress related
problems (Cooper, Rout & Faragher, 1989, Sutherland, &
Cooper, 1992). Psychological problems among health care
professionals were earlier reported in Western societies
but are now becoming evident in the Indian context.
Hospital work often requires coping with some of the most
stressful situations found in any workplace. The job strain
model proposed by Karasek (1979) classified medical
practice as a profession with high demand. The high demand
nature of medical practice is well documented. In 2000, the
country had 1.25 million doctors and 0.8 million nurses.
That translates into one doctor for every 1800 people and
showing the work pressure on doctors (Goel & Kumar,
2007).
OBJECTIVES AND HYPOTHESES

As the above review suggests medical professionals are at
increased risk of psychological disturbances due to their
workplace environments. But this issue has not yet been
investigated in the context of medical professionals working
in Indian hospitals. It is well known that in India, public
health services are provided mainly by government
hospitals at the central and state levels. These hospitals
serve a large portion of Indian population at minimum or no
cost. There are differences between state and central
government hospitals in terms of service conditions,
benefits, work load, facility, setup, administration and
management of hospitals. Still, there is scarce knowledge
of how working conditions are related to the level of
psychological distress in Indian medical professionals.
Based on the above review the present study was
conducted with the objectives of examining:
Literature suggests that high demanding jobs are likely to

have a long-term negative impact on worker lifestyle and
may result in psychological problems (Quick, Quick, Nelson
& Hurrell, 1997). The relationship between working
conditions and the level of psychological distress in
employees has been explored in a number of studies. Hardy
et al. (1998) found that short and long-term behavioural
and psychological effects of stress are apparent in
practitioners working in a health-care setting. A number of
these stressors are intrinsic to medical practice, such as
working with emotionally intense issues, suffering, fear,
sexuality, failures, and death. Stressors identified in the
medical profession are to a great extent psycho-social in
their origin. As a consequence, it would be expected that
physicians should be at increased risk for emotional distress
(Appleton, House & Dowell, 1998).
a)
the perceived differences in dimensions of the

hospital work environments, the demographic
characteristics and mental health status in terms
of reported levels of psychological well-being and
psychological morbidity among medical
professionals working in central and state
government hospitals,
b) the nature of the relationship between medical

professionals perceptions of certain dimensions
of the work environment in hospitals, such as the
levels of perceived organizational support, interprofessional support and participative climate, with
their mental health status in terms of psychological
well-being and psychological morbidity, and
c)
Studies indicate a consistent association between

psychological distress and long working hours, high demands
at work, low control at work, low social support at work, and
job insecurity. Workers in hospitals must deal with lifethreatening injuries and illnesses complicated by overwork,
under-staffing, tight schedules, lack of organizational and coworkers support, paper-work, intricate or malfunctioning
the relationship between demographic

characteristics of medical professionals and their
mental health status in terms of psychological wellbeing and psychological morbidity.
Based on the above objectives it was hypothesized that:

1.
In comparison to state government hospitals, reported

levels of perceived work environment dimensions,
HSB Research Review
Vol. 2 No. 2
was developed by the researcher on the basis of interviews

with a small number of medical professionals. It contained
4 items and its reliability coefficient was 0.86. The WarwickEdinburgh Mental Well-being Scale (WEMWBS) was used
to assess the psychological well-being of medical
professionals. The scale consisted of 14 items covering
both positive affect and positive functioning and its
reliability coefficient was 0.94. The GHQ-12 was used to
assess levels of psychological morbidity in terms of
psychological malfunctioning and short-term changes in
mental health. The scale consisted of 12 items and its
reliability coefficient was 0.90. Responses were taken on 5point scales for each item in all the five scales. Demographic
information related to age, years of service, salary and
promotions received was also obtained.
namely, perceived organizational support, interprofessional support and participative climate, would
be higher in central government hospitals.
2.
In comparison to medical professionals working

in state government hospitals psychological wellbeing would be higher and psychological morbidity
would be lesser among medical professionals
working in central government hospitals.
3.
Significant differences in demographic

characteristics are likely to emerge between medical
professionals working in central hospitals and
medical professionals working in state hospitals.
4.
Dimensions of the perceived work environment in

hospitals, namely, perceived organizational
support, inter-professional support and
participative climate would have more positive
relationship with psychological well-being among
medical professionals working in central
government hospitals in comparison to the state
government hospitals, but would have a negative
relationship with levels of psychological morbidity.
5.
July-December 2011
The participants were approached on the hospital premises

after obtaining the permission of the Chief Medical
Superintendent in each of the hospitals surveyed and the
consent of each participant was also obtained. Any
confusion regarding the purpose of the study was explained
to them and they were assured of the anonymity of their
responses.
Higher levels of salary, years of service, promotions

and age would have positive relationship with
psychological well-being but would have negative
relationship with psychological morbidity among
medical professionals in the two types of hospitals.
RESULTS
Data were statistically analyzed for examining the
differences in the levels of demographic characteristics,
perceived work environment dimensions and levels of
psychological well-being and psychological morbidity
among the medical professionals working in central and
state level hospitals through t-tests. Data were also
analyzed for examining the hypothesized patterns of
relationships between the demographic variables and
participants perceptions of the work environment with the
mental health status dimensions of medical professionals
through correlation and step-wise regression analysis.
METHODOLOGY
Participants: A sample of medical and para-medical staff
(N=100) employed under the state-level medical services
and central-level medical services of the railways, working
in government hospitals, participated in the study. From
the state-level hospitals of Uttar Pradesh, participants
consisted of 50 doctors and para-medical personnel.
Similarly, participants from central government railway
hospitals consisted of 50 doctors and para-medical
personnel. Physicians, surgeons, pathologists, radiologists,
dentists and anesthetists comprised the sample of medical
doctors while the para-medical participants consisted of
members from the nursing staff, lab-technicians, x-ray
technicians and personnel related to hospital care services.
Table 1 presents the differences between the means of the

the variables understudy for state-government and centralgovernment employed medical professionals. These two
groups of medical professionals were found to be
significantly different on all dimensions of demographic
characteristics, perceived work environment and mental
health status. Results showed that although state
employed medical professionals received less salary (t=2.73,
p<0.01) and lesser number of promotions (t= 3.01, p<0.01)
than central-government employed medical professionals,
they had spent greater number of years as employees (t=
3.76, p<0.01) and their mean age was also higher (t= 2.39,
p<0.01) than central-government employed medical
professionals. Regarding the workplace environment, state
employed medical professionals perceived less interprofessional support (t=4.75, p<0.01) as well as
organizational support (t=4.68, p<0.01) and reported lower
levels of participation in decision making process of the
organization (t=5.37, p<0.01) than the central-government
employed medical professionals. State employed medical
Measures and Procedure: Levels of perceived

organizational support, participative climate, interprofessional support, mental well-being and psychological
morbidity were measured using Likert-type five-point rating
scales. Perceived Organization Support (POS) was measured
by the scale reported by Eisenberger et al. (1986). It
contained 8 items and the Cronbach reliability co-efficient
of the scale was 0.85. The participative climate in hospitals
was measured by a modification of the scale reported by
Gupta (2006). The scale contained 10 items which were
modified to suit the requirements of the hospital work
environment and the Cronbach reliability coefficient was
0.84. The scale for measuring inter-professional support
4
HSB Research Review
Vol. 2 No. 2
professionals also reported significantly higher levels of

psychological morbidity (t=9.01, p<0.01) and lower level of
mental well-being (t=5.53, p<0.01) as compared to the
central-government employed medical professionals.
July-December 2011
correlated with psychological morbidity (r= -.30). Results

of correlation analysis for the sample of state employed
medical professionals showed that among the demographic
variables, years of service were positively correlated with
mental well-being (r=.36). Among the dimensions of the
perceived work environment, participative climate and interprofessional support were positively correlated with mental
well-being (r = .28; r =.34) while perceived organizational support
was positively correlated with mental well-being (r = .34)
but negatively correlated with psychological morbidity
(r = -.42).
Table 2 presents the correlations between the variables

understudy with dimensions of mental health status of
central and state-government employed medical
professionals. Results show that among the demographic
variables, salary was negatively correlated (r = -.29) and
age was negatively correlated with mental well-being (r = -.29)
but salary was positively correlated with psychological
morbidity (r=.42,) among the central government employed
participants. Among the dimensions of the perceived work
environment, inter-professional support was negatively
Results of stepwise multiple regression analysis (Table 3)

for medical professionals working in central-level hospitals,
showed that among the demographic variables, salary
Table 1. Showing significance of the differences between the means of variables for medical professionals in central and
state hospitals (N=100)
State
Central
Variables
Mean
Std. Deviation
Mean
Std. Deviation
t-test
Salary
2.32
.71
2.92
1.38
2.73**
Years of Service
21.5
9.15
14.98
8.14
-3.76**
Promotions
.96
1.03
1.64
1.17
3.08**
Age
48.92
8.23
44.98
8.26
-2.39**
POS
22.44
4.05
27.76
6.94
4.68**
Participation
29.62
7.11
37.12
6.85
5.37**
Inter Professional Support
12.2
3.40
15.1
2.65
4.75**
Psychological morbidity
32.94
6.16
21.62
6.4
-9.01**
Well-being
49.52
8.69
58.62
7.76
5.53**
* p<.05; **p<.01
Table 2. Showing correlations of variables with the mental health status dimensions of medical professionals in central
and state level hospitals (N=100)
Predictor Variables
Salary
Years of service
Promotion
Age
Participation
Inter-professional support
Perceived Organizational Support
Psychological morbidity
Mental well-being
Central Hospitals (N=50) R values

Psychological
Psychological
morbidity
well-being
.42**
-.29*
-.01
-.10
.09
-.06
.17
-.29*
-.21
.11
-.30*
.03
-.03
-.69**
1.00
-.69**
-.69**
1.00
State Hospitals (N=50) R values

Psychological
Psychological
morbidity
well-being
-.04
-.12
-.16
.36**
-.01
08
-.21
.27
-.12
.28*
-.20
.34**
-.42**
.34**
1.00
-.50**
-.50**
1.00
* p<.05; **p<.01
Table 3. Stepwise regression analysis of the demographic variables with psychological morbidity among medical
professionals working in central and state level hospitals. (N=100)
Central Hospitals
Variables
Salary
R
.42
R sq.
.17
R Square change
.17
State Hospitals
No variables entered the equation

* p<.05; **p<.01
5
% Variance
17.3
Beta Coefficient
.42
t ratio
3.17
HSB Research Review
Vol. 2 No. 2
July-December 2011
Table 4. Stepwise regression analysis of the demographic variables with mental well-being among medical professionals
working in state and central level hospitals. (N=100).
Variables
salary
R
.29
R sq.
.08
Years of service
.36
.13
Central hospitals
R Square change
.08
State hospitals
.13
% Variance
8.2
Beta Coefficient
-.29
t ratio
-2.07
12.6
.36
2.63
* p<.05; **p<.01
Table 5. Stepwise regression analysis of the perceived work environment dimensions with psychological morbidity
among medical professionals working in central and state level hospitals. (N=100)
Variables
Inter professional support
Perceived organizational support
R
.30
.47
.42
Central hospitals
R sq.
R Square change
.09
.09
.22
.13
State hospitals
.18
.18
% variance
9.1
13
Beta Coefficient
-.30
.61
t ratio
-2.21
2.80
17.7
-.42
-3.21
* p<.05; **p<.01
Table 6. Stepwise regression analysis of the perceived work environment dimensions with mental well-being among
medical professionals working in state and central level hospitals. (N=100)
Variables
R
.34
State hospitals
R sq.
R Square change % variance
.12
.12
11.8
Central hospitals
Beta coefficient
.34
t ratio
2.53
No variables entered the equation

* p<.05; **p<.01
positively predicted 17.3 percent variance in psychological
morbidity with a beta value of .41 (p<.01) whereas none of
the demographic variables predicted psychological
morbidity among medical professionals working in statelevel hospitals (Table 3). Results of stepwise regression
analysis also showed that salary negatively predicted 8.2
percent variance in mental well-being of medical
professionals with a beta of -.286 (p<.01) for central level
hospitals, while the years of service positively predicted
12.6 percent variance in mental well-being of medical
professionals working in state hospitals with a beta of .35
(p<.01; Table 4).
well-being of medical professionals working in state

hospitals with a beta of .35 (p<.01).
DISCUSSION
The present study was conducted with the aim of
investigating the effects of differences in the perceived
work environment of central level and state-level
government hospitals on the mental health status of
employed medical professionals consisting of the
paramedical and medical staff. The study therefore examined
the differences in the perception of dimensions of the
hospitals work environment by the medical professionals,
their demographic characteristics and reported levels of
mental health status in terms of their psychological wellbeing and psychological morbidity in the two types of
hospitals. Findings supported the hypothesized
relationships to a considerable extent. The central level
hospital was reported to have significantly higher levels of
the dimensions of perceived work environment, namely the
perceived organizational support, participative climate and
inter-professional support as compared to the state
government hospital. Among the demographic variables,
the medical professionals in the central level hospital had
significantly higher salary, fewer numbers of years of
service and lower average age with more promotions as
compared to those working in stat-government hospitals.
In consonance with the trend, medical professionals in the
Regarding perceived work environment dimensions, results

showed that among medical professionals working in central
hospitals, perceived organizational support positively
predicted 13 percent variance in psychological morbidity
with a beta coefficient of .61 (p<.01) and inter-professional
support negatively predicted 9.1 percent variance in
psychological morbidity with a beta value of .30 (p<.01)
while perceived organizational support negatively predicted
17.7 percent variance in psychological morbidity with a
beta value of -.42 (p<.01) ) among medical professionals
working in state hospitals (Table 5). Table 6 shows that
none of the perceived work environment dimensions
predicted mental well-being of medical professionals
working in central hospitals but perceived organizational
support positively predicted 11.8 percent variance in mental
6
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Vol. 2 No. 2
central level hospital had lower levels of psychological

morbidity and higher levels of psychological well-being as
compared to their counterparts in the state-level hospitals.
The results thus strongly supported the hypothesis that
central level government hospitals would be perceived more
positively by their employees as compared to the state level
government hospitals which would in turn have
consequences for their mental health status.
July-December 2011
Findings related to the hypothesized patterns of

relationships between medical professionals perceptions
of certain dimensions of the psychological work
environment in hospitals, namely, perceived organizational
support, inter-professional support and participative
climate, with their mental health status in terms of
psychological well-being and psychological morbidity, also
revealed some unexpected trends. Although perceived
participative climate failed to significantly predict
psychological well-being as well as psychological morbidity
among medical professionals at both the central and state
levels, the dimension inter-professional support
negatively predicted psychological morbidity among
medical professionals working in the central-level hospital.
Findings related to the hypothesized patterns of

relationships between the demographic characteristics of
medical professionals with their mental health status in
terms of psychological well-being and psychological
morbidity, however, revealed some unexpected trends.
Among the demographic variables, results revealed that
salary of participants was positively related with
psychological morbidity among participants and was
negatively related with their psychological well-being in
the central level hospital but had no relationship with the
mental health status of participants in the state-level
hospitals. Findings further indicated that the salary of
participants in the central level hospital was a significant
negative predictor of their level of psychological well-being
but a significant positive predictor of the level of their
psychological morbidity. It appears that the salary of
participants in the central level hospital is not perceived as
adequate in spite of the fact that they receive more salary
than the participants in the state level hospital. Even though
the sample is a small representation of the huge body of
human resources working in the government-owned
hospitals at the central level, the findings clearly indicate
that dissatisfaction with the human resource policies of
the central government as related to the amount of
compensation for services rendered in the healthcare sector
may be largely responsible for the dismal quality of
healthcare prevalent in these government-owned hospitals.
Moreover, the positive relationship of salary with
psychological morbidity among healthcare professionals
could also affect the efficiency of the functioning of
government-run hospitals.
Conversely explained, this finding lends support to the

contention that higher levels of co-operation and support
between people working in the different departments and
specialities should have a positive effect on the mental
status of healthcare employees in terms of reduced levels
of psychological morbidity among the different categories
of medical professionals. In a study on 731 staff working in
mental health crisis resolution/home treatment teams in
England, Metcalfe, Metcalfe, Bradley, Mariathasan and
Samele (2008) suggested that creating a culture of engaging
leadership is critical, since it not only predicts the
performance of teams, it also predicts a range of positive
affective outcomes, including high levels of motivation,
job satisfaction, job and organisational commitment, as well
as wellbeing indicators, including high levels of fulfilment,
self-esteem, self-confidence, and reduced levels of stress
and emotional exhaustion. But as the results of the present
study indicated, this finding was relevant only for the
central level hospital while no such positive effects of interprofessional support on the mental health status of
employees emerged in the state-level hospitals.
The third dimension of perceived work environment, namely,
perceived organizational support, also emerged as a
significant predictor of mental health status of medical
professionals in a somewhat unexpected manner. As
hypothesized, perceived organizational support negatively
predicted psychological morbidity and positively predicted
psychological well-being among medical professionals in
the state-level hospitals. Perceived organizational support
was earlier found to be influenced by policies, procedures
and decisions indicative of the organizations concern with
employee welfare and the organizations favourable
evaluation of employee contribution. Previous studies have
already indicated that perceived organizational support was
positively related to perception of HRM practices such as
perceived sufficiency of pay and perceived sufficiency of
family oriented policies and actions (Guzzo, Noonan and
Elron, 1994), high quality employee supervisor
relationships, favourable developmental training
experiences and promotions, (Wayne, Shore & Liden, 1997),
clearly stated guidelines defining appropriate work
However, in the state-level hospital, the duration of service

of participants had significant positive relationship with
their psychological well-being. These results again
confounded the expected patterns of relationships. It is
indeed peculiar that a longer duration of service should
have a positive effect on the psychological well-being of
the health professionals only in the state-level hospitals.
At the conjectural level it may be surmised that a number of
medical professionals in the state medical services may
also be engaged in private consultancy and could thereby
supplement the compensation in terms of salary received
from a regular job. Hence the longer they are in service the
more likely it is that their job adds to their demand as reliable
medical professionals which in turn may enhance their
psychological well-being.
HSB Research Review
Vol. 2 No. 2
July-December 2011
manages to access private nursing home services unless

otherwise crucial to survival; they prefer government or
charity-run hospitals. Upper-class people, on the other
hand, can access nursing home services and other cosmetic
health services. Nursing homes small hospitals, most with
fewer than 25 beds offer fewer medical specialty services
and are owned and operated by physicians who work in
them (Rehman & Qureshi, 2008)
behaviour and job demands, supportive communications

with immediate supervisors and upper management and
procedural justice in performance appraisal decisions
(Moorman, Blakely and Nichoff, 1998). Further, employees
who experienced a strong level of POS theoretically felt the
need to reciprocate favourable organizational treatment with
attitudes and behaviours that in turn could benefit the
organization (Eisenberger et al., 1986). In support of this
social exchange perspective, research has revealed that
POS is positively related to job attendance and measures
of job performance (Eisenberger, Fasolo, & Davis-LaMastro,
1990), the tendency to help co-workers (Shore & Wayne,
1993), the tendency to offer constructive suggestions for
organizational improvement, and affective organizational
commitment. Overall, it appears that employees with higher
levels of POS are likely to be more committed and possibly
more willing to engage in extra role or organizational
citizenship behaviours (Organ, 1988) than are employees
who feel that the organization does not value them as highly.
Additionally, some work also suggests that POS may be
beneficial to the individual as well as to the organization.
In an earlier study of nurses caring for AIDS patients,
George, Reed, Ballard, Colin, and Fielding (1993) reported
that both POS and social support moderated the relationship
between extent of exposure to AIDS patients and negative
mood, such that those with the lowest levels of POS
evidenced the strongest relationship between mood and
exposure. Moreover, perceived organizational support was
reported to be negatively related to negative outcomes for
the organization such as absenteeism and turnover
intentions (Eisenberger et al, 1986).
Large government hospitals generally have better facilities

than nursing homes, but they are widely believed to provide
poor-quality care. They fail to maintain their advanced
equipment, train their technicians and do not publicize their
capabilities to doctors who refer patients (Ensor and Witter,
2001). These conditions have led to dissatisfaction and
demand for high quality medical care owing to critical gaps
in infra structure, workforce satisfaction, equipment,
essential diagnostic reagents and drugs (Arjunan et al.,
2002). As against the state of affairs in government
hospitals, top managers in private hospitals such as those
of LIFENET (Rehman & Qureshi, 2008) motivate staff by
underlying employees important roles. LIFENET hospitals
reportedly consider team spirit essential to an organization
and success as a business. Employees are required to
understand LIFENETs larger mission and many have a
strong sense of community which has grown out of personal
relationships within the departments and an array of
hospital-wide events. Awards are given to recognize dozens
of employees, many from maintenance and housekeeping
departments. Achievements include outstanding
attendance, punctuality, intramural sports achievement and
honesty. Since retention of competent professionals is a
major problem for the government-run healthcare sector,
the present findings indicate that governmental human
resource policies which have mainly targeted the industrial
sector should also focus on the betterment of the hospitals
organizational and work conditions and its effects on the
mental health status of healthcare professionals, as
highlighted by this study, in both the state and central
level government hospitals.
But as against the expected trends, perceived organizational

support had a positive relationship with psychological
morbidity among the participants in the central level
hospital and no significant relationship at all with their
psychological well-being. It is likely that perceived
organizational support may be used by employees as an
indicator of the organizations benevolent or malevolent
intent in the exchange of employee effort for reward and
recognition.
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OCCUPATIONAL
STRESS AND JOB
PERFORMANCE
ABSTRACT
Dr Naresh Kumar
Professor and Chairman, University School of Management,
Kurukshetra University, Kurukshetra
Email ID : nareshkumar@kuk.ac.in
The present study attempts to examine the relationship

between occupational stress (which includes
Organizational Role Stress and Job Related Tension) and
job performance among Information Technology
professionals. The data pertaining to the study have been
collected from 400 Information Technology professionals
working in various Information Technology Multinational
Companies. The obtained results reveal that the
professionals express moderate level of job related tensions
and high level of organizational role stress. Their job
performance is negatively related to organizational role
stress and job related tensions. Both organizational role
stress and job related tensions are found significant
predictors of job performance
Ms Vandana Singh
Research Scholar, University School of Management,
Kurukshetra University, Kurukshetra
Email ID : vandana_10march@yahoo.co.in
Key Words: Job Performance, Organizational Role Stress,

Job related Tensions
INTRODUCTION
Performance is an extremely important criterion that relates
to organizational outcomes and success. Performance refers
to a set of outcomes produced during a certain period of
time, and does not refer to the traits or personal
characteristics of the performer (Romanoff, 1989). Job
performance has two aspects behavior being the means
and its consequence being the end (Gilbert, 1998) Job
Performance is affected by the stress that an individual
feels at his or her workplace, this is generally referred to as
occupational stress. Further, each individual is exposed to
a range of stressors both at work and in their personal lives
which ultimately affect his or her performance. Moderate
level of pressure at work can be positive leading to
increased productivity. However, when this pressure
becomes excessive it has a negative impact. This exposes
an important factor i.e. occupational stress. Based on a
number of different occupational stress theories and
practices Beehr and Franz (1986) identified four approaches
to studying occupational stress: medical, clinical/
counseling psychology, engineering psychology, and
organizational psychology.
The term stress is derived from the Latin word stringere,
which means to draw tight, and was used in this way in
the 17th century to describe a hardship or an affliction
(Cartwright & Cooper, 1997). Later in the 18th century the
term stress referred primarily to an individuals force,
pressure, strain or strong effort. These early definitions
11
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July-December 2011
(1996); Motowidlo et al. (1986); and Westman & Eden (1996),

reported that high job stress leads to low job performance
used in physics and engineering began to influence the

notion that stress may affect individuals, where forces are
seen to exert pressure on an individual, producing strain
(Hinkle, 1977).
Abualrub (2004) investigated that perceived social support

from coworkers enhanced the level of reported job
performance and decreased the level of reported job stress.
It also indicated a curvilinear (U-shaped) relationship
between job stress and job performance; employees who
reported moderate levels of job stress believed that they
performed their jobs less well than those who reported low
or high levels of job stress.
Models of occupational stress (also termed job stress or

work stress) have generally accepted the transactional
model of stress proposed by Lazarus (1966), at least from a
theoretical perspective, suggesting that stress results from
the transaction or the interaction between the individual
and the environment. Empirical work has predominantly
used this interactional approach to assess occupational
stress and its outcomes (Cooper et al., 2001).
Nirmala (2002) revealed that there is significant negative

co relation between the major sources of occupational
stress and job performance.
In the present study the term occupational stress includes,

Organizational Role Stress with sub variables (Inter Role
Distance (IRD), Role Stagnation (RS), Role Expectation
Conflict (REC), Role Erosion (RE), Role Overload (RO), Role
Isolation (RI), Personal Inadequacy (PI), Self-Role Distance
(SRD), Role Ambiguity (RA), and Resource Inadequacy
(RIn)) and job related tensions.
Allen and Gryski (2006) observed that job-related tension

has intensified in recent years with evidence linking it to
lower levels of employee job satisfaction and organizational
productivity.
Lim and Teo, (1999) suggested that most of the factors
which generate stress among IT personnel in Singapore
are linked to various characteristics of their work
environment, particularly to pressures associated with the
job itself and to organizational aspects. Gilboa et al. (2008)
investigated the relationships of work-related stressors
with job performance: role ambiguity, role conflict, role
overload, job insecurity, workfamily conflict,
environmental uncertainty, and situational constraints and
found a negative mean correlation between each job
performance measure and each stressor included in the
analyses
Here an attempt has been made to know how the above

mentioned variables affect the job performance of
individuals (IT professionals) working in highly dynamic
and competitive IT industry
REVIEW OF LITERATURE
Miles and Perreault (1976) identified four different types of
role conflict Viz. Intra-sender role conflict, Inter sender role
conflict, Person- role conflict and Role overload. Brief &
Aldag, (1976) and Greene (1978) revealed that role
incumbents with high levels of role ambiguity respond to
their situation with perceptions of lower performance on
the part of the organization, of supervisors, and of
themselves.
Keijsers et al. (1995) found that high job stress leads to

high job performance. However Anderson, (1976) and
Cohen, (1980) found that people with moderate stress
perform better than those with high or low levels of stress
where as Kousar et al. (2006) revealed that there was no
significant relationship between level of overall stress and
job performance. It was concluded that there was moderate
level of stress, however, no affect of stress was found on
job performance. In view of the above inconclusive findings
an attempt has been made to further probe the relationship
between different dimensions of occupational stress and
job performance as well as job related tensions and job
performance
Brook (1973) reported that qualitative changes in the job

create adjustment problem among employees. The
interpersonal relationships within the department and
between the departments create qualitative difficulties
within the organization to a great extent.
French and Caplan (1972) argued that pressure of both
qualitative and quantitative overload can result in the need
to work excessive hours, which is an additional source of
stress. Having to work under time pressure in order to meet
deadlines is an independent source of stress.
In view of the above research review it was thought

appropriate to design a study on IT professionals as they
are more vulnerable to stress because of their working shifts
which includes the late hour shifts, time pressure and other
role related stressors such as role overload, role isolation,
role ambiguity and self role distance which not only
exacerbates the existing stress but also hinders their ability
to complete their tasks thus leading to lower performance.
Moreover their performance appraisal system is also weekly
designed which to some extent becomes the source of job
related tension thus further increasing the stress level. The
present study attempts to investigate the relationship
Role conflict adversely affects an employees performance.

Empirical studies supporting this relationship was
researched by Jamal (1984); Rabinowitz & Stumpf (1987).
Other researchers have found that role ambiguity adversely
affects job performance. Leicesteret et al. (1991); Bagozzi
(1980) and Breaugh (1980), have supported these results
with similar outcomes involving the relationship between
role ambiguity and job performance
Researchers have investigated the relationship between
occupational stress and job performance. Leveck & Jones
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Vol. 2 No. 2
Job related tension: This index is based on (Kahn et al.,

1964) consisting of 15 statements describing what the
authors judge to be symptoms of conflict or ambiguity.
Respondents are asked to how often they are bothered by
each type of symptom on a 5-point Likert Scale.
Respondents answered each item by choosing one of the
fixed alternative responses: (namely; never bothered; rarely
bothered; sometimes bothered; bothered rather often;
bothered nearly all the time and does not apply). Scores of
1 to 5 are assigned to first five responses and a score of 0
to last response. Respondents total score is his or her
average score over all the items, except those to which he
or she responded does not apply. A range of scores between
0 and 5 is indicated.
between occupational stress and job performance so as to

understand the extent to which these factors jointly
contribute to the poor performance of IT professionals.
Objectives of the study
1)
To Study the relationship between Organizational

Role Stress and Job performance
2)
To Study the relationship between Job Related

Tensions and Job Performance
3)
To study the relationship between Job Related

Tensions and Organizational Role stress
4)
To examine the predictive value of Organizational

Role Stress and Job Related Tensions for Job
Performance of IT professionals in India
Job Performance Scale: The work outcome scale modeled

after (Randell et al., 1990) was used to have fair assessment
of work outcome or job performance of the subjects. The
scale consists of six aspects such as work accomplishment,
dealing with coworker, knowledge of work assigned,
management of time and resources, sharing knowledge and
information with other members and overall work
performance. The rater was required to provide rating of
work performance on each area on an 11 point scale. A
score of 1 being lowest, 11 being highest and 6 being the
moderate. The subjects made self rating about themselves.
They were requested to give fair responses. The reliability
of scale was estimated in terms of inter rater coefficient.
The reliability coefficient was found to be .78 (N=400) which
was regarded as very satisfactory (as mentioned by author)
RESEARCH METHODOLOGY
Sample: A sample of 400 employees working in various IT
companies based in Northern as well as Southern India
was selected. The present data were collected with the help
of standardized tools such as Job Related Tensions (Kahn
et al 1964), Organizational Role Stress (Udai Pareek 1997)
and Job Performance, (Randell et al. 1990).
The obtained data were processed for the computation of
Mean, Standard Deviation (S.D), & Pearsons Correlation
and Multiple Regression. All the Statistical Analysis was
performed with the help of SPSS.
Scoring Procedure and Organizational Role Stress: The
organizational role stress scale (ORS) by Udai Pareek, (1997)
has been used to measure organizational role stress and its
dimensions such as inter-role distance, role stagnation, role
expectation conflict, role erosion, role overload, role
isolation, personal inadequacy, self role distance, role
ambiguity and resource inadequacy. ORS is a five point
scale, containing five items for each role stress and a total
of 50 statements. The answer sheet is also used for scoring.
The total scores on each role stress range from 0 to 20. To
get the total score for each role stress, the ratings given are
totaled horizontally as shown in table below. Retest
reliability coefficients were calculated for a group of about
500 employees from three banks. The scale has acceptable
reliability (as mentioned by author)
Statement number
1 11 21 31 41
2 12 22 32 42
3 13 23 33 43
4 14 24 34 44
5 15 25 35 45
6 16 26 36 46
7 17 27 37 47
8 18 28 38 48
9 19 29 39 49
10 20 30 40 - 50
July-December 2011
RESULTS
Descriptive Analysis: The collected data was analyzed with
the help of descriptive statistics. Skew ness and kurtosis
describes the pattern of scores distribution.
The scores of employees on 13 variables including 1 of Job
Performance, and 12 of Occupational Stress Viz. Inter Role
Distance, Role Stagnation, Role Expectation Conflict, Role
Erosion, Role Overload, Role Isolation, Personal
inadequacy, Self-Role Distance, Role Ambiguity, Resource
Inadequacy, Overall organizational role Stress and Job
Related Tensions have been shown in table 1. All the
measures of occupational stress barring overall
organizational role stress and self-role distance are
positively skewed and the measure Job Performance is
negatively skewed.
Dimension
Inter Role Distance
Role Stagnation
Role Expectation Conflict
Role Erosion
Role Overload
Role Isolation
Personal Inadequacy
Self Role Distance
Role Ambiguity
Resource Inadequacy
Careful inspection of mean of variable job performance

(57.78) shows that the IT professionals are performing at
high level as mean score on job performance is greater than
36 (i.e. standard mean).
The IT professionals perceive high level of stress on most
of the measures of organizational role stress such as: inter
role distance, role stagnation, role expectation conflict, role
overload, role isolation, personal inadequacy, self role
distance, role ambiguity, resource inadequacy, except for
role erosion which is at moderate level as the mean score is
13
HSB Research Review
Vol. 2 No. 2
oh job related tensions) have been computed by applying

Pearsons product moment method of correlation. It may be
noted that correlation coefficients of .197 and .257 are
significant at .05 and .01 levels respectively.
greater than 8 (i.e. the standard mean) for all the measures
of organizational role stress. IT professionals also perceive
moderate level of job related tensions as it is clear from
their mean score (40.58) on the measure of job related
tensions (standard mean = 35)
An inspection of inter correlation matrix table 2 reveals

that job performance (JP) correlates negatively with all the
measures of organizational role stress i.e. -.349 (p<.01) with
Inter Role Distance (IRD), -.290 (p<.01) with Role Stagnation
(RS), -.374 (p<.01) with Role Expectation Conflict (REC), .295 (p<.01) with Role Erosion (RE), -.327 (p<.01) with Role
Overload (RO), -.267 (p<.01) with Role isolation, -.327
(p<.01) with Personal Inadequacy (PI), -.356 (p<.01) with
Self- Role Distance (SRD), -.297 (p<.01) with Role Ambiguity
(RA), -.306 (p<.01) with Resource Inadequacy (RI) and .555 (p<.01) with overall organizational role Stress (OS).
This Interpretation reveals that higher the organizational
role stress lower is the performance.
Table 1. Summary of Descriptive Statistics

(N=400)
S.
Variables
Mean
1
2
3
4
Job Related Tensions

Inter Role Distance
Role Stagnation
Role Expectation
Conflict
Role Erosion
Role Overload
Role Isolation
Personal Inadequacy
Self Role Distance
Role Ambiguity
Resource Inadequacy
Overall Organizational
Role Stress
Job Performance
40.57
9.50
9.96
9.87
5
6
7
8
9
10
11
12
13
Std.
kewness Kurtosis
Deviation
7.01
1.60
3.40
2.55
0.22
-0.53
2.61
0.13
-0.60
2.54
0.19
-0.12
10.03
9.68
9.39
9.67
9.45
9.55
9.61
96.75
2.63
2.72
2.73
2.70
2.43
2.50
2.64
14.98
0.16
0.18
0.15
0.14
0.07
0.11
0.2
-0.28
-0.34
-0.26
-0.75
-0.59
-0.38
-0.40
-0.48
-0.72
57.78
3.35
-0.46
-0.52
Further, Job Related Tensions (JRT) correlates -.127 (p<.01)

with Role Expectation Conflict (REC), -.161 (p<.01) with Role
Erosion (RE), -.157 (p<.01) with Role Overload (RO), -.205
(p<.01) with Role Isolation (RI), -.105 (p<.05) with Personal
Inadequacy (PI), -.125 (p<.05) with Self- Role Distance
(SRD), -.108 (p<.05) with Role Ambiguity (RA), -.168 (p<.01)
with Resource Inadequacy (RI) and -.228 (p<.01) with
overall organizational role Stress (OS). All the inter
correlations between job related tensions and measures of
organizational role stress are negative thus indicating
Correlation Analysis: The obtained data were analyzed

with the help of correlation analysis. The inter correlation
among the 13 variables, 1 of Job Performance and 12 of
Occupational Stress (11 of organizational role stress and 1
Table 2. Inter Correlations Matrix
Job related
tensions
Inter Role
Distance
Role
Stagnation
Role
Expectation
Conflict
Role
Erosion
Role
Overload
Role
Isolation
Job
Inter
Role
related Role
Stagnatensions Distance tion
Role
Role
expectation Erosion
Comflict
July-December 2011
Role
Role
Personal
Self
Role
Resource Overall
Job
Overload Isolation Inadequacy Role
abiguity Inadequacy Organizational Performance
Distance
Role Stress
-0.051
-0.093
-.127(*)
-.161(**) -.157(**)
-.205(**) -.105(*)
-.125(*)
-.108(*) -.168(**)
-.228(**)
-0.005
.223(**)
.258(**)
197(**)
.262(**)
.165(**)
.293(**)
.233(**)
.202(**) .234(**)
.531(**)
-.349(**)
.278(**)
.253(**)
.227(**)
.200(**)
.219(**)
.277(**)
.158(**) .220(**)
.532(**)
-.290(**)
.371(**)
.281(**)
.311(**)
.299(**)
.276(**)
.269(**) .260(**)
.625(**)
-.374(**)
.300(**)
.207(**)
.143(**)
.232(**)
.145(**) .225(**)
.536(**)
-.295(**)
.245(**)
.267(**)
.234(**)
.212(**) .292(**)
.584(**)
-.327(**)
.269(**)
.291(**)
.244(**) .311(**)
.570(**)
-.267(**)
.338(**)
.261(**) .268(**)
.588(**)
-.327(**)
.368(**) .363(**)
.621(**)
-.356(**)
.315(**)
.546(**)
-.297(**)
.608(**)
-.306(**)
-.555(**)
Personal
Inadequacy
Self Role
Distance
Role
Ambiguity
Resource
Inadequacy
Overall
Organizational
Role Stress
Job
Performance
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HSB Research Review
Vol. 2 No. 2
The regression equation, in score form, indicates that for every

unit increase in Job Related Tension, job performance (Y)
decreases by .145 units. (Here the Job related Tension has
emerged as negative predictor). In the same way, individual
contribution of each of the predictors can be calculated
thereby that job related tensions and organizational role

stress are independent in nature. It is appropriately clear
that job related tensions has negative but not significant
relation with job performance and all the measures of
organizational role stress are negatively but significantly
related to job performance.
Table 3 shows that multiple correlation (R) between the

predictors and dependent measure is .526. The obtained F
for the significance of multiple R equals to 12.32. The
degrees of freedom being 12 and 387, the F is significant
beyond .001 probability level. The findings clearly indicate
that the variables job related tensions and organizational
role stress have significant impact on job performance. The
square of multiple R (R2) being .28 hereby suggests that all
the 12 variables jointly account for only 28 % of total
variance in Job Performance of an IT professional.
Regression Analysis: The above correlation represents the

association between job performance, organizational role
Stress and job related tensions. But to assess the degree of
relationship between the dependent variable and the
independent variables regression analysis is applied. Thus
in order to examine the extent to which the set of all these
variables predict the variance in job performance,
organizational role stress and job related tensions, the
multiple Regressions were worked out for IT professionals
working in various multinational companies in India.
DISCUSSION
TABLE 3. Parameters/Coefficients in Regressions

N=400
S. Predictors
Regression
Coefficients b
(Constant)
40.651
1 Job Related Tensions
-.145
2 Inter Role Distance
-.407
3 Role Stagnation
-.382
4 Role Expectation Conflict
-.412
5 Role Erosion
-.445
6 Role Overload
-.491
7 Role Isolation
-.568
8 Personal Inadequacy
-.479
9 Self Role Distance
-.509
10 Role Ambiguity
-.442
11 Resource Inadequacy
-.595
12 Overall Organizational role Stress -.594
40.57
9.50
9.96
9.87
10.03
9.68
9.39
9.67
9.45
9.55
9.61
96.75
Dependent Measure Job Performance
57.78
Multiple R = .526
Standard Error of Measurement
F=12.318
July-December 2011
The findings of the present study reveals that all the

measures of occupational stress share its variance with job
performance negatively, which mean that, increase in
occupational stress decreases the job performance. The
findings of the study are in conformity with the earlier
researches conducted by Brief & Aldag (1976); Greene
(1972), they reported that role incumbents with high levels
of role overload, role conflict and role ambiguity show lower
levels of performance. Similarly, Jamal (1984) reported that
role conflict adversely affects an employees performance
which is in conformity with the results of the present study.
Leveck & Jones (1996); Motowidlo et al. (1986) reported
that high job stress leads to low performance which is in
conformity with the results of the present study. Westman
& Eden (1996) and Gilboa et al. (2008) in their investigation
found that work related stressors such as role ambiguity,
role overload and role conflict show negative mean
correlation with job performance which is in conformity
with the results of the present study. However, Keijers et
al. (1995) found that high job stress leads to high job
performance which is not in conformity with the results of
the present study. The findings of the presents study
reveals that no doubt the IT professionals are under high
stress but perform at high rate. This may be because of
work culture, normative requirements or rapid performance
appraisal system adopted by the multi national companies.
The measure job related tension share its variance with job
performance.
Mean
R2= .28
3.255
DF=12 and 387
A general equation of multiple regressions that involves all

the 12 predictors (e.g. X1 to X12) and one dependent variable
(Y) can be stated as under:
Y = a + b1X1 + b2 X 2 + b3 X 3 + b4 X 4 + b5 X 5 +
+ b12 X12
Where, X1,X2,X12 refers to Job Related Tensions
and other measures of occupational stress, Y refers to
Job Performance and a is Constant
The findings with regard to predictive value of occupational

stress for job performance are of important implication in
the field of organizational behavior. The results of
regression and correlation show that organizational role
stress and job related tensions jointly account for 28 per
cent variance in job performance of IT professionals.
By substituting the values of regression coefficients (table

3) of all predictors and constant, the complete regression
equation can be read as:
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16
HSB Research Review
Vol. 2 No. 2
MULTIVARIATE
PROFITABILITY
ANALYSIS OF INDIAN
GENERAL INSURANCE
COMPANIES: A STUDY
OF POST REFORM
PERIOD
July-December 2011
ABSTRACT
The contours of insurance business have been changing
across the globe and the rippling effect of the same can be
observed in the Indian market as well. The insurance
industry of India has started to reveal the potential after
the process of reforms which resulted in to liberalization,
privatization and globalization of insurance industry in
India. Now it has become quite tough for the companies to
work in a competitive environment and there is uncertainty
regarding the effect of these reforms on the profitability of
these companies which is important for the safety and
soundness of insurance industry. The present study is an
endeavor to examine the effect of reforms on the profitability
performance of the various public sector and private sector
general insurance companies, and identifies the gap in the
performance so as to make suggestions thereof. The study
brings out that public sector has exhibited higher
underwriting losses in the post-reform period and the higher
investment return of the public sector general insurance
companies has compensated their underwriting losses. The
higher investment income of the public sector general
insurance companies is due to their aggressive investment
portfolio policy and better performance of share market in
the recent past. But the prospects for a rapid improvement
in investment return are currently uncertain. Given these
uncertain prospects of investment return, the public sector
general insurance companies must focus on sustainable
profitability business model by emphasizing on
improvement in the underwriting results to achieve greater
profitability and to achieve better underwriting results.
Dr Manjit Singh
Associate Professor, School of Applied Management,
Punjabi University, Patiala, Punjab
Email id: smanjitt@gmail.com
Dr Rohit Kumar
Assistant Professor, Punjabi University College, Moonak,
Sangroor, Punjab
Key Words: Combined Ratio, Underwriting Results,

Investment Income, Return on Equity
INTRODUCTION
The insurance industry has also succumbed to the general
trend towards globalized markets and risks and as such the
insurance industry in India has seen an array of changes in
the past one decade. This general trend is evident in the
fact that in recent years there has clearly been more rapid
growth in global trade, direct investment and portfolio
investments than in the production of goods and services.
Liberalization of insurance services involves removing
restrictions to foreign and domestic investment and
allowing firms the freedom to set rates. The benefits of
liberalization of the insurance markets are multi-faceted.
Foreign insurance companies can enhance the efficiency
17
HSB Research Review
Vol. 2 No. 2
July-December 2011
at its disposal. The underwriting results showed losses in

about all the years except 1993-94. Rudolf (2001) examined
the key factors and latest trends determining profitability
in the major non-life insurance markets. The results
indicated that only Germany and Japan did not have
negative underwriting results and return on equity was high
in UK, moderate in Canada and US, and low in France and
Germany. The study found that underwriting result and
investment yield are negatively correlated. Brien (2001),
indicated that there was strong evidence that the new
entrants have had high growth rates (in new businesses
and assets) but, from a low base, they have made little
impact in terms of market share. Lai and Limpaphayom
(2003) examined the relation between organisational
structure and firm performance in the Japanese non-life
insurance industry. The results indicated that the stock
companies that belong to one of the six horizontal Keiretsu
groups have lower expense and lower levels of free cash
flow than independent stock and mutual insurance
companies. Keiretsu insurers also have higher profitability
and higher loss ratios than independent insurers. Oetzel
and Ghosh (2008), in his paper, explored the relationships
between market liberalization and insurance firms
performance in emerging markets and developing countries.
The results of the analysis suggest that the host country
liberalization is positively associated with firm profitability
for all insurers, foreign and local, operating in a given host
country. No significant profitability differences were found
between foreign and locally owned firms, although U.S.
owned subsidiaries were significantly less profitable than
subsidiaries from any other country. Dhanda (2004), in his
study titled, Divisional Performance Evaluation of LIC
Business in North Zone evaluated the performance by
using both primary and published information. The
profitability analysis showed that more than 60 per cent of
total income was received by way of premium income and
the remaining income was earned by investing funds. Chen
and Wong (2004), in their research paper, analysed the
solvency of general and life insurance companies in Asia
using firm data and macro data separately. The research
indicated that the financial health of a Singapore insurer
seems to be significantly weakened by the Asian financial
crisis as the insurance industry in different Asian
economies is at different stages of development. They
require different regulatory guidelines. Hoyt and Powell
(2006) analysed the financial performance of medical liability
insurer by using two appropriate measures, namely, the
economic combined ratio and the return on equity. The
study found that there was no evidence that medical
liability insurers had been earning excessive returns or that
they were over-capitalized. Kasturi (2006), focused on the
performance management system in the insurance
corporation in general based on the principles of
performance management in the service organization. The
study reveals that success of an insurance company
depends on four important functions, such as identification
of the local insurance markets by providing superior

customer services, introducing new products and
transferring technological and managerial know- how. It
increases competition and encourages a more pronounced
specialization according to comparative advantage.
As a result of the various reforms introduced by the
Government of India in the insurance sector, private
companies in collaboration with some foreign companies
have made their entry into the field. It has thrown a new
challenge before the public sector companies. Now it has
become quite tough for the companies to work in a
competitive environment. It has resulted in reduction of
product prices, increases in distribution cost and better
service quality. There is uncertainty regarding the effect of
these reforms on the profitability of these companies which
is important for the safety and soundness of insurance
industry and the present study is an endeavour to examine
the profitability of the various general insurance companies
in the post reform period.
The Indian insurance industry come to a full wide circle
from being a competitive market to nationalisation and once
again to a liberalized and highly competitive market. The
researchers have explored and probed this sector
worldwide. Chidambaran et al. (1997) presented an empirical
analysis of the economic performance of the U.S. propertyliability insurance industry, using estimation across 18 lines
of insurance for the years 1984 through 1983. The study
adopted an industrial organisation at approach, focusing
on the economic loss ratio as a measure of pricing
performance. The research found that there are still
questions about performance that are related to industry
concentration. One explanation is that higher concentration
is conducive to the muting of pricing rivalry. Another is
that higher differences in firm efficiency result in both higher
concentration and higher profit rates. Baltelsmit and
Bouzouita (1998) examined the relationship between
profitability and market structure in automobile insurance
and tests for the existence of a positive relationship between
concentration and performance. The results showed a
significant positive impact of concentration on profitability
for combined liability and physical damage lines in private
passenger automobile insurance. Rao (1998) examined the
efficiency of the LIC, in physical and financial terms. There
has been a significant improvement in the physical
performance of the LIC. But the financial performance in
terms of profitability had not been up to the expected level.
Verma (2000) evaluated the performance of the GIC and its
subsidiary companies over the years, throwing light on the
probable effects of the various insurance sector reforms
on the future development of General Insurance in the
country. The study found that the GIC along with its
subsidiaries has emerged not only as a strong insurance
institution but also as an influential institutional investor
in the financial market of India due to large amount of funds
18
HSB Research Review
Vol. 2 No. 2
of markets, assessment of risks and estimation of losses,

penetration into and exploitation of markets, control over
investment and operating costs. Mahmoud (2008) observed
that the mean of efficiency of financial performance, ratios
of the public and private sectors do not vary significantly
for the following ratio returns on investments, net profit to
total assets, net profit to surplus, total liabilities to total
assets, and underwriting expenses paid to premiums written.
July-December 2011
of the decomposition shows that an insurers ROE is

determined by earnings after taxes realized for each unit of
net premiums (or profit margin) and by the amount of capital
funds used to finance and secure the risk exposure of each
premium unit (solvency). The after-tax profit margin equals
the pre-tax profit margin times one minus the corporate tax
rate. The tax rate depends upon individual tax strategies
and is otherwise an exogenous parameter of the industry.
The pre-tax profit margin is the sum of the underwriting
result (or underwriting margin) and the investment result.
The investment result is determined by total investment
yield (relative performance including realized capital gains)
multiplied by invested assets (asset leverage).The
underwriting result - in per cent of net premiums - is
determined by the loss ratio, the expense ratio (Rudolf,
2001). The benefit of this type of decomposition is to
separate the various factors affecting profitability, isolating
them for further analysis. Though they will be analyzed
separately, they are interrelated through the decisionmaking processes of insurers.
The above review indicates that the measuring of

profitability of general insurance companies in developed
countries like Europe, United States, and Canada etc. has
attracted much attention from researchers, at the
international level. But no worthwhile research has been
conducted to find out the determinants of profitability of
the general insurance companies in the liberalization era in
the Indian context and the factors contributing for this
difference. This gap in the research is particularly notable,
because in this liberalized world, the public sector general
insurance companies survival depends upon their
improved performance on profitability. So, this paper tries
to fill this research gap and evaluate the impact of
liberalisation on the profitability of the public sector as
well as private sector general insurance companies.
To have a better view of the performance of general

insurance companies the ratios have been analyzed and
interpreted by calculating mean, median and standard
deviation. The hypotheses regarding profitability have been
tested by the application of Mann-Whitney test.
OBJECTIVES AND METHODOLOGY OF THE STUDY

The present study attempts to appraise the comparative
profitability of the public sector and the private sector
general insurance companies, examines the factors affecting
the profitability of public and private sector general
insurance companies, and identifies the gap in the
profitability and to make suggestions to improve the
profitability of the general insurance industry in India. The
study is mainly based on the secondary data which has
been collected from IRDA annual reports, annual reports
of Non-life Insurance companies, various journals related
to insurance, websites etc. The reforms in the insurance
industry were initiated in the year 1999 and the private
sector Non-life Insurance companies started their business
in 2000. A total of eight private sector Non-life Insurance
companies started their business from the year 2002-03.
So, to analyze the comparative profitability of the public
sector and private sector insurance companies in the postreform period, all the four public sector companies and eight
private sector companies were taken up for the study. The
period of the study was 2002-03 to 2007-08. The null
hypothesis of the study is that the profitability of the private
sector general insurance companies is significantly higher
than that of the public sector general insurance companies
RESULTS AND DISCUSSION

To examine the impact of selected factors on public sector
general insurers profitability and to empirically test, which
of the identified variables have significantly contributed
towards general insurers profitability in either direction,
the Spearmans rank correlation analysis and multiple stepwise regression analysis have been used. The Spearmans
rank correlation has been used due to skewed data of
profitability parameters. The return on equity has been
taken as dependent variable whereas claim, expense,
underwriting results, investment income, net retention and
growth rate has been taken as independent variables.
Combined Ratio
This ratio reflects the combined effect of expenses of
management and claim incurred. It is the most common
measure of underwriting profitability. Financial analysts rely
on it for comparing the profitability of insurance business
of different companies and for comparing different lines of
business. The companies use it for steering their business
(Holzheu, 2006).
The results reveal that the average combined ratio in the
case of public sector general insurance companies during
the period 2002-03 to 2007-08 is 120.15 per cent, whereas it
is 90.74 per cent in private sector insurance companies. It
is evident that combined ratio of the public sector is higher
by 29.41 per cent than the private sector. This has been due
to higher claim ratio of the public sector. Both the public
and private sector general insurance companies showed a
standard deviation of 8.89 per cent and 29.95 per cent
To analyze the drivers of profitability, it is useful to

decompose ROE into its main components. Profits are
determined first by underwriting performance (losses and
expenses, which are affected by product pricing, risk
selection, claims management, and marketing and
administrative expenses); and second, by investment
performance, which is a function of asset allocation and
asset management as well as asset leverage. The first fork
19
HSB Research Review
Vol. 2 No. 2
July-December 2011
Table 1. Combined Ratio of General Insurance Companies during the Post-reform Period
Name of the
Company
2002-03
2003-04
2004-05
2005-06
2006-07
National
106.40
116.18
113.03
143.63
116.05
New India
113.28
117.71
114.28
122.39
109.16
Oriental
110.93
119.79
123.29
120.73
111.56
United India
119.89
124.40
133.91
138.53
122.72
Mean
112.62
119.52
121.13
131.32
114.87
Median
112.10
118.75
118.78
130.46
113.80
S.D.
5.62
3.57
9.67
11.48
5.960
Royal Sundaram 92.04
90.84
89.92
87.67
87.07
Reliance
89.47
91.84
85.54
86.32
54.50
IFFCO-Tokio
60.97
75.78
72.91
74.55
96.71
TATA AIG
84.69
82.15
86.80
84.95
93.39
Bajaj Allianz
87.33
80.14
69.58
80.64
79.09
ICICI Lombard 95.44
47.02
66.35
76.55
77.35
Cholaman Dalam 262.67
94.27
95.28
105.86
81.07
HDFC CHUBB 153.83
83.09
101.24
101.08
111.80
Mean
115.81
80.64
83.45
87.20
85.12
Median
90.75
82.62
86.17
85.63
84.07
S.D.
64.88
15.01
12.59
11.10
16.77
Source: Compiled from IRDA Annual Reports from 2002-03 to 2007-08.
2007-08
Mean
123.60
115.09
123.57
123.42
121.42
123.49
4.22
91.69
92.27
95.13
90.42
82.53
92.87
82.56
110.01
92.18
91.98
8.58
119.82
115.32
118.31
127.14
120.15
119.84
8.89
89.87
83.32
79.34
87.07
79.89
75.93
120.28
110.18
90.74
87.2
29.94
(Percentage)
Median
S.D.
116.12
114.69
120.26
123.91
119.84
12.92
4.45
5.67
7.33
8.89
90.38
87.90
75.17
85.88
80.39
76.95
94.78
105.63
87.20
2.08
14.39
13.90
4.14
5.83
17.87
70.35
23.68
29.95
Test of Significance
Test
Mann- Whitney Test
Ratio
Combined Ratio
Z-value
-6.236
Asymp. Sig. (2-tailed)

0.00
cent which clearly indicates that the variation in underwriting

results of the private sector general insurance companies
is higher. The Mann-Whitney test also reveals that there is
a significant gap between underwriting losses of the public
and private insurers. The main reason for higher
underwriting losses of the public insurers is mainly ascribed
to low reinsurance of their business and higher expenses
of management and incurred claim. Their excessive
management expenses have been higher due to massive
strength of manpower. On the other hand, private companies
get most of their business reinsured to reduce their losses
from underwriting. Moreover, they have minimum staff
strength and advanced technology at their disposal. So,
public sector general insurance companies need to reduce
the staff strength and use more advanced technology to
compete with the private sector. The general insurance
business in India has been de-tariffed with effect from 1st
January, 2007; and even companies are allowed to change
the policy wordings with effect from 1st April, 2008. Now, it
is the right time for the public sector to revisit their loss
making portfolios to improve upon their underwriting
results.
respectively. It indicates that the variation in the combined

ratio of the private sector general insurance companies is
higher. The results of Mann-Whitney test also indicate that
the combined ratio of the public sector is significantly
higher than that of the private sector general insurance
companies.
Underwriting Results Ratio
The underwriting results ratio of a general insurance
company is depicted by taking net written premium minus
increase in the unexpired risk reserve minus expense of
management minus claim incurred minus commission. The
underwriting results indicate the performance of an
insurance company from core insurance business. The
underwriting results ratio is calculated by dividing
underwriting results to net written premium.
It is clear that the average underwriting results ratio of the
public sector general insurance companies is -23.35 per
cent and that of private sector companies is -15.55 per cent.
Thus, the underwriting losses of public sector companies
are higher as compared to the private sector companies.
However, the private insurers showed decreasing trend
except during the year 2007-08. The standard deviation of
the underwriting results ratio of the public insurers is 7.79
per cent, whereas that of the private insurers is 40.35 per
Investment Income Ratio

Investment performance discloses the effectiveness and
efficiency of investment decisions. As such, investment
20
HSB Research Review
Vol. 2 No. 2
July-December 2011
Table 2. Underwriting Results Ratio of General Insurance Companies during the Post-reform Period
Name of the
Company
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
Mean
National
New India
Oriental
United India
Mean
Median
S.D.
Royal Sundaram
Reliance
IFFCO-Tokio
TATA AIG
Bajaj Allianz
ICICI Lombard
Cholamandalam
HDFC CHUBB
Mean
Median
S.D.
-14.14
-13.82
-13.21
-19.08
-15.06
-13.98
2.70
-21.59
-41.10
-4.57
-19.27
-2.07
-34.05
-237.78
-147.39
-63.48
-27.82
84.29
-21.00
-18.96
-22.77
-25.09
-21.95
-21.88
2.60
-6.24
-15.63
-0.61
-6.02
0.39
13.90
-44.95
-38.15
-12.17
-6.13
20.01
-18.96
-17.57
-27.56
-34.37
-24.62
-23.26
7.86
-3.98
-8.02
1.79
0.79
7.81
0.84
-15.88
-12.42
-3.63
-1.595
7.98
-40.64
-27.50
-26.52
-39.94
-33.65
-33.72
7.68
-3.65
10.86
-2.21
-0.15
3.29
-4.65
-16.17
-4.77
-2.18
-2.93
7.69
-19.13
-13.72
-18.12
-28.90
-19.97
-18.62
6.40
-1.43
-6.07
-2.39
-1.61
1.55
-3.82
-1.15
-6.41
-2.67
-2
2.66
-28.92
-17.18
-23.65
-29.62
-24.84
-26.28
5.76
-8.05
-20.49
-8.43
-4.46
-1.77
-4.82
-5.06
-20.47
-9.19
-6.55
7.27
-23.80
-18.12
-21.97
-29.50
-23.35
-21.88
7.78
-7.49
-13.41
-2.74
-5.12
1.53
-5.43
-53.50
-38.27
-15.55
-4.71
40.34
(Percentage)
Median
S.D.
-20.07
-17.38
-23.21
-29.26
-21.89
9.55
5.05
5.42
7.23
7.79
-5.11
-11.83
-2.30
-3.04
0.97
-4.24
-16.03
-16.45
-4.71
7.27
17.28
3.50
7.39
3.68
15.72
91.57
54.83
40.35
Source: Compiled from IRDA Annual Reports from 2002-03 to 2007-08.

Test
Mann- Whitney Test
Ratio
Z-value
Underwriting Results Ratio -4.539
performance becomes critical to the financial solidity of an

insurer. The investment performance is negatively
correlated to insolvency rate (Chen and Wong, 2004). It is
also a function of asset allocation and asset management
as well as asset leverage. The investment income ratio is
determined by investment income to net written premium.

0.00
Return on Equity Ratio

Return on Equity Ratio indicates how well the resources of
the owners have been used (Anthony and Reece, 1995). It
measures the return accruing to owners capital. It is
computed by dividing profit after tax to Net worth. Table 4
shows the return accruing to owners capital in the General
Insurance companies under study.
The results presented in the Table 3 indicate that the

average investment income ratios of the public and private
insurers are 40.27 per cent and 19.11 per cent respectively.
Thus, it is 21.16 per cent higher in the case of public sector
insurers. The standard deviation of investment income ratio
of the public insurers is 10.61 per cent, while it is 28.44 per
cent in the case of private insurers which explains more
variation in the investment income of the private insurers.
It brings out that the private sector has accumulated fewer
underwriting losses and generated less investment income
and having been in business much longer, the public sector
companies have considerable investment portfolios and
have benefited greatly from the strong performance of the
Indian economy. The substantial investment portfolios of
the public sector have compensated for their relatively
weaker underwriting performance. The Mann-Whitney test
also indicates that the gap in the investment income of
public sector insurance companies is significantly greater
than that of the private sector.
The analysis provides that the average return on equity of

the public sector insurers is 14.89 per cent, and that of
private sector insurers is 5.36 per cent which means the
public sector insurers earn 9.53 per cent higher average
return on equity than the private insurers. The MannWhitney test also indicates that there is a significant gap
between the return on equity of the public and private
insurers. The return on equity of the public insurers is
significantly higher than that of the private insurers.
Therefore, the study rejected the hypothesis that the
profitability of the private insurers is significantly higher
than that of the public insurers.
On the basis of above analysis, it can be concluded that the
private sector General Insurance companies have shown better
efficiency in terms of combined ratio which resulted into lower
underwriting losses. A closer investigation of the product
portfolio, through their annual reports, reveals that it is mainly
21
HSB Research Review
Vol. 2 No. 2
July-December 2011
Table 3. Investment Income Ratio of General Insurance Companies during the Post-reform Period
Name of the
Company
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
Mean
National
New India
Oriental
United India
Mean
Median
S.D.
Royal Sundaram
Reliance
IFFCO-Tokio
TATA AIG
Bajaj Allianz
ICICI Lombard
Cholamandalam
HDFC CHUBB
Mean
Median
S.D.
22.80
25.05
25.38
32.07
26.33
25.21
3.99
17.48
121.80
18.25
12.31
11.47
33.45
168.67
42.94
53.30
25.85
59.09
26.42
34.85
46.39
43.95
37.90
39.40
9.12
11.45
47.02
11.26
11.18
10.68
19.62
32.16
14.05
19.68
12.75
13.23
24.19
38.32
48.79
49.26
40.14
43.55
11.77
6.67
22.58
8.01
9.92
8.11
16.01
12.03
8.48
11.48
9.20
5.37
37.64
47.96
44.69
62.92
48.30
46.32
10.65
7.10
27.06
7.49
8.94
7.45
12.12
13.19
9.36
11.59
9.15
6.63
36.94
47.46
40.29
51.96
44.16
43.87
6.80
8.44
6.34
9.83
9.13
8.55
9.37
9.88
10.99
9.07
9.25
1.36
37.04
47.74
39.71
54.75
44.81
43.72
8.03
9.01
7.78
9.97
9.54
10.64
12.61
8.23
8.59
9.55
9.275
1.54
30.84
40.23
40.88
49.15
40.27
40.00
10.60
10.03
38.76
10.80
10.17
9.48
17.20
40.69
15.74
19.11
10.66
28.44
(Percentage)
Median
S.D.
31.68
42.89
42.49
50.61
40.00
7.08
9.29
8.36
10.47
10.61
8.73
24.82
9.90
9.73
9.60
14.31
12.61
10.18
10.66
4.02
43.30
3.90
1.32
1.65
8.71
63.30
13.49
28.44
Source: IRDA Annual Reports from 2002-03 to 2007-08.

Test
Ratio
Z-value
Mann- Whitney Test
Investment Income Ratio
-5.758
0.00
table used to display correlation coefficients between these

variables. Matrices form the basis for computation and
understanding of the nature of relationships in multiple
regressions, discriminate analysis, factor analysis, and
many other similar techniques. One sample t-test is used as
a parametric tool for testing the significance of correlation
coefficient. The study aimed at identifying the most
important independent variable(s) which has higher
significant association with the dependent variable. The
degree of association, i.e., strength and direction of
correlation coefficients, between the selected variables and
public sector insurers profitability is studied for both the
public and private sector companies during the post-reform
period, and the correlation matrices are given in following
Tables.
ascribed to the fact that the private companies are concentrating

more on the creamy business. In respect of loss making
portfolio, such as motor business, they have avoided to enter
this business to reduce their claim incurred ratio. Further
investigation reveals that public sector insurance companies
do not get much of their business reinsured in contrast to the
private sector players, who get most of the business reinsured
to reduce their claim incurred ratio. But the higher investment
return of the public sector offsets their underwriting losses
and resulted into their better operating, net earning and returns
on equity ratios. The main reason for higher investment income
of the public sector companies is their higher net retention
which enables these companies to use more premium in
investment. So, in order to increase the investment income
and profitability, the private sector companies need to increase
their net retention. In general, the strong capital base of public
sector companies has enabled them to retain more of their
portfolio, and private insurers with lower capitalization (and
hence lower capacity to retain risks) have resorted to higher
utilization of reinsurance resulted in lower net retention.
It can be seen from the Table 5 that only one independent

variable, viz. investment income ratio has a significant
positive correlation with return on equity and the coefficient
is 0.532. All other independent variables have insignificant
correlation with return on equity. Few independent variables
have also significant correlation with one another during
the post-reform period, such as expense of management
ratio and claim ratio have a significant negative correlation
with underwriting results and their coefficients are -0.551
and -0.762 respectively. Underwriting results have
Multivariate Profitability Analysis of the General

Insurance Companies in the Post-reform Period
Interdependence among variables is a common characteristic
of most multivariate techniques and correlation matrix is a
22
HSB Research Review
Vol. 2 No. 2
July-December 2011
Table 4. Return on Equity Ratio of General Insurance Companies during the Post-reform Period
Name of the
Company
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
Mean
National
New India
Oriental
United India
Mean
Median
S.D.
Royal Sundaram
Reliance
IFFCO-Tokio
TATA AIG
Bajaj Allianz
ICICI Lombard
Cholamandalam
HDFC CHUBB
Mean
Median
S.D.
12.58
7.52
7.59
11.83
9.88
9.71
2.70
-3.54
15.64
5.94
-10.46
8.77
3.11
-2.96
-6.32
1.27
0.07
8.65
6.39
14.97
28.20
21.22
17.69
18.09
9.27
6.17
6.79
8.66
12.39
16.52
14.07
-4.33
-18.58
5.21
7.72
11.52
10.78
9.32
23.30
15.16
14.64
12.97
6.28
3.85
4.21
12.42
9.79
26.36
19.38
-2.35
-6.68
8.37
7.00
10.97
-9.57
14.90
17.25
18.04
10.15
16.07
13.21
6.17
9.40
5.22
6.98
19.31
13.49
-2.20
3.54
7.74
6.57
6.49
29.39
24.25
24.55
19.16
24.34
24.4
4.17
14.88
0.63
9.14
8.85
18.68
8.62
8.80
1.60
8.90
8.82
6.01
10.49
20.09
0.46
19.46
12.62
14.97
9.21
2.66
-27.27
2.36
6.22
18.29
9.56
4.96
-11.33
0.68
3.81
13.99
10.01
15.17
16.89
17.48
14.89
15.06
8.91
5.03
1.57
7.29
5.63
17.99
11.37
0.32
-6.30
5.36
6.19
10.04
(Percentage)
Median
S.D.
10.64
14.94
20.28
18.60
15.07
12.49
6.32
10.81
3.42
8.92
5.01
5.50
7.30
7.92
18.49
11.53
-2.28
-6.50
6.20
6.00
15.01
3.52
8.18
5.65
5.57
5.28
8.19
10.05
Source: IRDA Annual Reports from 2002-03 to 2007-08.

Test
Mann- Whitney Test
Ratio
Z-value
Return on Equity Ratio
-3.93

0.00
Table 5. Spearmans Correlation of Public Sector General Insurance Companies during Post-reform Period
Return on Claim
Expense
Underwriting Investment Net
Growth
Equity
Results
Income
Retention Rate
Return on Equity
1
Claim
-0.111
1
Expense
0.07
0.081
1
Underwriting Results -0.024
-0.762(**) -0.551(**) 1
Investment Income
0.532(**)
0.410(*)
0.482(*)
-0.588(**)
1
Net Retention
-0.077
-0.019
-0.152
0.023
0.05
1
Growth Rate
-0.098
-0.362
-0.438(*)
0.333
-0.357
-0.231
1
* Significant at 5 per cent level (2- tailed)
** Significant at 10 per cent level (2-tailed)
Table 6. Spearmans Correlations of Private Sector General Insurance Companies during the Post-reform Period
Return on Claim
Expense
Underwriting Investment Net
Growth Rate
Equity
Results
Income
Retention
Return on Equity
1
Claim
0.051
1
Expense
-0.585(**) -0.294(*)
1
Underwriting Results 0.793(**)
-0.017
-0.497(**) 1
Investment Income
-0.101
-0.001
0.082
-0.408(**)
1
Net Retention
-0.352(*)
0.078
0.385(**) -0.168
-0.417(**) 1
Growth Rate
-0.051
-0.450(**) -0.157
-0.124
0.075
-0.134
1
* Significant at 5 per cent level (2- tailed)
** Significant at 10 per cent level (2-tailed)
23
HSB Research Review
Vol. 2 No. 2
July-December 2011
Table 7. Multiple Regression Analysis of the Public Sector General Insurance Companies during the Post-reform
Period (2002-03 to 2007-08).
Step Intercept
Unstandardized Co-efficient (b)
R2
Adjusted R2
F- Change
Sig. F(Constant a)
Investment
Underwriting
Change
Income Ratio (x1)
(x2)
I
II
-0.704(-0.106)
3.6(0.698)
0.387(2.433)*
0.781(5.041)*
.864(4.093)*
0.212
0.562
0.176
0.520
5.922
16.754
0.024
0.001
Note: The figures given in parentheses represent the t-values.

Significant at 5 per cent level.
The analysis in Table 7 reveals that investment income to
significant negative correlation with investment income
net written premium entered the regression model in first
ratio due to this higher underwriting loss is offset by higher
step, singularly explaining 17.6% variation in return on
investment income ratio of the public sector general
equity of the public insurers with significant regression
insurance companies resulted into higher profitability.
coefficient 0.387. In second step, underwriting results to
It can be seen from the Table 6 that two independent
net written premium has been entered the analysis and
variables, namely, expense of management ratio and net
together with investment income ratio explain 52% variation
retention ratio have significant negative correlation with
in return on equity with significant regression coefficient
return on equity and the coefficients are -0.585 and -0.352
0.864, i.e., one unit increase in underwriting results to NWP
respectively. Underwriting results have significant positive
leads to 0.864 unit increase in the return on equity. Thus,
correlation with return on equity and the coefficient is 0.793.
the multivariate regression analysis for the period 2002-03
Other independent variables, namely, claim ratio, investment
to 2007-08 concludes as follows:
income ratio & growth rate have not significant correlation
Y1=3.6+0.781 (x1) + 0.864 (x2)
with return on equity. Few independent variables have also
significant correlation with one another, such as claim ratio
Where, y1 is the return on equity measured by net profit
has significant negative correlation with expense of
after tax as percentage of net worth. It has been observed
management ratio and the coefficient is -0.294. Expense of
that no other variable was found to be significantly affecting
management has a significant negative correlation with
the return on equity of the public insurers and investment
underwriting results; and underwriting results has a
income to NWP and underwriting results to NWP have
significant negative correlation with investment income
been found significantly affecting profitability of the public
ratio and the coefficient is -0.408.
sector general insurance companies during the period 200203 to 2007-08.
Table 8. Multiple Regression Analysis of the Private Sector General Insurance Companies during the Post-reform
Period (2002-03 to 2007-08)
Step
Intercept
(Constant a)
9.605(6.795)*
Unstandardized Co-efficient (b)

Underwriting
Investment
(x1)
0.485(5.02)*
Income (x2)
-
II
6.543(5.137)*
0.723(5.135)*
0.322(8.050)
Note: The figures given in parentheses represent the t-values.
R2
Adjusted R2
F-Change
Sig. FChange
0.364
0.35
25.2
0.00
0.606
0.588
26.37
0.00
Significant at 5 per cent level.

The above table carries the multiple regression analysis of
the private sector general insurance companies during the
period 2002-03 to 2007-08. The results show that
underwriting results to net written premium entered the
regression model in first step, singularly explaining 35 per
cent variation in the private insurers profitability with
significant regression coefficient (b) 0.485. In second step,
investment income to net written premium has been entered
the analysis and together with underwriting results ratio
explain 58.8 per cent variation with significant regression
coefficient 0.322, i.e., one unit of investment income to NWP
leads to 0.322 increase in the private insurers profitability.
The multivariate regression analysis for the period 2002-03

to 2007-08 can be expressed as follows:
Y = 6.543 + 0.723 (x1) + 0.322 (x2)
Where, y is the return on equity measured by net profit
after tax as percentage of net worth. The study exhibits
that underwriting results has the most powerful impact on
the profitability of the private insurers in the post-reform
period.
The multivariate analysis reveals that the investment
income of the public sector has a significant positive
correlation with return on equity and investment income;
24
HSB Research Review
Vol. 2 No. 2
July-December 2011
in their core insurance business. One of the main reasons

for that is lesser reinsurance of the business as compared
to that of private sector insurance companies. Public sector
companies are depending more and more on the investment
income to increase their earnings, and getting more exposed
to the risks, which may prove to be risky in the long run. It
is suggested that the public sector insurance companies
should try to balance their investment activities to keep
risk complexion at reasonable level by getting more business
reinsured. A closer investigation of the product portfolio
through reveals that it is mainly ascribed to the fact that
the public insurers have exhibited higher claim ratio because
these insurers got majority of their business from loss
making portfolios like motor and health. It is suggested
that these companies should also focus on other portfolios
like engineering, fire, personal accident, marine, etc. It may
decline their claim ratio which would result into their better
underwriting results. The balanced portfolio performance
of the public insurers will also enhance their growth rate,
which is at present much lesser than the private sector
general insurance companies.
and underwriting results have significant negative

correlation with each other. The regression results indicated
that both investment income and underwriting results have
significant impact on the profitability of public sector
general insurance companies. The negative correlation
between underwriting results and investment income
indicated the trend that higher investment income resulted
into lower underwriting profits and vice-versa. The
correlation analysis of the private sector indicated that
return on equity has a significant correlation with expenses
of management and net retention, and positive relation with
underwriting results. The regression analysis reported that
both underwriting results and investment income have
significant impact on return on equity. As is evident from
the analysis, there is significant variation in return on equity
is due to both underwriting results and investment income
of both the public and private insurers. But all the insurers
have exhibited underwriting losses. So, in order to enhance
their profitability, these companies need to focus on their
underwriting results.
CONCLUSIONS AND SUGGESTIONS
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26
HSB Research Review
Vol. 2 No. 2
July-December 2011
CORPORATE REDRESS
SYSTEM FOR
INSURANCE
CONSUMERS
ABSTRACT
Dr Deepa Sharma
Assistant Professor in Commerce
Maharaja Agrasen College, University of Delhi, New Delhi
Email: dr.deepasharma@hotmail.com
A progressive company must have a well-knit mechanism

for redressing the grievances of dissatisfied-consumers in
order to retain them and attract the new ones. It needs no
emphasis that if the consumer complaints are satisfactorily
handled and grievances redressed effectively and
expeditiously, a consumer will have hardly any occasion or
eventuality to approach the external agency for redress of
his grievance. This paper intends to evaluate the working
of the consumer grievance redress (CGR) system in
insurance companies, in terms of its structure and the extent
of training and responsibility of redress officers, complaintprocessing, relief provided, the time taken in disposal of
complaints, and the provisions and practices for awards,
penalties, and complaint-handling audit.
Keywords: Consumer Grievance, Complaint, GrievanceRedress System, Insurance
INTRODUCTION
Redress of consumer grievances is a pre-requisite for
ensuring long-term customer loyalty and profitability for
any business concern. Because service encounters are
complex interactions affected by multiple elements (Kotler,
et al., 2011) customer complaints are bound to happen, more
so in a contract of insurance, where the reciprocal
obligations are often not properly understood and
performed. Hence, in service companies, handling of
customer complaints is all the more important and necessary.
Companies that encourage dissatisfied customers to
complain and empower employees to remedy the situation
on the spot have been shown to achieve higher revenues
and increased profits than the companies that do not have
a systematic approach to addressing service failures (Tax
and Brown, 1998). According to Etzel, Walker, Stanton, and
Pandit (2008), the analysis and management of customer
complaints is an evaluation tool that can be used by both,
the non-business and the profit-seeking organisations. In
fact, consumer-grievance redress by a company is an
effective way of self-regulation, which is beneficial not only
to the consumer but also to the company and the
government. The issues pertaining to the nature, pattern,
and functioning of the redress system of insurance
companies were examined in the light of the responses of
the sample companies senior and junior executives
entrusted with the handling of consumer complaints.
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HSB Research Review
Vol. 2 No. 2
July-December 2011
redress mechanism set up by companies. In fact, no

comprehensive study, to our knowledge, has been
conducted on corporate redress system for grievances of
insurance consumers, despite the fact that this is an
emerging area in services marketing and customer
relationship management. With a view to bridging the gap
in this area of great socio-economic relevance, the present
study was undertaken.
LITERATURE REVIEW
The growth of consumer movement has prompted
companies to set up a consumer grievance-redress
mechanism. According to Buskirk and Rothe (1970),
business firms need to establish a separate corporate
division for consumer affairs, change corporate practices
that were perceived as deceptive, and to educate channel
members about the need for consumerist effort, in their
response to consumerism. Kendall and Russ (1975)
examined the complaint handling in consumer packaged
goods industries (CPGMs) of the US. With regard to
corporate responses to consumer complaints, the study,
inter alia, revealed: (a) all companies responded
promptlythree quarters of them had definite policies with
respect to a given time period, at most a week; (c) all the
companies responded in the form of a personal letter along
with the offer of product replacement (87 per cent) or moneyback (64 per cent); (d) in half of the companies a public
relations or consumer affairs department was entrusted with
the responsibility of handling consumer complaints. In 20
per cent of the companies, the sales and marketing
department was given the responsibility while in another
20 per cent, the science or research department was
entrusted with the task.
OBJECTIVE OF THE STUDY

The study seeks to examine the structure and pattern of
grievance-redress system available to consumers, with
respect to selected companies in the insurance industry
and to evaluate the approach taken by them, in the redress
of consumer grievances.
RESEARCH MEHODOLOGY
A representative sample of 60 insurance company
executives, 30 each of the senior level (i.e., from those
working at the head offices and the regional and/or zonal
offices) and the junior level (those working at the divisional
and branch offices) were personally interviewed with the
help of a structured questionnaire for collecting the
information on various facets of the problem. For the
sector-wise comparison, responses of 37 executives
belonging to the public-sector insurance companies and
23 to the private-sector companies were analysed.
Fornell and Westbrook (1984) ascertained the organisational

barriers and the consequences of their complaint handling
and found that the organisations willingness to listen to
consumer complaints decreased as the level of consumer
complaints increased. Moreover, the unwillingness to listen
to consumer complaints led to increased consumer
complaints by separating the consumer affairs department
from management participation. Contrary to what was in
the best interests of both the firm and the customers, an
organisations willingness to listen to and act upon its
customers complaints was negatively related to the
consumer problems voiced. Homburg and Furst (2005) found
that though both the mechanistic and the organic
approaches significantly influence the complaining
customers assessment, the mechanistic approach had a
stronger total impact. The beneficial effects of the
mechanistic approach were stronger in the case of the B-2C settings than in B-2-B ones and for the service firms
than for the manufacturing firms. Gruber, Szmigin, and Voss
(2009) sought to explore the nature of complaint
satisfaction, specifically to examine how contact employees
should behave and which qualities they should possess.
They found that being taken seriously in the complaint
encounter and the employees listening skills and
competence are particularly important. The value of the
study lies in the fact that if companies know what customers
expect, contact employees may be trained to adapt their
behaviour to the customers underlying expectations, which
should have a positive impact on customer satisfaction.
Company Policy for Consumer Grievance Redress : All

the insurance companies contacted, reported that they had
in place a consumer-grievance redress system. This fact
was clearly mentioned in the company policy statement by
57.1 per cent of the companies. However, only 21.4 per cent
of the executives were not aware of this fact. The redress
system was claimed to have been adopted by public-sector
insurance companies, as far back as 1980s. The system has
been in place in the private insurance companies since their
inception in the year 2000, when the insurance sector in
India had just opened up to the private sector.
The review of related studies reveals that only a few

researchers have sought to evaluate consumers grievance-
Decentralisation of Corporate Redress System: Four out

of the five public-sector companies claimed to have
The respondents out of corporate executives were picked

up from all the levels of organisations, where redress system
for consumer grievances was operational. With the help of
the no-probability convenience sampling method and based
on other relevant considerations, a sample of seven
companies from the private-sector (four from the life
insurance and three from the general insurance) and all the
five public-sector insurance companies were selected. The
area chosen for the study consisted of the metropolitan
cities of Delhi, Mumbai, and Pune, and the satellite towns
of Delhi, namely, Noida, Ghaziabad, Faridabad, and Gurgaon.
The questionnaire used in the study was exhaustive enough
to extract voluminous data from the respondents, even
though they were relatively not so large in number.
MAJOR FINDINGS
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Vol. 2 No. 2
decentralised the grievance redress system. On the other

hand, 55.6 per cent private-sector companies reported to
have centralised operations for grievance redress. It may
be clarified here that the centralised mechanism of
grievance redress, here, means the phenomenon where
complaints are received and disposed of at the corporate
headquarters. On the other hand, where the company has
entrusted its CGR functioning to its divisional and/or
branch offices, it is said to have a decentralised grievanceredress system.
July-December 2011
part of only the induction programme conducted for a short

duration of 3 to 7 days. The lack of training in complainthandling in companies might have been one of the factors
which resulted in a large number of unresolved cases and
unnecessary escalation of complaints. The responsibilities
of all the officials were specified at all levels, which included
the reporting on action and decisions taken on complainthandling. As regards the receipt and processing of
complaints among the public-sector companies, it was noted
that the complaint relating to any administrative failure,
was processed by the manager in the receiving office.
However, the complaints relating to claim-settlement or to
products like ULIPS (in the case of life insurance) were
referred to either the regional office or, as the case may be,
to the divisional office. The relevant divisional or the
branch office was responsible for the final disposal of the
complaint. Among the private-sector companies, it was
either the call centre or the customer service executive at
the branch/regional office, who received the complaint.
However, such complaints were processed by the GROs at
the head office or the concerned department head, and were
finally disposed of by them.
Organizational Set-up for Complaint-handling: Four of

the five public-sector insurance companies, and four out
of seven private-sector companies, claimed to have an
independent redress mechanism in the form of a department
or cell. In the public-sector companies other than the LIC,
this department was designated as Customer Service
Grievance Cell. The LIC, the only public-sector life
insurance company, where the grievance redressal
mechanism formed part of the marketing department, termed
it as CRM Department. This was established in the year
2000. Among the private-sector insurance companies, such
an independent redress system was identified either as the
Customer Support, Compliance Customer Care, or the
Complaints department. Where there was no separate or
independent cell, the CGR cell formed part of either the
Operations department or the Customer Care department.
In one of these companies, complaint-handling was not the
exclusive responsibility of any single department, but was
deemed to be shared by all the department heads. In terms
of the designation of officials who formed part of the redress
system, it was noticed that in the public-sector companies
other than the LIC, a specific designation, like Chief
Manager (Grievances) was assigned only to one of the
head office executives. Almost the same pattern was
observed among private-sector companies, which is well in
conformity with their centralised working. It is interesting
to note that although the public-sector insurance
companies claimed to have decentralised their redress
mechanism, there was no specific designation explicitly
assigned to officers down the hierarchy.
Complaint-Handling Manual for Employees: As reported

by the company executives interviewed, a complaintprocessing manual had been developed in an overwhelming
majority (82.6 per cent) of private sector companies, leaving
their counterparts in the public sector far behind (43.2 per
cent). However, the manual was made available to the
concerned employees, in a large majority (78.9 per cent) of
cases among the private-sector companies. The manual on
complaint-handling often formed part of Operation
Manual, Whistle-Blowers, Anti-Fraud Enquiry Manual,
Business Process Manual, Standard Operation Process
(SOP), or Situation Action Process Flow (SAP). The
Intranet seems to have become a convenient mode of
communication among techno-savvy companies. The nonavailability of the complaint-handling manual with the
executives concerned in other companies is an indication
of the companies not heeding to the requirement of the
regulator for protection of policy-holders interest. The
absence of such a manual also acts as a barrier in monitoring
the performance of the CGR process.
Training and Responsibility of CGR Officers: In both the

public and the private-sector insurance companies, no
specific qualification had been prescribed for the post of
the CGR officers. However, in public-sector companies, it
is generally the Scale V officers and Scale IV officers who
were assigned the CGR function at the corporate head office
and regional offices, respectively. At the lower levels, it is
either the divisional officer or the branch in-charge who is
eligible to look after the CGR function. In the private-sector
insurance companies, it was the persons experience in
customer-servicing and complaint-handling at any call
centre, which was given weight for eligibility for such
assignment/charge. As regards the training of such officers,
no special programme of lectures was conducted on a
continuing basis. Training in complaint-handling formed
Recognition for Effective Complaint-Handling: A large

majority of executives disclosed that their company had no
system of recognizing or rewarding an employee or the
branch team for effective or exemplary complaint-handling
work. This might be one of the reasons why company
executives lacked the needed motivation to exercise their
redress authority and be responsive to the complainant. In
order to continually improve the effectiveness and
efficiency of the CGR process, an organisation would
motivate its employees to make a redress-oriented effort.
This is sadly not the philosophy of many business
concerns. In those companies, which had a system of
reward and recognition for redress-oriented executives, an
29
HSB Research Review
Vol. 2 No. 2
appreciation letter was issued by a few (16.7 per cent) of

the sample companies. It appears that the CGR is not
regarded such an important function as to merit an incentive
or reward.
July-December 2011
per cent), in a majority of public-sector companies, no more

than a week was taken (78.4 per cent) in acknowledging the
complaint.
Nature of Consumer Complaints Received : The most
frequent consumer complaints received by the companies
were those relating to the claim-settlement (58.3 per cent).
Among these complaints, rejection of claims (66.7 per cent)
and delay in claim-settlement (46.7 per cent) were reported
to be the more common cause of complaint. At the same
time, a large majority (76.3 per cent) of respondents stated
that the claim-settlement ratio in their companies was more
than 75 per cent. Notably, this statement was made by most
of the respondents belonging to public-sector insurance
companies. This ratio (more than 75 per cent) seems to be
unrealistic in the light of their responses given earlier.
Penalising the Defaulting Officers: The penal provisions

for the CGR officers whose conduct was found to be at
variance with the policies and objectives of the company
were available in companies. This was reported by an
overwhelming majority (80.0 per cent) of executives.
However, as regards the form of penal action taken against
the defaulting officers, it was noted that in a large majority
of cases (75.0 per cent), it was a mere warning letter issued
to the officer concerned. Harsher penalty, like deduction
from the officers salary and placing him under suspension,
was reported to have been sparingly used.
Publicising the Grievance Redress Process : The
companys website was used most frequently (65.0 per cent)
as the mode of publicising the CGR process, followed by
display at the reception counter (45.0 per cent). However,
during the personal visit to these offices, the researcher
noted that the display of the CGRP was rather
inconspicuous. Very few (13.5 per cent) executives of the
public-sector insurance companies reported to have the
CGR process mentioned in the policy cover. The companies
in either sector sparingly used the print and other mass
media to publicise the CGRP. Thus, the CGRP was not
adequately publicised by the companies.
Consumer Grievances Considered Significant: The types

of grievances viewed as significant by company executives
were classified and the same are shown in Tables 1.
Although the perspective of the respondents with respect
to the gravity of the grievances varied largely, what was
more important in the public-sector insurance companies
is who forwarded the complaint for disposal. Among the
various sources [1(a) to (d)], the complaint forwarded by
the Union Ministry of Finance was considered the most
significant of all (47.6 per cent), followed by the one
endorsed by the Insurance Regulatory Development
Authority (IRDA). This phenomenon was particularly
noticed among public-sector companies. The complaints
filed at the public redress systems were reported to be the
next significant grievance (15.0 per cent). However, the
respondents took the complaints filed at the Ombudsman
office more seriously as against those filed at the consumer
forums. The complaints, which occur frequently, causing
hardship to a number of consumers, were also found to be
significant by an equal number of respondents. However,
such complaints were claimed to be significant, by a
relatively large number of private-sector executives.
It seems these companies operated in a closed system,

where their communications are directed towards the
techno-savvy customers who had an e-mail account and
had access to the Internet. Their overdependence on the
company website and e-mail as a mode of marketing
communication has put many complainants at a
disadvantage.
Moreover, they do not foresee the need of the potential
claimants (and complainants), including the legal heir of
the deceased policy-holder. The wise counsel tendered by
Zeithaml, Bitner, Gremler, and Pandit (2008) to welcome
and encourage customer complaints seems to have been
ignored by these companies. This is important as it also
serves to educate the customers as to how, where, when,
and whom to complain to, thus providing convenience to
both the complainant and the company.
This is an amazing finding that there were two types of

executives: one, those who viewed the grievances as
significant in terms of specific aspects, such as the source,
frequency, heavy financial liability involved, premium
amount, company image and similar other aspects (Serial
Nos. 1 to 13 in Table 1), and second, those who made no
distinction between the grievances received for redress
(Serial No.14). At the same time, there was one respondent
(of a public-sector company), who took note of even those
complaints which involved a small amount. Thus, a
consumer grievance is more effectively redressed by the
company when it is routed through the administrative
ministry of the Govt. of India or the relevant regulatory
body.
Filing of Complaint: Evidently, the companies allowed the

complainant to approach the company via any mode
convenient to him, whether in person, on-line, on telephone,
or by post. The call centre and e-mail have lately become
popular channels of communication for complainants in
the case of private-sector companies, as against their
public-sector counterpart, who seem to be picking up. A
high significant difference was noted in the time taken by
the companies of the two sectors for acknowledging the
receipt of complaint (Chi-square=15.60, p=<.01). While it
took not more than a day in private-sector companies (56.5
Complaints Handled at Various Levels: The responses of

the executives, in respect of the type of consumer
complaints handled by them at various levels, are
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Vol. 2 No. 2
July-December 2011
Table 1: Consumer Complaints Considered Significant by Companies

N=60
Rank
Particulars/Nature of Complaint
1. Complaints forwarded by:
a) Union Ministry of Finance
b) Department of Public Grievances(DPG), Govt. of India
c) IRDA
d) H.O./R.O.
Total (a+ b+ c+ d)
2. Complaints filed at:
a) Ombudsman Office
10 (16.7)
(37.2)*
6 (10.0)
9 (15.0)
6 (10.0)
14(23.3)
(58.3)*
4 (6.7)
24 (40.0)*
8 (13.3)
2 (3.3)
3 (5.0)
11 (18.3)
3 (5.0)
5 (8.3)
9 (15.0)
8 (13.3)
1(1.7)
1 (1.7)
10 (16.7)
3 (5.0)
2 (3.3)
1(1.7)
1(1.7)
3 (5.0)
3 (5.0)
1 (1.7)
9 (15.0)
3 (5.0)
11 (18.3)
2 (3.3)
1 (1.7)
1 (1.7)
1(1.7)
1(1.7)
-
1 (1.7)
2 (3.3)
5 (8.3)
2 (3.3)
1(1.7)
4 (6.7)
- -
2 (3.3)
27 (45.0)*
6(10.0)
(66.7)*
b) Consumer Forums
3 (5.0)
Total (a + b)
9 (15.0)*
3. Frequently-occurring complaints
9 (15.0)
4. Complaints relating to equity plans
2 (3.3)
5. Claim-related complaints and those involving large amounts
3 (5.0)
6. Complaints pertaining to delayed response
3 (5.0)
7. Complaints related to mis-selling
2 (3.3)
8. Complaints which might affect the image of the company
1(1.7)
9. Complaints involving high premium
1(1.7)
10.Complaints involving frauds & heavy financial burden
1(1.7)
11. Complaints involving small amounts
1(1.7)
12. RTI applications deemed as complaints
1(1.7)
13. Complaints received from general public
14. No demarcation among complaints (All complaints are significant to us)
Note: Percentages are in parentheses
Table 2: Types of Complaints Handled at Various Levels
S. Insurance Executives
No. Particulars
Public-Sector Cos.
(N=37)
Private-Sector Cos.
(N=23)
Total(N=60)
1.
Complaints of all kinds at all levels
23 (62.6)
11 (47.8)
34 (56.7)
2.
Complaints of all kinds at H. O. only
2 (8.6)
2 (3.3)
3.
Behaviour related; technical cases requiring

modification of rules; no-settlement of claims;
ULIPS; legal cases pertaining to Ombudsman,
National Commission & IRDA, at H.O. level
5 (13.5)
4 (17.39)
9 (15.0)
4.
Repudiation of claim related complaints,

escalated complaints, & consumer forum
cases (District Forums & State Commissions),
at R.O/Zonal level
5 (13.5)
4 (17.39)
9 (15.0)
5.
Operational and policy-related complaints at

Branch /Divisional levels; Ombudsman cases,
at divisional level of public-sector cos.
4 (10.8)
2 (8.6)
6 (10.0)
Note: Percentages are in parentheses.

31
HSB Research Review
Vol. 2 No. 2
summarised in Table 2.
July-December 2011
response was generally specified as three days, in the

public-sector companies the provision was of three to seven
days. For the final resolution of the complaint, the maximum
time limit ranged from eleven days to thirty days and thirty
days to three months in the private and public insurance
companies, respectively. The time frame in terms of the
extent of investigation involved was found to be of a
shorter duration among the private-sector companies (29.7
per cent) as compared to the public-sector. It needs to be
added here that the time frame reported by the public-sector
respondents was not specified as in their company, but
was claimed to be desirable. 16.7 per cent of the executives
included those who candidly admitted that their company
did not have any specific time frame for the CGRP.
Amusingly, all of these belonged to the public-sector.
Having no specific time frame was not surprising.
Regulation 5 of the IRDA (Protection of Policyholders
Interests) Regulations, 2002, simply stipulates that every
insurer should have in place proper procedures and
mechanism to redress grievances of policy-holders
efficiently and with speed. The term speed may have
different connotations to different people. Unless the time
is defined in terms of days, weeks or months, the provisions
cannot lead to the timely redress of consumer grievance.
Only a small paragraph, devoted to grievance redressal
procedure consisting of no defined time-line and other
related aspects in this single relevant regulation of the
IRDA, supports the status of grievance redress system in
insurance companies, particularly in the public sector. The
absence of specific provision for time frame for disposal of
complaints can also be attributed to the technical nature of
the insurance contract and to the varied approach needed
for the final resolution of each case.
As is evident from the table, more than one-half of the

respondents (56.7 per cent) claimed to have no specific
category of complaints to be handled at various levels.
Complaints of all kinds were handled at every level of the
company. Rest of the respondents disclosed some of the
specific complaints processed at different levels. Technical
complaints requiring modification of rules, behaviourrelated grievances, and those related to non-settlement of
claims were handled by the head office executives. The
complaints relating to the repudiation of claim, escalated
complaints, and those relating to equity plans (such as
ULIPS) were the responsibility of the regional and/or the
zonal level executives, while the operational and policyrelated complaints were reported to be disposed of at the
branch and/or divisional levels. With regard to the
complaints inviting external intervention (litigation), the
findings are important. While the complaints pertaining to
the Ombudsman, the National Commission, or those
forwarded by the IRDA were exclusively handled at the
head office, the cases being adjudicated by the District
Consumer Forums and State Commissions, were handled at
the regional and/or zonal levels. Moreover, the cases of the
public-sector insurance companies filed before the
Ombudsman were disposed of by the divisional offices.
Time-frame for the CGRP : Apparently, in almost all of the
insurance companies studied, no specific time frame was
provided in respect of the entire redress process or even
according to the different types of complaints involved.
However, on summarising the varied responses of the
executives, it can be inferred that a majority (60.9) of the
respondents (belonging to private sector insurance
companies) had a provision for the maximum time limit in
terms of the initial response and the final complaintresolution. Almost half the number of these respondents in
the public sector (37.8 per cent) claimed to follow the same
practice. While, in the private-sector companies, the initial
Relief Promptly Provided to Complainants: A companys

policy on the provision of relief to the complainants might
include an apology, a polite and quick clarification, refund,
substitute, replacement, technical as well as financial
Table 3: Relief Readily Provided by Companies

S. No.
Rank
Total
Forms of Relief Provided

1.
Claim settlement within a specified time
19 (31.7)
18 (30.0)
14 (23.3)
51 (85)
2.
Quick and polite clarification
19 (31.7)
11 (18.3)
11 (18.3)
41(68.3)
3.
Immediate settlement of claim
11 (18.3)
6 (10.0)
4 (6.7)
21(35.0)
4.
Refund of excess premium
3 (5.0)
14 (23.3)
4 (6.7)
21(35.0)
5.
Renewal of lapsed policy
2 (3.3)
7 (11.7)
11 (18.3)
20(33.3)
6.
Letter of regret/apology
3 (5.0)
2 (3.3)
6 (10.0)
11(18.3)
7.
Interest on delayed settlement
1 (1.7)
8 (13.3)
9(15.0)
8.
Compensation for wrongful rejection
1 (1.7)
2 (3.3)
1 (1.7)
4 (6.7)
9.
Substitute policy
1 (1.7)
1 (1.7)
2 (3.3)

32
HSB Research Review
Vol. 2 No. 2
in their system. It also signals towards the procedural and

interactional fairness, by providing quick and polite
clarifications for the occurrence of a grievance. The
software applications in a number of companies, recently,
have paved the way for systems and procedures that allow
for quick action. This was observed during the study at the
head offices of two major insurance companies in the
private-sector.
assistance or immediate settlement of issues involved. The

list can be endless. What is important for the study was to
identify the relief or remedies within their scope of authority,
while operating from different authority levels in the
company and those, which are not. The various kinds of
relief provided readily by the companies are summarized in
Table 3.
It is noticeable from the table that an overwhelming majority
(85 per cent) of respondents were comfortable with the
settlement of claims within a specified time period. The
next three forms of relief reported to be readily provided by
the companies were:
1.
a quick and polite clarification of the reasons thereof

(68.3 per cent);
2.
immediate settlement of the claim (35 per cent), and
3.
refund of excess premium (35 per cent)
Considerations in Complaint-Resolution : Where there is

a high inflow of complaints at the company offices, certain
factors might be considered more appropriate while
resolving the complaint. Such factors, on the basis of which
companies resolve the complaint, were identified. The same
are presented in Table 4.
From the above table, it appears that, as compared to publicsector companies, the private sector companies did not
consider the following factors while resolving a complaint:
Compensatory remedies, like interest on delayed

settlement and compensation for wrongful rejection, were
found to have been provided sparingly. It appears that these
companies only seek to satisfy (to the extent of the loss
suffered), and not to surprise, the complainant in order to
ensure customer loyalty.
1.
2.
3.
Extent of severity;
Complexity of the case; and
Need for immediate action.
These companies (47.8 per cent) rather resolved a complaint

on a first-come, first-served basis. A sizeable number of
public-sector insurance companies (29.7 per cent) followed
the same criteria. However, in terms of adopting some of
the considerations/bases (S. no. 2 to 6 in the table), these
companies scored over their counterpart in the private
sector. None of the respondents reported the likely impact
on goodwill of the company as an important consideration
for resolving a complaint.
Time Taken in Providing Relief : The time taken by the

companies ranges from a minimum of 1 day to 3 days and
goes up to 2 months to 3 months, in each kind of the relief
specified. The companies took the maximum time (not less
than a month) where the relief pertains to the claim
settlement within the specified time. The minimum time (of
1 day to 3 days) was involved in providing the following
remedies:
1.
2.
3.
July-December 2011
The first-come, first-served, criteria for resolution of a

complaint suggests that the companies are fairly
responsive. At the same time, it also implies a casual
approach of such companies towards grievance redress.
Quick and polite clarification (58.5 per cent);

Refund of the excess premium (47.6 per cent); and
Immediate settlement of the claim (28.6 per cent).
Curbing Frivolous Complainants : As admitted by the

respondents, no action was taken against frivolous
complainants. In fact, no such practice existed in the
insurance companies, under study. They simply ignored
such complaints or merely rejected them outright. Only one
Among the companies who provided interest on delayed

settlement, a majority (66.7 per cent) of the same did so
within seven days. Thus, the redress of grievances becomes
speedier in companies, which provide remedies in the form
of refund, renewal, or settlement of claims, indicating equity
Table 4: Considerations in Resolution of Complaint

Executives
Basis of complaint-resolution
Public Sector
(N=37)
Private Sector
(N=23)
Total
(N=60)
1. Firstcome, first-serve
11 (29.7)
11 (47.8)
22 (36.7)
2. Need & possibility of immediate action
11 (29.7)
4 (17.4)
15 (25.0)
3. Extent of severity
8 (21.6)
5 (21.7)
13 (21.7)
4. Complexity of case
5 (13.5)
3 (13.0)
8 (13.3)
5. Track record of complainant
1 (2.7)
1 (1.7)
6. Frequently occurring grievance
1 (2.7)
1 (1.7)
7. Likely Impact on goodwill of the company

33
HSB Research Review
Vol. 2 No. 2
It needs no emphasis that if the consumer complaints are

satisfactorily handled and the grievances redressed
effectively and expeditiously, a consumer will have hardly
any eventuality to approach the external agency, including
a regulatory body, namely, Ombudsman or Consumer
Forum, for redress of his grievance.
respondent reported the matter to the IRDA. It is amazing

that though certain companies did penalise their defaulting
officers, they did not do so in the case of frivolous
complainants, resulting in escalation of unnecessary work.
Complaint-handling Audit : A majority (65.2 per cent) of
respondents belonging to private-sector insurance
companies claimed to have in place a regular audit of their
complaint-handling system as against the public sector
(32.4 per cent). However, a larger number of executives down
the hierarchy were either not sure of the system or admitted
that it was rarely conducted. Almost all the respondents
who had affirmed the conducting of the audit on a regular
basis also admitted that it was never done independently,
rather, conducted as a part of the general audit of the
company. The complete absence of, or an irregular conduct
of, the audit of the CGRP suggests the following
phenomenon:
1.
The companies do not have in place the stated criteria

or the standards related to complaint-handling against
which they could measure its performance and
accordingly facilitate the needed improvements;
2.
The companies still do not regard consumer grievance

redressal as important a function as any other, for which
the audit was already provided; and
3.
July-December 2011
REFERENCES
Buskirk, Richard H., and James T. Rothe (1970),
Consumerism: An Interpretation, Journal of
Marketing, 34(4), 61-65
Etzel, Michael J., Bruce J. Walker, William J. Stanton and
Ajay Pandit (2008), Marketing: Concepts and
Cases, 14th ed. (New Delhi: Tata McGraw-Hill)
Fornell, Claes, and Robert A.Westbrook (1984), The
Vicious Circle of Consumer Complaints, Journal
of Marketing, 48(3), 68
Gruber, Thorsten, Isabella Szmigin, and Roediger Voss
(2009), Developing a Deeper Understanding of
the Attributes of Effective Customer Contact
Employees in Personal Complaint-handling
Encounters, Journal of Services Marketing ,
23(6), 422-435
Homburg, Christian, and Andreas Furst (2005), How
Organisational Complaint Handling Drives
Customer Loyalty: An Analysis of the Mechanistic
and the Organic Approach Journal of Marketing,
69(3) , 95-114
The companies have got accustomed to attending to

complaints and resolving them the way they are done,
without caring for any improvement.
CONCLUSION AND POLICY-IMPLICATIONS
Kendall, C. L., and Fredrick A. Russ (1975), Warranty and

Complaint policies: An Opportunity for Marketing
Management, Journal of Marketing, 39(2), 36-43
The findings of the study have important policyimplications for both the policy-makers and the policyholders of insurance companies. The insurance companies
need to revamp their consumer complaint handling system,
in terms of the measures, such as developing a positive
attitude and redress-oriented approach of the company
executives towards consumer complaints, ensuring a strict
enforcement of the code of conduct for complaint-handling,
imparting of adequate training to redress officers in handling
of consumers grievances, which will lead to reduction in
escalated complaints. Moreover, the consumers expect
companies to be fair in interactive and procedural justice.
The inherent complexity of a financial product, like
insurance, calls for an effective CGR mechanism, wherein
the consumer gives another chance to the organisation to
satisfy him.
Kotler, Philip, Kevin Lane Keller, Abraham Koshy, and

Mithileshwar Jha (2007), Marketing Management,
12 th ed., (New Delhi: Pearson Education)
Tax, Stephen S., and Stephen W. Brown (1998), Recovering
and Learning from Service Failures, Sloan
Management Review , Fall, 75-78
Zeithaml, Valerie A., Mary Jo. Bitner, Dwayne D Gremler,
and Ajay Pandit (2011), Services Marketing, 5th
ed. (New Delhi: Tata McGraw- Hill), 235-236
34
HSB Research Review
Vol. 2 No. 2
PATIENTS
SATISFACTION
MEASUREMENT HYPE OR HOPE : A
CRITIQUE
July-December 2011
ABSTRACT
Patients satisfaction measurement stands to play a crucial
role amongst the health care providers. As physicians and
hospitals have begun to experience increased pressure for
the delivery of quality of hospital or medical services as
well as enhancement of the patients safety at an affordable
cost which calls for greater attention and accountability
amongst the health care professionals. The concept,
philosophy and application of the patients satisfaction
measurement need to be further integrated into an overall
measure of its clinical quality. Variation in Patients
satisfaction measurement tools, however, is an obstacle
considering aspect of instruments reliability part of the
quality equation. At present, data on patients satisfaction
is gathered by various entities, for different purposes and
at different levels in the health care system for designing
of health plans, hospitals and medical practices. The most
commonly and largely used method for patients
satisfaction measurement is conducting of customized
surveys to assess and improve its hotel-motel functions
for ensuring delivery of a better medical or hospital service
to maintain an apt stance in competitive health care market.
The patients satisfaction measurement is mainly based on
improvement services, and use of available patients
discharge information for selection of a sample supported
with use of focus group in few cases used to develop better
insight on it. In few cases, a consultant division also keeps
abreast of any changes in the medical or healthcare industry
that might warrant alterations as data on patients
satisfaction measurement can play crucial role in the
strategy formulation and in application of business tactics
by the medico professionals and hospitals in designing
and delivering of medical or hospital services to patients.
Prof Parimal H Vyas

Department of Commerce and Business Management
Faculty of Commerce,
The Maharaja Sayajirao University of Baroda
Vadodara [Gujarat]
E-mail: parimalvyasmsu@yahoo.co.in
Dr Madhusudan N Pandya
Department of Commerce and Business Management
Faculty of Commerce,
The Maharaja Sayajirao University of Baroda
Vadodara [Gujarat]
E-mail: mnpandya61@rediffmail.com
Keywords : Patient satisfaction, Measurement, Competitive

health, Medico Professional, Health care environment.
In a competitive health care environment, patients want
and expect better health care services than they did in the
past, and medical centers are concerned about maintaining
their overall image. The results of patient satisfaction
surveys are used by hospitals to arrive at benchmarks for
best practices across hospitals within the health system,
using the data to make adjustments in areas such as
efficiency of the admissions process, managing admission
of patients to a clinical unit or bed, and maintaining
sensitivity to the needs of patients. Information on patient
satisfaction can also be for quality monitoring and
35
HSB Research Review
Vol. 2 No. 2
the year 1951.To illustrate, life expectancy had reached to

64 years; the Infant Mortality Rate (IMR) has fallen to 63
per 1,000 Populations; Crude Birth Rate has declined to 25
whereas Crude Death Rate has fallen to 8.1. (J. Kishore,
2006). As per the Report Macroeconomics and Health,
2005 of the National Commission, longevity in India had
reached to 66 in the year 2004 whereas IMR has declined
by over 70 per cent in the year 1990.
improvement efforts at its clinical practices (Christopher

Guadagnino, 2003).
RATIONALE & METHODOLOGY
An attempt has been made in this conceptual paper to
critically appraise on emerging issues and challenges
concerning patient safety to showcase that patients have
been suffering or dissatisfied mainly due to carelessness
of healthcare service providers. This paper offers a
comprehensive but critical appraisal on the healthcare
sector of India with a specific and clear thought on Patient
Satisfaction Measurement based on significant review of
literature. It calls for a broad-minded approach with a heavy
emphasis on multy-party deliberations, consultative and
collaborative discussion on issues confronting
standardization of measurement of patients satisfaction; a
need for standardization in patients satisfaction
measurement in hospital services, and quality diamond
model of patient satisfaction resultant into grave hard work
for improving patients satisfaction and up-liftment of
initiatives for strengthening the most crucial aspect of
health care that is patient satisfaction.
Besides, the favourable changes were observed in case of

selected diseases such as Malaria which has been contained
at 20 lakh cases. Smallpox and Guinea-warm have been
completely eradicated, and Leprosy as well as Polio has
reached to nearly state of elimination. A significant
improvement in the Quality of Health Care over the years
becomes evident as shown in Table Number 01. Crude Birth
Rate (Per 1000 Population) has induced from 40.8 in the
year 1951 to 23.1 in the year 2007. Crude Death Rate (Per
1000 Population) has declined from 25.1 in the year 1951 to
7.4 in the year 2007. Similarly, Total Fertility Rate (Per
Woman) had gone down from 6.0 in the year 1951 to 2.8 in
the year 2006. IMR (Per 1000 Live Births) had reduced from
146 of the year 1951 to 55 in the year 2007. Child (0 to 4)
Mortality Rate (Per 1000 Children) was 57.3 in the year 1972
which has reduced to 17.3 in the year 2006.
A Brief Review of Health Sector of India: An attempt to put

forward an overview on the health care sector of India is
being made on basis of available factual data concerning
Health Care Indicators of India, Infrastructure for health,
and Expenditure incurred for the Health Care Sector
although in case of certain selected health indicators, India
has improved substantially during 1951 to 2001. The efforts
of Government of India for providing the safer and healthy
environment can be witnessed in form of an introduction
of various Government programmes, policies, and
legislations implemented from time to time. One can find
continuous improvement in various health indicators from
Table 1: Selected Health Indicators in India
Sr. No. Selected Indicators
01
Crude Birth Rate (CBR)
(Per 1,000 Population)
02
Crude Death Rate (CDR)
(Per 1,000 Population)
03
Total Fertility Rate (TFR)
(Per Woman)
04
Maternal Mortality Ratio (MMR)
(Per 1,00,000 live births)
05
Infant Mortality Rate (IMR)
(Per 1,000 live Births)
06
Child (0 to 4) Mortality Rate
(Per 1,000 Children)
07
Couple Protection Rate
(In Percentages)
08
Life Expectancy At Birth
[8.1] Males
[8.2] Females
July-December 2011
The Life Expectancy at Birth for Males had increased from

37.2 in year 1951 to 62.6 during years 2002 to 2006. The
Life Expectancy at Birth for Females had increased from
36.2 of the year 1951 to 64.2 during years 2002 to 2006. (The
Economic Survey, 2006-2007, 2007 2008 & 2008-2009).
During years 2000 to 2005, over 1, 00,000 deaths have been
averted due to the up scaling of Directly Observed
Treatment Short-Course (DOTS) (Ibid).
The progress has not only been observed in case of selected
1951
40.8
1981
33.9
1991
29.5
25.1
12.5
9.8
6.0
4.5
3.6
NA
NA
146
(1951-1961)
57.3
(1972)
10.4
(1971)
37.2
110
437
(1992-1993) NFHS
80
41.2
26.5
22.8
44.1
55.4
(1981-1985)
54.7
59.0
(1991-1995)
59.7
(1991-95)
36.2
Source: The Economic Survey 2006 2007, 2007-2008 & 2008 2009.
NFHS: National Family Health Survey; NA: Not Available.
36
Current level
23.1
(2007)
7.4
(2007)
2.8
(2006)
254
(2001-2004)
55
(2007)
17.3
(2006)
48.2
(1998-1999)NFHS
62.6
(2002 2006)
64.2
HSB Research Review
Vol. 2 No. 2
health indicators and diseases but the Indian health care is

considered best at the global level. Indian doctors are
comparable to the best in the world as they are technically
proficient, and capable of performing sophisticated
procedures and that too at a fraction of the cost available
in the west (Ministry of Health and Family Welfare, 2005).
5,000, 30,000 and 1,00,000 respectively as well as 3,000,

20,000 and 80,000 Populations in Tribes & Desert Areas
respectively (Annual Report of Health & Family Welfare
Report, 2005-2006).
Source: www.cbhidghs.nic.in (1) GOI, 1997 (Adapted from
Human Development in South Asia, 2004), & Central Bureau
of Health Intelligence, Ministry of health & Family Welfare.
Table 2 : Trends in the Health Care Infrastructure in India

(1951 2004)
Sr. No. Particulars
1951
1981
2005
01
SC/PHC/CHC
725
57,353
1,71,608
02
Dispensaries and
Hospitals (All)
9,209
23,555
27,770
03
Beds (Private &

Public)
1,17,198 5,69,495 9,14,543
04
Nursing Personnel
18,054
1,43,687 8,65,135
05
Doctors (Modern
System)
61,800
2,68,700 6,56,111
July-December 2011
Public health is of crucial importance to any community

and it needs to be given priority. If one considers, the Health
Expenditure of India in view of prevalent trends on basis of
the various Five Year Plans of India as shown in the Table
number 03, it becomes evident that the priority to Health
Sector of India showed declining trend in terms of
Expenditure incurred on Health as a per cent of Total
Development Plans of India. The amount spent on Health
Sector of India in the First Year Plan (1951-1956) was 3.33
per cent that has been reduced to 2.09 per cent in the Tenth
Five Year Plan in India (2002-2007).Therefore, there exist a
need to enhance and broaden the Public Health Knowledge
with new research activities and community based
experiences.
Source: Ibid.
Further, one can also find significant improvement also in
Health Care Infrastructure as shown in Table Number 02.
One can find consistent increase in the total number of
Dispensaries and Hospitals as well as Total Number of Beds
in the Hospitals as well as Doctors & Nursing Staff (Ibid).
An attempt has been made by the researchers to offer a
comprehensive review of literature on measurement of
Patients Satisfaction as follows.
The Rural Primary Public Health Infrastructure has recorded

an impressive increase consisting of 1, 45,000 Sub-Centers
as well as 23,109 Primary Health Centers, and 3,222
Community Health Centers, catering to a population of
Susan Michie, Che Rosebert (1994) described the

stages involved in developing a satisfaction survey
for out-patients attending a London teaching hospital,
using existing expertise within the organization. Its
Table 3 : Trends in Health Expenditure of India (1951 2002) :( Rupees in Millions)

Five Year
Plans
Period
Amount
Total Plan Investment

(All Development Heads)
First
Second
Third
Annual
Fourth
Fifth
1951-1956
1956-1961
1661-1966
1966-1969
1969-1974
1974-1979
1979-1980
1980-1985
1980-1985
1985-1990
1985-1990
1990-1991
1991-1992
1992-1997
1997-2002
2002-2007
2007-2012
Actual
Actual
Actual
Actual
Actual
Actual
Actual
Outlay
Actual
Outlay
Actual
Actual
Actual
Outlay
Outlay
Outlay
Outlay
1,960
4,672
8,576.5
6,625.4
15,778.8
39,426.2
12,176.5
97,500
1,09,291.7
1,80,000
2,18,729
61,518
65,855
4,34,100
8,59,200
14,84,131.3
36,44 ,718
Sixth
Sixth
Seventh
Seventh
Eighth
Ninth
Tenth
Eleventh
37
Health (Central & States)

Outlay/
Per cent of
Expenditure
Total Plan
652
3.33
1,408
3.01
2,259
2.63
1,402
2.12
3,355
2.13
7,608
1.93
2,231
1.83
1,821
1.87
20,252
1.85
33,929
1.88
36,886
1.69
9,609
1.56
10,422
1.58
75,822
1.75
19,818.4
2.31
31023.3
2.09
-
HSB Research Review
Vol. 2 No. 2
implications for researchers (Binshan Lin, Eileen Kelly,

1995).
results showed that overall, greatest dissatisfaction

was expressed about the length of time spent waiting
to see a doctor, one of the clinical support services
and the facilities such as car parking and refreshments.
Greatest satisfaction was expressed for the personal
consideration shown by doctors, nurses and other
clinic staff, the manner of being received at the hospital
clinic and reception, and the contact with the hospital
when booking the appointment (Susan Michie, Che
Rosebert, 1994).
Steven A, Taylor and J, Joseph Cronin Jr., (1994)

clarified and extended the conceptualization and
measurement of consumer satisfaction and service
quality in health services. Although, the two constructs
SERVQUAL and SERVPERF serves as cornerstones in
the design and implementation of health care marketing
strategies, a review of literature suggested that
satisfaction and service quality are difficult to
distinguish, both conceptually and operationally, in
health care settings. The findings from two studies
conducted by the authors to distinguish the nature of
these two important constructs within a health care
marketing context revealed that a non-recursive
relationship between service quality and patients
satisfaction. Health services marketers should be
careful about trying to apply broad theories and scales
such as SERVQUAL and SERVPERF used in other
service settings because they may translate poorly to
health care. (Steven A, Taylor and J, Joseph Cronin Jr.,
1994).
Emilie Roberts et. al., (1994) developed a method of

assessing the quality of health care to highlight the
areas of greatest concern to patients designed to
examine patients experience with care starting with
the concerns expressed by patients and using it as a
basis for evaluating and ranking different aspects of
the service which needed improvement. The paired
comparison technique was successfully used and
validated in a variety of commercial and business
environments. The aim of this case study was to assess
the feasibility of the paired comparison technique in
rating patients satisfaction with aspects of their care
in a hospital. The results of the study indicated that
the paired comparison technique, at least in its present
form, cannot be recommended as a tool to aid
understanding of patients satisfaction. Its findings
indicated that there were drawbacks in using the paired
comparison technique to assess service quality in a
highly specialized hospital setting dealing with an acute
and potentially life threatening condition (Emilie
Roberts et. al., 1994).
Binshan Lin, Eileen Kelly, (1995) focused on how to

reassert the importance of studying patients
satisfaction surveys and to clarify and illuminate some
of the methodological problems that provided several
July-December 2011
38
Hana Kasalova, (1995) demonstrated that the apparent

generosity error that is, subjectivity in rating service
quality may be compensated for by a mathematical
process that is, rectification, which was derived from
the assessment of every respondents general scale.
In all cases, the patients satisfaction was found to be
very high in spite of the fact that the originally used
five-point scale was changed to a nine-point one in
order to give respondents the chance to measure more
accurately the quality of individual services. However,
the generosity error intervened again: even with
detailed instructions that five points would mean
good, fair quality, most questions again elicited an
excellent (nine points) as answers. (Hana Kasalova,
1995).
Zack Z. Cernovsky et. al., (1997) explored the

relationship of treatment satisfaction to another
personality questionnaire, the Zuckermans Sensation
Seeking Scales. Satisfaction of 119 addicts with an
addiction treatment program was measured by an 11
item satisfaction scale. The Sensation Seeking scales
included 40 items, and the patients were asked to rate
their satisfaction with psychotherapeutic
interventions, psychological tests, medical laboratory
tests, with hospital rules, and hospital meals and snack
foods. Its results indicated overall high level of
satisfaction with the programme (Zack Z. Cernovsky
et. al., 1997).
Ingemar Eckerlund et. al. (1997) conducted a pilot study

at three departments of ophthalmology in Sweden and
the data were collected using questionnaire involving
a new method called quality, satisfaction, and
performance (QSP) which was used to measure quality
and to focus on quality improvement and consisted of
three integrated components. First component
measured the degree of patients satisfaction, and
different aspects thereof, among different patients
groups. Second component measured patients
perceived quality levels of various quality dimensions,
and the third component focused on goals, with
questions directed at what patients satisfaction
should ultimately lead to, viz., increased trust, and
increased likelihood for positive recommendations. The
questionnaire addressed eight different quality
dimensions viz., accessibility; hospitality; service
commitment; environment; information advice; staff
knowledge; participation influence, and continuity
freedom of choice. It not only measured the degree of
satisfaction but also the impact that various quality
dimensions or factors had on patients satisfaction apart
from an advantage of validity in the model that is
required for the user to specify organizational goals
(Ingemar Eckerlund et. al., 1997).
HSB Research Review
Vol. 2 No. 2
It also highlighted patients tolerance of shortcomings

and their appreciation of staff providing high quality
care while under pressure. It was concluded that
patients regarded the National Health Service as
deteriorating generally (Eileen Evason, Dorothy
Whittington, 1997).
Reva Berman Brown, Louise Bell (1998) described the

research process and the development of the
instrument employed in auditing patients perceptions
of quality and also described the adaptation processes
used in order to place the Parasuraman SERVQUAL
instrument into the health setting in the UK. The
researchers examined the issue of auditing from a new
perspective that solely focused on the views of the
service user. It was guided by two already-validated
research instruments that is, the first model
Parasuraman SERVQUAL instrument (Parasuraman et
al., 1988), and second model developed by the
Heywood- Farmer instrument (Heywood-Farmer and
Stuart, 1990), which looked at professional service
quality, and was originally used to audit the quality of
service provided by General Practitioner (GPs) (Reva
Berman Brown, Louise Bell, 1998).
SERVQUAL Gap Model that measurement of quality

exclusively by means of perceptions of the result is
more valid than by the difference between expectations
and perceptions of the result.
Eileen Evason, Dorothy Whittington, (1997)offered

results of a focus group exercise conducted in 1993
with ten groups of people who had been in-patients, or
who had children who had been in-patients, at a
complex of hospital facilities in Northern Ireland, and
it was found that the focus group methodology was
successful in amplifying feedback previously gleaned
from surveys.
July-December 2011
This scale, which they call SERVPERF, is equivalent to

SERVQUAL but excluding the statements about
expectations, and the weightings. To carry out the research
a questionnaire defined based on the SERVQUAL was
administered on 170 patients in the city of Valencia, and
findings were presented in to three important measures
aimed at measuring service quality which included,
tangibles, reliability or technical quality and process of
performance of the service or functional quality of the
process (Clara Martinez Fuentes, 1999).
Clara Martinez Fuentes (1999) had developed a

methodological analysis for the use of the SERVQUAL
measure scale in the Spanish public health sector to
focus on the analysis of the quality of the service given
by public hospitals, on one hand, and on the
dimensions of this service, which were appreciated by
customers, on the other hand. The conceptual basis of
this study centered on the quality of service in public
hospitals and measured satisfaction by focusing on
structure, process and result. In the literature on service
quality, two models have emerged and the first model
was posited by Gronroos (1982) known as the Image
Model which advocated that perceived total quality
will depend basically on two variables that is, what the
customer already expects of the service; and the manner
in which this service has been performed in its technical
and functional aspects. The second model, known as
the Gap Model was developed by Parasuraman et al.
(1985), also from the idea that the quality of a service
depends on experience and perception and it presented
five kinds of gaps. By synthesizing these two models,
quality in a service, in a positive sense, will exist when
perceived quality exceeds the expected quality.
Cronin and Taylor (1994) made most criticisms of the
39
Ulf Goran Ahlfors et. al. (2001) considered to develop

and undertook clinical evaluation of consumer
satisfaction rating scale (UKU-ConSat).Its results
showed that it could be applied to several relevant
patient categories viz., psychotic; affective; neurotic,
organic and alcohol and substance abuse disorders.
According to both patients and staff the rating scale
promises to become useful both for research and for
improvement of routine psychiatric services. The
construction of the scale permitted both an overall
assessment of patients satisfaction and a more detailed
assessment of specific ingredients of the structure and
process of care and the outcome (Ulf Goran Ahlfors et.
al., 2001).
Jessie L. Tucker, Sheila R. Adams (2001) investigated

the apparent methodological shortcomings of the
literature that considered patients evaluations of their
care. The multidimensional aspects of satisfaction
suggested by previous studies to predict satisfaction
were access, communication, and outcomes. As
suggested by other previous studies, the independent
variables used to predict quality were caring, empathy,
reliability, and responsiveness. Its results suggested
that just two distinct dimensions of the care experience
were found to capture 74 per cent of the variance in
satisfaction-quality, with patients socio-demographic
differences accounting for only 1 per cent. These two
distinct dimensions included provider performance
aspects and access (Jessie L. Tucker, Sheila R. Adams,
2001).
Thomas Meehan et. al. (2002) conducted a research

study to report on the development, testing and
psychometric properties of a brief consumer
satisfaction measure for use with psychiatric inpatients.
Focus group discussions with inpatients were used to
develop a pool of items related to satisfaction with
hospital stay. Instrument development employed three
separate but related phases. In Phase I, focus group
discussions with 66 inpatients at three acute care units
with the aim to generate a pool of items related to
HSB Research Review
Vol. 2 No. 2
standardization in patients satisfaction measurement

considering its three pioneering questions viz., Is patient
satisfaction worth measuring? How can it best be measured?
And how are we to use the results?
patients satisfaction with hospital stay was

conducted. In Phase II, a second sample of 72 patients
from the same three acute units was asked to rate the
51 items in terms of importance in contributing to their
satisfaction. During the Phase III, the draft
questionnaire was administered on 494 consecutive
inpatients that were approached to discharge in acute
and rehabilitation facilities, and 356 completed surveys
were returned.
Gigantesco, P Morosini, A. Bazzoni, (2003) conducted

study with an objective to validate a brief
selfcompleted questionnaire for routinely assessing
patients opinions on the quality of care in inpatients
psychiatric wards which concluded that the
questionnaire seemed to be adequate for evaluating
patients opinions on care in inpatient psychiatric
wards because of its user-friendliness and suitability
for routine use (A. Gigantesco, P Morosini, A. Bazzoni,
2003).
Reva Berman Brown, Louise Bell, (2005) conducted

study aimed to describe the research process, and the
development of the instrument was employed in
auditing patients perceptions of quality improvement
in a community health care trust in a coastal town in
Essex, England. The questionnaire was administered
in by means of face-to-face meetings in the
respondents homes, and through the mail and 123
patients out of the sample of 210 participated in the
research. The instrument had measured health
outcomes in terms of quality improvement from the
users perspective, and highlighted gaps between what
the service offers in terms of quality and users
perceptions of what is delivered. Factor analysis
provided three factors or that included, physical
surroundings; treatment by staff, and understanding
of treatment.
Is Patient Satisfaction Worth Measuring?
On one side the worried alliance of consumer advocates,

marketing specialists, and proponents of patient-centered
care favour the activities of measuring patient satisfaction.
On the other side are skeptics who believe that focusing
on patients satisfaction diverts attention from what ought
to be healthcare providers principal concerns in an era of
resource constraints: inappropriate care; under use of
necessary care; and clinical outcomes such as morbidity,
mortality, and health status. These critics argument have a
point in a sense that compared with measures of technical
quality, data on patient satisfaction are easy to collect, and
many health care organizations have surrendered to the
temptation to stop there. Nevertheless, helping patients
achieve their goals is a fundamental aim of medicine.
Because patients goals and values vary widely, and are
not predictable on the basis of demographic and disease
factors alone, and are subject to change, the only way to
determine what patients want and whether their needs are
being met is to ask them. From this perspective, viewing
care through the patients eyes is an ethical and
professional imperative. Individual clinicians, medical
groups, hospitals, and health plans all have reason to be
interested in patient satisfaction, and not only because
satisfied customers add to the bottom line. Indeed,
arguments over the place of patient ratings usually turn
not on whether measuring patient satisfaction is important,
but on whether satisfaction can be measured reproducibly
and meaningfully (Richard Kravitz, 1998, www.ncbi.nlm.
nih.gov).
Factor analysis yielded three factors comprising of a staffpatients alliance; doctor and treatment issue, and an
environmental component. The in-patients evaluation of
service questionnaire addressed many of the shortcomings
of existing satisfaction measures. It was developed through
extensive consumer involvement, it is simply worded, easy
to score and appears to perform well with acute and
rehabilitation inpatients (Thomas Meehan et. al., 2002).
July-December 2011
How Can Patient Satisfaction Be Measured Best Way?
If patient satisfaction is to take its place alongside morbidity,

mortality, and functional status, several critical measurement
issues must be addressed that are outlined in brief as follows.
Scale Development Dilemma:
First, scale developers and end-users need to be clear about

what they are measuring. Patient satisfaction is not a unitary
concept but rather a refinement of perceptions and values.
Perceptions are patients beliefs about occurrences that
echo what has happened. Values are the weights patients
apply to these occurrences that demonstrate their
desirability, expectation, and necessity. Most contemporary
measures of patient satisfaction employ hybrid questions
that assess perceptions and values simultaneously. Such
hybrid questions have the virtue of linguistic economy but
make it difficult to distinguish perceptions from values.
Given these semantic vagaries, a patient who receives poor
care but has low standards may report the same satisfaction
as a patient who receives good care but whose standards
are unreasonably high. If in the instrument developed
It offered that patient-centered quality improvement

audit should be undertaken regularly so that both nonclinical managers and health care professionals can
establish whether or not they are providing services
that are patient-friendly and effective from the users
viewpoint or not (Reva Berman Brown, Louise Bell,
2005).
DISCUSSION
Patients Satisfaction: An attempt has been made to reflect
on various issues and its implications concerning
40
HSB Research Review
Vol. 2 No. 2
Lack of comparability of patient satisfaction data, however,

remains another hindrance in its expanded use. The biggest
single methodological obstacle to expanding the use of
surveys to targeted groups of patients is the ability to
collect a large enough sample from each group to yield
valid results (ibid).
patients are asked about Did the provider explain what to

do if problems or symptoms continued, got worse, or came
back? Responses to questions of this type are not readily
summed or averaged, and, nevertheless, what is lost in
scalability is gained in interpretability (ibid).
Significance of Questionnaire Instrument in Patient

Satisfaction Measurement:
A Need for Standardization in Patients Satisfaction

Measurement in Hospital Services: In a competitive world,
striving for excellence in every sphere for marching towards
21st century the standardization become essential which
help in getting recognition to organizations practices and
procedures. With the changing trends in medicine in the
healthcare sector, the increasing awareness of the patients
regarding quality medical services, and quest for patient
satisfaction, healthcare/hospital services providers begun
to realize the advantages of adopting a systematic way of
functioning through standardization. The development of
quality standards can bring about uniformity and
consistency in practices and documentation of systems in
use in healthcare organization.
Patients satisfaction measurement with medical care is not

forthright. One approach is to use qualitative methods, but
these are difficult to use for routine large scale service
evaluation. Another alternative is to use a quantitative
questionnaire which must be reliable, consistent, valid and
with minimum errors of responses (Robert K McKinley et.,
al. 1997, http://www.bmj.com).
Relationship Between Patient Satisfaction, Process

of Health Care & its Outcomes:
Another issue relating to patients satisfaction measurement

is with regard to the relation between patient satisfaction,
process of care, and health outcomes. The association
between patients satisfaction and health status represents
a tendency for healthier patients to report greater
satisfaction, rather than a tendency for patients whose
health has improved due to medical care to report greater
satisfaction (Richard Kravitz, 1998, www.ncbi.nlm.nih.gov).
However, many officials in hospitals are still a bit nervous

and skeptical, about introducing standardization activities
in medical practices as they are still not convinced about
impact of standardization on improving the running of
hospital efficiently. But, still no one can deny the fact that
the standardization helps to render better hospital services
to patients as shown in Figure given as below.
Use of Results of the Patient Satisfaction Measurement:
The real issue is concerning use of results of the patients

satisfaction measurement as many satisfaction batteries
can reliably distinguish between physicians who are great
communicators and those who are interpersonally
challenged. It is also related to a variety of downstream
outcomes, such as the propensity to change health plans,
or to sue for malpractice. These results are clearly of interest
to healthcare managers and marketers, but their relation to
clinical quality improvement is weak. Separating patient
perceptions from patient values and using questions that
focus on potentially variable behaviors, of persons and of
organizations, would help. If patient satisfaction
measurement is not to be dismissed as one more health
care fad, many challenges, like philosophical, empirical, and
practical must still be addressed (Ibid).
Figure 2 : Area Needs Standardization in Healthcare/

Hospital Services
Modification in Patients Satisfaction Measurement

Surveys:
Source: http://mdrf-eprints.in/
To illustrate, there are plethora of laboratories in and around
many hospitals giving varied results for the same sample.
Being service oriented does these service providers do not
have a major responsibility to ensure that the results
generated by them are absolutely precise and reproducible.
These standards can be developed and achieved by
ensuring that equipment should be systematically inspected
and regularly calibrated to obtain accurate and reliable
results. periodical validation of results to avoid Inter and
Intra observer variations, and avoiding breakdown costs
through regular preventive maintenance supported with
The variations in the patients satisfaction measurement

are an impediment to make it a reliable part of the quality
equation. Even if variation of patient satisfaction
measurement can be minimized to permit meaningful
comparisons across providers, questions remain as to adapt
to patient satisfaction surveys with appropriate modification
so it can fulfill an expanded role of quality of healthcare
measurement (Christopher Guadagnino, 2003).
July-December 2011
Lack of Comparability of Information in Patients

Satisfaction Measurement:
41
HSB Research Review
Vol. 2 No. 2
compulsory calibration of all equipment and maintenance

of such calibration records. Further cleanliness and hygiene
must form part of quality of health care in the hospitals.
Hospital-acquired infection can further aggravate the
patients difficulty. A major source of such infection is
haphazard disposal of excrement, urine and other body fluid
resulting in high risk of cross infections that may occur
due to contact with such infectious wastes, splash of these
body fluids and airborne infectious aerosols contaminating
utensils, test tubes etc., that are used without proper
cleaning. An efficient cleaning with high impact washing
water followed by most steam heat destroys any pathogens
remaining on the test tubes and other surfaces. The closed
system disposal equipment that is incinerator need to be
installed, and Needle tips must be incinerated through the
needle burner/cutter and then packed separately, labeled
and handed over to the cleaners.
July-December 2011
Second, it provides an indirect measure of many other

dimensions. It is usually correlated with effectiveness of
medical treatment. The service quality of medical services
too is multifaceted and its assessment requires manifold
measures of process viz., response times, prescription, and
admission rates combined with measures of outcome such
as health status and patients satisfaction.
Low patient satisfaction might be a result of poor obedience
of procedures, waste of resources and suboptimal clinical
outcome. Thus, Patients satisfaction should be one of the
key objectives of all medical services and need be included
as an outcome measure.
The continual improvement in service quality of medical
services is therefore fine tuned with measurement of
patients satisfaction. Customers have general expectations
form hospital services which increase the complexity in
providing satisfaction to patients to have clinical core
competence. It implies that cure rate does matter, and lavish
physical facilities can not substitute good clinical methods;
rational therapy; display of confidence, and evidence based
practices Customers expect that medico professionals must
honor the appointments which must be accurate and flexible
supported with communication in commonly used local
language instead of use of medical jargons by doctors. It is
essential that doctors patiently listen to patients problems
and give them sufficient time. Customers want that doctors
should display personal concern with befitting body
language towards the patients, and should possibly explain
the lot about their illness and treatment. The ParaMedical
staff should be well-equipped with adequate health
education and display concern, courtesy, promptness,
responsiveness, and empathy towards patients in their
behavioural patterns. They need to keep positive attitudes
and should preferably be flexible in handling patients in
person and in case of telephonic conversations; promptness
in all responses, and emergency case, admissions etc.
should be focused. Customers anticipate that they are
provided with reasonably good physical facilities in both
types of treatment situations that are outdoor as well as
indoor, and location of the hospital should be approachable
with good parking facilities, clean with adequate hygienic
sanitary facilities. It should be preferably supported with
child friendly environment, recreation facilities with
adequate space for movements. Customers expect proper
documentation with legible prescriptions; detailed
discharge summary certificates, prompt issue of papers for
Mediclaim, and clear explanation for administration of
medicines to ensure compliance. Customers want that they
should be provided with hospital information brochure and
hospital should display informative sign boards. They
expect transparency in financial matters, which is one of
the major causes for dissatisfaction; proper display of
routine consultation and indoor charges. The patients
should be properly informed about the expected expenditure
before any procedure or admission. Customers wish that
Medical records are the folders which hold information

regarding diagnosis and treatment. In many cases these
records are not handled with the required care resulting in
incomplete records, missing forms, illegible handwriting,
unclear and unaccountable statements and improper filling.
For this uniform methods and standards should be brought
in to practice for keeping Medical Records. It is remarkable
that even examination done by doctors can be standardized,
thus avoiding wrong interpretation, missing diagnosis and
unnecessary variation in patient care practices (http://mdrfeprints.in). So, standardization and continuous interaction
with patients shall enable healthcare service providers to
solve problems of both patients and hospital service
providers that would be helpful also in developing qualityoriented technologies, procedures, and systems, which can
earns patients positive word of mouth through delivery of
desired patients satisfaction that can be applied as shown
in a figure given as below.. The benefits of standardization
are highlighted in figure number 03 as given below.
Figure 3: Results of Standardization in Hospital Services
The Quality Diamond Model of Patient Satisfaction:

Patients satisfaction measurement is a complex task relating
to hospital Services as provided by different types of
hospitals which are significant from two perspectives. First,
patients constitute the hospitals direct clientele. The
patients overall satisfaction is crucial aspect of the hospital
service apart from other dimensions like technical quality
of medical care, and effectiveness of medical treatment.
42
HSB Research Review
Vol. 2 No. 2
July-December 2011
the hospital should make use of modern (information)

technology, and adapt it with new diagnostic and
therapeutic methods. The patients desire to have easy flow
between various services to save time. Thus, the healthcare
service providers consider factors affecting customers
expectations which include nature of medical illness; past
experience in the same set up; experience at other set up;
financial and social standing; level of education etc.
(www.iapindia.org).
focuses on quality health care, that is safe, equitable,

evidence-based, timely, efficient and patient-centered
healthcare services.
A diamond model of quality for its delivery for patients

satisfaction is given in figure as below
Patients Satisfaction Survey expansion also raises the

question whether patient satisfaction measurement should
broaden its focus beyond quality of service and begin to
measure perceptions of clinical outcomes. Some believe
that patient surveys should add more specific questions
about clinical quality to open a new window on provider
care practices and further drive quality improvement, while
others see fundamental barriers to integrating perceptions
of service and clinical quality. While satisfaction
measurement is still being used primarily to monitor and
improve service excellence, some hospitals are beginning
to ask more sophisticated, clinically-oriented patient
satisfaction questions, such as whether a person felt safe
during hospitalizations and whether they observed a
medical error occur.
Hospital surveys have made physicians much more aware

of patients expectations of service quality as a separate
component of quality of care. An increased focus on
enhancing relationships with patients can result in a
reduction in medical errors, and more satisfied patients are
less likely to file medical malpractice lawsuits.
Figure 1 : The Quality Diamond Model of Patient

Satisfaction
As patients become more sophisticated in their

understanding of healthcare service provider, outcomes and
complications rates, their perceptions of clinical quality
should increasingly become part of their evaluation and
satisfaction ratings.
There is going to be some movement in the healthcare
industry toward asking patients more direct questions
about the perceived level of the quality of care delivered,
such as whether they were given the wrong medicine,
whether the provider made the diagnosis accurately, and
whether the patient got better.
Source: www.iapindia.org
CONCLUDING REMARKS
Given the push toward increased provider accountability
and health care quality improvement initiatives, there is no
question that the attention and weight given to patient
satisfaction is going to increase. Patients satisfaction data
represents real events that transpire between providers and
patients, and that it needs to be seen as equivalent to clinical
indicators as a parameter of quality of care. The patient is
the final arbiter of what the experience of care has been,
and if healthcare service provider does not pay attention
to it at some level, they will not understand how their
processes can be improved so that the patient can walk
away with an experience that is multidimensionally okay.
Satisfaction is related to the overall effectiveness of
communication between physician and patient, which is
necessary for achieving good outcomes, while ineffective
communication can lead to poor quality. Satisfying the
patient and addressing their concerns is an outcome of it
as the patient is the best judge of whether their needs are
being met. The changing philosophy of medicine has led
to an increased sensitivity to patient satisfaction, and it
But such a trend has limitations, that is, patient perception

data about clinical processes and outcomes may lack
validity, and not many tools currently exist to measure what
is going on inside a hospital or a physicians office. There
is also a belief that patient satisfaction measurement is best
kept to the quality of service side rather than become
integrated with quality of care issues. The importance and
limitations of expanded patient satisfaction measurement
can be expressed as The perfect health care delivery is a
perfect outcome and a perfectly happy patient (ibid).
The very process of measuring patient satisfaction
reinforces a philosophy of quality by alerting patients
satisfaction that physicians are held accountable and
showing physicians that patients are pleased with the
quality of care they receive. The physician ratings tend to
be the highest scores of any category on the surveys, which
continues to reinforce for physicians the positive
relationships they foster with patients, who in turn
43
HSB Research Review
Vol. 2 No. 2
July-December 2011
of Surgical Care International Journal of Health
Care Quality Assurance, MCB University Press
Limited, Vol. No.7, No. 3, 1994, PP. 27-32.
encourage other patients to seek care at same hospital.

Quality improvement feedback mechanisms are more useful
in addressing provider-related concerns, such as the
complaint and grievance process, and provider access and
availability review. Healthcare Parishioners use the surveys
to retain patient populations and attract more market share,
to verify patient satisfaction results, and to assess and
measure specific initiatives taken by healthcare service
providers.
Gigantesco, P Morosini, A. Bazzoni (2003); Quality Of

Psychiatric Care: Validation of an
Instrument for Measuring Inpatient Opinion; International
Journal for Quality in Health Care, Published by
Oxford University Press, 2003, Vol. No. 15, No. 1,
PP. 73-78.
Practices that do wish to audit patient perceptions can

acquire customized surveys to identify issues specific to
the nuances of their practice, to identify services that they
may need to add to the practice, to reinforce areas of
excellent performance and to substantiate suspected
problems. Patient satisfaction data are also valuable for
staff training, morale-building and creative marketing.
Hana Kasalova (1995); Rectification of the Primary Data

Obtained by a Patients Satisfaction Survey;
International Journal of Health care Quality
Assurance; MCB University Press Limited; Vol.
No. 8, No. 1, PP. 15 17.
http://mdrf-eprints.in/264/1/Why_hospital_ should_go_
in_for_ISO_9002_certification.pdf, Retrieved on
26/12/2009.
Patients satisfaction measurement and interaction with

patients would be unable to solve their problems and help
to develop qualityoriented technologies, procedures and
systems. This can reduce healthcare costs while providing
customer satisfaction. A satisfied customer is an image
builder of a healthcare organization/hospital. Undoubtedly,
the healthcare organization/hospital not only builds its own
image and good-will but also develops its services through
quality standardization. The hospital thus earns customer
loyalty because it aims to continuously satisfy their
customers.
Human development in South Asia, 2004 (2005); Published

for the Mahbubul Haq Human Development
Center; Oxford University press, 2005.
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45
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Vol. 2 No. 2
EFFECTIVENESS OF
KNOWLEDGE
MANAGEMENT
SYSTEMS AN
EMPIRICAL STUDY OF
TEXTILE INDUSTRY OF
PUNJAB
July-December 2011
ABSTRACT
Knowledge management systems are generally computer
based systems which are primarily designed to support the
implementation of knowledge management within the firm.
This includes various activities namely knowledge creation,
transfer and sharing. This paper aims to find effectiveness
of km systems in textile industry of Punjab. The study finds
that km systems need to be reviewed in majority of the
units to make these more effective.
Radha Kanwal Sharma

Asst Prof, Chandigarh Business School, Landran, Mohali
radha03@gmail.com
Keywords : Knowledge management, Effictiveness, Textile

industry, Knowledge harvesting.
INTRODUCTION
Prof Prem Kumar

Vice Chancellor, Bahra University, Shimla,
drpremkumar@rediffmail.com
Knowledge management system is a computer-based

system that supports the implementation of knowledge
management within firms, so that distribution and accessing
of knowledge becomes more efficient and effective
(Rachman, 2007). Many benefits to be gained from the
application of knowledge management systems include
(Beijerse,1999): improving efficiency, improving market
position, improving corporate sustainability, improving
corporate profits, optimize the interaction between product
development and marketing, improving the competence of
the group, making learning professionals more efficient and
effective, providing a better basis for decision making,
improve communication between knowledge workers,
increasing the synergy between knowledge workers and
make companies focus on core business issues.
It is important to know the effectiveness of the knowledge
management system in a company as it provides a basis for
company valuation, stimulate management to focus on what
is important and justifies the investments in knowledge
management related activities. The objective of this study
has been designed keeping all these factors in mind.
Methodology and Findings: To study the effectiveness of
knowledge management systems in textile industry of Punjab,
twenty four textile units have been selected. The units have
been classified in three categories namely G1 (with turnover
up to 200 crores), G2 (with turnover from 201 to 500 crores) and
G3 (with turnover of more than 500 crores). Data has been
collected from people concerned with top management. The
sample size is 240. Well structured questionnaire has been
used to collect the data which has been designed after extensive
study of literature and discussions with experts. Five point
Likert scale ranging from (5) strongly agree, (4) agree, (3)
46
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Vol. 2 No. 2
July-December 2011
neither agree nor disagree, (4) disagree and (5) strongly

disagree has been used to rate the response. All the
comparisons are made with one way ANOVA.
change increase, this scanning activity is intensified and

directed by explicit definitions of purpose, scope, and focus.
This finding is supported by many studies.
During the study, following findings have been made:
Newgren et al. (1984) compared the economic performance

of twenty-eight US corporations that practiced
environmental scanning with twenty-two non-practicing
firms. Performance was measured over a five-year period
(1975-1980) using the firms share price/earning ratio,
normalized by industry. Data analysis showed that scanning
firms significantly outperformed non-scanning firms. The
average annual performance of the scanning firms was also
consistently better than the non-scanning firms throughout
the period. The study concluded that environmental
scanning and assessment has a positive influence on
corporate performance.
Best Techniques for Knowledge Creation: Various

techniques are used in industry for knowledge creation.
Effectiveness of each technique varies for different
companies. As seen from the table 1 environmental
scanning seems to be the most effective technique (overall
mean score is 4.17). Categories wise score indicate that G1
has rated it to be most effective followed by G2 and G3
respectively (mean scores are 4.31, 4.25 and 3.86 for G1, G3
and G2 respectively).
Without taking into account relevant environmental
influences, a company cannot expect to develop its strategy.
For an organization to survive and prosper, the strategists
should master the challenges of the profoundly changing
political, economic, technological, social, and regulatory
environment. To achieve this broad perspective, the
strategists develop and implement a systematic approach
to environmental scanning. As the rate and magnitude of
Scanning also benefits small businesses. In an in-depth

case study of environmental scanning at the Georgia Center
for Continuing Education, Murphy (1987) concluded that
scanning is an important component of the organizations
strategic planning process, improving the Centers ability
to react to and implement change in response to external
Table 1. Best techniques for knowledge creation in different sized categories of textile industry
Best techniques for
knowledge creation
Environmental scanning
Data mining/Text mining
Business simulation
Content analysis
Total
G1
Mean
4.31
3.85
3.31
2.85
14.32
SD
0.72
0.87
0.61
0.62
1.23
G2
Mean
3.86
3.86
3.57
2.81
14.10
SD
1.00
0.84
0.73
0.67
0.98
G3
Mean
4.25
3.75
3.50
3.30
14.80
SD
0.84
0.84
0.51
1.09
1.29
Overall
Mean
SD
4.17
0.85
3.83
0.85
3.42
0.64
2.92
0.75
14.33
1.19
F-ratio
1.08
0.19
0.61
1.30
1.45
management, and future orientation. The most significant

effect was that scanning provided a structured process
which encouraged people to regularly participate in faceto-face discussions on planning issues. As a result, the
organization was able to develop a number of strategic
options that could be used proactively to cope with external
change. Subramanian and his associates studied scanning
and performance in US Fortune 500 companies and found
support for a relationship between performances, measured
by profitability and growth, and advanced scanning
systems: firms using advanced systems to monitor external
events showed higher growth and profitability than firms
that did not have such systems (Subramanian et al., 1993).
factors. Furthermore, scanning has also contributed to

increased communication among the line and staff
personnel of the organization, and greater employee
involvement in the decision making process.
West (1988) examined the relationship of organizational
strategy and environmental scanning to performance in the
US foodservice industry. Data was collected from sixtyfive companies over a period of 1982 to 1986. The study
found that strategy and environmental scanning had a
substantial influence on the firms return on assets and
return on sales. High-performing firms in both
differentiation and low cost strategies engaged in
significantly greater amounts of scanning than lowperforming firms in those two strategic groups. Daft et al.s
1988 study of scanning by chief executives found that
executives of high-performing firms (those with higher
return on assets) increased the frequency, intensity, and
breadth of their scanning as external uncertainty rose.
Data mining with mean score of 3.83 is second most popular

technique in textile industry. This finding too is confirmed
by the various studies that prove that an organization
encompassing data mining techniques can enjoy a number
of benefits; these include understanding customers
behavior, making a judgment on the effectiveness of the
companys web site if there is one, and benchmarking
marketing campaigns (Doherty, 2000; Mena, 1999).
Ptaszynski (1989) examined the effect of the introduction

of environmental scanning in another educational
organization. The study found the scanning to have a
positive effect on the organization in these areas:
communication, shared vision, strategic planning and
The study conducted by Folorunso and Ogunde (2004)

concludes that the process of extracting knowledge hidden
47
HSB Research Review
Vol. 2 No. 2
from large volumes of data (data mining) has proved very

successful in solving many business or scientific problems
to achieve competitive advantage. The Data Mining model
can be deployed on the massive data collected from past
business processes of the organization which then yields
the much needed previously unknown knowledge and
trends needed by top managers or decision makers in the
organization for effective business process redesigning.
July-December 2011
very high cost. As seen in table 1, it is not much popular for

knowledge creation. Content analysis is an effective tool
but this technique being complicated is not commonly used
in the textile industry (overall mean score 2.92).
The Best Technique for Sharing and Learning Knowledge
After thorough analysis of knowledge captured or created,
it needs to shared and transferred to individuals to
encourage learning. There are different techniques being
Business simulation in spite of its advantages involves

Table 2. Best techniques of knowledge sharing in different sized categories of textile industry
Best techniques for
knowledge sharing
After action reviews
G1
Mean
4.38
SD
0.74
G2
Mean
SD
4.29
0.70
G3
Mean
SD
4.75
0.44
Overall
Mean
SD
4.42
0.70
F-ratio
1.17
Identifying and sharing

best practices
3.68
1.03
3.69
0.73
3.35
0.86
3.63
0.93
1.24
Communities of practice
3.08
0.79
2.96
0.20
3.20
0.85
3.07
0.69
0.97
Story telling
2.85
0.54
3.23
0.49
3.83
1.24
3.12
0.77
2.39*
White pages
2.92
0.48
2.93
0.97
3.00
0.96
2.94
0.74
0.42
Total
16.92
1.45
17.09
1.61
18.13
2.00
17.17
1.65
3.61**
** Significant at 5%,* Significant at 10%

a very common practice in majority of units as mean scores
are relatively low (mean scores are 3.20, 3.08 and 2.96 for
large, small and medium categories respectively). At the
time of study online CoP existed in Trident only.
used for this purpose. Table 2 presents one way ANOVA

calculations regarding the best techniques of knowledge
sharing as rated by three groups: G1, G2 and G3.
It can be seen that overall mean value is maximum (mean
score 4.42) for after action review (AAR) making it most
popular technique for knowledge sharing. AAR consists
of establishing a clear perspective of situation, task,
purpose, and end-state to inform planning. Generally a
Before Action Review is carried out to verify alignment on
the intent and plan, anticipate challenges, and to establish
a plan for execution. Following the action (or periodically
throughout it), AARs dig into gaps between intended and
actual results in order to identify causes - and commit to
key sustains and improves for the next period of action.
This cycle fuels learning and accountability by testing
plans, assumptions and execution against actual results. It
can be seen from table that it is rated to be most effective
by G3 followed by G1 and G2.
Story telling though is the third commonly used technique

for knowledge sharing but it is not considered to be much
effective. Table 2 shows that story telling is popular
technique in G3 (mean score 3.83) unlike other two
categories (mean scores are 3.23 and 2.85 for G2 and G1
respectively). In many firms like Cheema Spintex this
technique is used only at the worker level and not for
executives. From the value of F ratio it can be inferred that
means are significantly different for story telling which is
not considered effective by G1 as compared to G2 and G3.
White Pages are not at all used in any of the units (mean
scores are 3, 2.93 and 2.92 for G1, G2 and G3 respectively).
Exception has been Trident where at the time of study, the
knowledge repository was being made and designing White
Pages was on the agenda. This can be attributed to the
findings related to limited use of company intranet in the
textile units.
Identifying and sharing best practices is the second most

popular technique used (as seen in table 2, overall mean
score is 3.63). Category wise mean scores are 3.69, 3.68 and
3.35 for G2, G1 and G3 respectively, indicating that G1 and
G2 have rated this technique more effective than G3.
Identifying the organizations best practices helps its
employees to learn from each other and reuse proven
practices. Effective sharing of best practices helps an
organization to raise the overall quality of services, improve
operations at poorly performing units so that their
performance more closely approaches that at the best units
and avoid duplication of effort or reinventing the wheel.
Best Technique for Organizing and Managing Knowledge:

Table 3 shows that overall mean value is maximum (overall
mean score 3.71) for knowledge harvesting (mean scores
are 3.78, 3.69 and 3.53 for G1, G2 and G3 respectively)
making it the most effective technique. The main reason
behind this is that only required knowledge is obtained
through knowledge harvesting. This saves lot of time as
well as cost in acquiring and sorting out the relevant
knowledge. Research also shows that collecting and sharing
expert knowledge can produce a long-term competitive
Table also shows that Communities of practice (CoP) is not

48
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Vol. 2 No. 2
July-December 2011
Table 3. Best techniques of organizing and managing knowledge in different sized categories of textile industry
Best techniques for organizing
G1
and managing knowledge
Mean
Knowledge audit
3.56
SD
1.11
G2
Mean
SD
3.51
0.94
G3
Mean
SD
3.45
1.22
Overall
Mean
SD
3.53
1.08
F-ratio
0.27
Knowledge mapping
3.13
0.84
3.20
0.67
3.03
0.16
3.12
0.74
0.34
Knowledge harvesting
3.78
0.89
3.69
0.47
3.53
0.51
3.71
0.74
0.46
Intranet
3.26
0.75
3.29
0.46
3.40
0.88
3.31
0.70
0.52
Total
14.24
1.99
13.69
1.29
13.50
1.62
13.95
1.77
1.04
mean scores of three groups (mean scores are 4.26, 3.88

and 2.85 for G2, G1 and G3 respectively). It is apparent that
this problem is more pronounced in G2 and G1 whereas
professional at G3 do not face such problems. This point
towards knowledge oriented culture in G3 where employees
are encouraged to adopt knowledge related behavior.
advantage for an organization (Nonaka 1994; Alavi and

Leidner 2001; Tsai 2001; Lee and Choi 2003).
Knowledge audit is the second most effective technique
for knowledge organizing and management (overall mean
score is 3.53).
This finding is also supported by research. Burnett et
al.(2004) contend that the results of a knowledge audit
provide an organization with valuable information including:
(1) the knowledge needs of the organization, (2) what
knowledge assets are available and where they are located,
(3) if knowledge gaps or bottlenecks exist, and (4) the
knowledge flow within the organization. A side effect of
conducting a knowledge audit is that people in the
organization are stimulated to think more about the
knowledge that is important to them. The greatest benefit
of a knowledge audit is the resulting inventory of knowledge
sources and flows. A major disadvantage of conducting a
knowledge audit is the amount of time required to interview
and observes the knowledge workers (Nissen, 2006).
Research indicates that human resource management

practices (HRM), based on motivations and incentives, is
not only important but constitutes one of the most
strategically relevant resources (Milgrom and Roberts, 1990,
1995; Baron and Kreps, 1999). New types of incentives and
procedures permitting an efficient knowledge creation and
sharing, within teams, are required to encourage people in
a knowledge-based economy.
Stimulating creativity and sharing knowledge become
essential and require appropriate HRM practices (Gupta
and Singhal, 1993). Recent empirical evidence tend to prove
that knowledge development and utilization can be
facilitated by human resource practices (Leiponen, 2000;
Laursen and Manhke, 2001; Laursen, 2002; Galia and Legros,
2005; 2006). Hinds (2003) also highlight the obstacles posed
by sharing of knowledge. There are two things that cause
delays in sharing experiences, namely: motivation and
cognitive. The biggest problem in the sharing of knowledge
is how to motivate community members to share knowledge.
Motivation therefore is a key element in the sharing of
knowledge and technologies only facilitate and expedite
the process of sharing knowledge.
Knowledge mapping and interanet are not considered to

be effective techniques by majority of the units (overall
mean scores being 3.12 and 3.31 respectively). From the
value of F ratio it can be inferred that means are not
significantly different for any of the categories.
Barriers in Knowledge Creation: Knowledge as input is
not always captured externally. Expertise of an organization
lies in the fact that how it creates knowledge from within
using the technology as well as minds of its employees.
Knowledge creation leads to innovation and incremental
improvements resulting into competitive advantage of the
company. Table 4 presents one way ANOVA calculations
of scores of barriers in knowledge creation as recorded by
three groups i.e. G1, G2 and G3.
Resistance to change results into lack of receptivity to new

ideas and adaptation. If top management shows this
resistance , it can pose multiple problems like discouraging
experimentation and innovation along with poor or no
budgetary allocation for the same but such a problem is
not observed in textile industry as the overall mean score
for this is low (2.63). During the study it has been observed
that respondents showed positive attitude towards
management and many said that their management
welcomed any new move that can be fruitful for the
company. From the value of F ratio it can be inferred that
means are significantly different for resistance to change
by top management (G2 emphasizing it more than other
two categories).
The biggest barrier that the firms seem to suffer in

knowledge creation is the inadequate reward for knowledge
contribution (mean score 3.82). In most of the cases the
pressure to innovate is very high from the top management
but the reward is generally not considered as an option to
encourage people to contribute knowledge. There is
generally lack of extrinsic as well intrinsic motivation for
employees. This becomes the biggest deterrent for
knowledge creation or sharing.
As far as poor budget and lack of understanding of

customers is concerned, neither of these factors poses any
F ratio indicates that there is significant difference in the

49
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Vol. 2 No. 2
July-December 2011
Table 4. Barriers in knowledge creation in different sized categories of textile industry

Barriers in knowledge
creation
Poor understanding of
customer needs
G1
Mean
2.02
SD
1.10
G2
Mean
SD
1.81
0.95
G3
Mean
SD
1.65
0.74
Overall
Mean
SD
1.90
1.01
F-ratio
2.19
Resistance to change
2.38
1.08
3.14
1.47
2.50
1.52
2.63
1.32
3.61**
Skill shortage/lack of talent
2.69
0.91
2.71
1.29
1.73
0.45
2.54
1.05
3.17**
Insufficient budget for

innovation/ research
2.46
1.01
2.90
1.12
2.25
1.10
2.55
1.08
1.67
Inadequate reward for

contribution
3.88
0.53
4.26
0.74
2.85
1.33
3.82
0.90
5.11***
Insufficient information
technology
2.16
0.79
2.06
0.48
1.55
0.50
2.03
0.70
1.84
Govt. regulations. If any
2.77
1.12
2.57
0.91
2.55
1.15
2.68
1.07
0.73
Total
18.36
3.71
19.46
2.81
15.08
5.06
18.13
4.00
6.98***
** Significant at 5%, *** Significant at 1%

problem for knowledge creation. It is clear from the previous
discussion that customers are most important for firms and
this barrier if exists can be suicidal for the company. All the
business moves depends upon knowledge bank related to
the customers. All the knowledge creation relating to
customer satisfaction is completely dependent upon this.
Any misunderstanding in this context can lead to
substantial losses. It has been found that even though top
management does not reward for knowledge contribution,
it does encourage experimentation has liberal budget
(overall mean score for this variable is low: 2.55). This is an
indication of positive attitude of top management. This is
echoed by Holsapple and Joshi (2000) that the financial
resources available to firm place a ceiling on knowledge
creating activities. Increasing the financial resources
available for knowledge creation may influence the quality
of knowledge created, the quality of result or even the
efficiency of knowledge creation.
Further it can be seen from table that govt. and political

environment does not have any effect on knowledge
creation within the companies.
Characteristics of Existing Knowledge System: Though
the formal organized knowledge set up is missing in majority
of the organizations, still people talk of the knowledge and
its importance in these trying times of cost cutting and
recession. People at different levels are provided knowledge
in different ways. For top and middle level, there are
conferences and seminars, training sessions abroad,
meetings with experts and availability of research journals
and other relevant articles. For people at other levels, there
are regular training sessions; various work improvement
concepts like quality circles, Kaizen etc. which help sharing
knowledge etc.
Table 5 shows that majority of the respondents do not seem
satisfied with the existing knowledge system. Majority
thinks that the existing system does not fit well into the
existing culture (overall mean score is 3.28). Further F ratio
indicates that the mean scores are significantly different
for this variable in all three groups with lowest mean score
in G3 (category wise mean scores are 3.42, 3.33 and 2.73 for
G1, G2 and G3 respectively). This indicates that level of
dissatisfaction among executives regarding current
knowledge setup is higher in G3. As discussed before, G3
units are larger in size and operations. Their work culture is
pro change and these units are professionally managed.
Employees therefore have higher expectations and want a
streamlined knowledge set up in their units.
Skill shortage results when there is dearth of talented

people or under qualified people who can not be trained
further to meet the technical and other requirements. From
the table 4, it can be seen that overall mean score for skill
shortage are very low, meaning thereby that there is no
shortage of talent. F ratio indicates that G3 gives this factor
least importance as compared to G1 and G2. In a state like
Punjab where literacy rate and per capita income are high,
it is not difficult to find people with right skills and talent.
So companies do not come across such a problem most of
the time.
Table 4 also shows that IT is not any problem for any of the
categories. It therefore can be inferred that although textile
units are not much techno savvy, these are well equipped
with required IT and this never poses a problem in
knowledge creation.
Nonaka and Konno (1998) suggest that the knowledge

creation involves social processes of socialization and
externalization. Individuals hold certain beliefs and in the
process of socialization these beliefs are shared and this
becomes tacit knowledge. Whenever these beliefs are
50
HSB Research Review
Vol. 2 No. 2
July-December 2011
Table 5. Characteristics of existing knowledge system in different sized categories of textile industry
Characteristics of
existing KM system
It fits into culture of the
organization
Small
Mean
SD
3.42
1.05
Medium
Mean
SD
3.33
1.26
Large
Mean
SD
2.73
1.09
Overall
Mean
SD
3.28
1.14
F-ratio
2.41*
It is appropriate and
needs no improvement
2.08
0.64
2.26
0.81
2.13
0.79
2.14
0.72
0.87
It meets knowledge needs

of every employee
2.92
1.43
2.81
1.44
3.65
1.61
3.01
1.49
1.11
It is meant for people at all

levels in the organization
2.97
1.21
3.06
0.84
3.25
1.32
3.19
1.20
2.51*
It is easily accessible to all 3.71

depending upon the relevance
of knowledge required
1.18
3.43
1.21
2.88
1.18
3.49
1.22
2.63*
It yields desired results
3.46
1.08
3.49
0.83
2.40
0.81
3.29
1.05
4.71***
It is efficient and quick to use 3.54
1.24
3.00
1.22
2.50
0.78
3.21
1.23
3.65**
It needs to be reviewed
4.15
0.54
4.20
0.73
4.10
0.84
4.16
0.65
0.56
Total
26.24
2.70
26.37
3.76
23.63
2.63
25.84
3.18
5.67***
***Significant at 1%, ** Significant at 5%,* Significant at 10%

externalized, this tacit knowledge becomes explicit
knowledge. This indicates the importance of beliefs to value
creation. A positive culture in an enterprise leads to higher
value creation. Koudsi(2000) also agrees that the biggest
challenge for knowledge management is not technical one
but a cultural one. It is the difficult task of overcoming
cultural barriers especially when the sentiment that holding
the information is more important than sharing it (Anthans,
1998). This is supported by Reynold at the Delphi group in
Boston who released a study in which 53 percent
respondents cited culture as the biggest obstacle while
deploying knowledge management (Cole Gomoiski, 1997).
knowledge is generally available for people at top or middle

levels. Other employees have to approach their superiors
for their knowledge needs. The solution is not always
satisfying as the answers from each individual are not
standardized and up to the mark. The outcomes stress on
the need of improvement in the existing system.
As seen from the table 5 (overall mean score is 3.49), the
existing knowledge system in whichever form it may be, is
easily accessible to all. F ratio shows that means are
significantly different for all three groups (mean scores are
3.71, 3.43 and 2.88 for G1, G2 and G3 respectively) i.e. G1
and G2 categories the scores give a positive indication
meaning thereby that knowledge system is easily accessible
to all. This may be due to small set up of units. But in G3
category the picture is gloomy (mean score 2.88). The larger
set up, more intervening levels and higher expectations of
the employees may be the reasons behind it.
In companies like Vardhman, Trident ,Nahar group, OCM,

Oswal Woolen Mills, Jindal Cotex where there is no dearth
of talented people who aspire to have good career growth
and join the companies after getting education at premium
institutes of the country, the existing knowledge system
falls below their expectations. As textile industry is a
traditional industry where the control of majority of the
units is still in the hands of families, this response is an
indication for the business to move towards change.
Overall mean score for variable existing knowledge system

yields desired results is 3.29 which are again low. F ratio
shows that means are significantly different for three groups
(mean scores are 3.46, 3.49 and 2.40 for G1, G2 and G3
respectively). It indicates that employees in G3 are most
dissatisfied with the existing knowledge systems tendency
to yield desired results as compared to G1 and G2. This further
highlights the scope of improvement in existing system.
It is clear from the mean scores (overall mean scores are

2.14 and 3.01 respectively) that neither the existing
knowledge system is appropriate, nor does it fulfill
knowledge needs of every employee which leads to the
conclusion of low knowledge penetration.
Overall mean score for variable concerning efficiency and

speed of existing knowledge system is 3.21. F ratio indicates
that means regarding this variable are significantly different
for three groups (mean scores are 3.54, 3 and 2.50 for G1, G2
and G3 respectively). Lowest mean score for G3 again
shows maximum level of dissatisfaction over the efficacy
of existing system.
Table 5 shows that existing knowledge system is

inappropriate for people at all levels of hierarchy (overall
mean score for this is 3.19 which is relatively low). F ratio
indicates that mean score for G1 is minimum in this regard
(category wise mean scores are 2.97, 3.06 and 3.25 for G1,
G2 and G3 respectively). It has been observed that
51
HSB Research Review
Vol. 2 No. 2
It can be seen from table 5 that overall mean score for need
for improvement in existing knowledge system is 4.16 which
is significantly high. All the three groups seem to agree
unanimously to this fact that existing knowledge system
needs to be reviewed.
Galia, F, and Paris,D.(2006), An Invisible Frontier?

Intrinsic-Extrinsic Motivations and Knowledge
Sharing in Firms working paper (No.16), CEREN.
Gupta, A.K. and Singhal, A. (1993), Managing Human
Resources for Innovation and Creativity,
Research Technology Management, Vol.36,No. 3.
Hinds, P.J. and Pfeffer, J. (2003),Why Organization Dont
Know What They Know, Sharing Expertise
Beyond Knowledge Management,MIT Press
Koudsi, S. (2000), Actually, It Is Brain Surgery. Fortune,
March 20: 233.
Holsapple, C. and Joshi, K. (2000), An investigation of
factors that influence the management of
knowledge in organizations, Journal of Strategic
Information Systems, Vol 9(2), 235-261.
Laursen, K. (2002), The importance of sectoral differences
in the application of complementary HRM practices
for innovation performance, International
Journal of the Economics of Business, Vol 9, No.1,
pp:139-156.
Laursen, K. and Mahnke, V. (2001), Knowledge strategies,
firm types, and complementarity in human-resource
practices, Journal of Management and
Governance, Vol 5, No.1, pp: 1-27.
Lee, H. and Choi, B. (2003), Knowledge management
enablers, processes, and organizational
performance: An integrative view and empirical
examination, Journal of Management Information
Systems, Vol 20, No.1, pp 179-228.
Leiponen, A. (2000), Competencies, innovation and
profitability of firms, Economics of Innovation
and New Technology, Vol 9, No.1, pp: 1-24.
Mena J. (1999), Data Mining Your Website, Digital Press,
ISBN: 1-55558-222-2, USA.
Milgrom, P. and Roberts, J. (1990), The Economics of
modern manufacturing: Technology, strategy, and
organization, American Economic Review, Vol 80,
no.3, pp 511-528.
Milgrom, P. and Roberts, J. (1995), Complementarities and
fit: strategy, structure and organization change in
manufacturing, Journal of Accounting and
Economics, Vol. 19, pp 2-3.
Murphy, M. (1987), Environmental Scanning: A Case Study
in Higher Education. Athens, GA: University Of
Georgia. (Ed.D. Thesis)
Newgren, K. E., Rasher, A. and Laroe, M. E. (1984), An
empirical investigation of the relationship between
environmental assessment and corporate
performance, Paper read at Proceedings of the
44th annual meeting of the Academy Of
Management, August 12-15 1984, at Washington DC.
Nonaka,I. (1994), A dynamic theory of organization
knowledge creation, Organization Science, 5 (1):
14-37.
Conclusions: From discussions above, following

conclusions can be made:
1.
Environmental scanning is the best technique used for

knowledge creation. This is followed by data mining.
2.
The most effective technique of knowledge sharing is

considered to be after action review. Sharing best
practices is moderately important technique.
3.
Knowledge harvesting is considered to be the most

effective technique when it comes to organizing and
managing knowledge. This is followed by knowledge
audit.
4.
Inadequate reward for contribution is the biggest barrier

faced by most of the textile units which hinders the
knowledge creation.
5.
The existing knowledge system in all the textile units

needs to be reviewed. Though the existing system is
ranked moderately important as far as its accessibility
is concerned. The efficiency, capacity to yield desired
results, tuning with the existing culture, and its being
meant for people at all levels is considered to be
somewhat important. Its ability to meet knowledge
needs of every employee is ranked low. This
characterizes the low penetration of knowledge in most
of the textile units.
July-December 2011
REFERENCES
Alavi, M. and Leidner, D.E. (2001), Knowledge
Management and Knowledge Management
Systems: Conceptual Foundations and Research
Issues, MIS Quarterly, Vol.25, pp107136.
Anthes, G.H. (1998), Learning how to share,
Computerworld, Vol. 32 No. 8, pp. 75-7.
Baron, J. And D. Kreps (1999), Strategic Human Resources,
Framework for General Managers, John Wiley & Sons.
Beijerse, R.P. (1999), Questions in knowledge management:
defining and conceptualising a phenomenon,
Journal of Knowledge Management, Vol. 3 ,No. 2,
pp.94 - 110
Cole-Gomolski, B. (1997), Chase Uses New Apps to Id
Best Customers, Computerworld, Vol.31, No. 35,
Pp. 49-50.
Dougherty, V. (1999), Knowledge is about people, not
databases, Industrial and Commercial Training,
31(7), pp262-266.
Folorunso, O. and Ogunde, A. O. (2004), Data mining as a
technique for knowledge management in business
process redesign. The Electronic Journal of
Knowledge Management, 2 (1), pp 33-44.
52
HSB Research Review
Vol. 2 No. 2
Nonaka,I.and Konno,N. (1998), The concept of ba:

Building foundations for knowledge creation,
California Management Review, Vol. 40, No.3,
pp40-47.
Ptaszynski, J. G. (1989), Ed quest as an organizational
development activity: Evaluating the benefits of
environmental scanning, Chapel Hill, NC: The
University of North Carolina at Chapel Hill. (Ph.D.
Thesis)
July-December 2011
Nature and Their Relationship to Performance.
Management International Review, Vol 33, No.3,
pp. 271-286.
Rachman, S. J. (2004), Fear and Courage: A Psychological

Perspective. Social Research, Vol 71 (Spring
2004), pp 149-176.
West, J.J. (1988), Strategy, environmental scanning, and
their effect upon firm performance: An exploratory
study of the food service industry, Blacksburg,
VA: Virginia Polytechnic Institute and State
University. (Ph.D. Thesis)
Subramanian, R., Fernandes, N. and Harper, E. (1993).

Environmental Scanning in US Companies: Their
53
HSB Research Review
Vol. 2 No. 2
July-December 2011
DAY OF THE WEEK

EFFECT ON STOCK
MARKET RETURN AND
VOLATILITY OF INDIA
ABSTRACT
This paper examines the presence of day of the week effect
anomaly in Bombay Stock Exchange (BSE). Several
hypotheses have been formulated; dummy variable
regression, GARCH (1, 1) model, was used in the study.
Kruskal-wallis test, levene test were used to test equality
of mean returns and standard deviation of the returns across
the day of the week. The result indicates that the average
daily returns on all the five days of the week are positive
and is highest on Wednesday while it is lowest on Friday.
Result of kruskal Wallis test shows that the average daily
return of every working day of the week is statistically
equal.Levenes test shows significant difference in volatility
pattern across days of the week. Dummy variable regression
result shows that Monday, Tuesday and Wednesday have
positive but statistically insignificant coefficients. Results
of GARCH (1, 1) model show statistically significant
negative coefficients for Tuesday and statistically
significant positive coefficient for Monday dummies. The
conclusion of all the findings is that significant day of the
week effect present in BSE(Sensex) volatility but no
significant day of the week effect present in BSE(Sensex)
return.
Ms Suman
PhD Scholar, Department of Commerce, M D University,
Rohtak, Haryana
Prof S S Chahal
Former Dean, Faculty of Commerce, M D University, Rohtak,
Haryana
Keywords: Stock market volatility, Day of the week effect,

Bombay Stock Exchange, Dummy variable regression,
GARCH Model.
INTRODUCTION
This paper attempts to examine if there is any day of the
week variation in the stock return and their volatility. A
formal test on the variations of return and volatility across
days of the week is interesting because it is important to
know if the higher return on a particular week day is just a
reward for higher risk on that day. In other words, it is
interesting to examine if the day of the week effect in
volatility is the same as that in returns. The present paper
attempts to examine the seasonal variation patterns in
returns and their volatility.
LITERATURE REVIEW
Sunil Poshakwale(1996) found empirical evidence on weak
form efficiency and the day of the week effect in Bombay
Stock Exchange over a period of 1987-1994. The results
provide evidence of day of the week effect and that the
stock market is not weak form efficient. The day of the
week effect observed on the BSE pose interesting buy and
hold strategy issues.
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HSB Research Review
Vol. 2 No. 2
Ravindra R. Kamath, Rinjai Chakornpipat, and Arjun

Chatrath, (1998) examined the day-of the-week effect in the
Securities Exchange of Thailand using OLS as well as
GARCH models. They examined the aggregate stock index,
SET, as well as its ten industry-classified indices over a 15year period starting in 1980. They found persisting day-ofthe-week effects irrespective of the methodology
employed. The findings are in direct contrast with earlier
suggestions that the day-of-the-week anomalies are
exaggerated by traditional treatments to the data.
July-December 2011
the stock price movements yields abnormal return

consistently for any specific day of the week. Four market
series, namely, the BSE Sensex, BSE 100, S&P CNX Nifty,
and S&P CNX 500 were considered on a daily basis for a
10-year period. On the whole, they found the presence of
the day-of-the-week effect in the Indian stock markets.
Aboudou Maman, Tachiwou (2010) Found the first
evidence for the presence of the day of the week effects in
West African regional stock market in the sample for the
period September 1998 to December 2007.The observed
daily patterns exhibiting lower daily means and lower
standard deviations. In local currency terms, a pattern of
lower returns around the middle of the week, Tuesday and
then Wednesday; and a higher pattern towards the end of
the week, Thursday and then Friday, are observed. The
results have useful implications for international portfolio
diversification. This may be of particular interest for the
global investor.
Hakan Berument and Halo Kiymaz( 2001) tested the presence

of the day of the week effect on stock market volatility by
using the S&P 500 market index during the period of January
1973 and October 1997. The findings show that the day of
the week effect is present in both volatility and return
equations. While the highest and lowest returns are
observed on Wednesday and Monday, the highest and the
lowest volatility are observed on Friday and Wednesday,
respectively. Further investigation of sub-periods reinforces
their findings that the volatility pattern across the days of
the week is statistically different.
Ricky Chee-Jiun Chia and Venus Khim-Sen Liew(2010)

Examined the existence of day-of-the-week effect and
asymmetrical market behavior in the Bombay Stock
Exchange (BSE) over the pre-9/11 and post-9/11 subperiods. They found the existence of significant positive
Monday effect and negative Friday effect during the pre-9/
11 sub-period. Further analysis using the EGARCH and
EGARCH-M models revealed the asymmetrical market
reaction to the positive and negative news in BSE. Moreover,
significant day-of-the-week effect is found present in BSE
regardless of sub-periods, after controlling for time-varying
variance and asymmetrical market behavior.
Halil Kiymaz, Hakan Berument (2003) investigated the day

of the week effect on the volatility of major stock market
indexes for the period of 1988 through 2002. Using a
conditional variance framework, they found that the day of
the week effect is present in both return and volatility
equations. The highest volatility occurs on Mondays for
Germany and Japan, on Fridays for Canada and the United
States, and on Thursdays for the United Kingdom. For most
of the markets, the days with the highest volatility also
coincide with that markets lowest trading volume.
Padhi Puja, (2010) the average return on Friday is known to

be high and for Monday less, which is termed as days-of
the- week effect or week-end effect. They checked
whether there is the presence of the days-of-the week effect
in the aggregate indices including Sensex and Nifty, BSE
100, BSE 500 and S&P CNX 500 by modeling linear
regression, GARCH (1,1),GARCH-M (1,1) and asymmetric
model EGARCH and GJR model. The linear regression
shows the days of the week effect in the Sensex. In the
GARCH (1,1) model Nifty shows the days-of-the-week
effect. All other indices are showing statistically
insignificant results. The risk factor is positive for Nifty
and BSE100.
Harvinder Kaur (2004) investigated the nature and

characteristics of stock market volatility in India. The
volatility in the Indian stock market exhibits characteristics
similar to those found earlier in many of the major developed
and emerging stock markets. Various volatility estimators
and diagnostic tests indicate volatility clustering, i.e.,
shocks to the volatility process persist and the response
to news arrival is asymmetrical, meaning that the impact of
good and bad news is not the same. Suitable volatility
forecast models are used for Sensex and Nifty returns.
Chiaku Chukwuogor-Ndu (2006) examined the financial
markets trends such as the annual returns, daily returns
and volatility of returns in 15 emerging and developed
European financial markets. A set of parametric and nonparametric tests is used to test the equality of mean returns
and standard deviations of the returns. The results of the
Levenes (1960) test of the equality of standard deviations
of the returns at the 5 percent confidence level could not
reject the Null Hypothesis that mean returns are equal
across the days of the week for all the markets except for
MBTEL, Italy.
DATA COLLECTION
The data comprises daily closing values of Indian stock
market BSE Sensex from January1, 1999 to May31, 2010.
The secondary data for this study consist of daily return,
which have been obtained from www.allstocks.com,
www.bseindia.com The time period for determining the day
of the week effect on stock return is around 12 years ranging
from 1st January, 1999 to 31st May, 2010.
METHOD OF ANALYSIS
Chander, Ramesh /Mehta, Kiran/Sharma, Renuka(2008)

They empirically scrutinizes whether anomalous pattern in
First of all, the following formula is used to calculate the

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HSB Research Review
Vol. 2 No. 2
July-December 2011
daily stock returns for the above mentioned stock index.

Rt = [log(Pt) log(Pt-1)]
Where Pt is the price of stock index on date t, Pt-1 is the
price of the stock index on day t-1 and Rt is the daily return
on day t.
Where,
Three types of methodologies are available to analyze the

day of the week effect, These are: parametric tests, nonparametric tests and econometric models.
H = Kruskal-Wallis Test
In the next step, we tested whether the average daily return

of all the week days are statistically different from zero or
not. In order to test this hypothesis we use one-sample ttest. The t-statistic is calculated according to the following
formula:
Ri = Rank of the sample
n = total number of observations in all samples

In the next step we tested the equality of variance across
the days of the week, to test this hypothesis we use Levene
Test statistics. The Levenes-statistic is calculated as
following:
Where
Where, x is the average return for each day of the week
from Monday to Friday, is hypothetical mean which equal
to zero, is the standard deviation of the each days return
from Monday to Friday, n is the number of observations of
each week day from Monday to Friday and
is the
W is the result of the test,
k is the number of different groups to which the

samples belong,
N is the total number of samples,
Ni is the number of samples in the ith group,
Yij is the value of the jth sample from the ith group,
standard error.
Further, we tested whether The average daily return of every

working day of the week is statistically different from the
rest of the days of the week or not.
There is a general argument that financial time series have

almost a persistent trend and are self explaining in nature.
So to avoid the effect of such trend value we also apply the
econometric model. We use the auto regressive model with
dummy day variable in which the dependent variable is
daily return and independent variables are constant, day
dummy and AR(5). The dummy variable represents the
specific day of the week, as its value is 1 for the specific
day and 0 for all other days of the week. The choice of five
AR terms is rather arbitrary, but is has been motivated with
the objective to make estimation of conditional mean
smooth and unbiased for the week days through taking
into consideration all the five trading days of the week.
More specially, the following regression model is used.
In order to test this hypothesis we use independent sample

t test. The t-statistic is calculated according to the following
formula:
where
Where s2 is the unbiased estimator of the variance of the
two samples, n = number of observations, 1 = group one, 2
= group two.
Rt sensex = a + b1 D + b2 AR (1) + b 3 AR (2) + b 4 AR(3) + b 5

AR(4) + b6 AR(5)+ et (1)
Where, Rt sensex is daily return of sensex , a is constant, D
is dummy variable and et is the error term.
In the next step, we tested whether the average daily return

of every working day of the week is statistically equal or
not.
Before using a time series in the regression model it is pre

condition that the series must be stationary. So to ensure
the stationarity of the time series used in our analysis we
apply Augmented Dickey Fuller (ADF) unit root test and
Phillip Perron tests. We have applied both test with
In order to test this hypothesis we use Kruskal Wallis test

for the equality of means. The H-statistic is calculated as
following:
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HSB Research Review
Vol. 2 No. 2
intercept and with trend & intercept at level by taking 1 lag

value in all cases.
July-December 2011
is the highest on Monday and lowest on Thursday. As the

week progresses the volatility decreases from Monday to
Thursday. In general the market tends to be more volatile at
the beginning of the week and less volatile as the weekend
approaches. On the other hand, there is no definite pattern
in return.
As one of the prime objectives of the present study is to

measure the day of the week effect on the volatility of
underlying stock market, for that purpose we use the
GARCH (1,1) model. To specify the GARCH model two
equations have to be specified. One is the mean
equation(wich have been mentioned above) and the second
is the variance equation.
The skewness coefficient for all the weekdays deviates from

zero and the kurtosis is also far from three in most of the
cases. The kolmogorov Smirnov (K-S) statistic for testing
normality is highly significant, indicating that distribution
of the returns for each of the weekdays are not normal
The variance equation we have to specify, which are as

follows:
Testing for statistical significance : average daily return

of each day is not different from zero: To test the first
hypothesis the table 3.2 represents the t value and
corresponding p value for Sensex index. From the table it
can be seen that mean return for all days are positive. It is
also evident that returns on all the days are statistically
insignificant at 5% significance level. Thus our testable
null hypothesis is acceptable. So we can say that there is
no significant day of the week effect observed in BSE
Sensex.
ht = w + ai e 2t-1 + bi ht-j + Y D (2)

In the equation first term after the intercept w is the ARCH
term, which shows the affect of recent news on the volatility
of the underlying stock market by putting the square of
previous error term. And second term is the GARCH term,
which shows the affect of previous volatility on the current
volatility. And Y D is showing the impact of the dummy
variable on the volatility in the return of underlying stock
market, which is BSE in case of the present study.
Hypothesis to be tested
Testing for statistical significance: difference between one

day return and return of rest of the days: To test the second
hypothesis the table 3.3 represents t value and their
corresponding p value for BSE sensex . It is apparent from
the table that at 5% significance level average daily return
of each day is not statistically significant from the mean
return of rest of the days, thus null hypothesis is accepted.
So we can draw the similar conclusion that the BSE is
experiencing no day of the week effect.
Hypothesis 1
H0: The average daily return of every working day of the
week is not statistically different from zero.
week is statistically different from zero.
Hypothesis 2
week is not statistically different from the rest of the days
of the week.
Testing for statistical significance : equality of means:

An attempt has been made to test whether mean returns are
statistically equal across all five days of the week or they
show statistically significant differences. Non parametric
test has been employed to test the issue ,because of its
robustness arising from lack of restrictive assumption such
as population normality. Thus, the usual one way analysis
of variance is replaced by its non-parametric alternative,
the Kruskal-Wallis (KW) test.

week is statistically different from the rest of the days of
the week.
Hypothesis 3
week is statistically equal
This table 3.4 represents Kruskal Wallis table for BSE Sensex
It is obvious from the table that at 5% significance level
our null hypothesis is accepted, so we can infer that the
average daily return of every working day of the week is
equal which supports that there is no day of the week effect
in BSE Sensex.
H: The average daily return of every working day of the

week is statistically different
Hypothesis 4
H0: The volatility of every working day of the week is
statistically equal.
Testing for statistical significance: equality of variance:

Here it is tested whether volatility in stock return is equal
across all five days of the week or does it show statistically
significant differences. Levenes test is employed for testing
the equality of variance of daily return across days of the
week. This test is used instead of the more popular Barletts
test. Because it has been found that the Barletts test tends
to reject the hypothesis of homoskedasticity more often in
case of non normal distribution. In fact it has been found
H: The volatility of every working day of the week is

statistically different.
EMPIRICAL FINDINGS
Sample mean and standard deviation across days of the
week: From table 3.1 it is seen that average daily return is
lowest on Friday and highest average return occurred on
Wednesday. The standard deviation, i.e. Risk or Volatility,
57
HSB Research Review
Vol. 2 No. 2
July-December 2011
that the Levenes is among the most powerful test even in

small samples and is robust regarding the departure of the
underlying data from normality.
information. From the different test statistics it could be

concluded that the day of the week effect exists in volatility
whereas it does not exists In case of returns.
This table 3.5 represents Levenes table for BSE Sensex It

is obvious from the table that at 5% significance level our
null hypothesis is rejected, so we can infer that there is
significant difference in volatility pattern across days of
the week.so there is day of the week effect in volatility of
daily returns.
REFERENCES
Balaban, Evean (1994), Day of the Week Effects: New
Evidence from an Emergency Stock Market, Central
Bank of the Republic of Turkey, Research Department,
Discussion Paper no. 9410.
Berument, Hakan and Kiymaz, Halil (2001), The Day of the
Week Effect on Stock Market Volatility, Journal of
Economic and Finance Vol. 25, PP 181-193.
Testing for stationarity of data: Augmented Dickey Fuller

(ADF) unit root test and Phillip Perron tests applied. Both
tests with intercept and with trend & intercept at level by
taking 1 lag value in SENSEX of BSE India. The results of
these tests in Table 3.6 depicts that all variable are stationary
at level and also integrated at the same level. So all these
series are fit for regression analysis without any
transformation.
Chander, Ramesh and Mehta, Kiran (2008), A Re Examination

of the Day of- the- Week- effect in The Indian Stock
Market, ICFAI Journal of Applied Finance, Vol. 14, PP.
5-20.
Chukwuogor, Chiaku (2006), Stock Market Return Analysis:
Day of the Week Effect, Volatility of Returns: Evidence
from European Financial Markets (1997 2004),
International Research Journal of Finance and
Economics, PP. 112 -124.
Regression Result of BSE(Sensex): This table 3.7

represents OLS regression results for BSE Sensex. It is clear
from the table that Thursday and Friday have negative
coefficient and Monday, Tuesday and Wednesday have
positive coefficient but the coefficient of all the days are
not statistically significant, which is also consistent with
our previous results. Thus it can be further concluded that
no day of the week effect present in BSE Sensex.
Kamath, Chakornpipat and Chatrath, Arjun (1998), Return

Distribution and Day of the Week Effect in the Stock
Exchange of Thailand, Journal of Economics and
Finance, Vol. 22, PP, 97-106
Stock Market Volatility using BSE (Sensex): From this

table 3.8 it is seen that in case of all the days the coefficient
of ARCH (1) term showed that the effect of the recent past
information is creating a positive and significant impact on
the volatility of the return of the stock market. While
coefficient of GARCH (1) term also showed a positive and
significant impact on the share market volatility, the GARCH
term impact is higher in comparison to ARCH term which
implies that the past volatility affect more to future volatility.
The impact of our dummy variable; Tuesday and Thursday
are negative which implies that volatility reduces due to
impact of these days. While the impact of Monday,
Wednesday and Friday is positive. Monday and Tuesday
impact is statistically significant. The total of the ARCH
and GARCH term is less than 1, which implies that the model
is perfectly structured.
Kaur, Harvinder (2004), Time Varying Volatility in Indian

Stock Market, Vikalpa, Vol. 29, PP. 25-42.
Kiymaz, Halil and Berument, Hakan (2003), The Day of the
Week Effect in Stock Market Volatility and Volume:
International Evidence, Review of financial economics,
Vol. 12, PP 363-380.
Poshakwale, Sunil, (1996), Evidence on Weak form
Efficiency and Day of the Week Effect in Indian Stock
Market, Finance India, Vol. X, PP. 605-616.
Puja, Padhi (2010), Day of the Week Effect and Stock Return
Volatility: Theory and Empirical Evidence, Advances
in Management, Vol. 3, PP. 14-21.
Rahman, Md. Lutfur (2009), Stock Market Anomaly: Day of
the Week Effect in Dhaka Stock Exchange, International
Journal of Business and Management, Vol. 4, PP. 193206.
CONCLUSION
The present paper confirm that Monday return have highest
volatility. The phenomenon that Monday has higher
volatility because of Monday is preceded by two holidays.
There is no definite pattern in the returns across the
weekdays but in the case of volatility as the week progress
the volatility decreases. It is found that the market is more
volatile at the beginning and less at the end of the week.
Average daily return is highest on Wednesday.It is found
from the GARCH (1,1) model that impact of Tuesday and
Thursday is negative which leads to decrease in volatility
of the BSE sensex and the past volatility has more impact
on current volatility as compared to that of recent past
Sen Liew,Venus Khim and Jiun Chia, Rickey Chee (2010),

Evidence on the Day of- the- Week- effect and
Asymmetric Behavior in the Bombay Stock Exchange,
The IUP Journal of Applied Finance, Vol. 16.
Tachiwou, Maman Aboudou (2010), Day of the Week
Effects in West African Regional Stock Market,
International Journal of Economics and Finance, Vol.
2, PP. 167-173.
58
HSB Research Review
Vol. 2 No. 2
July-December 2011
APPENDIX-TABLES
BSE SENSEX: DAYWISE STATISTICS ON DAILY RETURNS

TABLE 3.1
DAYS OF THE WEEK
MONDAY
TUESDAY
WEDNESDAY
THURSDAY
FRIDAY
N
Mean
Median
Std. Deviation
Skewness
Kurtosis
K-S Statistic
Minimum
Maximum
563
0.000649827
0.002037796
0.021043212
0.257056619
8.49306702
2.169 (.000)
-0.11809177
0.159899845
563
0.000638524
0.001084932
0.016256812
-0.291796269
3.603636742
1.798 (.003)
-0.074226417
0.079310971
569
0.001162519
0.001005729
0.016248412
-0.098444598
1.850831075
1.370 (.047)
-0.075230678
0.057722153
567
0.000309313
0.001542667
0.015965355
-0.160517685
1.846562363
1.225 (.100)
-0.070033405
0.06667006
556
0.000232498
0.001203819
0.018845032
-0.449226278
4.201762424
1.798 (.003)
-0.116044446
0.079005332
TABLE 3.2
Day of the week
Mean return
T value
P value
Monday
Tuesday
Wednesday
Thursday
Friday
0.00065
0.000639
0.001163
0.000309
0.000232
.733
.932
.707
.461
.291
.464
.352
.088
.645
.771
TABLE 3.3
Days of the
Week
SENSEX
Average
Index T - Value P Value
Daily Return
All Days
Monday
Tuesday
Wednesday
Thursday
Friday
0.0005986
0.00065
0.000639
0.001163
0.000309
0.000232
100
108.59
106.75
194.29
51.62
38.76
0.065
0.061
0.845
-0.436
-0.545
TABLE - 3.6
SENSEX
Unit Root Test
Augmented Dickey Fuller Test(ADF)
Phillip Perron Test (PP)
* Significant at 1 per cent.
P value
.950
TABLE 3.5
BSE(SENSEX)
Levenes statistic
5.834
P value
.000
TABLE 3.7
Days of the
Week
Monday
Tuesday
Wednesday
Thursday
Friday
0.948
0.951
0.398
0.663
0.586
With Intercept
-37.69513*
-49.39980*
TABLE 3.4
BSE(SENSEX)
Chi-Square value
.710
Daily Stock Return SENSEX

Coefficient
T - Value P Value
0.000317
0.039297
0.9687
0.000553
0.068570
0.9453
0.000685
0.853047
0.3937
-0.000445
-0.554180
0.5795
-0.000333
-0.411199
0.6810
With Trend & Intercept

-37.68983*
-49.39202*
TABLE 3.8
DAYS
MONDAY
C
Coefficient
0.0000102
P value
0.5871
ARCH
Coefficient P value
0.133659
0.0000
GARCH
Coefficient
0.846738
P value
0.0000
DUMMY
Coefficient
0.000334
P value
0.0002
TUESDAY
0.000178
0.0000
0.126052
0.0000
0.854253
0.0000
-0.000521
0.0000
WEDNESDAY
0.0000418
0.0614
0.131495
0.0000
0.851842
0.0000
0.000143
0.1542
THURSDAY
0.0000789
0.0008
0.132633
0.0000
0.850044
0.0000
-0.0000344
0.7370
FRIDAY
0.0000617
0.0011
0.132177
0.0000
0.850295
0.0000
0.0000527
0.5362
59
HSB Research Review
Vol. 2 No. 2
CAUSAL RELATIONSHIP
BETWEEN ECONOMIC
DEVELOPMENT AND
GENERAL INSURANCE
IN INDIA
July-December 2011
ABSTRACT
The present study discerns the relationship between GDP
and the general insurance premium in India by employing
Johansen Co-integration Test, Granger Causality Test and
Vector Auto Regression (VAR) for the period 1970-71 to
2008-09. The Impulse Response Functions (IRFs) have also
been used to investigate the effect of an impulse shock of
one of the innovation on the current and future values of
the same or other time series variable. Johansen Cointegration Test results do not provide evidence of a long
run causal relationship between GDP and general insurance
premium in India. Granger test established unidirectional
causality from general insurance premium to GDP
confirming the indisputable significance of general
insurance in nations growth. VAR results indicate that
growth in GDP cause general insurance premium to increase
in short term period. Further, the effect of the increase in
general insurance premium can been seen to effect the GDP
positively only after a lag of one year. IRF graphs show
that there is a transient response immediately or after some
lag on the application of a positive shock (impulse) which
gradually dies out.
Dr Mahesh Chand Garg

Associate Professor
Haryana School of Business
Guru Jambheshwar University of Science and Technology
Hisar, Haryana
Email: mc_garg@yahoo.com
Keywords: Economic Development, General Insurance

Premium, Granger Causality Test, Vector Auto Regression
INTRODUCTION
The importance of the insurance-growth nexus is growing
due to the increasing share of the insurance sector in the
aggregate financial sector in almost every developing and
developed country. The growing links between the
insurance and other financial sectors also emphasis the
possible role of insurance companies in economic growth.
Insurance companies indemnify the one who suffer a loss
and stabilize the financial position of individuals and firms.
With possibility of transfer of different kind of risks to
insurance companies, risks averse economic unit are more
induced to buy goods or services, especially those of higher
values. In this way insurance sustains demand or
consumption for good or services which encourage
production and employment and finally, economic growth.
Insurance ensures the stable and smooth functioning of
economic development by encouraging loss mitigation.
Insurers also acts as the intermediaries by investing the
funds into Government and socially oriented sectors and
stock market and thus contributing to nations growth.
However, the dependence between economic development
60
HSB Research Review
Vol. 2 No. 2
July-December 2011
financial intermediaries. Rudra (2007) probed the nexus

between exports and imports in India. The empirical evidence
is based on Vector Auto Regression, Causality Test and
Co-integration test. Co-integration test established that
both exports and imports are co-integrated with each other,
indicating the long term relationship. The Granger Causality
test support that there exist bi-directional causality. Arena
(2008) examined causal relationship between insurance
market activity (life and nonlife insurance) and economic
growth using the generalized method of moments (GMM)
for dynamic models of panel data for 55 countries between
1976 and 2004. The study finds that both life and nonlife
insurance have a positive and significant causal effect on
economic growth. Vadlamannati (2008) observed that the
contribution of the insurance sector to economic
development is positive and exhibits a long-run equilibrium
relationship. The study further concludes that reforms exert
no strong relationship, but the rate of growth of reforms
has a positive influence on economic development. Smegi
and Haiss (2008) opined that the role of insurance
companies, though growing in importance in financial
intermediation, has hardly been investigated with regard
to the direction and causality vis--vis GDP growth. urak,
Lonar and Poposki (2009) examined the relationship
between insurance sector development and growth in the
10 new EU member states during 1992-2007 and concluded
that the sector has promoted economic growth in these
countries. Kogid, Mulok, Beatrice, and Mansur (2010)
investigates the factors that stimulate and maintain
economic growth in Malaysia from the year 1970 to 2007.
The results show that there exists long-run co-integration
and multiple short-run causal relationships between
economic growth and the determinant factors. Sook-Ching,
Kogid and Furuoka (2010) examined the existence of a causal
relation between the life insurance sector and the growth
of the Malaysian economy using Johansen co-integration
test, and the Granger causality test based on the Vector
Error Correction Model (VECM). The results provide
sufficient evidence to support a long-run relationship
between the life insurance indicator (the total assets of
Malaysian life insurance sector) and the real GDP. AzmanSaini and Smith (2011) sheds light on the impact of insurance
sector development on output growth, capital accumulation
and productivity improvement using data from 51 countries
during 1981-2005. The dynamic panel data analysis results
demonstrate that insurance sector development affects
growth predominantly through productivity improvement
in developed countries, while in developing countries it
promotes capital accumulation. Lee (2011) uses
disaggregated data on real insurance premiums to examine
the interrelationship between insurance markets activities
and economic growth for 10 selected OECD countries during
1979-2006 using panel unit-root tests, heterogeneous panel
co-integration tests, and panel causality techniques. The
study concludes that there is fairly strong evidence
favoring the hypothesis of a long-run equilibrium
and general insurance sector is not single sided. The

development in economy also directly reflects the
accelerated development in insurance sector. As the
economy grows, the insurance premium also get boosted
up with the increase in trade, better standard of living and
entrepreneurial activities.
The present research paper discerns the causal relationship
between gross Domestic Product (GDP) and the general
insurance premium by employing Granger Causality Test
for the period 1970-71 to 2008-09. The remainder of this
paper is as follows: The review of literature is presented in
the next section and the subsequent section describes the
research methodology used in the research paper. The next
section presents the correlation between economic
development indicators and premium underwritten under
various general insurance categories from 1991-92 to 200809. The succeeding section deals with the empirical
assessment of interdependence between GDP and general
insurance premium in India and the ending section provides
the concluding annotations.
A review of related literatures on the subject has been
undertaken to determine the relationship between economic
development and insurance. Ashley (1981) investigated
Granger causality between the CPI inflation and price
dispersion in both directions by comparing the out-ofsample forecasting performances of univariate and bivariate
time series models. He shows that inflation has predictive
power for price dispersion but not vice-versa. Ward and
Zurbruegg (2000) apply a co-integration analysis on a
unique set of annual data for real GDP and total real
premiums issued from 1961 to 1996. The findings show that
in the long run there is a bidirectional causal relationship
between total insurance premiums and real GDP for
Australia, Canada, Italy, and Japan, but a unidirectional
causality running from real GDP to real insurance premiums
for France. Sharma and Panagiotidis (2005) examined
whether exports growth Granger causes GDP growth and
whether exports growth Granger causes investment.
Analysis fail to find support for the hypothesis that exports
Granger cause GDP and same holds for the relationship
between exports and investment. Further, Impulse Response
Functions (IRFS) concluded that relatively big shocks in
real exports do not generate significant response. Engel
and West (2005) conducted bivariate and multivariate
Granger causality test to evaluate the present-value model
for exchange rates. From the asymptotic tests, they find
statistically significant Granger causality from exchange
rates to fundamentals. Guryay, Safakli and Tuzel (2007)
empirically examined the relationship between financial
development and economic growth in Northern Cyprus
using Ordinary Least Square method. Granger causality test
showed that financial development does not cause
economic growth, on the other hand there is evidence of
causality from economic growth to the development of
61
HSB Research Review
Vol. 2 No. 2
July-December 2011
relationship between real GDP and insurance markets

activities after allowing for the heterogeneous country
effect. Samad (2011) investigates the causality relationship
between economic growth, exports and imports in Algeria
using Co-integration, Error Correction Model, and VEC
Granger causality/Wald Exogeniety tests. The study finds
that economic growth in Algeria is linked to export industries
and import is linked to economic growth.
Johansen Co-integration test
However, it has been observed that there are contradicting

findings by various researchers regarding the causal
relationship between economic development and insurance.
Therefore, it was felt that there is a need to investigate the
relationship between economic development and general
insurance in India.
Y ( t ) = A21, j X ( t j ) + A22, jY (t j ) + E y ( t )
Granger Causality test is utilized for determining the

direction of causality between GDP and general insurance
premium. The test uses the linear regression modeling of
the stochastic processes.
Mathematically,
L
j =1
j =1
j =1
j =1
X ( t ) = A11, j X ( t j ) + A12, jY (t j ) + Ex ( t )
where, L is the maximum number of lags (order).
With the growing complexities in the modern economic

system, the performance of the insurance sector and
economic development is highly interdependent. The
causality direction between the two is a highly interesting
and debatable topic. There are two theories describing the
direction of causality namely demand-following theory and
supply-leading theory. Demand- following theory considers
the development of the financial sector as the direct and
obvious outcome of the economic development. In contrast
to this, supply-leading theory believes the development of
financial sector, here insurance, as the prerequisite for the
economic development.
Granger test depending on the time series X and Y may

give any of the following results:
Case 1: Y causing X . In this case change in X has no
effect on Y but change in Y makes X to change. This is
indicated by
A21 = 0 .
Case 2: X causing Y . In this case change in Y has no

effect on X but change in X makes Y to change. This is
indicated by
An attempt is made to empirically analyze dependence

between development of insurance sector and the Indian
Economy. The study also examines the relationship
between general insurance premium and Gross Domestic
Product (GDP) for the period 1970-71 to 2008-09. The GDP
used for the analysis is at constant price. General insurance
premium series is obtained by adjusting the premium at
current price with GDP deflator. Both the series represents
the annual data. Since there is a significant difference in
the range of the two series, all the tests are applied on their
natural log transformations. Data for the purpose is
complied from Annual Reports of general insurers, IRDA
Annual Reports, RBI database, Human Development Index
Report, various issues of IRDA Journal and Society of Indian
Automobile Manufacturers.
A12 = 0 .
Case 3: Bilateral causality. In this case both the time series

are interdependent.
Case 4: Independence. This is the case where none of the
variable depends on the other. This is indicated by
A12 = A21 = 0 .
It is in principle to predict a variable in a time series from
the past values of another time series in addition to the
past values of same series . This essentially means that the
two time series needs to be stationary to allow such
prediction. However, in case the two are not stationary,
they are made so by inserting appropriate level of
differencing before applying the test. Augmented DickeyFuller (ADF) test is used to establish the order of integration
and the degree of differencing to establish the stationarity.
The lag is chosen at minimum Akaike Information Criteria
(AIC) value. Co-integration means some linear combination
of the two series must be stationary. This can be tested by
using Johansen Co-integration test. To satisfy this test the
probability likelihood value should be lesser than that of
critical value. The lag value calculated from ADF test is
used for determining co-integration in Johansen test.
In order to establish the relationship between the country

economic development and general insurance industry,
Pearsons correlation coefficient has been calculated between
fire insurance and industrial production, marine insurance and
exports, motor insurance and number of registration of vehicles
and, mediclaim insurance premium and human development
index. The correlation between the investment by general
insurers and the economic growth, as indicated by gross
domestic product is also analyzed. In addition, Granger
Causality Test, Augmented Dickey-Fuller Test and Jonson Cointegration Test have been applied.
Vector Auto Regression and Impulse Response Functions

The mathematical dependence of one time series over
another is obtained by unrestricted Vector Auto Regression
(VAR) or restricted Vector Error Correction (VEC) model.
Granger Causality Test, Augmented Dickey-Fuller and

62
HSB Research Review
Vol. 2 No. 2
This choice of VAR or VEC model depends on the fact

whether, the two time series are co-integrated at least, if
not stationary. If the two series are not co-integrated
restricted VEC model cannot be applied. However, in this
case, VAR model is used to mathematically represent the
system.
covering for such risks, provide skills and prevention

techniques to minimize the losses. In more risk prone areas,
the general insurance companies even monitor the measures
to minimize the accidents faced by the insured, on the
regular basis. With such financial confidence, the
entrepreneurs need not fear financial instability or maintain
large reserve for any unaccounted, uninsured losses. This
encourages the expansion of business by directing funds
to more productive uses. Table 1 portrays the figures of
industrial production and fire insurance premium in India.
High correlation value of 0.968 speaks about the eminent
relationship between industrial production and fire
insurance premium.
VAR is commonly used for predication of interrelated time

series and for analyzing the impact of random disturbances
on the system. Mathematically, VAR is represented by:
yt = A1 yt 1 + + Ap yt p + Bxt + t
where, yt is vector of endogenous variables, while xt is
exogenous variable vector.
is innovation vector
uncorrelated with and lagged values of itself and yt . A 1------- Ap and B are matrices of coefficient to be estimated.
The Impulse Response Functions (IRFs) have also been
employed to investigate the effect of an impulse (shock) of
one of the innovation on the current and future values of
the same or other time series variable.
The following are the hypotheses of the present research
paper:
1.
The null hypothesis in ADF Test is that there exists a

unit root.
2.
The null hypothesis of Johansen Co-integration Test

is that the series are not co-integrated.
3.
The null hypotheses examined by the Granger

Causality Test are (a) DLGIP does not Granger cause
DLGDP and (b) DLGDP does not Granger cause DLGIP.
LGIP stands for natural log transformation on real
general insurance premium and LGDP stands for natural
log transformation on real GDP.
ECONOMIC DEVELOPMENT INDICATORS AND

COMPONENT-WISE INSURANCE PREMIUM
This section describes the trend in economic development
and growth of general insurance sector in India. The general
insurance business is divided into various categories for
the purpose of comparative analysis with various economic
development indicators. The general insurance premium is
classified into fire insurance, marine insurance, motor
insurance and mediclaim insurance premium. Similarly, for
the economic development, the indicators selected are
industrial production, exports, number of registration of
vehicles and Human Development Index. The correlation
between the investment made by general insurers and the
economic development, as indicated by gross domestic
product of India is also analyzed.
July-December 2011
With the rapid growth in the medical technology and

increase in medical cost, the health care has turned as
highly expensive function and treatment expenses
particularly involving hospitalization have become
unaffordable to the large part of the population. By the
health insurance, such a risk can be pooled among the large
set of individuals through indemnification, otherwise cost
could be catastrophic. Individual health insurance also
reduces the Government burden of public health
expenditure. On saving this expenditure, the same fund can
be utilized for development elsewhere, thereby improving
the standard of living directly or indirectly. For such reason,
health insurance is recognized as the class of utmost
importance for individual and thus formed the only category
in general insurance, where tax benefit is given for its
tpremium. Table 1 gives the figure of the mediclaim insurance
premium and Human Development Index (HDI). Most of
the contribution in health insurance comes through
mediclaim policy, which covers the expense during
hospitalization. HDI summarizes the measurers of human
development, broadly comprising of life expectancy, literacy
and standard of living. Correlation value of 0.989 depicts
the firm relationship between mediclaim insurance premium
and HDI.
With the increase in purchasing power and amount of
demand for all types of automobiles, almost matching with
that of supply during the past few years, India has witnessed
a rapid growth in registering of motor vehicles. The motor
insurance being compulsory in India, for third party, the
insurance industry has directly gained from this scenario
and has observed an almost similar growth in total motor
insurance premium. Table 1 shows that increase in the
number of vehicles in India, which signifies the improving
standard of living is highly correlated with motor insurance
premium, correlation value among the variables stood at 0.976.
Marine insurance is broadly composed of two categories
namely Hull and Cargo. Since the losses in case of uninsured
marine accidents can be huge, it is always preferred to
insure both hull and cargo. This way amount of marine
insurance premium directly relates with that of marine
transportation. As the major portion of India exports is
through sea route, Table 1 shows the high correlation of
General insurance industry plays a vital role in the process

of industrial development and development of
entrepreneurship. During all phases of production, starting
from raw material to finished goods, both infrastructure
and the product are exposed to several risks. The general
insurance industry in additional to providing financial
63
HSB Research Review
Vol. 2 No. 2
July-December 2011
Table1: Economic Development Indicators and Different Premium Categories

Year
Fire
Premium
Industrial
Production
Mediclaim
Premium
Human
Motor
Development Premium
Index
(Rs. Crores) (Rs. Crores) (Rs. Lakhs)
Motor
Vechiles
Marine
Premium
Exports
GDP
General
Insurance
Investment
(Rs. Crores) (Thousand)
(Rs. Crores) (Rs. Crores) (Rs. Crores) (Rs. Crores)
1991-92
795
121918
9632
0.381
2136
23380
634
44042
594168
6335
1992-93
932
142566
11200
0.401
2210
25718
771
53688
681517
7640
1993-94
1096
165663
15204
0.447
2498
29922
832
69751
792150
9030
1994-95
1248
202888
17998
0.468
2513
31033
827
82674
925239
10486
1995-96
1501
248450
21030
0.489
2714
33786
961
106353
1083289
12833
1996-97
1719
280247
24568
0.514
2954
37332
991
118817
1260710
14893
1997-98
1916
300389
27489
0.426
3246
41368
1126
130101
1401934
17276
1998-99
2087
332464
31254
0.552
3412
44875
1023
139753
1616082
19739
1999-00
2299
350233
37583
0.571
3521
48857
977
159561
1786526
22659
2000-01
2057
392138
51898
0.577
3811
54991
1054
203571
1925415
24009
2001-02
2667
410667
74204
0.59
4001
58924
1048
209018
2097726
19574
2002-03
2950
463302
99955
0.595
5441
67007
1089
255137
2261415
21859
2003-04
3150
509106
112926
0.602
6457
72718
1134
293367
2538170
24227
2004-05
3331
598674
132117
0.611
7504
81715
1189
375340
2877701
26519
2005-06
3774
676207
163442
0.619
8702
90621
1243
456418
3402316
29803
2006-07
4185
745891
182547
0.678
9146
96808
1268
435896
3941865
32615
2007-08
4937
865924
225879
0.719
14341
106591
1341
476895
4540987
34718
2008-09
5479
938271
256431
0.756
25413
139112
1387
465892
5228650
39510
Correlation
0.968
0.989
0.923
0.954
0.968
Source: RBI Annual Reports various issues, Annual Reports of general insurers, data from Department of Road Transport
and Highways, GOI and Society of Indian Automobile Manufacturers (SIAM), Human Development Index Report, IRDA
Annual Reports various issues, IRDA Journal
Note: Mediclaim premium represents the premium of public insurers only.
0.954 among the exports and marine insurance premium.
INTERDEPENDENCE OF ECONOMIC DEVELOPMENT

AND GENERAL INSURANCE
The insurance companies receive premium for providing

the covers and carrying out underwriting business. This
way, insurance companies amass huge funds which are to
be properly invested. General insurers build up such a large
pool of funds that they have been called as economys
investment reservoirs.
Augmented Dickey-Fuller and Johansen Co-integration

Test
Satisfying ADF Test for both the series is the first
prerequisite for Granger Causality Test. ADF Test null
hypothesis has been accepted at level for both the time
series at all the lags, as ADF test statistics is greater than
critical values at both 1 per cent and 5 per cent significance
level, as depicted by Table 2. This signifies that both the
time series are non-stationary at level.
For economic developments, investments are necessary.

The investment by insurance sector in various sectors such
as Central & State Govt. Securities, Infrastructure & Social
Sector Development and Stock Market directly signifies
the development in economy. The investments by general
insurance companies and GDP of India have shown
inviolable correlation with each other. Correlation scores
among the variable stood at 0.968 as indicted by Table 1
portrays the linear relationship among investments by
general insurance companies and GDP.
However, ADF test statistics value being lower than

critical value at 1 per cent and 5 per cent suggests that
and LGIP are stationary at first difference. Table 3
discerns that at first difference of, lag 0 and 1 are the
only two lags where null hypothesis can be rejected.
Since the AIC value is lower at lag 1, 1st difference at lag
64
HSB Research Review
Vol. 2 No. 2
1 is selected for. For LGIP at 1 st difference time series,

the null hypothesis is rejected for all the lags from 0 to
3 (Table 4). But AIC decreases from lag 0 to 1 but goes
increasing on moving from 1 to higher values. Thus for
LGIP also 1 st difference at lag value 1 is selected.
July-December 2011
value of 1 and 2 respectively and AIC value being lower at

lag 2, hence Granger test has been tested at lag 2. The
value for AIC criteria for DLGDP does not Granger cause
DLGIP hypothesis stood at 48 and 45 at the lag value of 1
and 2 respectively and AIC value being lower at lag 2, hence
Granger test has been tested at the lag value 2.
Granger Causality Test
The null hypothesis DLGIP does not Granger cause

DLGDP is rejected at 5% significance value while null
hypothesis DLGDP does not Granger cause DLGIP is accepted.
Granger Causality Test investigates the causal relationship

between LGDP and LGIP at the lag value of 1 and 2 for both
the time series. The value for AIC criteria for DLGIP does
not Granger cause DLGDP stood at 68 and 56 at the lag
This gives the unidirectional causality from general
Table 2: ADF Test Statistic for Unit Root at Various Differences (Lag 0)
Difference
ADF Test
LGDP
LGIP
Critical Value at
1%
5%
Level
Statistics
Null Hypothesis
0.420662
Accept
-0.234050
Accept
-3.621023
-2.948404
1st Difference
Statistics
Null Hypothesis
-3.647332
Reject
-4.035767
Reject
-3.626784
-2.945842
LGDP: - stand for Natural log Transformation on real GDP.

LGIP: - stand for Natural log Transformation on real General Insurance Premium.
Table 3: ADF Test Statistics for LGDP at 1st Difference (Various Lags)
Lag
ADF Test Statistics
AIC
Critical value
Null Hypothesis
1%
5%
-4.617332
-4.058116
-3.626784
-2.945842
Reject
-4.632902
-4.905352
-3.632900
-2.948404
Reject
-2.847576
-4.822044
-3.639407
-2.951125
Accept
Table 4: ADF Test Statistics for LGIP at 1st Difference (Various Lags)
Lag
ADF Test Statistics
AIC
Critical value
Null Hypothesis
1%
5%
-4.035767
-3.099706
-3.626784
-2.945842
Reject
-3.865475
-3.948873
-3.632900
-2.948404
Reject
-3.734260
-3.588852
-3.639407
-2.951125
Reject
-3.940820
-3.887887
-3.646342
-2.954021
Reject
Johansen Co-integration test is applied on and LGIP series for testing long-term relationship at the lagged values computed
from ADF test.
Table 5: Johansen Co-integration Test
r
Trace Statistics
5% Critical Value
1% Critical Value
4.95
15.49
19.93
0.11
3.84
6.63
Acceptance of null hypothesis of no co-integration (r=0) and one co-integrating vector (r=1) provides the evidence that
and LGIP are the set of non co-integrated time series (Table 5).
65
HSB Research Review
Vol. 2 No. 2
July-December 2011
also as the economic development is not affected

immediately by the increase in insurance but shows a lagged
response. Thus results obtained by the IRFs, is consistent
with result shown by co-integration test, both of which
indicates that there does not exists long-term relation
among the general insurance premium and GDP.
insurance premium to GDP. Null hypothesis DLGIP does

not Granger cause DLGDP being marginally rejected at
5 % significance value, gives a weak evidence
suggesting the causality direction from general insurance
premium to GDP.
Vector Auto Regression
Further, results gathered by VAR equations are also in line
Vector Auto Regression illustrates the impact of unitary

Table 6: Granger Causality Test
Null Hypothesis
F-Statistics
Probability
AIC
DLGIP does not Granger Cause DLGDP
0.59
0.4470
68
DLGDP does not Granger Cause DLGIP
3.26
0.0801
48
1.31
0.0455
56
At Lag 1
At Lag 2
DLGIP does not Granger Cause DLGDP
DLGDP does not Granger Cause DLGIP
3.42
innovations on the time series. Since ADF test and cointegration test states that the time series are neither
stationary nor co-integrated, first difference of time series
is used in analyzing VAR. VAR behavior between general
insurance premium (LGIP) and GDP (LGDP) is described by
the following relationship:
0.2849
45
with the IRFs, both of which shows that increase in GDP

cause GDP to increase only initially and effect of increase
dies out afterwards as indicated by Figure 1. Figure 2 shows
that increase in premium cause GDP to increase after gap of
some time, same is indicated by VAR equation.
D (LGIP) = 0.009*D {LGDP (Lag 1)} - 0.001*D {LGDP

(Lag 2)} + 1.145*D {LGIP(Lag 1)} 0.379*D {LGIP (Lag 2)} - 1271.704
D (LGDP) = 1.228*D {LGDP (Lag 1)} - 0.281*D {LGDP
(Lag 2)} - 6.792*D {LGIP (Lag 1)}
+13.725*D {LGIP (Lag 2)} + 33104.601
The result clearly indicates that general insurance
premium is dependent on GDP at lag value of 1, but GDP
value at lag 2 negatively effects general insurance
premium. This depicts that growth in GDP cause premium
to increase only in short run. The effect of increase in
general insurance premium can been seen to positively
effect the GDP at lag value of 2.
Figure 1: IRF of GDP to GDP
VAR also allows further analyzing the system by generating

Impulse Response Functions (IRF s ). These graphs
essentially shows the effect of an impulse shock of one of
the innovation on the current and future values of the same
or other time series variable.
All IRF graphs show that there is a transient response
immediately after application of a positive shock (impulse)
which gradually dies out. Analyzing the effect of impulse
of premium on GDP is on the lines of the causal relationship
indicated by Granger Causality test.
Figure 2: IRF of GDP to General Insurance Premium
GDP does not show any effect to impulse of general

insurance premium initially and then increases and finally
dies out in an oscillatory manner. This is quite intuitive
Figure 3 highlights that increase in GDP cause premium to

increase only initially and same is indicated by VAR. Figure
66
HSB Research Review
Vol. 2 No. 2
4 highlights that increase in general insurance premium

cause general insurance premium to increase initially but
dies out soon.
July-December 2011
values of the same or other time series variable. All IRF

graphs show that there is a transient response immediately
after application of a positive shock (impulse) which
gradually dies out. The results obtained by the IRF s, are
consistent with result shown by co-integration test, both
of which indicates that there does not exists long-term
relation among the general insurance premium and GDP.
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Insurance Premium
CONCLUSION
The present paper attempted to trace out the linkage among
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Analysis unveiled that economic development indicators
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of vehicles and human development index are strongly
correlated with fire insurance, marine insurance, motor
insurance and mediclaim insurance premium respectively.
The paper discerns the causal relationship between the
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Causality Test. Analysis reveals that there exists only
unidirectional causality from general insurance premium to
GDP. Johansen Co-integration test applied for testing long
term relationship among GDP and general insurance
premium divulges that variables are not co-integrated.
Further the result obtained by VAR clearly indicates that
growth in GDP cause premium to increase only in short
run. The effect of increase in premium can be seen to
positively affect the GDP only after a year. This is quite
intuitive also as the economic development is not affected
immediately by the increase in insurance but shows a lagged
response. Further, the Impulse Response Functions have
been utilized in order to investigate the effect of an impulse
shock of one of the innovation on the current and future
67
HSB Research Review
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68
HSB Research Review
Vol. 2 No. 2
July-December 2011
STUDENTS AS
RESPONSIBLE
CONSUMERS AGENTS
FOR SOCIAL CHANGE
ABSTRACT
The study presents the findings of socially responsible
consumption behaviour assessed on a regional sample of
one hundred student-respondents; using Socially
Responsible Consumption Behaviour (SRCB) Scale;
developed from literature, modified to suit Indian
conditions. In the article, statistical techniques of Meancomparison, Regression Analysis and ANOVA are applied
to find the determinants of socially responsible
consumption behaviour and socially responsible
consumers. The study attempts Academic Intelligence and
Civic Sense as SRCB determinants; thus fills the knowledge
gap in literature as no study in the past has utilized the two
as behavioural determinants. The results for Place of Living,
Academic Intelligence and Civic Sense are found to be
significant.
Prof Narendra Singh

Department of Commerce, Kurukshetra University,
Kurukshetra, Haryana
Email : profnsingh@gmail.com
Ms Karnika Gupta
Research Fellow (UGC), Department of Commerce
Kurukshetra University, Kurukshetra, Haryana
Email : karnikagupta7@gmail.com
Keywords : Socially Responsible Behaviour, Sustainable

Development, Globalization, Determinants
INTRODUCTION
India, presently, the home to largest young population, is
passing through a transformation phase of high economic
growth. As the country is growing, the income and
consumption levels consequently are increasing and
straining the natural resources and environment.
According to Uzzell and Rathzel (2008), individual
behaviour in the form of consumer is considered as one of
the main cause of environment degradation. The solution
to environmental and social ills is now looked at on
modifying consumer purchase behaviour (Wells, 1990). The
enlightened consumers have realized that their purchasing
behaviour has an impact on many environment problems
and they are, therefore, adapting to this new threatening
situation by considering environmental issues while
shopping and purchasing (Laroche et al., 2001). Promoting
sustainable consumption and production are important
aspects of sustainable development, which depends on
achieving long-term economic growth that is consistent
with environmental and social needs (OECD, 2008).
Achieving sustainability require stabilizing or reducing
environment burden.
As consumer is the center of business activities, his proper
understanding will unable businesses to deploy strategies
for meeting competition and setting their activities on right
track. In the present scenario in India, as the competition is
increasing, the prices of consumer goods have either come
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HSB Research Review
Vol. 2 No. 2
July-December 2011
education students used mean comparison for different

demographic characterstics in which only age and class
levels showed statistically significant results.
down or stayed low; implying a consumption boom which

is becoming a key trigger of economic growth (Dubey, 2007).
Consequently, consumption patterns of people are changing
and many factors determine their changed behaviour.
Increasing industrialization has tempted people to work in
established industries in large cities and they are moving
there from semi urban and rural places. Opportunities and
facilities for education are increasing. Above all, the lowincome households are transiting to high-income categories.
As a result, living standards of people are changing. These
changes may be a result of psychology of new generation,
which is developing from a new perspective. Indian
population is considered to be young when compared with
developed world and they will take the leadership position
in future. Therefore, the present paper is an attempt to
explore social responsibility among students because, as
the future conservers and caretakers of the society and
environment they need more elaborations on their socially
responsible consumption; accordingly future business
practices can be positioned by corporations for sustainable
development of the community.
Dubey (2007) while studying consumer decision making

led by environmental information; found that participants
answers to questions relating to environmental
surrounding, pollution and health had a tendency to vary
according to their gender, age and occupation. He said to
be able to make environmentally aware decisions;
consumers must have both information and certain practical
skills and knowledge.
Singh (2009) empirically investigated the socially
responsible behaviour of Indian consumers by equal
division of sample among urban and rural population. Urban
residents scored high on all demographic categories. Age
and Place had been found significant determinants of
SRCB.
Savita and Kumar (2010) explored consumer attitude
towards environment friendly products. They made
comparative analysis of gender and residential status and
found that male segment of consumers and urban residents
have more favourable attitude than their counterparts.
LITERATURE REVIEW
A number of research papers and articles provide a detailed
insight about the factors that affect consumer responsible
behaviour. The researches in this area provide linkages
between environment, society and consumer behaviour.
The findings about behavioural determinants from literature
are presented below:
PROBLEM STATEMENT
In marketing literature, it is often to find that demographic
characteristics of consumers are commonly studied feature
to guide stakeholders. The present paper, in addition to
demography, is an endeavor to explore new dimensions of
consumer behaviour relationship with social responsibility.
The young consumers are the future of the nation therefore,
constitute the study population; the elaboration on them
is a unique feature. The study also searches for the link
between Academic Intelligence, Civic Sense and SRCB.
Schwepker and Cornwell (1991) while examining

ecologically concerned consumers and their intentions to
purchase ecologically packaged products found that locus
of control, attitude toward litter and pollution perceptions
what they called as socio psychological determinants
were significant for discriminating between consumers who
had low and high purchase intentions concerning these
products. According to them, those who were living in large
cities were more likely to purchase ecologically packaged
products. Their study also remarked that increased
awareness about solid waste disposal problem might result
in attitude and purchasing behaviour change.
RESEARCH OBJECTIVES
More specifically, the study addresses itself to the following
objectives:
According to Chan (2001) various psychological constructs

such as affect, knowledge, verbal commitment, attitudes,
and memory had been advocated as important determinants
of eco friendly behaviour.
Laroche et al. (2001) investigated the demographic,
psychological and behavioural profiles of consumers who
were willing to pay more for environment friendly products.
They found that this segment of consumers were more likely
to be females, married and with atleast one child living at
home. Their research found that eco literacy was not a good
predictor of consumers willingness to spend more for green
products.
1.
To explore consumer social responsibility among Indian

students.
2.
To examine the determinants of their socially

responsible behaviour.
3.
To analyze the socially responsible consumption

behaviour across respondents demographic profile.
4.
To highlight implications and suggestions of the study.
The study is based on primary data, collected through a
standardized scale on Socially Responsible Consumption
Behaviour (SRCB) developed by Antil and Bennet (1979),
Antil (1984). The scale is introduced upon a sample of 100
students of Ambala District with slightly modified questions
according to Indian conditions. The sample is
representative of the population as the students of different,
age, gender, educational and family income levels are
Shanka and Gopalan (2005) in an exploratory study of

socially responsible consumer behaviour of higher
70
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Vol. 2 No. 2
included in it. The responses are coded in software program

SPSS (Evaluation version 11.0). Each response in the
statement is coded ranging from 1 to 5 from never to
ever. Several items are reverse scored to avoid response
bias. Consistent results are found with Cronbachs alpha
coefficient of 0.803.
Table 2
An insightful effect of demography on students

consumption behaviour is explored. The determinants are
found by employing regression analysis. The effect of
demography has been analysed using mean comparison
between the groups. The results are presented in separate
tables for mean values as per each demographic variable.
The tables also show the sample division, characterstics
and standard deviation. For easy observation and
understanding the discussions are presented considering
three important aspects, which are related to and leads to
each other, these are:
Theory
Support
and Contradiction
Description Shows the state of happening at a point of

time or during a period of time.
DETERMINANTS OF SRCB
The determinants are implicit from the results of regression
analysis, shown below in Table 1.
Determinants of SRCB
Standardized
Coefficients
S. E.
beta
(Constant)
122.56
16.025
7.65
.000
Gender
1.22
3.19
.035
.38
.703
Place of Living -7.28
3.62
-.191
-2.01
.047
Educational
-.38
Qualifications
3.37
-.013
-.112
.911
Field of Study -3.55
2.14
-.158
-1.66
.100
Academic
Intelligence
-1.17
1.82
-.061
-.65
.520
Family Size
-2.58
3.34
-.072
-.77
.441
Family Income -1.90
2.36
-.076
-.81
.423
Age
.139
3.90
-.004
.04
.972
Civic Sense
1.62
.27
.534
6.01
.000
R
Square
Adjusted
R-Square
Std. Error
of Estimate
Sig.
.57
.33
.26
14.68
4.841
.000
Age and SRCB: Inverse relationship has been noticed

between age and SRCB. Among two age groups teenagers
are found more socially responsible as compared to adults.
The reason may be that now, at school level students are
provided with the opportunities to read environment as a
subject from primary classes. This can increase their
understanding of environment better than those who have
not received a chance to have environmental knowledge.
These results contradict with the results of Shanka and
Gopalan (2005); their study suggested the tendency of
becoming conscious of societal aspects as age increases
but favours them as age differences have been found
statistically insignificant. The result is in line with the result
of Singh (2009) as there, younger were found more socially
responsible.
Support and Contradiction Presents, results of previous

researches in the same line; which are in favour or against
present findings.
Unstandardized
Coefficients
SRCB ACROSS DEMOGRAPHIC PROFILE
Theory On the other hand, attempts to develop

hypotheses which explain why it happened.
Table 1
Association Measures of Determinants
Results of regression analysis (table 1) highlight that civic

sense and place of living are the two determinants which
have been found statistically significant at 5% probability
level. The highest beta (.534) and t (6.01) support the
greatest contribution of civic sense as a determinant. The
second best determinant of SRCB is place of living as shown
by its t (-2.01) and beta (-.19) values. The positive sign of
beta depicts direct relationship and negative sign shows
inverse relationship between dependent SRCB and
independent determinants. The other determinants are
found not significant but further explained with regard to
their mean values and Anova Exploration. Table 2 depicts
that the determinants that are used in regression model
have a positive correlation (.57) with SRCB and explain
33% variations in it. The significant F (4.84, .000) value
shows the reliability of anticipation power of determinants.
ANALYSIS AND RESULTS
Description
July-December 2011
sig.
Table 3
SRCB Score across Age-groups
Age Groups
Mean
Std. Deviation
15 - 18
144.10
41
16.38
19 - 24
141.34
59
17.55
Total
142.47
100
17.05
Gender Differences and SRCB: It can be inferred from table

4 that girls are more socially responsible than boys. This
may be because of liberal environment for girls as compared
to past times. Now, girls also have equal opportunities to
grow by higher education and their perceived level of social
concern then become higher. This result supports Zelezny
et al. (2000); Laroche et al. (2001); Tindall et al. (2003), Hunter
et al. (2004); Alibeli and Johnson (2009); Lee (2009) and
Singh (2009); all have found women more concerned about
environment and society than men.
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HSB Research Review

Table 4
Vol. 2 No. 2
this may be because of fewer opportunities of environmental

education and knowledge, which we often fail to realize.
The insignificancy of this determinant contradicts Shanka
and Gopalan (2005) where class levels emerged as a
significant determinant.
Gender-wise SRCB Scores
Gender
Boys
Girls
Total
Mean
141.08
143.40
142.47
N
40
60
100
Std. Deviation
17.59
16.76
17.05
Table 6
Place of Residence and SRCB: The inferences suggest

that those who belong to small communities or areas
understand well their accountability to society than those
who reside in urban areas; may be because, our civilized
society is engaged in polishing and decorating the cages
in which humanities and carefulness will be kept
imprisoned. One of the misfortunes with urbanization is
that in getting rid of false shame, people have killed off so
much of the real shame as well. This result contradicts with
the result of Schwepker and Cornwell (1991); they found
those who live in larger cities are more concerned about
pollution than those in smaller cities but the result favours
them as they indicated that city size did not appear to be a
significant discriminating variable. The result is also in
contradiction with the result of Singh (2009) where
urbanization emerged as a significant indicator of social
responsibility.
Mean
146.33
141.04
142.47
N
27
73
100
Std. Deviation
12.01
18.44
17.05
Table 7
-12.05
-16.24
-20.34
12.05
-4.19
-8.29
16.24
4.19
-4.10
20.34
8.29
4.10
N
37
56
7
100
Std. Deviation
18.09
16.54
17.99
17.05
6.84
6.78
7.79
6.84
3.72
5.34
6.79
3.72
5.28
7.79
5.34
5.28
72
SRCB and Academic Intelligence
Intelligence
Mean
Std. Deviation
Poor
128.43
19.90
Fair
140.47
38
15.78
Good
144.67
42
17.61
Excellent
148.77
13
13.61
Total
142.47
100
17.05
Table 9
Post Hoc Multiple Comparison of Academic Intelligence
Academic Intelligence
Mean
Std.
(A)
(B)
Difference
Error
(A B)
Fair records
Good records
Excellent records
Fair Records
Poor records
Good records
Excellent records
Good Records
Poor records
Fair records
Excellent records
Excellent Records Poor records
Fair records
Good records
Mean
142.90
142.25
142.00
142.47
Academic Intelligence1 and SRCB: Academic Intelligence

or efficiency in students academic records is found
positively correlated with SRCB. Not only education but
students intelligence can also be a factor affecting SRCB.
The results can be studied from the table 7 below which
shows how intelligence level affects intellectual level.
These mean differences have been found statistically
significant as shown by the results of ANOVA which can
be studied from table 8. Post hoc multiple comparisons in
table 9 emphasize that this significant mean difference is
due to reliable differences between poor and excellent
records. The difference of two means (20.34) is found
significant at 10% level.
Education and SRCB: Education wise the results are

somewhat confusing. There is a slight difference of mean
scores among the levels of education and negative
relationship has been noticed. The result is reinforced with
result of age groups. The inverse relationship is not a result
of educational qualifications as a demographic variable but
Poor Records
SRCB and Educational Qualifications
Education
Up to 10+2
Graduation
PG and above
Total
Table 5 Residence-wise comparison of SRCB

Residence
Rural
Urban
Total
July-December 2011
Sig.
.38
.13
.08
.38
.74
.50
.13
.74
.89
.08
.49
.89
95% Confidence
Interval
Lower
Upper
Bound
Bound
-31.50
7.41
-35.55
3.07
-42.51
1.83
-7.41
31.50
-14.78
6.40
-23.49
6.90
-3.07
35.55
-6.40
14.78
-19.11
10.91
-1.83
42.51
-6.90
23.49
-10.91
19.11
HSB Research Review

Table 8
Vol. 2 No. 2
philosophy and history walk hand in hand. In the gaining

of science which explores frontiers of knowledge perhaps
the thing become out of their mind The essence of
knowledge is, having it to apply it; not having it, to confess
your ignorance. The appearance of study stream as
insignificant determinant supports Shanka and Gopalan
(2005).
ANOVA of Academic Intelligence

Sum of
Squares
df
Mean
Square
Sig.
Between Groups
2250.08
750.03
2.72
.049
Within Groups
26520.83
96
276.26
Total
28770.91
99
July-December 2011
Table 11
Education Wise Comparison of Intelligence: A cross study

of Educational Qualifications and Academic Intelligence
shows brilliant academic records in all levels of study
dominantly affect ones state and sense of social
responsibility. The mean scores of SRCB are high for those
who have good and excellent records in their education.
Thus there is a road, pass through the superior intellect,
targeting a great sense of social responsibility. A big
problem in our present educational system is that stupids
are the cocksure and intelligents are full of doubts. Yet
intelligents always try to do what they can, with what they
have; doesnt matter where they are.
SRCB according to field of study
Study Field
Mean
Std.
Deviation
Commerce and
Management
144.73
48
13.94
Science and
Engineering
137.85
34
18.54
Humanities
145.17
18
20.56
Total
142.47
100
17.05
Family Income2 and SRCB: The division of consumers on

the basis of their paying capacity has undergone a
tremendous change in the last few years. As analysed by
income levels, students from low and middle class have
high socially responsible consumption behaviour. The mean
score is quite symmetrical but students belong to high
earning group is not much concerned with least mean
(140.58). The matter of less social responsibility with the
rich may be uselessness; most often which results in
carelessness. The result is consistent with the results of
Alibeli and Johnson (2009); they found middle class has
expressed good support for the preservation of
environment and the conservation of natural resources.
Laroche et al. (2001) is again supported as according to
them the persons above average socio economic status
(middle class) are socially conscious.
Table 10. Education Wise Intelligence Measures

Educational
Academic
Mean N
Std.
Qualifications Intelligence
Deviation
Up to 12
Poor records
116.67 3
15.95
Fair records
143.58 21 17.00
Good records
147.85 13 16.06
Total
142.89 37 18.09
Graduates
Poor records
137.67 3
23.86
Fair records
136.65 17 13.65
Good records
142.19 26 17.99
Excellent records 153.30 10 10.63
Total
142.25 56 16.54
Pg & above
Poor records
136.00 1
.
Good records
152.33 3
23.03
Excellent records 133.67 3
12.58
Total
142.00 7
17.99
Total
Poor records
128.43 7
19.90
Fair records
140.47 38 15.78
Good records
144.67 42 17.61
Excellent records 148.77 13 13.61
Total
142.47 100 17.05
Field of Study and SRCB: By studying table 11 students
from science and engineering are found very less socially
responsible with a least mean of 137.85. On the other hand
students of humanities are found highly socially
responsible with highest mean of 145.17. It has rightly been
said that Science and Nature cannot move simultaneously;
both can be said as antonym of each other, the above result
in which students of science stream are less socially
responsible than their two counterparts points out this
thing. As it is true No technical knowledge can outweigh
knowledge of humanities, in the gaining of which
Table 12
SRCB according to Family Income
Family Income
Mean
Std.
Deviation
Low Income
142.78
45
16.90
Middle Income
142.67
43
17.26
High Income
140.58
12
18.20
Total
142.47
100
17.05
Family Size and SRCB: Small families are more socially

responsible than medium and large. The reason may be
that big families most of the time are concerned only for
their family members, they have less time to think and to do
for society and social welfare and might be their purchase
intentions and decisions are related with money benefits
with big purchases, without analyzing the deterious
consequences. Human can think for the society only after
the family. A big family and then family problems hardly
annoy people for rational thinking to do something for
others or society beyond conventional.
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Vol. 2 No. 2
July-December 2011
Family Size
Mean
Std.
Deviation
Small Families
145.50
18.40
reliable. Scheffe post hoc test compares these differences

in a bilateral form and shows that all two mean differences
between low medium, low high and medium high are
statistically significant which moves the F value towards
significative results.
Medium sized Families
142.26
77
17.47
Table 14
Large Families
141.93
15
14.93
Civic Sense Categories
Mean
Std. Deviation
Total
142.47
100
17.05
low civic sense
131.83
29
18.21
Medium civic sense
142.28
39
14.99
High civic sense
152.34
32
12.10
Total
142.47
100
17.047
Table 13
SRCB according to Family Size
Civic Sense and SRCB: Civic Sense has been categorized

into three and the effect of low, medium and high civic
sense on SRCB is analysed as shown by the under
mentioned tables. It is obvious from table 14 that there is a
direct relationship in civic sense and attainment of SRCB.
With good civic sense there is increasing returns to society
in the form of people high socially responsible behaviour
with regard to their consumption. Civic sense and good
behaviour improve ones personality and give good
impressions to others in the form of socially responsible
consumption behaviour. ANOVA exploration of mean
differences suggests that the differences are statistically
Table 16
Table 15
Effect of Civic Sense on SRCB
ANOVA of Civic Sense on SRCB

Sum of
df Mean
F
Squares
Square
Between Groups 6405.66
3202.828
Within Groups
22365.25
97 230.570
Total
28770.91
99
Sig.
13.891 .000
Post Hoc Exploration of ANOVA Results
Categories of Civic Sense

(I) Civic Sense
(J) Civic Sense
Mean
Difference
(I-J)
Std.Error
Sig.
95% Confidence
Interval
Lower
Upper
Bound
Bound
low civic sense
Medium civic sense
-10.45
3.72
.023
-19.71
-1.198
High civic sense
-20.52
3.89
.000
-30.19
-10.84
10.45
3.72
.023
1.198
19.71
High civic sense
-10.06
3.62
.024
-19.07
-1.06
low civic sense
20.52
3.89
.000
10.84
30.19
Medium civic sense
10.06
3.62
.024
1.058
19.07
Medium civic sense low civic sense

High civic sense
and to revise the environmental education curricula as per

the changing need of the time. The important implication
for businesses is to tap the attractive market of young
population, middle class and small sized families who are
already ready to behave as responsible consumers. Efforts
are required to enhance people civic sense, so that
consumption behaviour can be made responsible. In this
regard, media can play a significant role by providing social
advertising and information. Researchers will be benefited
by the inclusion and results of Academic Intelligence and
Civic Sense as two new behavioural determinants for new
researches on demography.
CONCLUSION
The study confirms that demographic factors influence
socially responsible behaviour of students and also
concludes that Place of Living and Civic Sense are the two
significant determinants of their SRCB. The mean
comparison of different categories confers that; teenagers,
girls, residents of rural areas, students with excellent
academic scores, having humanities and commerce as study
background and with high civic sense are responding to be
more socially responsible; whereas, those belonging to large
size and high income families are less responsible in their
consumption behaviour. Among these determinants, mean
differences are found statistically reliable for Academic
Intelligence and Civic Sense but Educational Qualifications
say little about social responsibility.
REFERENCES
Alibeli, Madalla A. and Johnson, Chris (2009),
Environmental Concern: A Cross National
Analysis, Journal of International and CrossCultural Studies, Vol. 3, Issue 1, pp. 1 8.
SUGGESTIONS AND IMPLICATIONS

As learners and future caretakers of the society there is a
need to develop sense of responsibility among students
Chan, Ricky Y. K. (2001), Determinants of Chinese

74
HSB Research Review
Vol. 2 No. 2
July-December 2011
Consumers Green Purchase Behavior,

Psychology and Marketing, Vol. 18(4), pp. 389
413.
Environmental Movement: The Contradictory

Effects of Gender, Society and Natural Resources,
16, pp. 909 932.
Dubey, Parag (2007), Changes in Consumer Decision

Making process Led by Environmental
Information, International Marketing Conference
on Marketing and Society 2007, IIMK, pp. 665
671.
Uzzell, David and Rathzel, Nora (2008), Changing Relations

in Global Environmental Change, Berlin
conference on the Human Dimensions of Global
Environmental change, pp. 1 18.
Wells, Richard P. (1990), Environmental Performance will
count on the 1990s, Marketing News, Vol.19,
March, p.22.
Hunter, Lori M., Hatch, Alison and Johnson, Aaron (2004),

Cross-National Gender Variation in Environmental
Behaviours, Vol. 85, No. 3, pp. 677 694.
Zelezny, Lynnette C., Chua, Poh-Pheng and Aldrich,

Christina (2000), Elaborating on Gender
Differences in Environmentalism, Journal of Social
Issues, Vol. 56, No. 3, pp. 443 457.
Laroche, Michel; Bergeron, Jasmin and Barbaro, Forleo

Guido (2001), Targetting Consumers Who are
Willing to Pay More for Environmentally Friendly
Products, Journal of Consumer Marketing, Vol.
18, No. 6, pp. 503 520.
(Footnotes)
1
Academic intelligence is assessed with the student first

division (above 60%) in the levels of his/her
education. First division in one level as fair
records, in two levels good records and three or
more levels is termed as excellent academic records.
Students non response of first division in any of
their educational level is termed as poor academic
records.
As students belong to non earning group, about family

income is asked upon. Low income category
includes students with monthly family income
below 10,000. Middle class is taken asking income
between 10000 to 30000 and students having
monthly family income above 30000 are considered
from high income class.
Number of persons in the household makes up the family

size. The distribution is taken up by taking
Lee, Kaman (2009), Gender Differences in Hong Kong

adolescent consumers green purchasing
behaviour, Journal of Consumer Marketing, 26/2,
pp. 87 96.
OECD Publications (2008), Promoting Sustainable
Consumption: Good Practices in OECD Countries,
OECD Publication, Paris, Vol. 2, p.7.
Savita, Ubba and Kumar, Naresh (2010), Consumer Attitude
Towards Environment-Friendly Products: A
Comparative Analysis, The IUP Journal of
Marketing Management, Vol. IX, Nos. 1 & 2, pp. 88
96.
Schwepker, Charles H. and Cornwell, Bettina T. (1991), An
Examination of Ecologically Concerned Consumers
and Their Intention to Purchase Ecologically
Packaged Products, Journal of Public Policy and
Marketing, Vol. 10(20), pp. 71 101.
up to 3 persons small families;
Shanka, Tekle and Gopalan, Gabriel (2005), Socially

Responsible Consumer Behavior Higher
Education Students Perceptions, Working Paper,
ANZMAC 2005 Conference: Corporate
Responsibility, pp. 102 107.
4 to 6 medium sized families

and above 6 large families.
4
Shrum, L.J., McCarthy, John A. and Lowrey, Tina M. (1995),

Buyer Characterstics of the green consumer and
their implications for advertising strategy, Journal
of advertising, Vol. XXIV, pp. 71 82.
Singh, Narendra (2009), Exploring Socially Responsible
Behaviour of Indian Consumers An Empirical
Investigation, Social Responsibility Journal, Vol.
5, No. 2, pp. 200 211.
Tindall, D. B., Davis, Scott and Mauboules, Celine (2003),
Activism and conservation Behaviour in an
75
Civic Sense is nothing but social ethics which are the

investigation into the basic concepts and
fundamental principles of human conduct. People
consideration for the unspoken norms of the
society makes their civic sense. In order to study
civic sense, some statements on social ethics are
added in the questionnaire; responses are captured
in a factor named civic sense. Taking a hypothesis
in mind that good civic sense should work for
sensible consumption behaviour, it is used as
predictor of SRCB and categorized to apprehend
the effect of students civic sense on their sense
of social responsibility.
HSB Research Review
Vol. 2 No. 2
ROLE OF STIMULATING
PACKAGES IN
COGNITIVE
DEVELOPMENT: AN
EMPIRICAL STUDY
July-December 2011
ABSTRACT
The present paper discusses that stimulation packages
comprising of group of activities, plans and subjects
adopted to understand new concepts, would have a positive
impact on the cognitive development of the children. This
study involves manipulating anganwadi programme as
the independent variable and cognitive development status
of children as dependent variable. The special activity
programme based on selected concepts (verbal, perception,
quantitative, memory and spatial relations) and operations
was administered to 4-6 years children of experimental
groups I & II to assess the impact on their cognitive
development. The results show that there was improvement
in performance of all the three study groups, including
control group and two experimental groups, but there were
significant differences in post intervention scores of control
and experimental group children. The hypothesis stands
accepted, implying that stimulating packages do pay to
enhance the cognitive development of the children.
Dr Nidhi Singh
Assistant Professer, DAV Institute of Management,
Faridabad, Haryana
Dr Usha Rani
Associate Professor and Principal (Officiating), CIS Kanya
Mahavidyalaya, Fatehpur Pundri, Kaithal, Haryana.
Key words: cognitive development, stimulating packages,

control group, experimental group, cognitive aspects,
spatial relations, memory, perception, etc.
INTRODUCTION
Cognitive development is a very crucial aspect of
development. It refers to higher mental process and the
functions involved in understanding and dealing with the
surrounding world. It is a process of knowing and is the
result of interaction between individual and the outside
world. Cognition involves the development of skills like
sensing, perceiving, recognizing, conceiving,
conceptualizing, judging, reasoning and problem solving,
It is very broad aspect and includes a set of different
functions interrelated with each other which develop
differently under the force of environmental factors (Gupta,
1992) . According to Piaget (1952) cognitive developments
is a continuous process of unfolding. It unfolds in stage
like sequence whose stages are in order and uniform for all
children. Every child goes through a sequence of
developments that can be observed from small to large
complex thinking, from one world utterance to lengthy
sentence and from scalable to representational drawings.
Development refers to change over time in the structure,
thought or behaviour of a person as a result of both
biological and environmental influence (Craig, 1986). .
Cognitive development is characterized by (i) acquisition
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HSB Research Review
Vol. 2 No. 2
of language and number skills and the rules that govern

the use of these symbols (ii) differentiation of perceptual
experience and learning the rules of logic and how to apply
them to reason out problems (Hendrick,1988). Cognitive
development is jointly determined by the biological
characteristics of the individual and the type of environment
in which the person grows. The rate of development is
neither biologically predetermined nor completely
responsive manipulation (Kirti, 1988).
July-December 2011
variable. This special activity programme was based on

selected concepts (verbal, perception, quantitative, memory
and spatial relations) and operations. This special activity
programme was offered to children of Experimental Group I
and Experimental Group II for a period of 8 weeks and about
50 to 60 minutes were devoted to each group. The Control
Group children were not provided any intervention. The
gain in cognitive development status of Experimental Group
I and Experimental Group II achieved through the programme
were analysed in comparison with the gain in control group
to establish the worth and productivity of the programme.
This was done through popular McCarthy Scales of
Childrens Abilities (MSCA) developed by McCarthy
Dorothea.
Cognitive development is a long-term and continuous

process that results from an interaction between the subject
and an environment. In terms of successful procedures for
fostering cognitive development, this means that the more
active the subjects, the more successful his learning is likely
to be. Intellectual activity is stimulated if the opportunities
for acting on objects or observing other peoples action or
discussing correspond to the subjects level of development
(Mussen et al., 1960) . In psychology also cognitive
development is defined as an extremely broad term which
includes attention, perception, memory, language formation
and development, reading and writing thinking, problemsolving, intelligence, creativity, imagination, expectations,
intention and beliefs (Shaver and Tarpy, 1993).
In first phase activities related to various aspects of

cognition were planned. For each activity a detailed
procedure was prepared in written format. The second step
was to organize and assemble the resources to arrange the
activities in an orderly manner. After organizing the
activities, material resources for different activities were
collected. Resources consist of various assets and tools
required to achieve maximum gain. Some of the material
resources were common for different activities.
Stimulated packages are need based and help to enhance

cognitive development. The packages are comprised of
group of activities, plans and subject adopted to understand
new concepts. They are subjective methods of collecting
inputs in order to arrive at final or semifinal decisions. These
packages facilitate cognitive understanding in the same
way that paper and pencil simplifies mental arithmetic and
counting on figures simplified learning strategy.
After planning and organization and assembling resources,

the programme was implemented. During the demonstration
it was kept in mind that every child must participate and
show interest in it. The concepts which were interrelated
were provided at a time for instance, perception was
provided with spatial relations; verbal with memory; and
quantitative with conceptual development. A revision of all
concepts covered was done towards the end of every week.
Inhelder et al. (1974) also explained that cognitive

development results essentially from an interaction between
the subject and the environment. In terms of successful
procedures for fostering the cognitive development, this
means that the more active the subject is, more successful
his learning is likely to be. As an organized stimulus
presentation is expected to better recall them an
unorganized one, attempts are made to create and administer
organized stimulus.
After implementation of the programme for eight weeks, a

gap of one month was given. After a gap of one month
cognitive level of children was tested with the help of MSCA
scale and Test of Cognitive Development.
To select children in Control Group, Experimental Group I
and Experimental Group II, separate lists of boys and girls
were prepared with general cognition in an ascending order.
Then equal numbers of children with similar performance
were paired for three groups. For Control Group children
were selected from Fatehpur village (District KaithalHaryana) and for Experimental Groups children were
selected from Mirzapur village (District KurukshetraHaryana). Frequencies are presented in Table 1.
According to Padmini (1989) the question of providing

appropriate experiences to foster cognitive development
in schools can be considered on four basic principles,
namely, appropriate environmental stimulation with
adequate breadth and depth; learning as an active process;
priority of intellectual activities based on actual experiences;
and importance of social interactions among children.
Intervention was imparted separately to Experimental Group

I and Experimental Group II. Experimental Group II was
comprised of only children and Experimental Group I was
comprised of children and their mothers. Intervention
programme was implemented for a period of 8 weeks in the
Anganwadi centers.
The present work was designed as an experimental study
to develop a programme for enhancing cognitive
development in 4-6 years old pre-school children attending
angnwadis. This study involved manipulated anganwadi
activity programme as the independent variable and
cognitive development status of children as dependent
IMPACT OF STIMULATING PACKAGES

This section comprises of pre intervention performance of
children, intervention programme, post intervention
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Vol. 2 No. 2
performance of children; comparison of pre and post

intervention performance of children; comparison of pre
and post intervention mean scores of Control and
Experimental Groups. Mean gain in different cognitive
aspects of Control and Experimental Group; comparison of
mean gain in Control and Experimental Groups are also part
of this section.
July-December 2011
development over a course of time which could not be

controlled.
Comparisons of post intervention mean scores of control
and experimental groups: Paired t-tests revealed significant
differences in pre and post intervention performance of
control and experimental groups children. Therefore, for
further clarification in three study groups, multivariate
analysis of variance was applied on post intervention mean
scores of control and experimental groups. Duncan Multiple
Range test was further applied to examine where the
differences lay in three study groups. The results are
presented in Table 5.
Pre intervention performance of children: The pre

intervention performance of children was measured on Scale
of MSCA and the performance was assessed in terms of
General Cognitive Index. The pre-intervention mean scores
of control and experimental groups are presented in Table
2. The table reveals that for Control Group means of general
cognition, verbal, perception, quantitative, memory and
spatial relations aspects were 83.83, 41.93, 40.57, 41.20, 42.20
and 7.40 respectively. For Experimental Group I the mean of
general cognition was 83.83, while that of verbal and
perception aspects were 42.23 and 41.30 respectively.
Means of quantitative and memory aspects were 41.47 and
42.40 respectively, while for spatial relations the mean was
7.41.
For the main effect of groups, univariate F-tests were

significant for general cognition, F(2,94) = 11.29, p<.001;
verbal, F(2,94) = 7.60, p<.01; perception, F(2,94) = 4.73, p<.05;
quantitative, F(2,94) = 3.25, p<.05 memory, F(2,94) = 5.65,
p<.01; and spatial relations, F(2,94) = 3.35, p<.05.
Further, the general cognition mean score of Control Group
(M=86.20) children was significantly lower than mean
scores of Experimental Group I (M = 94.53) and Experimental
Group II (M = 92.80) children. Control group childrens
verbal aspect mean score (M = 43.33) was significantly lower
than mean scores of Experimental Group I (M = 47.10) and
Experimental Group II (M = 5.63). Mean score of Control
Group children for perception (M = 41.24) were significantly
lower than Experimental Group I and Experimental Group II
(MS = 44.63 and 43.50 respectively). For quantitative and
memory aspects mean scores of control group (MS = 41.47
and 42.70 respectively) were significantly lower than mean
scores of Experimental Group I (MS = 44.00 and 46.13
respectively) and Experimental Group II (MS = 43.60 and
44.97 respectively). Finally, for spatial relations also mean
scores of Control Group (M = 7.61) was lower than that of
Experimental Group I (M = 9.62) and Experimental Group II
(M = 9.47).
For Experimental Group II mean of general cognition was

83.83. Means of verbal and perception aspects were 41.73
and 40.60 respectively. Means of quantitative and memory
aspects were 41.40 and 42.47 respectively, while for spatial
relations the means worked out at 7.46. As the performances
of three groups were similar, it is mentioned again that
children in control groups were paired on the basis of their
general cognition.
Post intervention performance of children: After imparting
intervention programme, children were post tested after a
gap of one month to assess impact of stimulating packages.
Post-intervention mean scores of control and experimental
groups are presented in Table 3. It can be seen that for
Control Group, Experimental Group I and Experimental Group
II mean scores for general cognition were the highest (86.20,
94.53 and 92.80) and that for spatial relations the lowest
(7.61, 9.62 and 9.47). However, the mean score for verbal,
perception and quantitative aspects fall almost at the same
level.
Mean and net gains in different cognitive aspects of control

and experimental groups: Table 6 shows the gain in general
cognition, verbal, perception, quantitative memory and
spatial relation aspects of cognition of Control and
Experimental Groups.
Comparison of pre and post intervention performance of

control and experimental group children: Separate paired
t-tests were computed to compare the pre intervention and
post intervention performance of Control and Experimental
Group children. Table 4 reveals that there were significant
differences in pre and post intervention performance of all
the three categories of children. Also, there was significant
improvement in pre and post intervention performance of
children in three study groups. Higher t values for
Experimental Group I and Experimental Group II indicate
that after intervention, experimental group children
performed much better and this improvement can be
attributed to intervention provided to these children.
However, improvement in control group might be normal
It is clear from the analysis based on the Table 8 that there

were significant gains in all aspects of cognition of Control
and Experimental Group children. Though the control group
children did not receive any intervention, there was a gain
in their scores of all cognitive aspects. This gain might be
either natural gain or it may be due to some other factors
that could not be controlled.
For main effect of group, univariate F-tests were significant
with respect to gains for general cognition F(2,94)=237.23;
verbal, F(2,94)=143.11, perception, F(2,94)=96.49;
quantitative, F(2,94)=96.01; memory, F(2,94)=65.95, and
spatial relations, F(2,95)=50.01 ps<.001.
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July-December 2011
As presented in the table under reference, Duncan Multiple

Range Test revealed that for the control group mean gain
in general cognition (M=2.37), verbal aspect (M=1.40),
perception (M=.67), quantitative (M=.27), memory (M=.50)
and spatial relations (M=.21) were lower than the gain in
these aspects of Experimental Group I (MS=10.70, 4.87, 3.33,
2.53, 3.73 and 2.20 respectively) and Experimental Group II
(MS = 8.97, 3.90, 2.90, 2.20, 2.00 and 2.01 respectively).
Although the control group children did not receive any

intervention, there was gain in their scores of general
cognition, verbal, perception, quantitative, memory and
spatial relations aspects of cognition. This gain might be a
natural gain or it may be due to some other factors that
could not be controlled. Whatever could be the reason,
these factors might-have been operating behind the gain
in the two experimental groups.
It is also clear from the table that gain in general cognition,

verbal, perception and memory aspects of Experimental
Group I was significantly higher than gain in these aspects
of Experimental Group II.
Table 2. Pre Intervention Means and SDs for Scores of

Cognitive Aspects of Control and Experimental Group
Children
RESULTS AND DISCUSSIONS
Cognitive Aspects
In conclusion, after intervention, majority of the children

in Experimental Group I and Experimental Group II fell in
the average category and none of the child could be
identified as mentally retarded.
General cognition
83.83
6.05
83.83
6.06
83.83
6.05
Verbal
41.93
3.43
42.23
3.56
41.73
3.41
Perception
40.57
4.49
41.30
3.92
40.60
3.78
Quantitative
41.20
3.82
41.47
3.91
41.40
3.70
Memory
42.20
3.87
42.40
3.87
42.47
3.56
Spatial relations
7.40
2.01
7.41
2.00
7.46
2.00
The results of this study show that, although there was

improvement in performance of all the three study groups
in general cognition, verbal, perception, quantitative,
memory and spatial relations aspect of cognition get, there
were significant differences in post intervention scores of
Control and Experimental Group children.
It was hypothesized that stimulation packages would have
impact on cognitive development of Experimental Group
Children. Results of the present study support this
hypothesis as there was significant improvement in
cognitive development of both the Experimental Group
children after receiving intervention. Mean gain in different
aspects of cognition was computed for three study groups.
It was found that mean gain in all these aspects of experiment
groups was significantly higher than those of control group
children. However significant differences were also
observed between two experimental groups for general
cognition, verbal, perception and memory aspects.
Note : refer to Deviation.
Table 3. Post Intervention Means and SDs for Scores of

Cognitive Aspects of Control and Experimental Group
Children
Cognitive Aspects
Table 1. Sample Selection of Study Group Children

n=96
Age Group and Gender
4 - 5 yrs.
Boys
Girls
+
5 - 6 yrs.
Boys
Girls
4 - 6 yrs.
Boys
Girls
Total
Control
Group
N=32
8
8
Experimental Experimental
GroupGroupIn=32
IIn=32
8
8
8
8
8
8
8
8
8
8
16
16
32
16
16
32
16
16
32
Control Experimental Experimental

Group
GroupGroupn=32
In=32
IIn=32
Control Experimental Experimental

Group
GroupGroupn=32
In=32
IIn=32
General cognition
86.20
6.07
94.53
7.25
92.80
6.87
Verbal
43.33
3.42
47.10
3.99
45.63
3.55
Perception
41.24
3.90
44.63
4.28
43.50
3.86
Quantitative
41.47
3.90
44.00
4.28
43.60
3.86
Memory
42.70
3.74
46.13
4.05
44.97
3.69
Spatial relations
7.61
2.31
9.61
3.11
9.47
3.01
Note : refer to Deviation.

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July-December 2011
Table 4. Pre and Post Intervention Paired t Values for Cognitive Aspects of Study Groups
Cognitive Aspects
Pre
Intervention
Mean
Post
Intervention
Mean
Mean
difference
t value
General cognition
83.83
86.20
2.37
10.19**
Verbal
41.93
43.33
1.40
9.96**
Perception
40.57
41.24
0.67
4.82**
Quantitative
41.20
41.47
0.27
2.80**
Memory
42.20
42.70
0.50
4.76**
Spatial relations
07.40
07.61
0.21
2.50**
General cognition
83.83
94.53
10.70
29.52***
Verbal
42.23
47.10
4.87
26.67***
Perception
41.30
44.63
3.33
17.23***
Quantitative
41.47
44.00
2.53
19.75***
Memory
42.40
46.13
3.73
29.52***
Spatial relations
07.41
09.61
2.20
11.36**
General cognition
83.83
92.80
8.97
24.73***
Verbal
41.73
45.63
3.90
25.60***
Perception
40.60
43.50
2.90
15.43***
Quantitative
41.40
43.60
2.20
13.17***
Memory
42.47
44.97
2.50
16.70***
Spatial relations
07.46
9.47
2.01
10.00**
Control Group
Experimental Group-I
Experimental Group-II
Note: Significant at ** p<.01 and *** p<.001

Table 5. Comparison of Post Intervention Mean Scores of Control and Experimental Group Children
Cognitive
Aspects
Control
Group
Experimental
Group-I
Experimental
Group-II
General cognition
86.20
94.53
92.80
11.29***
Verbal
43.33
47.10
45.63
7.60**
Perception
41.24
44.63
43.50
4.73**
Quantitative
41.47
44.00
43.60
3.25*
Memory
42.70
46.13
44.97
5.65**
Spatial relations
7.61
9.61
9.47
3.35*
Note: Significant at * p<.05; ** p<.01; and *** p<.001
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July-December 2011
Table 6. Total Gain in Groups

Cognitive Aspects
Control
Group
Experimental-I
Experimental-II
General cognition
gain
2.37a
1.27
10.70c
1.99
8.97b
1.10
237.23***
Verbal gain
1.40a
.70
4.87c
.90
3.90b
.80
143.11***
Perception gain
0.67a
76
3.33c
.71
2.90b
.92
96.49***
Quantitative gain
0.27a
52
2.53b
.90
2.20b
.61
96.01***
Memory gain
0.50a
57
3.73c
1.55
2.50b
82
65.95***
Spatial relations gain
0.21a
.51
2.20b
.81
2.01b
.78
50.01***
Note: Significant at *** p<.001

M.Sc. Thesis. C.C.S. HAU, Hisar.
REFERENCES
th
Craig, Grace J.(1986). Human Development (4 Ed.) PrenticeHall Englewood Cliffs, New Jersey. pp 27-54.
Mussen, P.H.; Conger, J. and Kagan, J. (1960). Essentials of

Child Development and Personality. Harper and
Raw Publishers, New York. pp 198-277.
Gupta, G.C. (1992). Ecology, Cognition, Metacognition and

Mind. A development perspective Indian Institute
of Advanced study Shimla. B.R. Publishing
Company, Delhi. pp 24.
Padmini, T. (1989). Fostering Cognitive Development in First

Standard Pupils. In U.K. Baveli; P.A.S. Ghuman
and P.R. Dasen. Cognitive Development of the
Indian Child. NCERT, New Delhi.
Hendrick, J. (1988). The Whole Child. Developmental

Education for the Early Years. Merril Publishing
Comp. Columbus, Ohio. pp 501-599.
Piaget, J. (1952). The Origin of Intelligence In children.

New York. International University Press. In Berk,
L.E. (4th Ed.) Child Development Allyn and Bacon.
Boston, Toronto, London p. 240.
Inhelder, B., Sinclari, H. and Bouet, M. (1978). Learning

and Development of Cognition. Routledge and
Kegan Paul Ltd. London.
Shaver, K.G. and Tarpy, R.M. (1993). Psychology. Macmillan

Publishing Company, New York, Mexwell
Macmillon Canada, Toronto. pp 310-397.
Kirti, Singh. (1988). Cross Cultrual Study on Spatial

Cognition of 6-8 Years Old Children. Unpublished
81
HSB Research Review
Vol. 2 No. 2
July-December 2011
Case Study
MAHINDRA RENAULT
JV: WHY ITS ON THE
END OF THE ROAD ?
INTRODUCTION
Summers of 2007 saw the automotive sector reporting the
super-success of the Mahindra Renaults -Logan. With
the product of Joint Venture (JV) signed in 2005 between
Mahindra & Mahindra (India) and Renault (France) and
the formal launch of the car in April 2007, Logan had
become the largest selling car in its category the C
segment sedan amongst its competitors like Tata Indigo,
Honda City and Maruti SX4.
Dr Jaskiran Arora
Associate Professor, G D Goenka World Institute, Gurgaon,
Haryana
E-mail : jaskaran.arora@gdgoenka.ac.in
Prof Umashankar Venkatesh
Dean, G D Goenka World Institute, Gurgaon, Haryana
Logan offered two petrol models and one diesel variant,

priced between Rs. 4.28 lakh and Rs. 6.43 lakh. According
to the analysts then, Logans two USPs i.e. price and that
it was most spacious car, were working in its favor. The
enthusiasm was ubiquitous and was reflected in various
awards and accolades Logan earned to its credit like HT
car of the Year 2007, JD Powers highest ranking for
Mahindra Renault Logan in the New-Vehicle Design etc.
However, the year 2008 had an all together different tone
and mood. The sales had started to decline and so much so
that it had to cut on its production. And by April 2010,
Mahindra and Renault decided to call off their partnership
and exit the joint venture.
What could have gone wrong with the sales of the once
so popular car within a year? What might be various
problems with the joint venture that within five years of its
formation, Mahindra and Renault decided it exit the
partnership? Why did the Mahindra Renault JV fail? What
is the significance of the Industrial policies in a country
and how critical they are in the success or failure of a JV?
A joint venture can fail only because of two reasons; either
because there is a problem with the venture or with the
joint!
- Anonymous
About Mahindra & Mahindra(2005) 1 : Mahindra had
embarked on its journey in 1945 by assembling the Willys
Jeep in India and stood at over US $6 billion Company in
the year 2005. Mahindra Group is among the top 10
Industrial Houses in India and the M& M is the only Indian
company among the top five tractor manufacturers in the
world and is the market leader in multi-utility vehicles in
India. The Group has a leading presence in key sectors of
the Indian economy, including trade and financial services
(Mahindra Inter-trade, Mahindra & Mahindra Financial
services Ltd.), automotive components, information
technology & telecom (Tech Mahindra, Bristcone), and
Infrastructure development ( (Mahindra Gesco), Mahindra
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HSB Research Review
Vol. 2 No. 2
July-December 2011
2006 the first road trials of the car in making, were done
when the trial vehicles were put through thorough durability
testing on Indian roads, besides accelerated tests on the
Renault test tracks. By September 2006, the JV went full
swing with the beginning of the trial production of Logan.
The vendor development and the quality assurance team
were busy carrying assessments of all the suppliers in order
to provide the market with a world class product. The
euphoria was reflected in Mahindra and Renaults decision
to extend their strategic alliance and sign another MOU to
set up a Greenfield facility with a capacity of 500,000 units
per year with the 50:50 partnership among M&M and
Renault Nissan.
Holidays & Resorts India Ltd. With over 60 years of

manufacturing experience, and over 40,000 employees on
its role all over the world, the Mahindra Group has built a
strong base in technology, engineering, marketing and
distribution which are key in its evolution as a customercentric organization and thus enjoys a leadership position
in utility vehicles, tractors and information technology, with
a significant and growing presence in financial services,
tourism, infrastructure development, trade and logistics.
The Mahindra Group was an embodiment of global
excellence in five continents and has the benefit of a strong
corporate brand image. It has a partnership with
International Truck and Engine Corporation, USA. It has
appeared in the Top 200 list of the Forbs most reputable
companies in the world and has appeared in the list of top
10 Indian reputable companies.
Launch of Logan (2007)5: April 3rd 2007 was an eventful

day in the
history of the
automotive
industry as it
saw
the
unveiling of the
new car
Logan, a true
blend of best of the East and West and a synergized product
of the worlds two brands who were leaders in their domains.
About Renault2 (2005): Founded in 1899, Renault is a French

automaker with industrial and commercial presence in 118
countries and it designs, develops, manufactures and sells
innovative, safe and environment-friendly vehicles
worldwide. Its over 100,000 employees contributes to a
strategy of profitable growth based on three key factorscompetitiveness, innovation and international expansion.
Renault is Europes leading brand, the only vehicle
manufacturer to have eight cars with maximum five-star Euro
NCAP rating and the winner of the Formula 1 World
Championship for Constructors and drivers in 2005. Due to
its alliance with Nissan, it was the worlds fourth largest
automaker in the world. The companys most successful
car to date was the Renault Clio, and its core market was
France. The Dacia Logan car produced jointly by Renault
and its subsidiary Dacia of Romania was doing very well
all over. Since its launch in 2004, around 4.50 lakh Logan
have been sold worldwide in 51 countries in five continents.3
I am proud that the Logan is the product of a match made

in heaven between Mahindra and Renault, said Mr. Anand
Mahindra. Our JV has been much like a marriage. Over
the last 2 years, the JV teams have worked together, learned
to understand each others cultures, sometimes squabbled,
but always leveraged each others strengths and ultimately
produced something they are both very proud of. The
partnership between Renaults design, precision and
technology and Mahindras ruggedness, fuel efficiency and
customer centricity will, I think, set new benchmarks for
the Indian automobile market. (Mahindra Newsletter,
2007)
About their Joint Venture (2005): In February 2005,

Mahindra & Mahindra and Renault decided to join forces
to produce and commercialize the Logan in India through
their newly formed company Mahindra Renault Pvt. Ltd.
(MRPL). It was expected to be success with people wanting
an inexpensive, no frills car. The joint venture was a 51:49
partnership between Mahindra & Mahindra and Renault.
The understanding was that purchase, engineering and
quality would be Renaults domain and finance, HR,
distribution and communication would be taken care by
Mahindra. The state-of-the-art Logan facility in Nashik
would offer body shop, stamping shop, a paint shop with a
top quality pre-treatment and an assembly line specific for
the Logan. The office of Mahindra Renault was established
in Kandvali, in Mumbai about 1 km from the Mahindras
office. The HR department started recruiting personnel for
the departments like vendor development, research and
design, quality assurance etc. Some employees from
Mahindra & Mahindra were also instituted in the Mahindra
Renault office.
Mr. Carlos Ghosn, President & CEO, Renault SA echoed

the euphoria in the words like a new step in Renaults
global expansion. It marks the start of Renault sales on
the Indian market and sees the first right hand drive
version of Logan created to meet the needs of our Indian
customers. I would like to congratulate the Mahindra
Renault team here in India for demonstrating how much
can be achieved in a very short period of time. said
(Mahindra Newsletter, 2007)
The story further (2007-2010): And true to its projection,
Mahindra Renault sold 2,890 Logan(s) in the month of July
2007, making it the top selling brand in its category. Logan
received a resounding response from customers in the cities
where it was launched. Mr. Rajesh Jejurikar, MD, Mahindra
Renault Pvt. Ltd., said 6 , The Logan has evinced
phenomenal response since its launch as evident from the
bookings. Our dealers had to deal with over 25,000
inquiries so far. This is very significant considering that
Making of Logan (2006 & 2007)4: In May and August,

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HSB Research Review
Vol. 2 No. 2
July-December 2011
putting a pressure on the sale of Logan. Logan was unable

to play the pricing game primarily because of two reasons.
First one was that only 50% of its components were
indigenous against relatively a much higher percentage of
localization by the other players in the market; and second
was the dual excise duty structure, which is 8% for small
cars (less than 4 metres) and 20% for the larger cars like
Logan (4.24 metres). The companies which were not under
any contractual obligations had trimmed the length of their
car to take the advantage of the lower excise for small cars
(Tata Indigo-CS). However, unfortunately this did not work
for Mahindra Renaults Logan. M&M had suggested
reducing the cars length to 4 metres to have it qualify for
the lower, 8 per cent excise duty. But Renault rejected the
idea because it did not want to alter the cars global
platform. 9 For the similar reasons certain features like fuel
lid opener, boot opener, direction of windshield wipers, CD
player instead of MP3 player etc. could not be altered to
adapt to the requirements of the Indian customers. Even
though the car had been a great success globally, but failed
to do well in India. The single product JV, which had been
selling less than 500 units in the last few months of 2009,
had already posted a loss of Rs.490 crore in 2008-2009. All
in all, the Mahindra-Renault Rs.700 crore venture appeared
to be doomed by the end of the year 2009. Mahindra and
Mahindra was already reinstating many of its employees,
who had joined the JV with Renault, back into the parent
company.
the Logan has been launched in only 40 percent of the

markets.
Our challenge now is to meet customer demand for the
car, Mr. Jejurikar had concluded
Within eight months of its launch, Logan received several
distinctions with respect to product performance in the
J.D. Power Asia Pacific 2007 India Initial Quality Study as it
outclassed all its competitors. The Logan was ranked as
the Best Entry Midsize Car in Initial Quality, with a score
of 65 PP100, i.e., problems per 100 vehicles ahead of other
leading passenger cars, indicating a high level of
satisfaction experienced by customers.
However the end of the year 2007 saw the reversal in the
trend of the sales. And by mid-2008 the sales of Logan had
declined so much that Mahindra Renault Pvt. Ltd. (MRPL)
had to cut down its production at the Nashik plant by 3040%. Live-Mint7 dated November 2008 had reported that
the cars sales have been declining due to an economic
slowdown and high interest rates. As the sales data put by
the company, the sales had reached a peak of 3068 units in
March, gradually declining to 1531 units in May, 1464 in
August and hitting the bottom with a sale of only 1067 cars
in October, which otherwise was supposed to be a festive
season attracting more customers to the market.
Though the decline in sales was being witnessed by the
entire automotive sector but the situation was little alarming
especially for MRPL and its vendors, as they had had very
optimistic projections so far. But by and large, given the
fact that the entire economy was hit by recession and
because of the increased interest rates, the decline in sales
was considered to be more of economic risk rather than
business risk for MRPL.
By 2010 there were news that major restructuring would

take place in the MRPL JV. There were speculations that
Mahindra may not make any new investments in its JV with
Renault and was likely to hand over the management and
control of the JV to the latter (DriveInside.com | Saturday
March 27, 2010).
Meanwhile, MRPL was finding different ways to drive up

the sales. It offered to sell Logan to its suppliers and
business associates at a discounted price. It also started
to export the car to South Africa by the end of year 2008.
16th April, 2010 came as a full stop to the MRPL joint

venture. The Times of India dated 17th April, reported that10,
- After months of deliberations, Carlos Ghosn-led French
carmaker Renault has finally decided to exit its lossmaking joint venture with Mahindra & Mahindra (M&M)
for the Logan, handing out full control to the Indian auto
major that will now reposition the car with a new branding
and name along with lower price.
However, the sales did not pick up even in 2009. And as a

consequence of the dismal sales, the relationship between
M & M and Renault also starting getting sour. There was
news in the market that Renault was approaching Bajaj Auto
to replace M&M in the venture.8 This created further dent
in the sales of Logan. The blame game went to the extent of
Renault feeling that Mahindra had erratic sales and
distribution strategy and therefore the sales were not
picking up and on the other hand Mahindra felt that there
was a major need for re-engineering the car for making it
more appealing to the Indian customers. The analysts,
however, felt that among the various reasons that were
contemplated for the poor sales figure of Logan, its price
and its design topped the list. Of course the non-availability
of the spare parts was also a problem. According to the
analysts Logan was not a very cost effective car. The
stronger competing models in the market like Maruti Swift
Dzire and Tata Indigo wore a more competitive price tag,
The deal was that M&M would buy Renaults 49% equity
and gain full control. Renault will continue to support
Mahindra and the Logan car through five-year license
agreement to supply purchasing engines, transmission and
key components. M&M will continue with the Renault name
and logo on the Logan till the end of 2010 and over the
period of 18 months, it will rename the car and use only
M&Ms logo. Renault would now be paid royalty fee on
the sale of the car.
The new agreement will give us the opportunity to chart
out a new strategy to help drive the Logan brand in India
which will also include engineering changes, in keeping
with customer requirements,10 M&Ms automotive sector
84
HSB Research Review
Vol. 2 No. 2
president Pawan Goenka commented.
July-December 2011
What might be various problems with the joint venture

that within five years of its formation, Mahindra and
Renault decided it exit the partnership? Why did the
Mahindra Renault JV fail? What is the significance of the
Industrial policies in a country and how critical they are in
the success or failure of a JV?
And by April 25th 2011, just over one year since the breakup of the JV, Mahindra & Mahindra renamed the Logan
sedan as Verito, thus dropping all the affiliations with
Renault.
TEACHING NOTE
The teaching objectives for the case are to familiarize the

students with various perspectives in a joint venture which
might not surface in the initial phase of the collaboration
but might creep into the arrangement as venture progresses.
The consequence of lack of mutual trust and respect can
be as dire as the culmination of the partnership.
Introduction: Automotive sector in India is one of the

largest and fastest growing globally and its passenger car
and commercial vehicle manufacturing industry is the
seventh largest in the world. The collaborative phase in
the automotive sector started in the early 1980s through a
joint venture between Maruti (a government of Indian
undertaking) and Suzuki Motor Corporation from Japan to
manufacture four wheelers. Gradually with de-licensing, the
automotive sector saw a remarkable growth and there has
been no looking back since then. The automobile policy of
2002, permitted complete foreign equity investment in
manufacturing of automobiles and components and led to
entry of international players like Hyundai, Mercedes Benz,
Toyota, Ford, General Motors, Mitsubishi, Daewoo, Renault
and the likes through collaborative arrangements. Some of
the joint ventures have been super success and some have
not been so successful.
To enumerate the issues that can be discussed within this

case in international business are:
1.
What are the various factors in the context of this case

that led to the failure of this cross-border joint-venture?
2.
What are the specific issues that must be considered

in the original agreement of a joint-venture, in order to
avoid any potential problems?
3.
Do you think Renaults stance is justified in this case?
Case Analysis:The cues that can be picked up from the

case to answer these questions are:
Case Synopsis: Mahindra Renault JV: Why its on the

end of the road? is a case written to accentuate and bring
out issues that arose in the setting up of this successful
cross-border joint venture. The case proposes that in
general there could be just two reasons for the joint venture
to fail and they are that either there is a problem in the
joint or in venture. Taking the case of Mahindra &
Mahindras joint venture with Renault Ltd. the case first
presents the initial success story of the collaboration that
first took place in 2005. Logan-the product of the
Mahindra & Mahindra and Renault was a C-segment sedan
which was offered in two petrol models and one diesel
variant, priced between Rs. 4.28 lakh and Rs. 6.43 lakh. The
car was a success as soon as it hit the market and won
various awards like J.D. Power Asia Pacific 2007s Best
Entry Midsize Car in Initial Quality, with a score of 65
PP100, i.e., problems per 100 vehicles ahead of other leading
passenger cars, indicating a high level of satisfaction
experienced by customers. However, gradually not only
did the sales of the car dip but also the relationship between
the two partners started getting foul. The case presents
the happening of all significant events in the progress of
this venture in the chronological order.
1.
As discussed in the case, though it was clear that

purchase, engineering and quality would be Renaults
domain; and finance, HR, distribution and
communication would be looked after by Mahindra,
the lack of flexibility in their assigned role led to the
problem in the joint. Mahindra, being an Indian
Automobile company since long, was in a better
position to understand the requirements of the Indian
customers. So the suggestion on re-engineering by
Mahindra on issues discussed in the case should have
received more weight. Of course, the apprehension of
Renault in not fiddling with the global image was
understandable but such issues should be resolved in
the original agreement and it is very essential that the
partners are willing to make the changes, in the interest
of the joint venture.
2.
Further, when all the car companies in that segment

were changing the length of their cars in order to take
the benefit of lower excise duty, MRPL could not
because of the rigidity on Renaults part.
3.
On very similar lines is the issue of inflexibility by

Renault in not being open to indigenous purchase of
the components. Of course it is understandable that
the foreign partner is very quality conscious, but atleast
this option could have been explored in order to cut on
cost. This could be a great discussion point as the
Indian Auto Ancillary Industry is renowned in the world
for its quality of products.
4.
Also, although firms may enter into collaborative

arrangements with complementary capabilities and
Teaching Objectives and Issues: This case has been written

for classroom discussion of a MBA course or any other
course in international business. It however, does not
intend to illustrate either effective or ineffective handling
of the decision making in a business situation. The
information in the case is drawn from public sources.
The key issues in the case are- what could have gone wrong
with the sales of the once so popular car within a year?
85
HSB Research Review
Vol. 2 No. 2
July-December 2011
production site in Chennai.
objectives, their views regarding things like desirable

performance standards may evolve quite differently
over time.
http://en.wikipedia.org/wiki/Renault
5.
Sourced from : http://www.hindu.com/2007/04/04/stories/

2007040401321700.htm
The case could also be discussed to appreciate the

significance of the Industrial policies in a country and
how critical they are in the success or failure of a JV
taking the instance of the change in the excise duty of
the cars with a certain length.
Sourced from M & Ms newsletter (Jan-Feb. 2007) available

online on the link - http://www.mahindra.com/Enewsletter/
JAN-MAR07/html/coverstory.html
5
Sourced from M & Ms newsletter (Jan-Feb. 2007) available

online on the link - http://www.mahindra.com/Enewsletter/
JAN-MAR07/html/coverstory.html
Renaults stance in this case appears to be very

conservative, but is quite understandable given the fact
that the model was running successfully across the globe.
So obviously, Renault did not find making any alterations
in the product convincing enough, in the Indian market
except its right hand drive version. This aspect of the case
might lead to a very stimulating discussion in the class
where the counter argument could be that the success of
the product in a foreign market essentially needs
localization/customization of the product.
http://www.moneycontrol.com/news/business/mahindrarenault-logan-receives-great-response-_283053.html
7
http://www.livemint.com/2008/11/07220514/MahindraRenault-halves-Logan.html
8
http://www.driveinside.com/News/Headlines/7NYXVE/
Mahindra-Renault-partnership-unstable-thanks-to-theLogan%E2%80%99s-falling-sales.aspx
(Footnotes)
1
http://www.driveinside.com/News/Headlines/7NYXVE/
Mahindra-Renault-partnership-unstable-thanks-to-theLogan%E2%80%99s-falling-sales.aspx
Sourced from
http://www.mahindra.com/OurGroup/Overview.html
and the press release during the signing of the MOU
between Mahindra, Renault and Nissan for setting their
10
http://timesofindia.indiatimes.com/biz/india-business/
Renault-to-exit-Logan-JV-with-Mahindra/articleshow/
5823117.cms
86
HSB Research Review
Vol. 2 No. 2
July-December 2011
Book Review
THE KITE RUNNER

Best fiction book by Khaled Hosseini.
Publisher: Bloomsbury, London
( Pages : 324 and Price : Rs 300)
There is a way to be good again. Based on one of the

most acclaimed novels in recent memory, THE KITE
RUNNER is a profoundly emotional tale of friendship, family,
devastating mistakes and redeeming love. The Kite Runner
is a fiction written by Khaled Hosseini. Khaled Hosseini is
an American novelist and physician of Afghan origin.The
Kite Runner was published in 2003 in 48 countries. Khaled
Hosseini has been working to provide humanitarian
assistance in Afghanistan through The Khaled Hosseini
Foundation. The Kite Runner touches the heart and the
mind of the reader. This is a tale of betrayal, cowardice and
redemption. Hosseinis writing is simple and powerful; a
no frills, spare style which stuns. There are graphic scenes
which involve child rape and molestation. The violence in
the book is painful to readand heartbreaking. The Kite
Runner by Khaled Hosseini is a devastating, masterful and
painfully honest story which makes you think hard about
friendship, good and bad, rigid class system and
relationship particularly of a father and a son. This novel
emphasises more on Afghan history and culture. The book
teaches us that it is very difficult to forgive our own self
than to forgive others. The language used by the author
binds the reader. This debut novel echoes the price of
disloyalty in humanity and terrific realities of war.
Ms Pooja Bhagwan
Assistant Professor of Commerce
Sri Guru Gobind Singh College, Chandigarh
Ms Kamalpreet Kaur
Assistant Professor, Department of Commerce
Govt. College of Commerce and Business Administration,
Chandigarh
Kite Runner is a heart wrenching tale of lost friendship and

redemption. The story is about two boys Amir and Hassan,
who grow up together in Afghanistan as brothers. Amir is a
son of wealthy businessman, a Pashtun whereas Hassan
belongs to low caste family group called Hazara. They
lived their boyhood in the streets of Kabul playing Kites as
Hassan was a successful Kite Runner. Hassan runs for
the last cut kite for Amir saying For you a thousand time
over. Hassan is a illiterate. The story puts the picture of
the racial discrimination prevalent in Afghanistan during
those days. The two young friends may be servant and
masters are inseparable. Amir continuously uses his
superior position to abuse Hassan and hides the fact that
Hassan is beaten up and raped by teenage pashtun bullies
- a horror. Amir witnesses and does nothing to protect
Hassan therefore converting his guilt into enemity. This
incidence haunted Amir for rest of his life. His failure
dictates his soul throughout the life. The Soviet invasion
of Afghanistan sends Amirs family to America witnessing
a lighter tune in terms of sustaining a father son relationship
that fills the heart with joy. The theme of novel moves
around the internal struggle that is span of Afghan story of
70s to the Taliban rule in the late 90s.
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HSB Research Review
Vol. 2 No. 2
Amir returns to Afghanistan on the request of an old family

friend who told him that There is a way to be good again.
Amir returns in disguise to Kabul to redress his childhood
sins as he was challenged to protect a young life that is the
life of Hassans son who was badly treated by pashtun.
Somehow Amir manages to redress his sins in a direct way
by saying those encouraging words again For you a
thousand time over. The story is gripping and emotional.
It make use of such references which touches eastern culture
and societies. Description of Afghanistan makes you feel
as if you are known to it.
July-December 2011
and has the potential of leaving you in tears at time. In

most of the part the story feels real. The author has captured
the essence of different culture and has represented them
well. The story is not light read but too complex. It emphasis
on life gruesome realities as the theme is very intense and
upsetting. Through well-timed plot twists and revelations,
Hosseini maintains a riveting pace that dares the reader to
leave his story The novel is page-turner and hard to put it
down especially at the advanced parts where Amir re-visits
Afghanistan. The Kite Runner is definitely one of the
best novels we have ever read, and we think it will maintain
that spot for quite some time.
The Kite Runner is powerful, proactive and best written

story. The violence depicted in the Kite Runner is painful
Overall it is an impressive and passionate novel.
88
HSB Research Review
Vol. 2 No. 2
July-December 2011
HSB RESEARCH REVIEW

Guidelines for Manuscript-Contributors
HSB RESEARCH Review invites original research-based papers, articles and management cases on topics of contemporary
aspects in all areas of management and social science issues affecting business environment. While sending contributions
the following guidelines must be carefully followed. Contributions that do not stick to the guidelines will not be considered.
1. Manuscripts submitted to the journal will be initially screened by the editors. Those considered inappropriate will
be returned promptly to the sender. Manuscripts that pass the initial screening will follow a double blind refereeing
process. They will be passed to a regional or country editorial board member who will consider its value in relation
to regional concerns, where required. They will also be reviewed by an expert in the discipline area concerned.
Neither the editors nor the journal will accept responsibility for errors, omissions, loss or damage to manuscripts.
Upon acceptance of a paper, the author(s) will be requested to provide an electronic copy of the paper, compatible
with Microsoft Word.
2. The selection of papers for publication will be based on their relevance, clarity, topicality and originality; the
extent to which they advance knowledge, understanding and application; and their likely contribution towards
inspiring further development and research. The Journal tries to maintain a balance between purely research
oriented papers and those derived mainly from the experiences of practitioners involved in different areas of
management.
3. The manuscript should be submitted and authors details must be printed on a separate sheet and the author
should not be identified anywhere else in the article. A brief autobiographical note should be supplied including
full name, affiliation, e-mail address and full international contact details. Manuscripts should not exceed 8,000
words (about 15 A-4 size pages, typed one and half space only on one side of the paper. The number of tables and
figures should not normally exceed five in all. Author/s name should not appear on any other page. Submit an
abstract of about 200 words. Give the academic profile of each author including e-mail ID in not more then 100
words. The articles should be in clear, coherent and concise English. Author/s should also send a copy of the
contribution in MS-word, Times New Roman font, by e-mail to: karampalhsb@gmail.com or
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that the paper/case has not been published or submitted for publication elsewhere.
4. All material and editorial correspondence should be addressed to: The Editor, HSB RESEARCH REVIEW, Haryana
School of Business, Guru Jambheshwar University of Science and Technology, Hisar-125001 (Haryana) Website:
http://www.gjust.ac.in The contributions received will be acknowledged immediately by e-mail. All correspondence
with contributors will only be through e-mail.
5. Manuscripts not considered or not accepted for publication will not be sent back. Contributors whose contributions
are accepted or rejected will be informed by e-mail only.
6. Tables and Figures should be given on separate page at the end of the paper. Please use minimum possible
number of tables and graphs. Tables (each on a separate sheet) should be numbered consecutively in Arabic
numerals and should be referred to in the text as Table 1, Table 2, etc. Tables should not duplicate results in
graphs. The minimum amount of descriptive text should be used on graphs and drawings (label curves, points,
etc. with single letter symbols). Graph axes should be labeled with variables written out in full, along the length of
the axes, with the unit in parenthesis. Each figure and illustration should be on a separate sheet. The location of
tables, figures and graphs in the text should be indicated.
7. The book review should normally not exceed 1,000 words. All notes should be indicated by serial number in the
text, and literature cited should be detailed under notes at the end of the paper bearing corresponding numbers,
before the references. Follow British spellings throughout (programme, not program).
8. No stops after abbreviations (USA, ILO). Use stops after initials (A.K. Sen).
9. Use double quotes throughout. The use of single quotes to be restricted for use within double quotes, e.g., As
Carter says the issue of providing best possible quality to the consumer and lowest possible cost needs critical
focus Quotations in excess of 45 words should be separated from the text with a line space above and below
and indented on the left. Quotes should be cited accurately from the original source, should not be edited, and
should give the page numbers of the original publications.
89
HSB Research Review
Vol. 2 No. 2
July-December 2011
10. Italicization and use of diacriticals is left to the contributors, but must be consistent, when not using diacriticals,
English spelling should be followed. Capitalization should be kept to the minimum and should be consistent.
11. Place the references at the end of the manuscript following the endnotes. The list should mention only those
sources which have been actually cited in the text or notes. References should be complete in all respects and
alphabetically arranged. Author/s name should be the same as in the original source. You should cite publications
in the text: (Adams, 2006) using the first named authors name or (Adams and Brown, 2006) citing both names of
two, or (Adams et al., 2006), when there are three or more authors. At the end of the paper a reference list in
alphabetical order should be supplied:
a) For books: Surname, Initials (year), Title of Book, Publisher, Place of publication.
e.g. Harrow, R. (2005), No Place to Hide, Simon & Schuster, New York, NY.
b) For book chapters: Surname, Initials (year), Chapter title, Editors Surname, Initials, Title of Book,
Publisher, Place of publication, pages. e.g. Calabrese, F.A. (2005), The early pathways: theory to practice
a continuum, in Stankosky, M. (Ed.), Creating the Discipline of Knowledge Management, Elsevier,
New York, NY, pp. 15-20.
c) For journals: Surname, Initials (year), Title of article, Journal Name, volume, number, pages.
e.g. Capizzi, M.T. and Ferguson, R. (2005), Loyalty trends for the twenty-first century, Journal of
Consumer Marketing, Vol. 22 No. 2, pp. 72-80.
d) For published conference proceedings: Surname, Initials (year of publication), Title of paper, in
Surname, Initials (Ed.), Title of published proceeding which may include place and date(s) held, Publisher,
Place of publication, Page numbers. e.g. Jakkilinki, R., Georgievski, M. and Sharda, N. (2007), Connecting
destinations with an ontology-based e-tourism planner, in Information and communication technologies
in tourism 2007 proceedings of the international conference in Ljubljana, Slovenia, 2007, SpringerVerlag, Vienna, pp. 12-32.
e) For unpublished conference proceedings: Surname, Initials (year), Title of paper, paper presented at
Name of Conference, date of conference, place of conference, available at: URL if freely available on the
internet (accessed date). e.g. Aumueller, D. (2005), Semantic authoring and retrieval within a wiki,
paper presented at the European Semantic Web Conference (ESWC), 29 May-1 June, Heraklion, Crete,
available at: http://dbs.uni-leipzig.de/file/aumueller05wiksar.pdf (accessed 20 February 2007).
f) For working papers: Surname, Initials (year), Title of article, working paper [number if available],
Institution or organization, Place of organization, date. e.g. Moizer, P. (2003), How published academic
research can inform policy decisions: the case of mandatory rotation of audit appointments, working
paper, Leeds University Business School, University of Leeds, Leeds, 28 March.
g) For encyclopedia entries (with no author or editor): Title of Encyclopedia (year) Title of entry,
volume, edition, Title of Encyclopedia, Publisher, Place of publication, pages. e.g. Encyclopaedia
Britannica (1926) Psychology of culture contact, Vol. 1, 13th ed., Encyclopaedia Britannica, London
and New York, NY, pp. 765-71.
h) For newspaper articles (authored): Surname, Initials (year), Article title, Newspaper, date, pages. e.g.
Smith, A. (2008), Money for old rope, Daily News, 21 January, pp. 1, 3-4.
i) For newspaper articles (non-authored): Newspaper (year), Article title, date, pages. e.g. Daily News
(2008), Small change, 2 February, p. 7.
j) For electronic sources: if available online the full URL should be supplied at the end of the reference, as
well as a date that the resource was accessed. e.g. Castle, B. (2005), Introduction to web services for
remote portlets, available at: http://www-128.ibm.com/developerworks/library/ws-wsrp/ (accessed 12
November 2007).
In case of more than one publication by the same author, list them in chronological order, with the older item
appearing first. For more than one publication in one year by the same author, use small (lower case) letters to
distinguish them (e.g. 1980a, 1980b), do not number the references.
Editor
HSB Rresearch Review
90
Statement about Ownership and Other

Particulars of HSB Research Review
Title of the Journal
HSB Research Review
Registration No.
HARENG/2010/36595
ISSN No.
0976-1179
Periodicity
Bi-Annual
Language
English
Owner
Haryana School of Business,

Guru Jambheshwar University of Science & Technology
Hisar - 125 001 (Haryana)
Publisher & Printer
Published & Printed by Prof S C Kundu for and on behalf

of Haryana School of Business, Guru Jambheshwar
University of Science & Technology Hisar - 125 001
(Haryana)
Editor
Dr Karam Pal Narwal

Associate Professor, Haryana School of Business
Place of Publication
Hisar (Haryana)
I, Prof S C Kundu, hereby declare that the particulars given above are true to the best of my
knowledge and belief.
S C Kundu
Publisher & Printer
Subscription Fee
Annual Subscription Fee Rs 500/- (for institution)

Rs 200/- (for individual)

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