Allana Management Journal of Research January-June-2011

ALLANA MANAGEMENT JOURNAL OF RESEARCH / JAN - JUN 2011 / PAGE NO.
001
CONTENTS
ALLANA MANAGEMENT JOURNAL OF RESEARCH

JANUARY - JUNE 2011
HUMAN
13
NURSES' MOTIVATION IN INDIA : INTRINSIC AND EXTRINSIC MOTIVATION, WHAT DO YOU LOOK FOR IN
RESOURCES
A JOB? AN EMPIRICAL STUDY
MANAGEMENT
RAVINDER KAUR, RESEARCH SCHOLAR, AMITY BUSINESS SCHOOL, NOIDA

24
A STEP FORWARD BEYOND THE TIP OF ICEBERG IN CONFLICTS : AN EMPIRICAL STUDY

MS. V. SELVA LAKSHMI, LECTURER, AIMS, PUNE
36
REINVENTING SOCIAL ETHOS [THE DIALECTIC OF ORGANISATION AND SOCIETY IN SOCIAL WORK CONTEXT]
MS. MONA SINHA, ASST. PROFESSOR, BHARATI VIDYAPEETHS INSTITUTE OF MANAGEMENT STUDIES &
RESEARCH, NAVI MUMBAI
DR. ANJALI KALSE, PROFESSOR, BHARATI VIDYAPEETHS INSTITUTE OF MANAGEMENT STUDIES & RESEARCH,
NAVI MUMBAI
FINANCIAL
63
MANAGEMENT
FINANCIAL FLEXIBILITY AND OPERATIONAL RISK MANAGEMENT IN BANKS

PROF. (DR.) M.D. MOHITE, PROFESSOR (EMERITUS), DR. D.Y. PATIL INSTITUTE OF MANAGEMENT AND
RESEARCH, PIMPRI, PUNE
72
VALUE CREATION IN INDIAN BANKING INDUSTRY : AN ANALYSIS

DR. R. SATISH, ASST. PROFESSOR, SRR ENGINEERING COLLEGE, CHENNAI
M. DANIEL RAJKUMAR, ST. MARYS SCHOOL OF MANAGEMENT STUDIES, CHENNAI
84
WILL CHINESE YUAN BECOME THE NEXT RESERVE CURRENCY?

PROF. PURNENDU MAITY, ANALYST, CREDIT POINT E.COM, PUNE
GENERAL
97
MANAGEMENT
A CRITICAL STUDY OF THE VALUE ADDITION TO EDUCATION BY ACADEMIC JOURNALS WITH SPECIAL
REFERENCE TO E-PUBLISHING
PROF. S. P. SINGH, DY DIRECTOR, INDIRA INSTITUTE OF MANAGEMENT, PUNE
107
GLOBAL RECESSION : MANAGEMENT CHALLENGES AND STRATEGIES MANAGERIAL PERCEPTION ON

GROWTH, CHALLENGES & STRATEGIES
MS. SHARAYU BHAKARE, HOD, BUSINESS ADMINISTRATION (COMMERCE), MODERN COLLEGE OF ARTS,
SCIENCE AND COMMERCE, PUNE
PROF. SUBBARAM RANGANATHAN, PROFESSOR & DIRECTOR, ASMA INSTITUTE OF MANAGEMENT, PUNE
121
ISLAMIC PERCEPTION OF COMMERCE & BUSINESS MANAGEMENT

DR. DASTAGEER ALAM, PROFESSOR, P.A. COLLEGE OF ENGG., MANGALORE
ALLANA MANAGEMENT JOURNAL OF RESEARCH / JAN - JUN 2011 / PAGE NO. 002
EDITORIAL
BOARD
CHIEF EDITOR
PROF. R. GANESAN
DIRECTOR, AIMS
ADVISOR
DR. A. B. RAO
SENIOR RESEARCH GUIDE & MANAGEMENT CONSULTANT
EDITORS
DR. ASHRAF RIZVI
PROFESSOR, IIM, INDORE
DR. ROSHAN KAZI
PROFESSOR, AIMS
DR. SURYA RAMDAS
DIRECTOR, INTERNATIONAL INSTITUTE OF MANAGEMENT SCIENCES (HRD)
ASST. EDITORS
PROF. ASHFAQUE AHMED PINITOD
ASST. PROFESSOR, UNIVERSITY OF YAMBU, KINGDOM OF SAUDI, ARABIA
PROF. S. D. BAGADE
ASST. PROFESSOR, AIMS
EDITORIAL
PROF. R. GANESAN
CHIEF EDITOR
ach issue of this journal has played a remarkable role in

enthusing and enlightening research - minded scholars
and academicians. Original research in the areas of
Management and Commerce can be ignited by an innovative
search for achieving objective oriented ends. Every type of
purposeful and realistically authentic research is guided by a
spirit of enthusiasm and self-motivation.
To support and supplement the modern technological
advancement, multi-disciplinary research and more especially
research in management and allied areas, is the dire need of the
day. Further genuine research in various fields of human
endeavour can yield valuable results thereby contributing to the
enrichment of knowledge.
The aim of 'Allana Management Journal of Research' is to 'nurture
and promote' talent in research. Accordingly as a research
journal approved by the office of Registrar of Newspapers for
India, Ministry of Information and Broadcasting, Government of
India, it has been registered and assigned ISSN 2231-0290.
This journal is meeting the requirements of many enthusiastic
researchers.
The editorial committee would appreciate enlightened views of
the readers on the research papers in this journal.
ABSTRACT
13
NURSES' MOTIVATION IN INDIA : INTRINSIC AND EXTRINSIC MOTIVATION,

WHAT DO YOU LOOK FOR IN A JOB? AN EMPIRICAL STUDY
MS. RAVINDER KAUR, RESEARCH SCHOLAR, AMITY BUSINESS SCHOOL, NOIDA
ike many other developing countries, India too has a serious human resource crisis in the healthcare
sector. One of the challenges is the low motivation of nurses'. Experience and the evidence suggest that
any comprehensive strategy to maximize nurses' motivation in a developing country context has to involve
a mix of financial and non-financial incentives.
THE OBJECTIVE :
of this study is to assess the role of non monetary incentives for motivation and to demonstrate to what extent
non-monetary incentives have the potential to increase the motivation of hospital employees' i.e. nurses as much
as the monetary incentives. Incentive is any means that makes an employee desire to do better, try harder and
expend more energy. Non-monetary incentives such as participation in decision making, verbal or written
recognition of good work etc. are the kinds of incentives that do not involve direct payment of cash. To realize the
objectives of the study, a survey study was administered at the 4 different units of Apollo Hospitals.
METHODOLOGY :
The research design entailed structured quantitative questionnaire with nurses from the 4 units of Apollo Hospital.
The selection of nurses was the result of a random sampling process. In each unit 130 nurses were carried out and
the total sample size was of 520 nurses'. Results from these questionnaires by respondents were backed up with
information from focus group discussions/interviews with senior nursing staff of the hospital. The field work
material was coded and quantitative data was analyzed with SPSS software.
RESULTS AND DISCUSSION :
The study shows that nursing employees overall are strongly guided by their professional conscience and similar
aspects related to professional ethos. In fact, many nurses are de-motivated and frustrated precisely because they
are unable to satisfy their professional conscience and impeded in pursuing their vocation due to lack of means and
supplies and due to inadequate or inappropriately applied human resources management (HRM) tools. The paper
also indicates that even some HRM tools that are applied may adversely affect the motivation of health workers.
KEYWORDS :
nurses, non-monetary incentives, motivation, human resource management and hospitals.
ABSTRACT
24
A STEP FORWARD BEYOND THE TIP OF ICEBERG IN CONFLICTS : AN EMPIRICAL STUDY

MS. V. SELVA LAKSHMI, LECTURER, AIMS, PUNE
n an organizational practice, the management has many aspects to reflect on for a workplace to be
harmonious and triumphant. One of these things that should not be left unattended is any presence of
conflict. The purpose of this study is to explore the area which induces conflicts among the employee's .The
employee's behavioral change after the conflicts is also investigated. The Significance of this study is, if solution
given in this paper be applied in day-to-day organizations, it helps reducing conflicts effectively. At last, it
provides some suggestions for the managers to handle the conflict in the better way.
ABSTRACT
36
REINVENTING SOCIAL ETHOS [THE DIALECTIC OF ORGANISATION AND SOCIETY IN SOCIAL

WORK CONTEXT]
MS. MONA SINHA, ASST. PROFESSOR,
BHARATI VIDYAPEETHS INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, NAVI MUMBAI
DR. ANJALI KALSE, PROFESSOR,
BHARATI VIDYAPEETHS INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, NAVI MUMBAI
he form and content of the world economy is fast evolving and we find capital being increasingly
concentrated and centralised as the battle of market competition intensifies. Companies have to keep
running just to stay in the same place so intense is the competition. One of the factors that make the
critical difference between the companies is the public perception of a business's value systems that are best
exhibited by initiatives in discharging its Corporate Social Responsibility (CSR). However, there is a great deal of
ambivalence and uncertainty about what CSR really means as well as what drives businesses to pursue it. We have
undertaken a detailed literature review to delineate the various positions taken in understanding and explaining
the concept of CSR especially how business relates to society and vice versa. In the process, we have examined the
conceptual evolution of CSR and explained some of its critical facets. Then we have tried to relate these facets to
the objective social reality, as we perceive it and posited our definition of CSR giving both the reason and
rationality of what we say and why we say so. We have found that there has been a shift in the paradigm with both
the academia and the industry moving from the altruistic standpoint to the strategic standpoint on CSR
interventions. Finally we have seen how this has moulded the science and the art of social work.
ABSTRACT
63
FINANCIAL FLEXIBILITY AND OPERATIONAL RISK MANAGEMENT IN BANKS

PROF. (DR.) M.D. MOHITE, PROFESSOR (EMERITUS),
DR. D.Y. PATIL INSTITUTE OF MANAGEMENT AND RESEARCH, PIMPRI, PUNE
conomic reforms and financial sector reforms have provided the great deal of Financial Flexibility to the
banks. An increasing use of modern information technology has provided the Financial Flexibility in terms
of volume of business, geographical coverage, products and service profiles, customer mix & emerging
new global banking business. All these have exposed the banks to new risk prone areas of Operational Risk.
In an emerging scenario of global banking the operational risk management is a new risk prone area with multi
complexities. Moreover, reward and risk are sensitively correlated. Therefore risk management must focus on risk
inventory risk synchronization, risk reduction and risk diversification. Along with this the risk base audit (RBA), risk
base supervision (RBS) and effective internal control system are must for banking operations for monitoring the
operational risk and ensuring financial flexibility with sustainable stability in banking business.
ABSTRACT
72
VALUE CREATION IN INDIAN BANKING INDUSTRY : AN ANALYSIS

DR. R. SATISH, ASST. PROFESSOR, SRR ENGINEERING COLLEGE, CHENNAI
M. DANIEL RAJKUMAR, ST. MARYS SCHOOL OF MANAGEMENT STUDIES, CHENNAI
hareholders' value creation and maximization has become the hallmark of corporate parlance. For a
number of years there has been a growing awareness of the importance of shareholder value for financial
strategy and management. At the same time there has been growing concern that the traditional
accounting measures of performance have serious inherent limitations that may lead to poor financial decision
making. In the academic world, a number of studies have been carried out on this burning topic abroad but has not
received much attention from Indian context in Banking Sector.The concepts of Economic Value Added (EVA) and
Market Value Added (MVA), which are currently regarded as the important indicators of shareholder value and
financial performance, are examined, along with some research evidence supporting them (and other evidence
opposing them). Various aspects of EVA are discussed, including different ways of calculating them, and their link
to other financial concepts such as employee productivity.
This study helps us whether there is a prime facie
case for the adaptability of EVA as one of the performance measurement tool in Indian Banking Sector.It is hoped
that the results and perspectives gained from this study will be helpful to bank managers who aim to optimize their
approach to shareholder value management.
KEYWORDS
Economic Value Added, Market Value Added, Employee Productivity.
ABSTRACT
84
WILL CHINESE YUAN BECOME THE NEXT RESERVE CURRENCY?

PURNENDU MAITY, ANALYST, CREDIT POINT E.COM, PUNE
ub-prime crisis, European debt crisis, Fed's QE2 policy consequently many observers conjecture is once
again rife that we are reaching the end of the era of dollar dependency. Evidently next question is where
will be the safe heaven? Who will give the hope against all odds ? Given the sheer size of economy and
fierce growth rate spotlight is now on Chinese Yuan. In another two decade years China is set to replace the US as
the world's largest economy. It is already the world's largest exporter and will soon also be the largest trading
nation. Contrary to the US, the world's largest debtor, China is also a large net external creditor, only trailing
Japan. A close parallelism from history in hand is that as once economically and financially ascendant Dollar has
replaced British Sterling troubled by the bequest of two world wars; would this time Redback will replace the
Greenback in similar way ? China is taking many incremental steps like more trade settlements in Yuan, Currency
Swap, and diversification of its reserves to internationalize its currency. Along the way there are challenges of
growth with right monetary policy maneuver, exchange rate stability, financial market and legal reforms which
requires considerable time in coming years. While Pound, Yen are not so strong currency given their economic and
financial size and structure but Euro is still in the race. Also technically speaking IMF SDR might be another viable
alternative. As world is becoming more multi-polar there is less conclusive possibility of actually Yuan becoming
single monopoly reserve currency like Dollar. After next 15-20 years more probable scenario is that it will become
an internationalized currency and pose as a strong contender along with Dollar and Euro for reserve currency
option.
ABSTRACT
97
A CRITICAL STUDY OF THE VALUE ADDITION TO EDUCATION BY ACADEMIC

JOURNALS WITH SPECIAL REFERENCE TO E-PUBLISHING
PROF. S. P. SINGH, DY DIRECTOR, INDIRA INSTITUTE OF MANAGEMENT, PUNE
cademic Performance Indicators (API) in Performance Based Assessment Scheme (PBAS) by University
Grants Commission (UGC) proposes, research and academic publications as important parameter in
assessment of teachers. The All India Council for Technical Education (AICTE) has also used the
'cumulative impact index' in drawing equivalence to Ph.D. These and many other factors have resulted in almost
every institute of higher and technical education, promote and publish academic journal. This research paper
critically analyses the role of academic journals in adding value to the process of education. Brief overview of the
merits and demerits of journal rankings and valuation methodologies (e.g. Impact Factors of JCR, SJR indicators,
Citations etc) is considered. The research also dwells with the various manipulative tendencies and practices
prevalent towards the same. The researcher analyses benefits of electronic form of journals publications. The
paper makes suitable recommendations to scholarly researchers and academicians based on outcomes of above
research.
KEY WORDS
Academic journal, Value to education, E-publishing, Journal rankings.
ABSTRACT
107
GLOBAL RECESSION : MANAGEMENT CHALLENGES AND STRATEGIES MANAGERIAL PERCEPTION

ON GROWTH, CHALLENGES & STRATEGIES
MS. SHARAYU BHAKARE, HOD, BUSINESS ADMINISTRATION (COMMERCE),
MODERN COLLEGE OF ARTS, SCIENCE & COMMERCE, PUNE
PROF. SUBBARAM RANGANATHAN, PROFESSOR & DIRECTOR,
ASMA INSTITUTE OF MANAGEMENT, PUNE
ccording to the World Bank, developing countries' combined growth will fall to 2.1 per cent, or to zero
per cent excluding China and India. In this context the study gains immense importance in understanding
the managerial perceptions of the emerging challenges during recession and the necessary remedial
actions to be taken so that the business growth is ensured.
The objectives of the study are :
a)
To understand the managerial perceptions of challenges in business growth during recession
b)
To analyse the perceptions using appropriate statistic.
c)
To discuss the analyzed results in fora of managers to brief on their possible futuristic performance
orientation.
A list of 15 statements had been prepared and managers who are employed in corporates across the world ranging
from the far east to the west in Asia, Africa and USA were asked to rank order them as they perceived them to be
challenges for business growth during recession. The mean of the ranks was divided in two comparable formats of
Indian Managers and Foreign Managers. Spearman's Rank correlation was used as statistic to determine the impact
of the ranking and necessary correlation study made. Total of 100 managers were asked to submit their response by
email and these were tabulated to obtain the mean rank and hypotheses tested at 5% significance level using 'z'
test(critical value: 1.771 at 5% significance) and statistical inference was made. It was seen that the calculated
value (-3.006689) is less than the critical value as per Table and hence the null hypotheses that 'the perceptions of
foreign and Indian managers are independent' is accepted. Managers need to understand that they have an
important role to play in organizational development vis-a vis their own growth.
ABSTRACT
121
ISLAMIC PERCEPTION OF COMMERCE & BUSINESS MANAGEMENT

DR. DASTAGEER ALAM, PROFESSOR, P.A. COLLEGE OF ENGG., MANGALORE
n today's world, life have become challenging and at every facet of one's life, we are faced with dilemmas on
how to live an ideal life, a life that is guided by the Holy Book of Quran and the Sunnah of Prophet Muhammad
(PUBH). This paper tries to draw inferences from various texts and ancient documents to present and draw
comparisons between what is permitted and disallowed. It draws comparisons between a Muslim who is ordained
by God to live his life as per the guidances and principles of the religion and the one who enjoys material benefits
and his behaviour is guided by results and outcomes and not how it is gained or earned.
HUMAN
RESOURCES
MANAGEMENT
NURSES' MOTIVATION IN INDIA :

INTRINSIC AND EXTRINSIC MOTIVATION,
WHAT DO YOU LOOK FOR IN A JOB?
AN EMPIRICAL STUDY
MS. RAVINDER KAUR,

RESEARCH SCHOLAR,
AMITY BUSINESS SCHOOL, NOIDA
he nurses' crisis has numerous dimensions. There are

inadequate numbers of workers, poorly distributed with
an unplanned brain drain (domestically and
internationally). With respect to existing human resources, the
low level of nurses' motivation has often been identified as a
central problem in health service delivery. For example, the
results from a survey undertaken by the Gesellschaft fr
Technische Zusammenarbeit (German Technical Cooperation,
GTZ) among representatives of ministries of health and GTZ staff
from 29 countries showed that low motivation is seen as the
second most important health workforce problem after staff
shortages. From the perspective of health professionals, the
challenges include lack of equipment, frequent shortages of
supplies and a mounting workload all these exacerbated in
small and rural facilities. Furthermore, despite decentralization
efforts, key functions of human resource management
(recruitment, overall staff distribution, remuneration,
promotion and transfers) remain highly centralized.
A study in South Africa on the effects of a newly introduced, socalled "rural allowance" showed the limited impact on retention
and motivation (Reid S, Durban: Health Systems Trust; 2004).
Similarly, analyzing the role of wages in nurses migration,
(Vujicic et al) conclude that what they call non-wage
instruments may be more effective in reducing migration flows,
as portrayed in a (WHO report- 2003). The study of (Kingma M),
while undertaken in developed countries, also provides
important insights on the limited effect of financial incentives
on nurses and instead points at the relevance of non-financial
incentives for nurses' job satisfaction and self-esteem. In their
study on health workers' motivation and performance

in Benin, (Alihonou et al) suggest introducing nonfinancial incentives while also improving structural
conditions. (Stilwell) shows, by reference to
Zimbabwe, that nurses based in remote areas,
despite lack of financial incentives and hard working
conditions, frequently exhibited a high level of
motivation to perform well.
Low motivation has a negative impact on the
performance of individual nurse, facilities and the
health system as a whole. Moreover, it adds to the
push factors for migration of nurse, both from rural
areas to the cities and out of the country (WHO2003,JLI press -2004). It is therefore an important
goal of human resources management in the health
sector to strengthen the motivation of nurses. Many
nurses' are de-motivated and frustrated precisely
because they are unable to satisfy their professional
conscience and impeded in the pursuit of their
vocation due to lack of means and supplies at work
and due to inadequate or inappropriately applied
human resources management (HRM) tools.
Motivation can be defined as "the willingness to exert
and maintain an effort towards organizational goals"
(Franco LM, Benett S, Kanfer R). Motivation develops
in each individual as a result of the interaction
between individual, organizational and cultural
determinants. Some of these factors are of more
distal nature, such as cultural norms and values and
individual personality, hence they lie outside the
scope of human resources management.
(Kanfer) identifies two aspects of the internal
motivation process: The "will-do" aspect concerns the
establishment of congruence between personal goals
and the goals of the organization (goal setting).
Questions that characterize this psychological
process are: "What is the personal value of devoting
more of my resources to the job?" or "What is the
personal value of achieving higher job performance?"
The "can-do" aspect concerns motivational
effectiveness, the extent of individual resources that
are mobilized to accomplish adopted goals (goal
achievement). The related question is: "How likely is
it to achieve the desired level of job performance?
Despite interest in the issue of human resources for
health, human resource management and the

question of what can be done to strengthen nurses'
motivation in developing countries has so far not
received as much attention as the subject merits. In
addition to the above problems, there is an everhigher demand for the availability and retention of
health workers.
One way to do this is to offer incentives. The World
Health Organization (WHO) defines incentives as all
rewards and punishments that providers face as a
consequence of the organizations' in which they work,
the institution under which they operate and the
specific interventions they provide (WHO, 2000: p
61). (Buchan) use the objective(s) of the incentive as
the definition: An incentive refers to one particular
form of payment that is intended to achieve some
specific change in behaviour." Incentives serve as
motivation for the nurses' to perform better - and stay
in the job - through better job satisfaction (Zurn,
Dolea and Stilwell, 2004). Enhanced motivation leads
to improved performance, while increased job
satisfaction leads to reduced turnover (greater
retention). Nurses' are internally motivated by :
Valence - how they perceive the importance of their
work;
Self-efficacy - their perceived chances of success in
their tasks; and
Personal expectancy - their expectations of personal
reward.
Although motivation is an internal state consisting of
perceived task importance, self-efficacy and
expected personal reward, it is possible to influence
it with external changes in the workplace. The
workplace climate plays a role in job satisfaction,
correlating highly with retention because workers
who are satisfied with their jobs remain in their jobs
(Luoma, 2006).
An exit study on 40,000 nurses in 11 European
countries showed a relationship between job
satisfaction and the intention to leave the profession:
the lower their job satisfaction, the more likely
nurses were to leave (Hasselhorn, Tackenberg and
Muller, 2003). Indeed, facilities that are able to
attract and retain staff tend to be those that offer the

nurses' high levels of job satisfaction (Zurn et al,
2004). Incentives systems are the most widely used
external influences on motivation (Louma, 2006).
Beyond worker motivation, incentives are used to
attract and retain health professionals to areas of the
greatest need, such as rural or remote areas with poor
infrastructure and poor populations. Incentives are
used to overcome inequities in supply of and access to
health services, such as rural allowances (South
Africa) and mountain allowances (Lesotho).
METHODOLOGY OF RESEARCH
Before prospective respondents agreed to participate
in the study, the interviewer informed them about the
overall subject of the questions: their experiences
and views of certain HRM tools and needs around their
work environment. The Design of the research study is
as follows :
The type of research adopted is Descriptive.
Descriptive research is used to gather descriptive
information nurses' classifications, nurses motivation
levels etc. The research study is quantitative in
nature. Mathematical analysis is used to generalize
the statements. The type of questionnaire used is
structured and formal. The types of questions used
are straight forward and limited probing in nature.
Time Dimension is cross sectional, information was
obtained from 520 samples of respondents from the
target population in senior nurse and junior nurse
from the 4 units of Apollo Hospitals Group. The type of
analysis is statistical analysis. The hypothesis is
tested using Spearman rank order correlation. The
research technique used is survey method. The
primary data needed for the study has been collected
through questionnaire and the contact method used
was person administered survey.
The target population for the 4 units of Apollo
hospitals Group for 4 units; Delhi, Hyderabad, Pune
and Kolkata is 2200 nurses. Sample consisted of 520
nurses' working with Apollo hospitals Group from units
like Delhi, Hyderabad, Pune and Kolkata included
employees from two hierarchical levels i.e. Senior

and junior nurses working in organizations. The size of
sample was determined using formula for sample for
small population.
The actual research question on the role and

relevance of non-financial monetary factors affecting
motivation levels was not unveiled in order to avoid
"socially desired behaviour" responses. The field work
material was coded and quantitative data was
analyzed with SPSS software.
ORGANIZATIONAL SITES
The study design entailed structured qualitative
questionnaire with nurses from the 4 units of Apollo
Hospital. The selection of nurses was the result of a
random sampling process. In each unit 130 nurses
were carried out and the total sample size was of 520
nurses'. Results from these questionnaires by
respondents were backed up with information from
focus group discussions/interviews with senior
nursing staff of the hospital.
MEASURES
The study used Measures Intrinsic and extrinsic
Motivation: What do you look for in a Job?
Udai Pareek (1968a, 1968b) identified and was used
specifically for healthcare workers working in
hospitals. The instrument contains 14 items in the
questionnaire, seven related to intrinsic and seven to
extrinsic motivation.
TABLE 1 :
TEST PERFORMED
- Non parametric correlation test was performed.
TABLE 2
PURPOSE
To study if there any correlation exists between the
senior and the junior nurses ranking for non monetary
motivations while selecting a job.
NULL HYPOTHESIS
Ho there is no correlation between senior and the

junior nurses ranking for non monetary while
TABLE 3 :
that they look into while selecting a job.

RESULTS AND CONCLUSION
Data were collected from 520 nursing employees
altogether, there were 130 employees equally drawn
from the four units of Apollo Hospital, which included
Delhi, Hyderabad, Pune and Kolkata. From each of
these four units sixty five (senior and junior nurses)
were selected for this study. In order to examine the
pattern of intrinsic and extrinsic motivation levels
were analyzed. The scores of nurses belonging to the
organizations working at two hierarchical levels
namely Senior Nurses and Junior Nurses for fourteen
items are shown in Table 1. The nurses are strongly
guided by their professional conscience and similar
aspects related to professional ethos overall, relating
to the "will-do" component of motivation. Many
health workers appear to be de-motivated and
frustrated precisely because they are unable to
satisfy their professional conscience and impeded in
pursuing their vocation due to lack of means and
supplies and due to inadequate or inappropriately
applied HR tools. These appeared to negatively affect
the "can-do" component of motivation. Due to the
extent of the problems at hand, they also affect the
"will-do" component of motivation.
In conclusion, efforts to strengthen nurse motivation
must protect, promote and build upon the

professional ethos of nurses. This entails appreciating
their professionalism and addressing health workers'
professional goals such as recognition, career
development and further qualification. It must be the
aim of HR to develop the work environment so that
nurses are enabled to meet personal and
organizational goals. This requires strengthening
nurses' self-efficacy by offering training and
supervision, but also by ensuring the availability of
essential means, materials and supplies as well as
equipment and the provision of adequate working
conditions that enable them to carry out their work
appropriately and effectively.
The findings confirm our starting point that nonfinancial incentives and HR tools do play an important
role when it comes to increasing motivation of health
staff. The findings suggest that HR tools have the dual
task to promote nurses' professional ethos and
commitment, and to strengthen their perception of
self-efficacy.
REFERENCES
Adams O, Hicks V. Pay and non-pay incentives, performance and motivation.
Prepared for WHO's December 2000 Global Health Workforce Strategy Group
Geneva 2001.
Aitken JM, Kemp J. HIV/AIDS, Equity And Health Sector Personnel in Southern
Africa EQUINET Discussion Paper Number 12. Harare: EQUINET and OXFAM
GB; 2003.
Alihonou E, Soud T, Houny F. La Motivation et La Performance du Personnel

de Sant au Bnin. New York : United Nations Children's Fund; 1998.
Bennett S, Gzirishvili D, Kanfer R. An In-Depth Analysis of the Determinants
and Consequences of Worker Motivation in Two Hospitals in Tbilisi, Georgia
Major Applied Research 5, Working Paper 9. Bethesda, Maryland: Partnership
for Health Reform Project ; 2000.
Buchan J. What differences does ("good") HRM make? Human Resources for
Health. 2004;2:6. doi: 10.1186/1478-4491-2-6. [PMC free article] [PubMed]
[Cross Ref].
Dielemann M, Viet Cuong P, Vu Anh L, Martineau T. Identifying factors for job
motivation of rural health workers in North Viet Nam. Human Resources for
Health. 2003;1:110. doi : 10.1186/1478-4491-1-1.[PMC free article]
[PubMed] [Cross Ref].
2001. Health worker motivation in Zimbabwe.

Schmidt-Ehry B, Seidel W. Human resources development. In : GTZ, editor.
The District Health System Experience and Prospects in Africa
Manual
for Public Health Practitioners. Eschborn: GTZ; 2003. pp. 121144.
Udai Pareek ( 1968a, 1968b). Training and Instruments in HRD and OD.
Second edition:2002,Publisher - Tata McGraw- Hill.
USAID The Health Sector Human Resource Crisis in Africa An Issues Paper.
Washington DC: USAID Bureau for Africa; 2003.
Vujicic M, Zurn P, Diallo K, Adams O, Dal Poz M. The role of wages in the
migration of health care professionals from developing countries.
Human Resources for Health. 2004;2:3. doi:10.1186/1478-4491-2-3. [PMC
free article] [PubMed] [Cross Ref].
Dolea C, Adams O. Motivation of health care workers: review of theories and

empirical evidence. Cah Sociol Demogr Med. 2005;45: 135161. [PubMed].
World Health Organization Migration of Health Professionals in Six Countries :

A Synthesis Report. Brazzaville : World Health Organization Regional Office
for Africa; 2003.
Franco LM, Bennett S, Kanfer R, Stubblebine P. Health Worker Motivation in

Jordan and Georgia: A Synthesis of the Results Major Applied Research 5,
Technical Paper 3. Bethesda, Maryland : Partnership for Health Reform
Project; 2000.
World Health Organisation (2000) The World Health Report 2000 Health
Systems: Improving Performance, World Health Organisation: Geneva.
www.who.int/ (accesed 18 January 2007).
Franco L, Kanfer R, Milburn L, Qarrain R, Stublebine P. Motivational

Determinants of Health Worker Motivation in Jordan: A 360 Degree
Assessment in Two Hospitals Major Applied Research 5 Working Paper 6.
Bethesda, MD: Partnerships for Health Reform Project, Abt Associates Inc;
2000.
Mutizwa-Mangiza D. The Impact of
Health Sector Reform on
Public Sector Health Worker Motivation in Zimbabwe Major Applied Research
5, Working Paper 4. Bethesda, Maryland : Partnership for Health Reform
Project; 1998.
Kingma M. Economic incentive in community nursing: attraction, rejection or
indifference? Human Resources for Health. 2003;1:2. doi : 10.1186/14784491-1-2. [PMC free article] [PubMed] [Cross Ref].
Joint Learning Initiative (JLI) Human Resources for Health: Overcoming the
Crisis. Cambridge, MA: Harvard University Press; 2004.
Franco LM, Bennett S, Kanfer R. Health sector reform and public sector
health worker motivation: a conceptual framework. Social Science and
Medicine. 2002;54:12551266. doi: 10.1016/S0277-9536(01) 00094-6.
[PubMed] [Cross Ref].
Haselhorn HM, Tackenberg P and Muller BH (2003) 'Working conditions and
intent to leave the professions among nursing staff in Europe : NEXT nurses'
exit study,'National Institute for Working Life, Stockholm, Sweden.
www.next.uniwuppertal.de/download/NEXTStrasbourg09102004.pdf
Herzberg F, Mausner B, Snyderman B. The Motivation to Work. New York :
Wiley; 1959.
Kanfer R. Measuring Health Worker Motivation in Developing Countries Major
Applied Research 5, Working Paper 1. Bethesda, Maryland: Partnership for
Health Reform Project; 1999.
World Health Organisation (2006) The World Health Report 2006 Working
Together for Health, World Health Organisation: Geneva. www.who.int/
(accessed 11 January 2007).
World Health Organisation (2006) World Health Day 2006 : Toolkit. World
Health Organisation: Geneva (accessed 11 January 2007).
World Health Organisation, Africa Region (2004) 'WHO Country Cooperation
Strategy: Kingdom of Lesotho 2004-2007.' www.whoafro.int.
World Health Organisation, Africa Region (2006) The Health of the People:
African Regional Health Report 2006. WHO: Geneva www.whoafro.int
World Health Organisation, African Regional Office (2006) Heroes for health.
www.who.int/features/2006/heroes/africa/en/index.html; accessed 6
January 2007.
World Health Organisation, Africa Region (2006). 'Health worker motivation
in Uganda,' African Regional Health Report 2006. www.whoafro.int, accessed
21 May 2007.
World Health Organisation, Africa Region (2006). 'Health worker motivation
i n U g a n d a , ' ( Vi d e o ) A f r i c a n Re g i o n a l H e a l t h Re p o r t 2 0 0 6 .
www.whoafro.int/broadcast/hrh_bestpractices/Uganda.mwv; accessed 21
May 2007.
World Health Organisation and Ministry of Health, Uganda (2002). 'The
effects of abolition of cost-sharing in Uganda,' Kampala, World Health
Organization and Ministry of Health.
World Bank World Development Report 2004 : Making Services Work for Poor
People Washington, DC. 2003.
World Health Organization Working Together for Health The World Health
Report 2006 Geneva. 2006.
Zurn P, Dal Poz M, Stilwell B and Adams O (2002) 'Imbalances in the health
workforce : briefing paper,'World Health Organisation: Geneva.
Lesotho Ministry of Health and Social Welfare (MoHSW) and the World Bank
(2001). 'Strengthening Lesotho's Healthcare System,' MoHSW, Maseru.
www.wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/
2000/02/03/000094946_00011405343115/Rendered/PDF/multi_page.pdf.
Luoma M (2006) Increasing the motivation of health care workers. The
Capacity Project, Technical Brief 7, September. www.capacityproject.org/
images/stories/files/techbrief_7.pdf
Pangu K. Health workers motivation in decentralized settings: waiting for
better times? Studies in Health Services Organisation and Policy.
2000;16:2131.
Reid S. Monitoring the Effect of the New Rural Allowance for Health
Professions. Durban: Health Systems Trust; 2004.
Stilwell B. Unpublished paper/internal report for the Department of
Organization of Health Care Delivery. Geneva : World Health Organization;
Zurn P, Dolea C and Stilwell B (2004) 'Nurse Retention and recruitment:

developing a motivated workforce,' Issue Paper 4, World Health Organization
: Geneva. www.icn.ch/global/Issue4Retention.pdf
HUMAN
RESOURCES
MANAGEMENT
A STEP FORWARD BEYOND THE

TIP OF ICEBERG IN CONFLICTS :
AN EMPIRICAL STUDY
MS. V. SELVA LAKSHMI

LECTURER, AIMS, PUNE
INTRODUCTION
teven V. Thulon quotes that Conflict builds character;

crisis defines it9 .Conflict is inevitable is life. It became a
necessary and healthy part of healthy relationships. Most
of us experience conflicts or skirmishes in every walks of our life,
starting from home to work place, which is natural and
unavoidable. It depends upon individual perspective to face
conflict in positive or negative manner.1
In organization, most of the people resource and people
management team and to look at conflicts at one look, and may
be due to time constraint or other factor constraint, they don't
see beyond one certain level. This article focuses on those areas,
which can be seem to be simple, but which in fact causes more
problems.
There is a close relationship between conflict and organizational
performance. The very mention of the term 'conflict' envisions
fights, riots, or war. In fact, on virtually every day of every year
one can find dozens of armed combat situations somewhere in
the world. During the typical workday, managers encounter
more subtle and nonviolent types of opposition such as
arguments, criticism, and disagreement2 .But, there is also
belief that, moderate level of conflicts enhances organizational
performance. Chun and Mcgginson define conflict as the
struggle between incompatible or opposing needs, wishes,
ideas, interests, or people. Conflict arises when individuals or
groups encounter goals that both parties cannot obtain
satisfactorily3
Conflicts can lead to search for solutions. Thus, it is

instrument of organizational innovation and
change2.It does impact not only organization, but also
individual performance. Conflict can either be bane
or boon according to the situation.
conflicts
beings,
conflicts are
conflicts can
are inevitable between human

conflicts are often beneficial
the natural result of change,
and should be managed.
OBJECTIVES OF THE STUDY
Almost 80 percent of workers in Quebec

indicated that they have often or
occasionally witnessed workplace
conflict in
the last year. This according to a
survey
published today by Ordre des
conseillers
enresources humaines
agrees; a Quebec
based Human
Resource Professional
Association.10
1.
To find out which factor influences largely on

conflicts arousal.
2.
To study about the association between the

team size and post conflict behavior.
A 2005 UK survey by Roffey Park found that

78% of managers are suffering from work
related stress, 52% have experienced
harassment, 46% have seen an increase in
conflict at work.
3.
To study about the association between the

age group and post conflict behavior.
42% of a manager's time is spent addressing

conflict in the workplace.6
4 a)
To study whether female members are

independent of time period.
4 b)
To study whether female members are

independent of time period.
Conflict in the workplace has clear effect on

a company's bottom line and more
importantly on the happiness of the staff6
Conflict resolution absorbs 30-40% of a

manager's time in the workplace.
25.8% of Hr personnel spend over 10% of their

time per week dealing with conflict. This
translates to somewhere between 3.5- 4 hrs
lost per Hr employee per week, meaning a
loss of 23.5 hrs per year7
This paper helps to take a deeper look into the

perspective of, what impact conflict brings into
organizational. It does the analysis of whether
conflict has positive or negative impact on the
organizational performance.
5.
6.
To study relationship between compatibility

among the members and mental stress
caused due to that.
To find out whether conflicts has positive or
negative effect on the organizational
performance and on the individuals
LITERATURE REVIEW
According to Kirchoff and Adams (1982),
there are four distinct conflict
conditions,
i.e., high stress environments,
ambiguous
roles and responsibilities, multiple
boss
situations, and prevalence of
advanced
technology.4
According to Kirchoff and Adams,1982,

Traditional theory says that conflicts are
caused by trouble- maker, conflicts
are bad,
conflicts should be avoided or
suppressed,
but contemporary theory states that
Different views of values, organizational

structural limitations, and historical events
are core issues frequently serving as the
basis for conflict. The other major basis for
conflict is competition for limited resources.
Competition arises over tangible resources
(e.g., land, money, food, and water) and
intangible assets (e.g., power,
appreciation, stature, or companionship).8
RESEARCH HYPOTHESES
H1:
Ego issues and miscommunication have

significant influence on Conflicts arousal.
H2:
Team size is not independent of Post conflict

behavior
H3:
Age group is not independent of Post conflict

behavior
H4:
Female members are not independent of

Time period.
H5:
Male members are not independent of Time

period
H6:
There is significant correlation between

compatibility among members and
mental stress.
RESEARCH METHODOLOGY AND DATA COLLECTION
The research was conducted in the Months of
February 2011 with the help of structured
questionnaire. The questionnaire was distributed
through various methods, such as in person, through
mail etc..The primary data collected as a result of the
survey has been systematically tabulated and
analyzed. The sample size was 100 respondents from
IT Industries in Pune. The sampling method was
simple random and judgemental. For test of
Hypotheses, Chi-square test was used. Other
analytical method adopted was Frequency
distribution, descriptive statistics.
INTERPRETATION
FOR RESEARCH OBJECTIVE 1
To study the analysis of the factors, which influences
on arousal of conflicts in organization.
MEAN AND STANDARD DEVIATION SCORES FOR
DIFFERENT FACTORS INFLUENCING CONFLICTS
INTERPRETATION
Table No.1.0 shows analytical interpretation of the
mean and standard deviation score for the different
factors influencing conflicts. It is found that, mean
value and standard deviation value for ego issues is
=4.19 and =.825, Mis communication is =3.94 and
=.722.Thus, it is concluded that ego issues and
miscommunication are two factors which is the
influencing factor behind conflicts.
To study association between team size and post
conflict behavior.
CHI-SQUARE TEST BETWEEN TEAM SIZE AND POST
CONFLICT BEHAVIOUR
INTERPRETATION
The Pearson chi-square value for a two tailed test is
.752, which is greater than level of significance ( =
0.05).Thus, we fail to reject the null hypothesis.
Hence, it is concluded, that team size is independent
of post conflict behavior.
To study the association between age group and post
conflict behavior

To study association between number of male
members in the team and time taken to get back to
work
CHI-SQUARE TEST SHOWING ASSOCIATION
BETWEEN NUMBER OF MALE MEMBERS IN THE TEAM
AND TIME TAKEN TO GET BACK TO WORK AFTER
CONFLICTS.
INTERPRETATION
.427, which is greater than level of significance ( =
Hence, it is concluded, that age group is independent
of post conflict behavior.
To study association between number of female
members in the team and time taken to get back to
work.
CHI-SQUARE TEST SHOWING ASSOCIATION
BETWEEN NUMBER OF FEMALE MEMBERS IN THE
TEAM AND TIME TAKEN TO GET BACK TO WORK
AFTER CONFLICTS
a. 3 cells (33.3%) have expected count less than 5. The

minimum expected count is 1.44.
INTERPRETATION
.208 which is greater than level of significance ( =
Hence, it is concluded, that number of male members
in the team is independent of time taken to get back
to work.
To study the correlation between compatibility and
mental stress.
TABLE SHOWING CORRELATIONS BETWEEN
COMPATIBILITY AMONG COLLEAGUES AND MENTAL
STRESS.
INTERPRETATION
.001 which is less than level of significance ( =
0.05).Thus, we reject the null hypothesis. Hence, it is
concluded, that number of female members in the
team is not independent of time taken to get back to
work after the conflicts.
INTERPRETATION
TABLE NO.9 TABLE DEPICTING VARIOUS BEHAVIOUR

EMPLOYEES POST CONFLICT
The value of r value is -.1, which means that the

compatibility and mental stress are negatively
correlated. Thus, we reject null hypothesis .Hence, it
is concluded that there is no significant relationship
between compatibility between members of the
group and mental caused due to incompatibility.
TABLE NO.7
TABLE SHOWING NO OF HOURS TAKEN TO GET BACK
TO WORK AFTER THE HEATED ARGUMENTS.
INTERPRETATION
The survey depicts the scenario, which says about 45
% of the employee behavior is not affected post
conflict, but at the same time 25% prefer smoking.
TABLE NO .10
TABLE SHOWING EMPLOYEE BEHAVIOR ABOUT
FOCUS LEVEL
INTERPRETATION
On an average of 33 % spent 2-4 Hrs to get back to
work after the heated arguments.
TABLE NO.8
TABLE SHOWING EMPLOYEE'S ATTITUDE TOWARDS
INFLUENCE OF IMPROPER DELEGATION OF WORK
FROM MANAGEMENT
INTERPRETATION
The survey result states that 57 % of the respondents
retain more focus level at work after conflicts to
prove them.
FINDINGS
Findings of the study can be summarized as follows :
INTERPRETATION
The survey result interprets that 48% accept to the
fact, that improper delegation of work from
management is one of the reasons that cause conflicts
between the employees.
Table No 1 reveals that, ego issues and mis

communication among the employees are the
main factors which forms as a clout for the
conflict arousal in the organization.
Table no 2 reveals that, the size of the team

does not have any influence upon the post
conflict behaviour of the employees such as
smoking, exercise, gossiping or getting back

to work.
organization, so to some extent it

present.
can be
Table No 3 reveals that, age group of the

employees, doesn't have any
influence upon the post conflict behaviour of the
employees
such as smoking, exercise, gossiping
or
getting back to work.
SUGGESTION
Employees should learn to channelize the

post conflict behaviour in the right manner,
which will be a constructive tool.
Table No 4 & 5, reveals that, the female

members in the team take time get
back to
work after the conflicts, whereas
study also
states that numbers of male
members of the
team are not dependent on
the time taken to
get back to work.
Smoking as the way adopted after the

conflicts suggest the possibility of health
hazard in long run. So, the Hr team should
interfere and help the employees suppress
arguments and conflicts.
Employees prefer exercising after the

conflicts, so management can set up a small
work out area at the walk able distance so,
that employees can de-stress,This helps in
behavioral regulation.
Table No 6 reveals that, mental stress caused

after the conflicts doesn't have any
correlation with compatibility among the
members of the team.
According to table no.7 ,post the conflict, 33

% employees need 2-4 hours to get back to
work, which indirectly indicates the time
wasted due to conflicts but at the same time
61 % need less than 2 hrs to get back to work.
According to table no.8, apart from ego and

miscommunication, 48% of the surveyed
employees agreed that, the role of
improper
delegation of work from the
management plays the major in inducing conflicts.
According to table no.9, study shows that 45%

of the surveyed employees get back to work
after the conflicts, But 25 % prefer smoking
after the conflicts.
According to table no.10, conflicts helps in
the positive way, 57% of the surveyed
employees felt that, they are more focused
on their work after the conflict.
Respondents had mixed feeling about,

whether conflicts are boon or bane. One felt
that conflicts affect the mental stability.
It helps in stimulation of a search for new

facts or resolutions and also create an
ambience of healthy competition in the
Organization should be careful when

apportioning work to the employees. Proper
channel should be choose, when delegating
work to employees, which helps them in
understanding the work clearly,
which in turn helps avoid conflicts between
working
members of the team to
which the task is
given.
For employees, if the conflicts arise between

them, it's better to forego the ego and have a
face to face communication to clear the
matter among them.
If the task assigned to them is not clear,

employees should get clarified to
avoid
miscommunication which helps to
curtail conflicts. Unsolved preceding conflicts
should be given importance.
CONCLUSIONS
There is a leap frog effect in the minds of the
employees about the conflicts. When the individuals
and organization handles the conflicts with right
attitude, it brings out positive energy among the
employees, which in turn helps the individual and the
organization for the better performance. In formal
working environment, Hr manger should take to
create right ambience to discuss clearly about the

goals to be achieved for further growth, strength &
weakness of the employees and norms should also be
stated in clear manner.
Work place also needs conflicts to build the synergy
among the employees, which helps them to bring out
their skills.
REFERENCES
James A. F. Stoner (1984), New Delhi, Prentice Hall of India.1984, P.408
K. Aswathappa, Organizational Behaviour,8th Revised Edition, p.354-355
Kae H. Chung and Leon C. Megginson (1981), Organizational behaviour, New
York, harper and Row. p.252
Kirchoff, N., & Adams, J.R. 1982. Conflict Management for Project Managers.
Drexel Hill : Project Management Institute.
Roffey Park [online](Jan 2005), Failure to manage change heightens stress,
harassment and conflict at work, survey reveals)
Watson, C. & Hoffman, R.(1996), Managers as Negotiators, Leadership
Quarterly, 03/17/96.
Helen Ross, Work place conflict survey, UK (2010), People Resolutions
Limited.
Fundamentals of Conflict for Business Organizations by Lawrence Kahn,
WEB REFERENCE
http://thinkexist.com/quotations/conflict/2.html
http://www.oppapers.com/essays/Workplace-Conflict-Survey-Says-WeCould/621404
HUMAN
RESOURCES
MANAGEMENT
REINVENTING SOCIAL ETHOS

[THE DIALECTIC OF ORGANISATION AND
SOCIETY IN SOCIAL WORK CONTEXT]
MS. MONA SINHA

ASST. PROFESSOR,
BHARATI VIDYA PEETHS INSTITUTE OF
MANAGEMENT STUDIES & RESEARCH,
NAVI MUMBAI
DR. ANJALI KALSE
PROFESSOR,
BHARATI VIDYA PEETHS INSTITUTE OF
MANAGEMENT STUDIES & RESEARCH,
NAVI MUMBAI
DEFINITIONAL PREMISE
ocial work is a profession and a social science committed

to the pursuit of social justice, to quality of life, and to
the development of the full potential of each individual,
group and community in a society. Social workers draw on the
social sciences to solve social problems. They may work in
research, practice, or both. Practitioners will usually possess a
degree or registered license in the discipline, dependent on
national law. Social work research is often focused in areas such
as individual and family therapy, social policy, public
administration and development. Social workers are organized
into local, national, continental and international segments.
Professional social scientists and Non-Governmental
Organizations are most often in the forefront of social work
intervention. This gives this author both the reason and the
rationale to co-author this paper.
According to the International Federation of Social Workers,
social work bases its methodology on a systematic body of
evidence-based knowledge derived from research and practice
evaluation, including local and indigenous knowledge specific to
its context. It recognizes the complexity of interactions between
human beings and their environment, and the capacity of people
both to be affected by and to alter the multiple influences upon
them including bio-psychosocial factors. The social work
profession draws on theories of human development, social
theory and social systems to analyze complex situations and to
facilitate individual, organizational, social and cultural changes.
There are three general categories or levels of intervention. The
first is "Macro" social work which involves society or

communities as a whole. This type of social work
practice would include policy forming and advocacy
on a national or international scale.
The second level of intervention is described as
"Mezzo" social work practice. This level would involve
work with agencies, small organizations, and other
small groups. This practice would include policy
making within a social work agency or developing
programs for a particular neighborhood.
The final level is the "Micro" level that involves service
to individuals and families.
Similarly there are three factors that form the
content of the social work dialectic: individual,
organization and society. This paper shall essentially
be concerned with the interaction between business
and industrial organizations on the one hand and civil
society on the other.
BACKGROUND
The dialectic between organisations and society is
best typified through the initiatives taken in
furthering corporate social responsibility and thus we
shall limit our academic discussion to this aspect only.
The concept of Corporate Social Responsibility (CSR)
in its present form originated in the fifties of the last
century when Howard R Bowen wrote a seminal book
The Social Responsibilities of a Businessman whom
Carroll takes to be the father of CSR. Since then the
notion of CSR has come to dominate the societybusiness interface and many theories and approaches
have been proposed. Although the concept of CSR has
dominated the Business-Society Interface, many
other alternative concepts have infiltrated the
academic literature to study the same such as
Corporate Citizenship, Corporate Governance,
Corporate Social Responsiveness, and Corporate
Social Performance. Even for CSR, many definitions
have also been proposed in order to explain the form
and the content. Lantos considers that CSR has been a
fuzzy area with unclear boundaries and debatable
legitimacy.
Importantly, the approach to CSR has also changed
from Agency theory to Stakeholder theory. The
concept of CSR has a normative altruistic basis and

the strongest indication comes from the terminology
itself used to describe the concept (Corporate Social
Responsibility) but current trends from both
academia and industry strongly indicate a shift in
paradigm from normative altruistic bias of CSR to
positivist strategic orientation to CSR.
At first we need to remove the fuzziness and thus to
clarify the CSR concept while distinguishing it from
other concepts having their genesis in Business
Society interrelationship by offering a historical
perspective on CSR and the debate preceding CSR,
reviewing the different viewpoints on the role of
business in society and what CSR actually means,
delimiting CSR boundaries, and distinguishing two
types of CSR: altruistic, and strategic, thereby
establishing parameters for its practice. The paper
also identifies and delineates the shift in CSR
paradigms from altruistic to strategic orientation of
firms towards CSR along with changing rules of the
games and machinations of the market place.
THEORETICAL UNDERPINNING
The interest of political economists in the mansociety interface is legion. It can even be traced to
Aristotle's Politics where he spoke of Oikanomie as the
science of household budgeting on the same
premises as the budgeting for the city state. Much
later Adam Smith in the Theory of Moral Sentiments
argued passionately for the need to have a just (fair)
society. Fourteen years thereafter, he propounded his
thoughts on how that just society can be managed
in An Enquiry into the Nature and Causes of the
Wealth of Nations. In both his works, Smith
concentrated on the concepts of equitable
distribution of wealth, value and profit for the
common good through the twin principles of unity
of interests and dignity of labor. Contrary to the
prevailing opinion in India, Smith was never in favor of
promoting big business and argued for the
emancipation of the small commerce in a highly
competitive but socially fair environment. Then came
a string of Socialist thinkers from Owen to Fourier and
from Rodbertus to Marx who spoke about equality of
opportunity and emancipation of man so that civil
society as a whole stands to gain, as has been argued
by Holesovsky. Pigou's Welfare Economics, Joan

Robinson's Theory of Imperfect Competition, Piero
Sraffa's The Production of Commodities by Means of
Commodities, and John Keynes's The General Theory
of Employment, Income and Money cautioned against
both primitive accumulation and speculative
spending and urged corporate houses to base their
behaviour on sound fundamentals such that society as
a whole stood to benefit there from. They argued that
since capitalist greed may disequilibrate markets in
favour of the owners of capital it was the solemn task
of the State (government) to undertake proactive
macroeconomic intervention measures. Some
economists like Tobin and Ross in their paper Living
with Inflation say that the trade-off between the
price level (and thus inflation) and unemployment as
envisaged by the Phillips Curve is no longer valid
under stagflation i.e. when stagnation and inflation
combined. Other economists, such as Jackson, Turner
and Wilkinson, (in Do Trade Unions Cause Inflation?
1972), have argued that the critical threshold of
inflation has been breached since institutional
mechanisms can no longer function adequately and
so it becomes the government's responsibility to see
that business in its zeal for the pursuit of profit does
not offset the balance within civil society. (See
Holevsovsky 1977 for details of above citations).
Political economists alluded to but did not directly
speak about a social responsibility of business.
Bowen's seminal work that gave birth to the notion of
CSR also generated a debate as to whether a business
has any social responsibility or not. This debate led to
evolution of not only CSR but also many other
concepts attempting to explain and understand the
business- society interface.
THE CSR DEBATE
The spectrum of opinions regarding the appropriate
role of business in society given by Lantos captures
the essence of the debate of CSR. At one end there are
those who say business only has an economic
responsibility to make a profit while obeying the law
(the pure profit-making view or economic CSR). These
are the monetarists and the supply side economists.
In the middle are people who simply want corporate
management to be more sensitive to the societal
impact of their decisions, especially regarding

potential harms to stakeholders (the socially aware
view or ethical CSR). These are the economic liberals
and neo-Keynesian interventionists. At the other end
of the spectrum are those who want to see
corporations actively involved in programs which can
ameliorate various social ills, such as by providing
employment opportunities for everyone, improving
the environment, and promoting worldwide justice,
even if it costs the shareholders money (the
community service view or altruistic CSR). These are
the NGOs with a socialist bent of mind and some
armchair revolutionaries. Whereas at one end of the
spectrum the basic concern is with economic values
such as productivity and efficiency, while avoiding
social involvement, at the other end the primary
concern is with societal welfare and improving the
quality of life even if this means at the expense of
profits.
Bornstein points out that there are instances of left
wing anarchists like Pierre Proudhon who declared
property is theft in his masterpiece Philosophy of
Poverty and socialists like Karl Marx replying to it in
his brilliant rejoinder Poverty of Philosophy, by
stating that primitive exploitation is a necessary
condition of capitalism. On the ideological centre
there are researchers who espoused the pure profit
making perspective arguing that business has lower
standards of ethics than society and no social
responsibility other than obedience of the law. In
contradiction, we have right wing economists like
Milton Friedman (the high priest of monetarism) took
to constrained profit making perspective and argued
There is one and only one social responsibility of
business - to use its resources and engage in activities
designed to increase its profits so long as it stays
within the rules of the game, which is to say, engages
in open and free competition without deception or
fraud. He disagreed with the notion of social
responsibility of business but accepted the constraint
that the business should respect the ethical values
and play fair. Then there were people who were
liberal thinkers and conscious of the objective social
reality that surrounded them and were socially
aware. Freeman accordingly presented the view of
business in his stakeholder model arguing that a
business should be sensitive to the stakeholder issues
and avoids harm to them. He espoused a more

positive view of Managers' support to CSR. In the
stakeholder theory proposed by him, he asserted that
managers must satisfy a variety of constituents,
(workers, customers, suppliers, local community
organizations etc.), who can influence the outcome
of the firm. In such a vein, Carroll took a community
service view of the business and argued that a firm
has economic, legal, ethical and discretionary
responsibilities and held that business should use its
vast resources for social good.
The debate changed gears over the years and the
original normative concept was given a positive hue
by many scholars, (e.g. Hart, Jones, Donald,
McWilliams, and Siegal), thus bridging the distance
between the extremes of the spectrum and building a
business case for CSR. Many of these studies
unmistakably pointed out to the fact that CSR may
help companies in achieving their business goals.
Taking the point further, Jones applied the classical
economic and institutional theory to CSR and argued
that firms involved in repeated transactions with
stakeholders on the basis of trust and cooperation
have an incentive to be honest and ethical, since such
behaviour is beneficial to the firm.
Hart applied the resource based view of the theory of
the firm to CSR and argued that for certain types of
firms environmental social responsibility can
constitute a resource or a capability that leads to
sustained competitive advantage. Russo and Fouts
(1997) tested this theory empirically and found that
firms with higher levels of environmental
performance recorded superior financial
performance. These studies by demonstrating that
while CSR by its adoption can help firms further their
economic interest, it can hurt the economic interest
by the absence of it and thereby settling the debate in
favour of CSR.
The debate having been settled, Van Oosterhout and
Huegens argue that the predominant concern
appearing in CSR literature seems to be not whether
CSR is the responsibility of business or not, but rather
to both posit and validate the argument that CSR is
desirable in its own right or is practiced because it is
in the long term interest of corporations to do so.
This why, what and how of the social responsibilities

of business has led to evolution of many concepts and
notions in the Business-Society interface e.g.
Corporate Governance, Sustainability, Corporate
Social Performance each one with its own perspective
and emphasis, merits and demerits. Social work
methodology is one such perspective.
BUSINESS-SOCIETY INTERFACE
Literature in the last decade of the last century was
dominated by the many important conceptions each
one tying to demarcate its own area in terms of
perspectives, focus and approach and many of them
are overlapping. While some of them can be
distinguished form CSR notion, others merely look at
CSR from a different focus. Three main approaches
follow. (a) The concept of Corporate Social
Performance according to Carroll, Wood and others is
essentially a performance (outcome) oriented
approach to CSR and is no different from CSR. (b)
Similarly, the Corporate Social Responsiveness
(Frederick) refers to the ability of the firm to manage
social dimension in the dynamic environment and
describes CSR only within the context of changing
environment. These concepts can be seen as
evolution of the concept of CSR according to Branco
and Rodrigues rather than an attempt at charting out
a different domain separate from CSR. (c) In
discussing the concept of Corporate Citizenship
Matten and Crane, see a corporate as a citizen having
rights and responsibilities but reciprocates the
essence of CSR. With the onset of the 21st Century
ecological concerns like acid rain, the greenhouse
effect, global warming and deforestation gained
international attention, especially after the Kyoto
Protocol.
This rise of ecological concerns in a way gave rise to
the Triple Bottom Line or the Profit, People and
Planet approach to CSR as espoused by Elkington.
While quality was the dominant buzzword in the 198090 decade and excellence was the buzzword in the
1990-2000 decade, it was the sustainability that
claimed centre stage of corporate concern in the new
century. One could further argue that business
sustainability as a concept is no different from the
Elkington paradigm except that it seeks to measure
the performance of a corporate on the three aspects

of society business interface and may be seen as
measurement orientated conceptualization of CSR.
boundaries of the same. The paper also identifies and

describes the shift in Paradigm from Altruistic to
Strategic CSR.
Our research indicates that while some other

concepts like Corporate Governance and
Sustainability differ on the parameters of nature and
focus they can be easily distinguished from CSR. Of
all the concepts treated above, CSR has relatively the
longest track record in the field and is often seen as a
kind of primitive to other established concepts in
business and society (Carroll) such as Stakeholder
Theory (Donaldson
& Preston,: Freeman,) and
Corporate Citizenship (Matten and Crane,),
Corporate Social Performance (Carroll). In addition,
CSR is a highly popular notion with many companies
having some form of CSR policy in place (Maignan &
Ralston,). CSR is linked to ethics and governance as
per Jayashree, Sadri and Jayashree) while it is linked
to sustainability by Sadri and Guha later on.
EVOLUTION OF CSR
There is need for clarity in what CSR really is.

Unfortunately, these competing concepts (treated
above) have proliferated in the business-society
interface. Some of them overlap with the domain of
CSR apparently, because the concept of corporate
social responsibility (CSR) is a fuzzy one with unclear
boundaries and debatable legitimacy. 'CSR means
something, but not always the same ting to every
body. to some it conveys the idea of legal
responsibility or liability; to others it means socially
responsible behaviour in the ethical sense; to still
others the meaning transmitted is that of 'responsible
for' in a causal mode; many simply equate it with
charitable contributions; a few see it as a sort of
fiduciary duty imposing higher standards of behaviour
on businessman than on citizens at large' (Votaw) as
quoted by Garriga et al.
Definitions are important no doubt but real clarity
comes when we see how the definition has evolved. In
order to address this issue of clarity, the paper would
explain the CSR concept by offering a historical
perspective on CSR, reviewing the different
viewpoints on the role of business in society, defining
CSR and distinguishing two types of CSR: altruistic,
and strategic, thereby establishing dichotonomous
parameters for its practice and outline the
As was stated earlier, though the concept of social

responsibility has a long historical existence and
there are references in the literature available dating
it back to 17th century, it has come to known formally
as CSR with the seminal book by Bowen on the topic.
Since then the concept has been interpreted by
different scholars with different approach and
perspective. The focus of CSR has also shifted from
the shareholder primacy perspective, propounded by
neoclassical school, to stakeholder primacy
perspective given by Freeman. Based on their own
interpretation scholars have defined and classified it
differently.
While many scholars have posited varied definitions
of the concept, the first one to give a comprehensive
outline of CSR embracing the entire range of business
responsibilities was that of Carroll. According to
Carroll, one of the most cited authors on the topic
The CSR firm should strive to make a profit, obey the
law, be ethical and be a good corporate citizen. a la
Carrol., He proposed a four-part definition of CSR,
suggesting that corporations have four
responsibilities to fulfil: economic, legal, ethical and
philanthropic. Economic responsibility is to be
profitable by delivering a good quality product at a
fair price is due to the consumers. Legal duties entail
complying with the law and playing by the rules of the
game. Ethical responsibilities call for being moral,
doing what is right, just, fair, respecting people's
moral rights and avoiding harm or social injury.
Philanthropic and discretionary responsibilities
involve giving back time and money in the forms of
voluntary service, voluntary association, and
voluntary returns to the society. These four parts are
termed as pyramid of corporate social responsibility
with economic responsibility being fundamental to
the total corporate responsibility structure.
Frederick outlined a classification based on a
conceptual transition from the ethical- philosophical
concept of CSR (CSR1), to the action oriented
managerial concept of Corporate Social
Responsiveness (CSR2). He then included the

normative element based on the ethics and values
(CSR3) and finally introduced the cosmos as the basic
normative reference for social issues in management
and considered the role of science and religion in
these issues (CSR4).
She then presented the outcomes of bringing

principles into practice within the domains outlined
by Carroll (1991) as responsibilities and categorizes
them in terms of social impact, social programmes
and social policies.
Wood on the other hand had thus stated: "The basic

idea of corporate social responsibility is that business
and society are interwoven rather than distinct
entities; therefore, society has certain expectations
for appropriate business behavior and outcomes." To
assess whether a corporation meets society's
expectations, she points to "the degree to which
principles of social responsibility motivate actions
taken on behalf of the company " She also argues that
"managers are moral actors who are to exercise their
discretion to meet expectations She strongly
suggested to substitute the language of
force
,coercion and violence with the language of choice
and freedom and mature relationships at individual ,
corporate and societal level to make good ethical
choices to create good society. Building further on the
work of Carroll (1991) and Wartick and Cochran
(1985), she related the four responsibilities of
Carroll's pyramid to the three principles of legitimacy,
public responsibility and, managerial discretion. She
outlined three levels at which these three principles
operate.
Baron had argued that both motivation and

performance are required for actions to receive the
CSR label. He distinguished CSR as motivated by self
interest (Strategic), normative principles (Moral) and
threats (Defensive) from stakeholders. He stated that
the subject of redistribution has a long history in the
normative literature on CSR. He argued that CSR
advocates argue both that normative principles
demand redistribution by firms and that firms which
do not meet the expectations of the society with
regards to their social performance they will be faced
with government actions .The first argument, he
states pertains to a moral motivation, whereas the
second argument pertains to or in anticipation of a
threat. The third argument according to him is that
firms voluntarily taking actions in the name of CSR
will be rewarded in the marketplace, e.g., by
increased demand for their products. So he classifies
CSR into three categories based on motivation into
Strategic CSR (motivated by self interest), Altruistic
CSR (motivated by normative principles) and
Defensive CSR (negatively motivated by threats). He
termed profit maximizing CSR as Strategic CSR.
The principle of legitimacy manifests at the

institutional level and stems out of a company's
overall responsibility to the society specifying what is
expected of all companies and implies that the
society has sanctions available with it, which it can
use if the obligations are not fulfilled. The next level
is the organizational level and operates on the
principle of public responsibility implying that
companies are responsible for solving the problems
created or caused by them. The third level is the
individual level where the principle of managerial
discretion is functioning emphasizing upon the
individuals to behave as moral managers choose
activities to achieve socially responsible outcomes.
She suggested three types of processes to bring these
principles operating at three different levels into
practice: Environmental Assessment (EA), Issues
Management (IM) and Stakeholder Management (SM).
Lantos on the other hand, has classified CSR into

Altruistic CSR, Strategic CSR and Ethical CSR. He
strongly built a case for strategic CSR and argued that
for any organization ethical CSR (avoiding societal
harms) is obligatory, for a publicly-held business
altruistic CSR (doing good works at possible expense
to stockholders) is not legitimate, and that
companies should limit their philanthropy to strategic
CSR (good works that are also good for the business).
On the basis of a thorough examination of the
arguments for and against altruistic CSR, he agreed
with Milton Friedman that (i) Altruistic CSR is not a
legitimate role of business; (ii) Ethical CSR, grounded
in the concept of ethical duties and responsibilities, is
mandatory and (iii) concluded that Strategic CSR is
good for business and is the only legitimate form of
CSR. Thereby he placed CSR initiatives squarely
within the realms of bounded rationality. He has also
distinguished between responsibilities which are

mandatory and which are voluntary. According to him
responsibilities which are mandatory can not be
treated as CSR while those that are voluntary can. In
the process he took CSR out of the hands of the
regulators and regulations and placed it in the
arena of core values of the corporate organisation.
He thus laid down the basis for integrating CSR within
the business model of the company.
Garriga and Mele to demonstrate divergent views on
a convergent theme (CSR) have classified the CSR
theories based on four dimensions of profits, political
performance, social demands and ethical values into
four categories (1) instrumental theories, in which
the corporation is seen as only an instrument for
wealth creation, and its social activities are only a
means to achieve economic results; (2) political
theories, which concern themselves with the power
of corporations in society and a responsible use of this
power in the political arena; (3) integrative theories,
in which the corporation is focused on the satisfaction
of social demands; and (4) ethical theories, based on
ethical responsibilities of corporations to society.
Munilla and Miles taking perhaps the cue from the
notion of the ongoing concern have proposed the
Corporate Social Responsibility Continuum as a
component of stakeholder theory to address the
levels of corporation's commitment to corporate
social responsibility from compliance to strategic and
thence to forced CSR. According to them, Forced CSR
occurs when CSR expenditures are perceived as a tax
or fiscal penalty being mandated by NGOs or other
external stakeholders that will diminish the firms
ability to create value for relevant stakeholders.
Compliance CSR occurs when CSR expenditure are
seen as a cost of doing business and when the firm
sees CSR expenditure as an investment in forms set of
competencies, it is called strategic CSR. They argued
that a strategic CSR perspective helps immunize the
firm from subsequent pressure from NGOs, and allows
the firm to exploit its investments in CSR for the
development of distinctive competencies, resulting
in superior, sustainable performance. Management,
they go on to argue, must understand the legitimacy
of the claims from their owners (principals) and other
stakeholders, and the power that each group has to
enforce the claim a la Carroll. In addition, while a

Compliance-based Stakeholder Perspective of CSR
may be the least costly, it may not be a sustainable
position for many corporations in the current dynamic
regulatory & social environments.
Jayashree has argued that business ethics and
corporate governance combine to create the
conditions for approximating organizational
excellence. CSR is nothing but a characteristic of
organizational excellence and shows the richness of
the corporate beliefs, values and cultures in so far as
they impact the larger civil society of which they are
an intrinsic part. Hence, they look at CSR definitively
and yet indirectly arguing that CSR is essentially
voluntary in nature and yet can be used strategically
to leverage the corporate brand image.
Based on the above seven perspectives the following
elements have been used by the present authors to
define, classify or capture the form and content of
CSR :
1) THE APPROACH
There are two contending views herein. It could be
used as an instrument for stakeholder wealth
maximization or managing the stakeholder.
2) NATURE OF THE RESPONSIBILITY
Although CSR is a corporate activity the nature of
(perceived) top managerial responsibility to carry it
through could be voluntary, obligatory or mandatory.
3) MOTIVE
Corporate houses that are involved in CSR could be
driven by either an altruistic (normative) motive or a
strategic (Instrumental) motive.
We would take into consideration all these aspects
before arriving at what we consider as constituting
the form and content of the concept of CSR in the post
WTO regime within the capitalist world economy a la
Wallerstein.
THE APPROACH
The first important element of CSR defining the form
and content of CSR stems from a book by Freeman
called Strategic Management: A stakeholder

approach often refers to the responsibility of business
towards society. The stakeholder theory developed by
Freeman focuses on the interactions between firms
and society. He defines a stakeholder as anybody who
affects and is affected by, the actions of the company.
The stakeholder approach has become central to the
CSR concept as the battle for market competition
intensifies and as capital is increasingly both
centralized and concentrated. Even the most ardent
opponents of CSR are compelled to agree that the use
of stakeholder management is an effective
instrument to generate long term profitability and
shareholder value. They agree with the notion of
stakeholder management from a business strategy if
not from a business ethics point of view. Even Carr
(1968), one of the strongest proponents of the pure
profit making view of the business also has recognized
that if a company wishes to take a long-term view of
its profits, it would need to preserve amicable
relations with whom it deals. Jensen's 'enlightened
shareholder maximization view' also holds that a
company can not maximize value if any important
stakeholder is ignored or mistreated, but the
criterion for making the requisite tradeoffs among it
stakeholders is long term value maximization.
Indeed, the very concepts of brand image, brand
value and brand recall hinge on how the stakeholders
are treated by the corporate entity and how they
perceive business and behaving.
Over the years the stakeholder theory has been
recognized as an integral part of CSR by many authors
prominent among who are Harrison & Freeman,
Klonoski, Clarkson, and Dawkins & Lewis. It is argued
that through effective stakeholder management
social and ethical issues can be resolved and the
demands of society and also those of the shareholders
will be properly accounted for Harrison & Freeman,
Once their concerns are attended to satisfactorily the
stakeholder takes a positive view towards the
corporate entity and this is always good for business.
Clarkson's definition distinguishes between
responsibilities towards society and those towards
stakeholders. He differentiated between social and
stakeholder issues, stating that social issues are
furthered by local institutions and adopted in the
forms of regulation and legislation, while stakeholder

issues are not concerned with legislation and
regulation. He defined stakeholder issues as an issue
when this institutional interference is absent
according to Clarkson. While many scholars have
interpreted and presented the theory differently, a
general congruence of opinion exists on the basic
assumptions of the stakeholder theory. Every
company has stakeholders who can influence the
company's performance and stakeholders that have a
stake in the company's performance and businesses
have relationships with stakeholders that affect and
are affected by the company's decisions, a la Jones &
Wicks.
Because the stakeholder theory is concerned with all
parties that influence and are influenced by the
company, it can automatically be linked to CSR a la
Klonoski. The obligation towards every stakeholder
needs to be identified and the company needs to
assume responsibility for meeting the obligations
towards their stakeholders according to Robertson &
Nicholson. There are many different stakeholders a
company has to take into account. They range from
stockholders to NGOs and from customers to
suppliers. The company has responsibilities towards
each of these. There are also many stakeholders that
have very different expectations of the company. It is
important to note that every company has its own set
of different stakeholders with different
expectations. Some stakeholders expect more than
others, while other stakeholders may be more
important or have a more direct influence on the
company. The withdrawal from some stakeholder,
because of their dissatisfaction with the company's
actions, may seriously damage or even cause
discontinuance of the system the company operates
in. Other stakeholders might be less influential, but
their withdrawal may cause the company significant
damage a la Clarkson. So, the stakeholder
management theory with respect to CSR identifies
the stakeholders and their expectations in order for
the company to identify its areas of involvement and
influence that need to be managed accordingly to be
able to prosper as a business. When Clarkson
distinguished between the primary and secondary
stakeholders, he defined the primary stakeholders as
those stakeholders without whose continuing
participation the corporation can not survive as a

going concern (shareholders and investors,
employees, customers, suppliers and government and
communities) whereas secondary stakeholders are
those who influence or affect, or are influenced or
affected by, the corporation, but are not engaged in
transactions with it and are not essential for its
survival. Mitchell et al offered a theory of stakeholder
identification and salience to address the issue of
stakeholder identification suggested three key
stakeholder attributes of Power to influence the
company, Legitimacy of the relationship with the
company and urgency of the claim on the company.
The perception of the managers on these attributes
will have definite implications on the priority given by
managers to competing claims of stakeholders.
stakeholder management in other cases.

NATURE OF THE CORPORATE RESPONSIBILITY
We see the nature of the overall responsibility of the
corporate entity towards CSR initiatives according to
the reviewed literature as being threefold.
1. MANDATORY
(When carrying out the responsibility is mandated by
law or code.)
2) OBLIGATORY
(When the industry norms, stakeholder pressure
make it
obligatory.)
3) VOLUNTARY
It was Freeman who set the ball rolling by giving the

stakeholder theory, which was essentially normative
in nature. Subsequently the theory was expanded into
normative, descriptive and instrumental (building a
business case for CSR) theory by Donaldson and
Preston (1995). Whereas the descriptive theory
attempts to analyse the way things are, the
normative theory is prescriptive and suggests how
things should be. The instrumental theory builds the
business case and talks about how traditional business
objectives can be achieved using stakeholders
management as an instrument. The instrumental
aspect of the stakeholder theory views stakeholder
interests as means for higher level goals of profit
maximization, survival and growth. Jawahar and
McLaughlin consider the use of stakeholder
management as a means to reach the end objective of
marketplace success, which for a corporate is the
ultimate objective of corporate decisions.
This clearly establishes the significance of
stakeholder management theory as a central tool
regardless of the perspective one has, to look at CSR.
In sum, if the stakeholders are managed well then
wealth creation follows. Hence it is debatable if the
two approaches are indeed contending or in
contradistinction of each other. The difference is one
of primary intention and stakeholder perception
besides being purely academic. What could be better
said is that primacy is given to wealth creation in
some cases whereas primacy is given to effective
(The corporate entity takes up social activities of its

own volition).
In consonance with Sadri and Jayashree's work, we
argue and posit our view that the obligatory and
mandatory responsibilities do not constitute CSR and
may very well be termed as Corporate Responsibility.
For any activity to be labelled as CSR it must be
voluntary in nature.
Many other scholars also stress the voluntary nature
of CSR. The distinction was made by Lantos in respect
of the inherent nature of CSR. In his work Lantos had
classied CSR as being either mandatory (ethical) or
being voluntary (social). Subsequent some writers,
disagree with this distinction since Lantos seems to
have used the term ethical rather loosely. Ethical
CSR being thus broadly defined extends beyond
economic and legal obligations of the corporate
entity. Acting as a morally responsible agent the
corporate entity is expected to also conform to the
mandatory requirements of CSR. That the mandatory
component of CSR includes more than economic and
legal considerations has been articulated by early
scholars including Joseph McGuire and Davis who had
insisted that the corporate entity has obligations that
extend beyond narrow economic and legal
requirements.
The voluntary aspect of social CSR delineated by
Lantos has similarly been touched upon by various
authors including Manne and Wallich. As Jamali has

aptly pointed out, in his book entitled Corporate
Social Responsibilities, Walton suggested that an
essential ingredient of a corporate entity's social
responsibilities is a degree of voluntarism, and Manne
and Wallich (1972) insisted that to qualify as a socially
responsible social action, a business expenditure or
activity must be purely voluntary. Davis suggested
that CSR describes a condition in which the
corporation is at least in some measure a free agent
and that the coerced pursuit of social objectives is
difficult to imagine. Hence, various early scholars
conceived of social responsibility as voluntary,
beginning where ethical responsibility ends,
reinforcing in turn the mandatory versus the
voluntary distinction articulated by Lantos. If the CSR
contribution is voluntary it should constitute CSR else
it may be termed as corporate responsibility.
Adopting this logic, Dima Jamali had further argued
that the use of the term CSR should be restricted to
social voluntary responsibility and the term corporate
responsibility can be used for the other (economic,
legal and ethical) responsibilities given by Carroll.
Applying the same yardstick to the CSR as motivated
by threats given by Baron or the ethical CSR given by
Lantos and later by Jayashree, Sadri and Dastoor
which being mandatory or obligatory can then be
considered to be out of the bounds of CSR definition.
To elucidate the point further we give the following
table that shows nature of CSR in terms of the various
CSR conceptualizations.
Nature
Carroll
Lantos
Baron
Sadri And Jayashree
Voluntary
Discreptionary/
Strategic/
Strategic/
Strategic/Altruistic/
Philanthropic
Altruistic
Altruistic
Ethical
Obligatory
Ethical
Ethical
Defensive
Mandatory
Economic /
Legal
MOTIVATION
This is simply the answer to the question what
causes a corporate house to embark on CSR or
alternatively, what is the philosophical underpinning
that makes a corporate house undertakes CSR
initiatives. The theory of rational choice in
economics takes into account the subjective
condition (willingness) and the objective condition
(ability) that need to be fulfilled. So too is the case in
CSR. Baron for instance, has stated that in order to

receive a CSR label both motivation (subjective
condition) and performance (objective condition) are
critical. We, in this paper, ask and address the issue of
what motivates a corporate entity to undertake CSR
whereas they straight away answer the question
(without even raising it) in that CSR is a vehicle for
business sustainability and so it is at once strategic
and altruistic. They speak more in terms of creating,
maintaining and developing the Triple Bottom Line,
which is a concept this paper shall presently address.
There is an ongoing debate about the purposes and
reasons for undertaking CSR initiatives. The question
why would a firm practice CSR? has been raised
often, and there were many and varied answers to
this. The answers were mostly two fold, on the one
hand the enlightened self- interest of the firm was
mentioned, and on the other hand authors argued
that the role of business in society requires the use of
CSR. This two-fold perspective is supported by Porter
and Krammer who have distinguished between pure
philanthropic and pure business views focusing on
social benefit and economic benefit respectively.
Graafland and Ven have also distinguished between
the positive strategic and positive moral motivation
and concluded that both strategic and moral
motivation are important for corporate social
performance.
To glean an understanding of what motivates a
company to undertake CSR initiatives the investigator
refers to the work of Garriga and Mel who have
identified four theoretical approaches to CSR. These
CSR motivations grew out of a four fold classifications
of CSR theories that in turn were based on the
dimensions of profits, political performance, social
demands and ethical values. These classifications
have been used by Cochius (2006) to answer the
question what motivations for CSR do firms have?
These classifications were plotted against four
categories: (1) Instrumental Theories, in which the
corporation is seen as only an instrument for wealth
creation, and its social activities are only a means to
achieve economic results; (2) Political Theories,
which concern themselves with the power of
corporations in society and a responsible use of this
power in the political arena; (3) Integrative Theories,
in which the corporation is focused on the satisfaction

of social demands; and (4) Ethical Theories, based on
ethical responsibilities of corporations to society.
However, both Jamali and Sadri & Jayashree accept
that these approaches overlap with the motivations
of enlightened self- interest and the role of business
in society. The other two motives (ethical and
integrative) are considered as they add value by
means of giving more detailed descriptions and
classifications of the same motivations. Baron (2001),
on the other hand, talked about the motivations of
self interest, moral values, and of suitably addressing
the threats by stakeholders. Lantos accordingly
proceeded in a logical manner when he grouped the
motivations into three categories ethical, altruistic
and strategic motivations. We too agree with Jamali
in that social reality is not to be seen in clear black
and white terms but as a huge grey area with several
shades within it.
The above discussion, leads us to conceptualize CSR
as having two fundamental approaches or
motivations: Strategic (also termed as value driven,
instrumental, driven by self interest, profit
maximizing CSR) vs. Altruistic (alternatively termed
as philanthropic, value based, ethical, moral, and
humanitarian CSR). Those approaches where this
dichotomy is not clearly demarcated may be
explained with the reference to the classification
made by Lantos and the accepted working definition
given earlier. This definition (as stated above) was
based on whether the CSR practice is voluntary or
mandatory. If the CSR contribution is voluntary it
should constitute CSR else it may be termed as
corporate responsibility according to Jamali.
Adopting this logic, Dima Jamali argued that the use
of the term CSR should be restricted to social
voluntary responsibility and the term corporate
responsibility can be used for the other (economic,
legal and ethical) responsibilities given by Carroll.
In line with Sadri and Jayashree's recent work,
according to us, CSR as motivated by stakeholder
threats mentioned by Baron and the ethical CSR given
by Lantos, which, being obligatory if not mandatory,
may be considered to be out of the bounds of CSR
definition. This is precisely because we opine that
CSR is a voluntary corporate commitment that

enhances the business-society interface and
meaningfully contributes to the elevation of the
quality of human life thereby.
In the classification posited by Garigga and Mele
instrumental theorists are motivated by strategic
motives; political theorists are motivated by
responsible use of the power in the political arena;
integrative theorists focusing on satisfaction of social
demands and ethical theories based on ethical
responsibilities of corporations to society may be
grouped under the CSR motivated by normative
principles or altruistic CSR. This paper seeks to
reduce this four fold motivational classification into a
two fold classification as was argued above. The two
fold classification is essentially either strategic or
altruistic. These two categories are further
elaborated below for the sake of definitional clarity
since these are germane to the ensuing investigation.
Strategic CSR has also been termed in the literature
as economic benefit, a la Porter and Krammer; a la
Windsor and as instrumental approach, a la Garriga
and Mel. CSR with this motivation (hereinafter
referred to as Strategic CSR) is supported by the
argument of enlightened self interest and focuses on
the economic benefit of the organization and aims at
gaining some advantage out of CSR in terms of
reputation, market acceptance, employee
motivation, corporate image, government support
and aims at profit maximization either in the short
run or long run. Davis (1973) indicates several reasons
for imbibing CSR into a firm's daily practice and
weaving it into the overall business plan that will lead
to business advantages. He argues that the long-run
self interest is one of the most prevalent reasons to
practice CSR. This belief assumes that business needs
to provide a variety of social goods in order to remain
profitable in the long run. The company that takes
community needs into account will create a better
community for conducting business (Davis 1973).
Strategic CSR or strategic philanthropy (Carroll,
2001) is done to accomplish strategic business goals
i.e. good deeds are believed to be good for business as
well as for society. With strategic CSR, corporations
give back to their constituencies because they
believe it to be in their best financial interests to do

so. This is philanthropy aligned with profit motives,
Quester and Thompson, (2001) which considers that
social goals might be profitable in the long run since
market forces provide financial incentives for
perceived socially responsible behaviour.
Stakeholders outside the stockholder group are
viewed as means to the ends of maximizing
shareholder wealth, Goodpaster, (1996). Such
strategic philanthropy grew popular beginning around
the mid-1980s Jones, (1997), and Carroll, (2001)
expects it to grow in the years ahead. The idea is that
while being socially responsible often entails shortrun sacrifice and even pain, it usually ultimately
results in long-term gain. Vaughn, (1999) states that
expenditures on strategic CSR activities should
properly be viewed as investments in a Goodwill Bank
which yields financial returns (McWilliams and Siegel,
2001). These long-term benefits might not
immediately show up on a firm's financial statements,
as is true of economic outcomes of many marketing
activities, such as marketing research and advertising
for image-building. Also, a company, (he argues)
would be wise to make deposits in this bank of
goodwill in order to make withdrawals when it comes
under fire. We somehow find that hard to agree with.
Providing for good (social) works from the corporate
coffer is therefore compatible with Friedman's
Monetarist view so long as the firm reaps indirect
financial benefits (Boatright, 1999). We might find a
corporation practicing strategic CSR by providing
charitable good deeds such as providing shelter for
the destitute, building a museum, or renovating the
local park if, as a result, those helped will feel
grateful and indebted to that organization, and will
reciprocate in various ways by giving it their business,
recommending it to others, asking government
regulators to stay at bay, and so on as Dadrawala
(1992) and Sunder (2000) variously argue. And, some
of those not directly helped will still look more
favourably on the firm and thereby turn their
loyalties toward it as Brenkert, (1996) points out.
Several Studies have been conducted confirming the
positive impact of CSR on the corporations. These
studies exploring the linkage between the firms' CSR
and corporate performance have given impetus to the
thinking on this dimension to the extent that Lantos

2001 argues that Strategic CSR is the only legitimate
form of CSR for organizations. CSR can positively
affect profitability Graafland, Graafland and Smid,
and it is seen to improve the company's reputation in
the consumer market Fombrun and Shanley, The work
of Miles and Covin extended empirical support for the
claim that environmental stewardship creates a
reputation enhancing advantage that assists
marketing and financial performance. Several other
empirical studies show that a good social reputation
facilitates the support of consumers to buy or refrain
from buying goods, especially in the retail sector
Brown and Dacin. There is substantial evidence
pointing to the fact that a negative social reputation
ultimately has a detrimental effect on overall
product evaluations whereas a positive social
reputation can enhance product evaluations (Brown
and Dacin). Furthermore, a good CSR reputation may
also be rewarded by both potential employees and
the current workforce according to Turban and
Greening.
ALTRUISTIC CSR
The other category of motive is the altruistic motive
that does not aim at any kind of advantage by
practicing CSR and insists that CSR is desirable in its
own right regardless of the impact it has on the
company. CSR based on this motive is herein after
referred to as Altruistic CSR. Unlike strategic CSR,
where it is believed that the money put into good
works will yield a return on investment for the
business, with altruistic CSR this is not the motive
(benefits accruing due to CSR are just a byproduct and
not the reason for undertaking CSR). For instance, if a
firm adopts an inner-city school and pours resources
into it, there is no guarantee that the business will
immediately gain when tomorrow's workers are
better educated, as they could work for other area
organizations or even move away (Singer, 2000).
According to Lantos (2001) the term altruistic or
humanitarian CSR suggests, genuine optional caring,
even at possible personal or organizational sacrifice.
Altruistic CSR is Carroll's fourth face of
CSRphilanthropic responsibilitiesto be a good
corporate citizen by giving back to society,
furthering some social good, regardless of whether
the firm will financially reap what it has spiritually

sown. It demands that corporations help alleviate
public welfare deficiencies (Brenkert, 1996), such
as urban blight, drug and alcohol problems, poverty,
crime, illiteracy, lack of sufficient funding for
educational institutions, inadequate moneys for the
arts, chronic unemployment, and other social ills
within a community or society. Altruistic CSR is based
on capability responsibilitythe company has the
resources to be able to do social good. One of the
favourite justifications for this form of CSR comes
from the contract theory, which argues that there is
an implicit contract between the constituents of the
society, and the business and business has a
responsibility to do justice to the contractual
obligations.
Altruistic CSR includes all philosophies, policies,
procedures, and actions intended to enhance
society's welfare and improve the quality of life, and
it involves linking core corporate competencies to
societal and community needs. Altruistic CSR
therefore, in a way, goes beyond and yet rests on
business ethics while attempting to make the world a
better place by helping to solve social problems.
Karanjia in the case of the House of Godrej, Lala in
the case of the House of Tata, Heredia in the case of
Amul showed this amply through the business
histories and biographies.
The proponents of the altruistic motive assume that
business' role in society is more than just making
profits and providing products and services. The most
basic justification for Altruistic CSR is the social
contract argument that business is a major social
institution that should bear the same kinds of
citizenship costs for society that an individual citizen
bears according to Davis. Similarly, Klonoski sees
corporations as social institutions that are not only
responsible to their shareholders, but also to society.
The view is also supported by the idea that companies
seek legitimacy pressurized by societal institutions,
such as governments and media as exemplified by
Weaver, Trevio and Cochran. Going a step further
Wartick and Cochran state that business exists at the
pleasure of society. This means that business has
certain obligations towards society as part of a social
contract. The details of this contract are subject to
change and differ for every situation, but the basic

notion is that businesses gain legitimacy through this
social contract. Their actions are brought into
conformity with the objectives of society through this
(implied or explicit) social contract Fox, Wartick and
Cochran. Wood translates this understanding as
business and society being interwoven and therefore,
society has certain expectations for appropriate
business behaviour and outcomes. Altogether the
different views on the specific role of business in
society can be summed up as business having a moral
obligation towards society and society having certain
expectations from business.
Another point made for Altruistic motivation of CSR is
that, as the two most powerful institutions, business
and government are obliged to address and rectify
problems of social concern ("power begets
responsibility."). They say corporate philanthropy is a
preferable substitute for government welfare, or at
least is necessary in the face of deficient public
welfare, which, indeed, is partially due to corporate
opposition to higher taxes a la Benkert. The public is
apparently transferring its expectations for solving
social problems from failed Great Society
government programs to business (Carroll, 2001).
This is reminiscent of the conservative economic
opposition to John Maynard Keynes on the question of
promoting aggregate demand through artificial
employment and public works even at the cost of
deficit financing.
In short, what distinguishes Strategic CSR and
Altruistic CSR is the motive of the managers adopting
CSR. If the motive is gaining some kind of advantage
for the company, it is strategic CSR and absence of any
such motive would classify the CSR programme as
altruistic CSR. On the philosophical plane the former
is akin to Jeremy Bentham's utilitarianism or what is
in it for me? and summum bonum of Stanley Jevons
and John Stuart Mill or the greatest good of the
greatest number. The latter takes its cue from
Immanuel Kant's categorical imperative or some
things are right or wrong irrespective of the personae
and the consequences involved or Georg Hegel's
minority of one or when an moral issue is at stake the
minority of one is enough to carry the day. The praxis
view takes the position that if a person can discuss
his or her decision openly then such a decision is

ethical. When a strategic CSR initiative is portrayed
as an altruistic business decision then we are in the
realm of Praxis.
The importance of the distinction is thrown into relief
when we see the work of Boatright who states that
the wisdom of strategic CSR is seen in the fact that
some of the most successful corporations are also
among the most socially responsible. Carroll argues
that due to belt tightening and increased pressure on
accountability for expenditures, the trend will likely
be towards funding those good works expected to
financially benefit the companies. Lantos while
making a case or strategic CSR argues that in view of
the rising public expectations for corporate good
works, returns to strategic CSR should rise.
RE-DEFINING CSR
Based on the above position taken, the essential
elements that now re-define the form and the
content of CSR in our considered opinion may be
identified as under
1.
Sufficient focus by the enterprise on its

contribution to the welfare of
society.
2.
The relationship with its stakeholders and

society at large.
3.
Voluntary nature
Scholars whose works were reviewed in the previous

section further strengthen these three points that
emanate from the accepted working definition. The
first point emphasizes the company's contribution to
the welfare of society. This element is closely related
to the 'values and objective of society' and 'benefit
society' stressed most of the definitions above a la
Bowen, Carroll, and Wood. The second point stresses
the importance of stakeholder management, which
has been stressed by Freeman, Donaldson and Preston
and Jones. The third point covers the voluntary
nature of CSR has been stressed upon by Lantos and
Jamali. Based on the same we can thus re-define CSR :
CSR is a voluntary verifiable continuing

commitment by business to contribute to
development of the quality of life of the

stakeholders and society at large.
Strategic CSR is defined as CSR undertaken

with the motive of gaining some kind of
advantage for the corporation.
Altruistic CSR is defined as CSR undertaken

without any motive or regard for its
implications on Organisational profitability
either short-term or long-term.
As the battle for competition intensifies every

company will be forced to leverage its core
competency to gain competitive advantage. In this
regard the perceived value of the corporate brand
is very crucial. This brand image, reputation and
recall have a direct impact on company profits as well
as its market expansion plans. Hence, it is
understandable that CSR could be used strategically
to gain competitive advantage. There is accordingly
evidence of a palpable shift in CSR paradigm from
Altruistic CSR to Strategic CSR that is apparent in both
industry practices and academic literature.
This shift in the movement involving integration and
involvement of business with society is evident not
just in the academic literature but also in industry
practices world over and especially in India, which
along with China will decide the future of CSR a la
Nelson. The reason and the rationality for positing our
argument is thus strengthened.
DYNAMICS OF THE SHIFT
The shift is prominently observable and appears to be
irreversible on account of the support it has gained on
account of the following :
1) LEGITIMACY
Strategic CSR helps companies see CSR not as a cost
but as a strategic investment which contributes to
their profitability directly, that way helps gain
legitimacy for corporations not only from community
and other stakeholders' point of view but also from
the point of view of shareholders. This grants them
legitimacy from the agency theory perspective also.
This form of CSR would also make the neoclassical
economists opposing CSR on the grounds of the
notions such as the free market, economic efficiency,

and profit maximization
of CSR.
REFERENCES
2) SUSTAINABILITY
For CSR to be successful it has to be sustainable. By
linking the CSR with the core corporate objective
strategic CSR not only improves the probability of its
success but also makes it sustainable.
Bangoli, M. and S. G. Watts (2003), 'Selling to Socially Responsible

Consumers: Competition and the Private Provision of Public Goods', Journal
of Economics and Management Strategy, 12-3.
Baron, David. (2001): 'Private politics, corporate social responsibility and
integrated strategy' Journal of Economics and Management Strategy, 10.
Boatright, J. R. (1999), 'Ethics and the Conduct of Business', Third Edition,
Prentice Hall, Upper, Saddle River, N.J.
3) EFFICIENCY AND EFFECTIVENESS
Bornstein, Morris (1989): Comparative Economic Systems: models and cases,

Irwin, Homewood Illinois.
Integration of CSR with business helps CSR to attain

high levels of efficiency and effectiveness and that
way promises better performance on the TBL of
people, profit and planet .
Bowen, H. R.(1953), Social Responsibilities of the Businessman Harper and

Row, New York.
From a social work perspective therefore we need to

look at CSR differently from the usual altruistic /
strategic dichotomy. This is because the area of
operations and focus of inquiry in social work is
boundless whereas in CSR it is to an extent regulated
by both the corporate ethos and the social
environment. It is therefore imperative for us to look
at CSR from an essential ethical perspective rather
than depend on the strategic-altruistic dichotomy.
This is because pure altruism is not at all devoid of
strategy and more often than not there is a hidden
(marketing or finance) perspective. This paper charts
a path towards a new paradigm and a new focus of
inquiry.
CONCLUSION
Given the apparent conceptual fuzziness about what
CSR actually means and entails we first reviewed
dominant literature on the subject. Then we
concretised the views by stating them succinctly so
that the definition could be logically arrived at. We
defined CSR and delineated the two approaches to
CSR (altruistic and strategic). Viewing it as a
continuum and explaining as an evolutionary process
we demonstrated first through literature and then
through industry examples why and how there was a
strategic shift of emphasis on CSR motivations for
business. In the process we re-defined the businesssociety interface and explained how and why the
paradigm had shifted from 1953 to 2007. Finally we
gave an indication of the new direction for academic
inquiry based on ethics on the very important reality
Baranco M and Rodrigues L (2007), Positioning the stakeholder theory within

the context of Corporate Social Responsibility, Electronic Journal of Business
Ethics and Organisational Studies,, Vol.12 No 1.
Brown, T.J., and P.A. Dacin (1997), 'The Company and the Product: Corporate
Associations and Consumer Product Responses', Journal of Marketing 61
(January).
Capron, M. (2003), as quoted in Baranco M and Rodrigues L (2007), Positioning
the stakeholder theory within the context of Corporate Social Responsibility,
Electronic Journal of Business Ethics and Organisational Studies,,,Vol.12 No
1.
Carroll, A. B. (1991),'The Pyramid of Corporate Social Responsibility:
Towards the Moral Management of Organizational Stakeholders', Business
Horizons, 34, (4).
Carroll, A. B. (1999), 'Corporate Social Responsibility. Evolution of
Definitional Construct', Business and Society 38(3).
Carroll, A. B. (2001), 'Ethical Challenges for Business in the New Millennium:
Corporate Social Responsibility and Models of Management Morality in
Business Ethics 01/02, Richardson, J.E.(Ed)., Dushkin/McGraw-Hill,
Guilford, CT.
Clarkson, M.E (1995), 'A Stakeholder Framework for analysing and evaluating
Corporate Social Performance', Academy of Management Review, 20.
Davis, K. (1973), 'The Case For and Against Business Assumption of Social
Responsibilities', Academy of Management Journal 16.
Davis, K. (1983),' An expanded view of the social responsibility of Business,'in
Beachanp, T. L. and Bowie , N. E., Ethical theory and Business, Second
Edition, Prentice-Hall, Inc., Englewood Cliffs, N.
Donaldson, T. and L. E. Preston (1995), 'The Stakeholder Theory of the
Corporation: Concepts, Evidence, and Implications', Academy of
Management Review 20(1)
Elkington, J. (1999). Cannibals with Forks. The Triple Bottom Line of 21st
Century Business, Oxford: Capstone.
Fombrun, C., and M. Shanley (1990), 'What's in a Name? Reputation Building
and Corporate Strategy', Academy of Management Journal 33.
Freeman, R. E. (1984), Strategic Management: A Stakeholder Approach
Pitman, Boston.
Friedman, M. (1970), 'The Social Responsibility of Business is to Increase its
Profits', New York Times Magazine, September 13th.
Garriga, E., and Mel, D. (2004), 'Corporate Social Responsibility Theories:
Mapping the Territory', Journal of Business Ethics, 53, ().
Graafland, J. J. (2004), 'Collusion, Reputation Damage and Interest in Code
of Conduct: The Case of a Dutch Construction Company', Business Ethics: A
European Review 13.
Graafland, J. J. and Bert van de Ven (2006), 'Strategic and Moral Motivation
for Corporate Social Responsibility', Journal of Corporate Governance 22,

Summer.
Environmental Performance and Profitability', Academy of Management

Journal, 40.
Harrison, J. S. and R.E.Freeman (1999), 'Stakeholders, Social Responsibility

and Performance: Empirical Evidence and Theoretical Perspectives',
Academy of Management Journal, 42, (5).
Sadri S and Jayashree S (2010): Business Ethics and Corporate Governance:

towards organisational excellence, Excel Books, New Delhi
Heredia, Ruth (1997): The Amul India Story, Tata McGraw Hill, New Delhi.
Hillman, A. J. and Keim, G. D. (2001) ,Shareholder value, stakeholder
management, and social issues: what's the bottom line?, Strategic
Management Journal, Vol. 22 No. 2.
Jamali, D. (2007), 'The case for Strategic Corporate Social Responsibility in
Developing Countries', Business and Society Review, 112:1.
Jawahar, I. M. and McLaughlin, G. L. (2001),Toward a Descriptive
Stakeholder Theory: An Organizational Life Cycle Approach, Academy of
Management Review, Vol. 26 No. 3.
Jayashree S, Sadri S and Dastoor D S (2008): The Theory and Practice of
Managerial Ethics, Jaico Books, Mumbai.
Jones, T. M. (1995), 'Instrumental Stakeholder Theory: A Synthesis of Ethics
and Economics', Academy of Management Review, 20, (2).
Jones, T. M., and A.C.Wicks (1999), 'Convergent Stakeholder Theory',
Academy of Management Review, 24, (2).
Jones,T. M.(1980), ' Corporate Social Responsibility Revisited , Redefined',
California Management Review, Vol.20, ( 2)
Karanjia, B. K. (1997), 'Godrej: A 100 years (1897-1997)' in two volumes,
Viking Penguin Books., New Delhi.
Klonoski, R. J. (1991), 'Foundational Considerations in the Corporate Social
Responsibility Debate', Business Horizons, 34, (4).
Lala, R. M. (1992), ' Beyond the Last Blue Mountain', Viking Penguin Books,
New Delhi.
Lantos, Geoffrey P. (2001), 'The boundaries of strategic corporate social
responsibility', Journal of Consumer Marketing, 18 (7).
Maignan, I. and Ralston, D. A. (2002), Corporate Social Responsibility in
Europe and the U.S.: Insights from Businesses' Self-presentations, Journal of
International Business Studies, Vol. 33 No.3.
Manne H and Wallich, H (1972), The Modern Corporation and Social
Responsibility, American Enterprise Institute for Public Policy Research,
Washington D C.
Matten, D. and Crane, A. 2005, Corporate citizenship: Toward an extended
theoretical conceptualization. Academy of Management Review, 30.
McWilliams, A. and D. Siegel (2001), 'Corporate social responsibility: a theory
of the firm Perspective', Academy of Management Review, 26
Miles, M. P., and Covin, J. G. (2000), 'Environmental Marketing: A Source of
Reputational, Competitive, and Financial Advantage', Journal of Business
Ethics, 23.
Mitchell, R.K., Agle, B.R. & Wood, D.J. 1997, Towards a theory of stakeholder
identification and salience: Defining the principle of who and what really
counts. Academy of Management Review, 22:
Munilla L S and Miles, M P (2005) The Corporate Social Responsibility
Continuum as a Component of Stakeholder Theory, Business and Society
Review, Vol. 110 No. 4
Pigou, A C (1932): The Economics of Welfare, London, Cambridge University
Press.
Porter, M. E. and M. R. Kramer (2002), 'The Competitive Advantage of
Corporate Philanthropy', Harvard Business Review, 80(12).
Quester, P. and B.Thompson (2001), 'Advertising and Promotion Leverage on
Arts Sponsorship Effectiveness', Journal of Advertising Research, 41(1).
Robertson, D. C., and N. Nicholson (1996), 'Expressions of Corporate Social
Responsibilities in U.K. firms', Journal of Business Ethics, 15.
Russo, M V and Fouts, P A (1997), 'A Resource Based Perspective on Corporate
Sadri S, Guha B S and Jayashree S (2010): Managing for Excellence, Excel

Books, New Delhi
Smith, Adam (1966): The Theory of Moral Sentiments, New York, Kell.
Smith, Adam (1971): An Inquiry into the Nature and Causes of the Wealth of
Nations, London, Everyman.
Sunder P. (2000), 'Beyond Business: From Merchant Charity to Corporate
Social Responsibility. Indian Business Philanthropy through the Ages', Tata
McGraw Hill Publishing Company, New Delhi.
Turban, D.B., and D.W. Greening (1996): 'Corporate Social Performance and
Organizational Attractiveness to Prospective Employees', Academy of
Management Journal 40.3.
Van Oosterhout, J., and P.P.M.A.R. Huegens (2006): 'Much Ado About Nothing:
A conceptual Critique of CSR', Report Series, Research in Management,
Erasmus Research Institute of Management.
Vaughn, S. (1999), Firms nd long-term rewards in doing good. In J.
E.Richardson (ed.), Business Ethics 99/00 Guilford, CT: Dushkin/McGrawHill.
Votaw, D (1972),' Genius Became rare: A comment on the Doctrine of Social
Responsibility Pt1', California Management Review, 15(2).
Waddock, S and Graves, S (1997), 'The Corporate Social Performance
Financial Performance Link', Strategic Management Journal, 18.
Walton, C. (1967). Corporate Social Responsibilities. Belmont, CA:
Wadsworth.
Wartick, S. L. and P. L. Cochran, P. L. (1985): 'The Evolution of the Corporate
Social Performance Model', Academy of Management Review, 10, (4).
Weaver, G. R., L.K.Trevio, and P.L.Cochran (1999), 'Integrated and
Decoupled Corporate Social Performance: Management Commitments,
external Pressures and Corporate Ethics Practices', Academy of Management
Journal, 42, (5).
Windsor D (2001),The future of Corporate Social Responsibility, The
International Journal of Organisational Analysis, Vol. 9 No. 3
Windsor D (2001), 'Corporate Social Responsibility: Three Key Approaches',
Journal of Management Studies, 43:1, January
Wood, D. J.(1991), 'Corporate Social Performance Revisited', Academy of
Management Review 16(4).
FINANCE
MANAGEMENT
FINANCIAL FLEXIBILITY
AND OPERATIONAL RISK
MANAGEMENT IN BANKS
PROF. (DR.) M.D. MOHITE

PROFESSOR (EMERITUS),
DR. D.Y. PATIL INSTITUTE OF
MANAGEMENT AND RESEARCH,
PIMPRI, PUNE
very country, on the global planet has ultimate aim of

development, irrespective of system of development is
to achieve maximum human welfare. For this a country
has to make huge productive investments, in leading sectors in
the economy. The commercial banks are the biggest financial
intermediaries in the economy. The banks play a vital role in
collecting the scattered savings of households, corporate savings
and government savings. These savings are channelized as
loanable funds into productive investment in the economy. Thus
banks are monetary blood banks for promoting sustainable
development in the economy. Therefore, operational financial
flexibility is a key issue in determining their efficiency,
productivity and profitability.
The commercial banks had relatively high financial flexibility
during 1947 to 1968. During this period of time, the banks were
owned and managed by private sector. The banks had flexibility
in pricing their assets and liabilities, assets allocations, branch
expansion customers mix and market segmentation. As a result
of financial flexibility banks had accumulated substantial
profits.
Our government in 1969, nationalized the fourteen leading
commercial banks. Since nationalization of banks, they have lost
their financial flexibility. The banks had no financial flexibility in
pricing their assets, allocation of assets, branch expansion
customers mix and market segmentations. Even in certain
segments of priority sector lending bank funds were provided
under concessional finance / differential rate of interest scheme
below the cost of funds. The government also utilized substantial
bank funds for development at low rate of interest. As

a consequence of lack of financial flexibility to the
banks, they had serious problems of low productivity,
inefficiency low profitability and losses.
In 1990 our government realized that the growing
inefficiencies, low productivity and losses in public
sector enterprises including banks were due to the
model of growth founded on public sector. Therefore,
in 1991, government introduced the economic
reforms viz liberalization, privatization and
globalization (LPG). By liberalization all controls
were removed. The model of growth built on public
sector has been dismantled and Indian economy is
integrated to global economy. Thus Indian economy is
geared to the market mechanism. As a result of
market economy, the management is sensitized for
quality, productivity, cost and customer service.
The foreign banks entered into Indian financial
market for business. These banks have financial
flexibility, new products profiles, modern technology
based banking operations, aggressive customer focus
banking and customer care and customer service. In
order to make our banks comparable and competitive
with foreign banks the financial flexibility to the
banks was advocated. Therefore government
appointed the committee on financial sector reforms,
chaired by Narsimham. The Narsimham Committee
submitted its report in 1991 and mainly focused its
recommendations on financial flexibility and
autonomy to the banks.
The Committee observed that lack of financial
flexibility to the banks due to over regulation and
excessive supervision resulted into deterioration in
the health and asset quality of the banking system as
indicated by the large sickness in the banks, bad and
doubtful debts, losses etc.
Reserve Bank of India (RBI), the statutory regularity
and supervisory authority has progressively
introduced the banking sector reforms recommended
by the Narsimham Committee to provide financial
flexibility and autonomy to the banks. RBI has also
directed to the banks to use modern information

technology for financial inclusion in the country.
The growing use of information technology, in banks
has provided maximum financial flexibility for
complex and huge volume of business, large number
of heterogeneous customers, vast geographical
areas, complex & multiple new products and services
profiles, different types of accounts, and emerging
new business in global market. The growing use of
information technology in banks has helped them to
reduce their banking cost, cost of human resources
and increase in productivity.
The information technology has become the major
input mechanism for banking operations. The vast
technology infrastructure, process, systems & people
have become the critical key segments of banking
operations. The failure of people, systems and
process will lead to failure in banking operations and
thereby a failure of an organization. Therefore, banks
are subject to an operational risk because of internal
failure in its operations. The failure of internal
operations controls resulted into sensational Harshad
Mehta scam in the Banking industry in our country.
The operational risk relates to information assets.
These are tangible assets comprising of hardware,
minicomputers, printers, printed materials,
programmers, furniture etc. The assets that are
conceptual in nature are software, data, information,
policies and procedures.
The operational risk management is also subject to
the external and internal threats. Therefore, the
Operational Risk Management (ORM) has to assess the
risk in terms of its occurrence, and magnitude of loss.
This will help the operational risk management to
design the strategy to monitor the risk. The
operational risk management can resort to the
strategy of risk elimination, reduction, retention and
transfer.
The exhibit I shows the structure of operational risk
management.
The Basel Committee on Banking Supervision has done

the pioneering work in the areas of risk management
for promoting the international banking on sound
line. The Basel Committee comprising of the
Governors of central banks of ten countries was
formed in 1975. The Basel Committee produced the
first document on 'International Convergence of
Capital Standards', in July 1988, for creating safety
and stability of global commercial banking. The Basel
Committee in June 2004 published the second accord.
The Basel Committee Accord Second has classified
the risk into three categories viz, Credit risk, Market

risk and Operational risk.
The second Basel Committee Accord defined the
operational risk as the risk of loss resulting from
inadequate or failure of internal processes, people
and system or from external events. In order to create
a structured framework of risk management in banks,
the Basel Committee has innovated three foundation
pillars of risk management system, which is exhibited
in the following exhibit II.
B. STANDARDIZED APPROACH (SA)

Under this approach the major business activities of
the bank is divided into eight portfolios viz.
I.
Corporate Finance
ii.
Trading and Sales
iii.
Retail Banking
iv.
Commercial Banking
v.
Payment and Settlement
vi.
Agency Services
OPERATIONAL RISK MEASUREMENT MODEL
vii.
Asset Management
The operational risk measurement model is briefly

explained as under
viii.
Retail Brokerage
1. SCALAR MODEL
The key business variables are identified. The
operational risk is calculated as a percentage of these
key business variables. The Basel Committee has
suggested two approaches viz.
A. BASIC INDICATOR APPROACH (BIA)
The capital calculated for operational risk is equal to
the average of previous three years of a fixed
percentage of positive annual gross income. The same
can be put in the form of equation as under :
The capital charge for each business portfolio is

separately calculated by respective percentage. The
total capital is calculated as the three year average of
the simple summation of the regulatory capital
charges across each business line in the year.
2. STATISTICAL APPROACHES
The statistical models are used in this method. The
loss data of past years is an input of building
statistical models. The statistical tools like 'Time
Series Analysis' of moving average method can be used
for this purpose. The past years loss data is arranged
in a chronological order. It becomes a time series data
of loss. It shows the trend behavior of loss. Based on
trend behavior of the variable viz loss, the future
trend behavior of loss can be illustrated with the help
of diagram of freehand method.
credit risk and liquidity risk. Now, the expansion in

scale of banking operations due growing retail
banking, investment banking, electronic banking,
new product profiles and global banking have shifted
to high-tech banking. The digital revolution has
influenced the revolution in banking operations. The
banking operations are now information technology
oriented. The fabrics of modern IT have embraced the
fabrics of baking operations to deal with mass and
diversified banking business at lowest cost, high
productivity performance and high profitability
through modern IT is subject to an operational risk.
3. FUZZY LOGIC
In this method, sensitivity risk variables are identified
at each level of an organization hierarchy. Such
sensitive variables are aggregated at the each level of
an organization' hierarchy. The ranked risk variables
show their significance in terms of their hierarchy
level in the organization. The key risk indicators are
identified. Then the scaling technique is used to know
their key influences. This technique focus on the key
risk drives in the hierarchy structure of an
organization.
4. CAUSAL MODEL
In this model, causes and effects of operational losses
are ascertained. The operational losses occur due to
an adverse influence of certain factors. Such factors
can be identified and significance efforts of these
factors can be checked.
CONCLUSION
During 1947 to 1968 banks had Financial Flexibility in
terms of pricing of assets and liabilities, allocation of
assets, customer mix and branch expansion. Since
1969 to 1990, banks lacked financial flexibility, due to
over regulation & supervision which resulted into
deterioration in their health and assets quality.
The economy reforms and financial sector reforms
have influx a great deal of financial flexibility for the
banks.
The banks management is inherited to manage the
The Operational Risk Management (ORM) has to place

a focus driven attention on IT, software model &
operative personnel. The bank management should
install in a phase manner the suitable IT
infrastructure with the help of professional experts. A
task force of technically competent persons should be
deployed to monitor its maintenance and work
efficiency. A task force should also effectively
supervise its functioning.
In order to minimize the probability of operational
risk, the bank management should hire the services of
software experts for designing an appropriate
software model for the bank. The software model
should be designed on the principle of need base
approach. The software model should be prepared in
such a way that there is no possibility of lacuna in
banking operations. It must be full proof model.
The operational risk may arise because of operative
personnel. The operative personnel may be
inefficient, ignorant and inexperience. Therefore,
the bank management must recruit the persons who
possess the required knowledge, experience and
expertise of operating the modern technology.
The bank management should create a training
center for training and up grading the existing
operative skill and expertise. A proper feedback of
training is necessary to improve the existing training
input and system.
The operational risk can also outburst due to willful
act of operative personnel. To restrict such
operational risk, the proper procedure and rules
should be made effective along with an effective
supervision and control.

Finally, in an emerging scenario of global banking the
operational risk management is a new risk prone area
with its multi complexities. Moreover, reward and risk
are sensitively related. Therefore, risk management
must focus on risk inventory, risk synchronization, risk
reduction and risk diversification. Along with this risk
base audit (RBA) risk based supervision (RBS) and
effective internal control system are must for banking
operations for monitoring the operational risk and
ensuring stability.
REFERENCES
Rao N K: The New Basel Accord, ICFAI University Press 2004.
Apte Narendra M: Corporate Governance, Risk Management and Internal
Audit, Journal of Institute of Chartered Accountant of India, Vol 53, No 5,
November 2004.
Banks Wake Up Risk Management, The Economic Times, April 25, 2001.
Dr Chitta Ranjan Sarkar: Managing Risk, A challenging task, Journal of
Institute of Chartered Accountant of India, Vol 53, No 5, November 2004.
IBA Bulletin, Operational Risk Management, Vol XXIV, No 8, August 2002.
Implementation of Basel II, An Indian Perspective by Kishor J. Udeshi, RBI
Bulletin, July 2004.
Managing High tech Risks in Banks, The Economic Times June 23, 1999.
Sharma N & Rajashekar : Operational Risk Management, IBA Bulletin, Vol.
XXIV, No 8, August 2002.
Risk Management is Good Management : Canadian Treasurer, May / June
2001.
Risk Management Tailoring Risk and Return, Chartered Financial Analyst,
Many 2001.
Risk Management in Banks, How to shield yourself,- this paper was presented
at the conference of Executive Director of Public Sector Banks, March 12-13,
2001, NIBM, Pune.
Raddar Datt & K P M Sundharam : Indian Economy, S Chand, 2009.
FINANCE
MANAGEMENT
VALUE CREATION IN INDIAN

BANKING INDUSTRY : AN ANALYSIS
DR. R. SATISH
ASST. PROFESSOR,
SRR ENGINEERING COLLEGE, CHENNAI
M. DANIEL RAJKUMAR
ST. MARYS SCHOOL OF MANAGEMENT
STUDIES, CHENNAI
INTRODUCTION
n business schools, we get to learn the various measures

adopted by analysts to gauge the performance of banks and
are able to fathom abbreviations like EPS, ROA and ROF but
many of us are not comfortable with these matrices rather a set
of new value-based measures like CVA, SVA, CFROI, EVA have
emerged on the screen. Out of these EVA has emerged as a clear
cut winner to these traditional accounting measures EPS, ROA,
ROF, etc. do not correlate well with the shareholder value
creation. On the contrary, EVA offers a consistent approach to
setting goals and measuring performance, communicating with
investors, evaluating strategies and allocating capital. EVA as a
value-based performance metric seeks to measure the periodic
performance in terms of change in value. Maximizing EVA means
the same as maximizing long-term yield on shareholder's
investment. It is the measure that captures the true economic
profit of the organization. For measuring the bank's financial
performance, there are traditional accounting profitability
measures and shareholders value based measures like EVA and
MVA.
IMPORTANCE OF THE BANKING INDUSTRY
The banking industry in India is in the midst of a transformation,
thanks to the economic liberalization of the country, which has
changed the business environment in the country. During the
pre-liberalization period, the industry was merely focusing on
deposit mobilization and branch expansion. Based on the
recommendations of the Narasimhan committee, the
Government of India started diluting its stakeholder ship in
public sector banks. Banks have been asked to

maintain a minimum capital adequacy ratio and make
provision for Non-Performing Assets [NPAs]. The
sector has become very competitive with the entry of
many private and foreign sector banks. The face of
banking is changing rapidly. Banks are trying to trim
costs but have achieved limited success because of
fixed overheads. There is a need to reduce
transaction costs and pass on a part of the savings to
customers by way of lower service charges and lower
interest charges. This will require tremendous efforts
in the area of technology and for banks to build
capabilities to handle much bigger volumes. Banking
sector reforms have improved the profitability,
productivity and efficiency of banks, but, in the days
ahead, banks will have to prepare themselves to face
new challenges.
Indian Banking has seen many changes in the last
decade like imposition of prudential standards,
greater competition among banks, entry of new
private banks, etc. This paradigm shift in the Indian
banking sector can be seen in terms of two
dimensions: One relates to operational aspect
especially performance and risk-management system
and the second dimension relates to structural and
external environment or exogenous aspects. Is
evaluating Indian bank's performance a rather
straight forward issue? The answer is no. One might
say that like a corporate, even banks can be judged
from the behavior of their stock prices. However, as
bank stocks have not been very active on exchanges,
barring few on few occasions, should we conclude
that Indian banks have by and large failed to add
values to their shareholders' wealth. The answer is
once again no as one needs to evaluate private and
public sector banks in a more dynamic manner than
just looking at their stock prices, non-performing
assets (NPAs), C/D ratios and others. Some may also
argue that the general slow down in lending by banks
and their eternal problem of recovery of non
performing assets (NPAs) has led to the sufferings of
Indian banks. The liberalization of the finance sector
in India is exposing Indian Banks to a new economic
environment that is characterized by increased
competition and new regulatory requirements. Indian
and foreign banks are exploring growth opportunities
in India by introducing new products for different
customer segments, many of which were not

conventionally viewed as lucrative customers for the
banking industry. Many Indian banks have, in the last
ten years, witnessed new shareholders. In general,
the performance of the banks may be viewed on three
dimensions namely structural, operational and
efficiency factors as suggested by Indian Banking
Association.
LITERATURE REVIEW
Tully (1993) has confirmed that there is no tricky
situation about the technique through which the EVA
can be augmented. It is a basic measure of return on
capital and there are three ways to increase it: Earn
more profit without using more capital, Use less
capital, and Invest capital in high return projects.
Jain (1994) has argued that the value added
statements has certain advantages like comparison of
performance, productivity measurement, resource
allocation and incentive schemes for employees. The
value added approach shows hoe the corporate
quiche has been alienated among various
contributors of value.
Lehn and Makhija (1996) affirm that EVA and Market
Value Added (MVA) are increasingly being eyed as
alternative measures of business performance and
strategic development. Despite the attention,
however, the empirical research has been devoted to
these two metrics. To provide clarifications on the
subject, a study, which examines the effectiveness of
EVA and MVA as measures of performance, as signals of
strategic development was conducted. They were
found to be significantly correlated with stock price
performance and inversely related to turnover. Firms
having greater focus in their business activities had
higher MVA than less focused counterparts.
Banerjee (1997) has conducted an empirical
research to find the superiority of EVA over other
traditional financial performance measures. Ten
industries have been chosen and each industry is
represented by four/five companies. ROI and EVA has
been calculated for sample companies and a
comparison of both has been undertaken, showing the
superiority of EVA over ROI. Indian companies are
gradually recognizing the importance of EVA. Some of
such companies are Ranbaxy Laboratories, Samtel

India Ltd. And Infosys Technologies Ltd.
Uyemura (1997) observed that over the last 20 years,
bankers have toiled with a variety of risk
management and profit concepts, such as matchedmaturity funds transfer pricing, duration analysis and
activity based cost accounting. Today, the interest
has developed in value-at-risk (VAR) capital
allocations and risk adjusted return on capital. Such
tools are important to understand and implement
when analyzing specific transitions; however, a top
down approach be the best choice for portfolios or
lines of business. The article describes a 'top-down'
approach to risk management- easily understood and
simpler to implement and lower in cost than
traditional approaches by using economic value
added (EVA) concept.
Thenmozhie (1999) explained the concept of EVA
and compared it with some other traditional measure
of corporate performance viz. ROI, EPS, RONW, ROE,
ROCE, etc. He used the coefficient of determination
to demonstrate that the traditional measures do not
reflect the real value of the shareholders, and thus
EVA has to be taken into account to measure of the
value of shareholders' wealth. She has also described
the concept of EVA in the Indian scenario with specific
reference to companies like NIIT, Hindustan Lever and
ITC.
performance of banks from accounting profits to

economic profits and shareholder wealth creation.
The study has been restricted to 12 commercial banks
consisting of 4 public and 8 private sector banks. The
period covered under the study is three years starting
from 1995-96 to 1997-98. Beta has been calculated on
the basis of daily stock price data with Bombay Stock
Exchanges BSE 200 index returns during January 1,
1997 to March 31, 1998 as the proxy for the market
returns. The study shows that the performance of the
Indian banks as measured by EVA is not very
satisfactory. The results of the study reveal that the
commercial banks under consideration have not
created any positive EVA due to: (a) banks could be
over-capitalized and (b) returns are very poor from
banking business. It also suggests that bank should
improve and strengthen their credit assessment
technique and monitoring mechanism to bring down
the non-performing assets so as to improve the
earning capacity.
Prakash Singh [2007] discussed banks profiles to
demonstrate a direct correlation between the
investment in stakeholder relationships and
corporate performance. EVA and MVA tell what the
institution is doing with investor's hard earned money.
He has examined how to evaluate banks performance
and also see which Indian bank have been able to
create or destroy shareholders wealth since 1998-99.
Parasuram (2000) discussed the EVA position of 14

major public sector banks, 7 new private sector
banks, 5 old private sector banks and 2 foreign banks.
Among the strength indicators, Deposit, return on
assets, interest income as a percentage of total
assets, interest yield spread as a percentage of total
assets and EVA were considered. The study concludes
that EVA is an Important measure to judge a bank
performance in view of current scenario of banks. EVA
has been found to have a high degree of correlation
with ROA but not with any of the other
measures.
It signifies a fact that banks realize the importance of
measuring EVA measuring separately even if they do
well on other fields.
Thampy and Beheli (2001) studied the economic
profits of commercial banks in the public and private
sectors during 1990s. It also moves the benchmark of
To examine the relationship between

Economic Value Added and Market Value
added in the Indian Banking Industry.
To analyze the trend and growth of Economic

Value Added and Market Value Added.
To assess the level of Employee productivity

in Indian Banking Sector.
RESEARCH METHODOLOGY
SOURCES OF DATA
This study is based on secondary data. The required
financial data is collected from the electronic
database PROWESS, provided by Centre for
Monitoring Indian Economy (CMIE), Mumbai. Apart
from this, we have used the published annual reports

of banks wherever required.
et.al (2001), sen (2003)]. These show 5.93%, 6.2%,

7.4%, 6.4%, 6.1% and 6.3% for years 2003-04, 2004-05,
2005-06, 2006-07, 2007-08, 2008-09 respectively.
SAMPLE DESIGN
BETA
The sample size of the present study is 39 banks from
the Indian Banking Industry. The study takes all the
banks that are listed on Bombay Stock Exchange BSESENSEX. Further, we eliminate the banks which have
merged with other bank. Finally, the sample
comprises of top 39 banks which includes 22 public
sector banks and 17 private sector banks were
selected as sample banks by considering the
availability of financial data for the study period
2003-04 to 2008-09.
COMPUTATION OF EVA
The Equity Approach is more suited to banks
compared to the entity approach since a big part of
banking business is liability management. The deposit
franchise given by the banking license gives the bank
the potential to create value on the liability side of its
balance sheet. The liability side of the banks balance
sheet is part of the business operations of the bank,
and it is not pure financing. This makes the equity
approach more appropriate In the case of banks, the
equity approach is recommended for calculating EVA
is : EVA= NOPAT(Capital * Cost of Equity)
Where, NOPAT is Net operating profit after tax.
Capital includes equity capital and retained earnings.
COST OF EQUITY
Cost of equity is the minimum rate of return, which
has to be made from an equity-financed project, in
order to maintain the present wealth of the
shareholders unaffected. It can be computed based
on Capital Asset Pricing Model (CAPM). According to
CAPM, Cost of Equity = Risk-free rate + (Beta * Market
Premium)
RISK-FREE RATE
It is the rate of return from securities, which are free
from any type of risk. Generally, government - backed
securities are considered as risk - free securities. So,
the yield on the 364-day Government of India
Treasury Bill is considered as risk-free rate [Thampy
It is the measure of the volatility of a stock in relation

to the market. It is the index of systematic risk. Beta
for the each stock was calculated based on the daily
stock price with the Bombay Stock Exchange's sensex
returns as the proxy for the market returns. Beta was
calculated by using the data from the period April 1,
2003 to March 31, 2009.
MARKET PREMIUM
Market premium is the excess return offered by the
market over the risk-free rate.
EMPLOYEE PRODUCTIVITY
Employee productivity can be defined as the total
quantity of output/result generated by the bank
during a specific period divided by the number of
employees. Business Per Employee and Profit Per
Employee are the two variables under employee
productivity used for this study.
CORRELATION
The relationship of the EVA with NPAs and with
employee productivity is computed with the help of
simple correlation. Correlation coefficient lies
between -1 and +1. If the correlation coefficient is
negative, the relationship between the variables is
also negative and vice versa. A coefficient of zero
implies no relationship. (It is to be noted that the
researcher has considered only six years for the study,
which may affect the accuracy of correlation test.)
ECONOMIC VALUE ADDED : TREND & GROWTH
Thampy and Baheti have followed a method which
was proposed by Tom Copeland , Tim Koller in 1996.
Parasuraman also proposes this equity approach
method for bank valuation. In equity approach, EVA =
Adjusted Net Profit (Capital x Cost of Equity) The
equity approach is more suited to banks compared to
the entity approach since a big part of banking
business is liability management, that is raising
deposits at rates below the opportunity cost of

capital. The deposit franchise given by the banking
license gives the bank the potential to create value on
the liability side of its balance sheet. The liability side
of the banks balance sheet is part of the business
operations of the bank, and it is not pure financing.
This makes the equity approach the more
appropriate.
The results of the study give a picture of positive
EVAs, contrary to the previous study. This clearly
shows that Indian banks are improving their
performance not only in making profits but also in
EVAs. Table 1 brings out the sector-wise computation
of EVA. It is clear from the table that the private
sector has not fulfilled the public expectations in
terms of average EVA generated during 2002-03 to
2007-08 where it registered Rs. 358.52 crores. On the
contrary to this, the public sector has shown high
sense of financial discipline by recording average EVA
of Rs.767.34 crores during the same period. The other
figures in the table tell the similar story where the
correlation coefficient is 0.119, which is positive, but
very low degree level and skewness values are
positively tilted in both the sectors. While testing
through the hypothesis, it is observed that the EVA
performance level in both the sectors has not been
significantly different if tested at 5% level of
significance.
EVA-based frequencies distribution is shown by Table
2. It is clear from the table that about fifty four
percent of the total sample banks are reporting
negative EVA throughout the period and another forty
one percent are generating positive EVA but it has
been less than Rs. 500 crores. About five percent of
sample banks reported an EVA of over Rs. 500 crores.
Table 3 presents the sector-wise Aggregate EVA of
Sample banks. Public sector has been able to come up
to the expectations of the public at large when
compared to the private sector banks.
Table 4 brings out the sector-wise statistical analysis
of EVA. It is clear from the table that the private
sector has not fulfilled the public expectations in
terms of average EVA generated during 2002-03 to

2007-08 where it registered Rs. 358.52 crores. On the
contrary to this, the public sector has shown high
sense of financial discipline by recording average EVA
of Rs.767.34 crores during the same period. The other
figures in the table tell the similar story where the
correlation coefficient is 0.119, which is positive, but
very low degree level and skewness values are
positively tilted in both the sectors. While testing
through the hypothesis, it is observed that the EVA
performance level in both the sectors has not been
significantly different if tested at 5% level of
significance.
Bank-wise statistical analysis is offered by Table 5
where it is interesting to observe that the number of
banks displaying the mean EVA and sum total of six
years EVA is thirty four which is quite contradict with
the results of Table 1. The values of range show the
volatility in EVA and that of standard deviation and
variance display variation scale from central
tendency and dispersion. Sixty-one percent banks
find their EVA positively skewed and Forty-three
percentages indicate positive kurtosis that indicated
longer tails.
EMPLOYEE PRODUCTIVITY
There is a clear positive relationship between EVA and
productivity. Employees of Indian Banks have become
more productive over the last few years. The average
business and profit per employee for Indian banks has
more than doubled in six years from 2003-04 to 200809. The improvement was due to business growth
outpacing. Private sector banks increased their
workforce by more than 110 percent during the study
period. The new-age private sector banks such as
ICICI, Axis Bank and YES Bank witnessed improvement
in their employee productivity in terms of both
business and profit. HDFC Bank, Kotak Mahindra Bank
and IndusInd Bank are the only banks which have
witnessed decline in their productivity over the
years. IDBI Bank, Corporation Bank and Oriental Bank
are the top three Public Sector Banks in terms of
productivity as shown in TABLE 7.
TABLE 1 : EVA OF SAMPLE BANKS
[Rs. in Crore ]
TABLE 2 EVA-BASED FREQUENCIES DISTRIBUTION OF SAMPLE BANKS
TABLE 3
SECTOR-WISE AGGREGATE EVA
[Rs. in Crore ]
TABLE 4 SECTOR-WISE STATISTICAL ANALYSIS OF EVA [Rs. in Crs]
MARKET VALUE ADDED : TREND & GROWTH

Market value added (MVA) is the excess of market
value of capital (both debt and equity) over the book
value of capital. If the MVA is positive, the bank has
created wealth for its shareholders. If the MVA is
negative, the bank has destroyed wealth for its

shareholders. The result of the trend and growth
analysis of MVA for Banking Industry is exhibited by
Table 6. MVA data is analyzed along with its primary
components Market capitalization and Net worth for
the selected banks during the study period.
TABLE 4 SECTOR-WISE STATISTICAL ANALYSIS OF EVA [Rs. in Crs]
TABLE 7 DETAILS OF EMPLOYEE PRODUCTIVITY
CONCLUSION
REFERENCES
Economic Value Added has become the order of the

day. Most of the Public and Private sector banks in our
country have already started looking at their portfolio
of services offered and what they should do in the
future for remaining competitive in the industry.
Shareholders Value is gaining an increased attention
as a criterion of business performance. All the banks
have no disagreement on the usefulness of the EVA.
However, many of the respondent banks still use
traditional accounting measures. Bank managers can
understand the intricacies in EVA, but seldom have
they succeeded in prevailing on the employees and
the need to adopt the EVA as a performance indicator
in order to achieve better results. We, however feel
that all this should not be a barrier to present more
reliable results. Along with the above
recommendations there should be environment of
acceptance of the concept among the shareholders,
employees, owners, management and other various
agencies. Then only this concept can hold its ground
in a sustainable manner especially in the context of
Indian Environment.
Bacidore, J.M.., J.A. Boquist, T.T. Milbourn and A.V. Thakor [1997 ] , The
Search for the Best Financial Performance , Financial Analyst Journal, Vol .
53 , No.3, pp.11-20.
Bao B and D.Bao [1998], Usefulness of Value Added and Abnormal Economic
Earnings: An Empirical Examination , Journal of Business Finance &
Accounting, Vol.25, No.1/2, pp. 251-64.
Grant, J.L. [1996], Foundations of EVA for Investment Managers, The
Journal of Portfolio Management, Vol.23, No.1, pp.41-48.
Madhu Sehrawat , Economic Value Added and Performance Measurement
, Deep and Deep Publications . (2009), Ch 8, pp.170-185.
O'Byrne, S.F. [1997] , EVA and Shareholder Return , Financial Practice and
Education , Vol.7, No.1, pp.50-54.
Parasuraman [2000], EVA- Its computation and impact on select banking
companies, The ICFAI Journal of Applied Finance, Vol.6, No.4 (October),
pp.14-30.
Singh and M.C.Garg , Economic Value Added in Indian Corporates, Deep
and Deep Publications, 2004, Ch 8 , pp. 261-273.
Stern Stewart & Co.[1997], The Stern Stewart Performance 1000:
Introduction and Documentation, Stern Stewart Management Services Inc.
Tully , S. [1993] , The Real key to Creating Wealth , Fortune, No.128, No.6,
pp.38-50.
Thampy Ashok and Baheti Rajiv [2001], EVA in Banks, The ICFAI Journal of
Applied Finance, Vol.7, No.1 (January), pp.44-55.
Uyemura, Kantor and Petit, EVA for Bank Value Creation, Risk Management
and Profitability Measurement, Journal of Applied Corporate Finance,
Vol.9, No.2, Summer, p.94.
Wood, A. Nicholas, Economic Value Added : Uses, Benefits and LimitationsA South African Perspective, Southern African Business Review, pp.1-12.
Young S. and Stephen F.O'Byrne, EVA and Value-Based Management,
York: McGraw-Hill publications, 2001, Ch-5, pp.161-179.
New
FINANCE
MANAGEMENT
WILL CHINESE YUAN BECOME

THE NEXT RESERVE CURRENCY?
PURNENDU MAITY
ANALYST,
CREDIT POINT E.COM, PUNE
EXECUTIVE SUMMARY
ub-prime crisis, European debt crisis, Fed's QE2 policy

consequently many observers conjecture is once again
rife that we are reaching the end of the era of dollar
dependency. Evidently next question is where will be the safe
heaven? Who will give the hope against all odds ? Given the sheer
size of economy and fierce growth rate spotlight is now on
Chinese Yuan. In another two decade years China is set to replace
the US as the world's largest economy. It is already the world's
largest exporter and will soon also be the largest trading nation.
Contrary to the US, the world's largest debtor, China is also a
large net external creditor, only trailing Japan. A close
parallelism from history in hand is that as once economically and
financially ascendant Dollar has replaced British Sterling
troubled by the bequest of two world wars; would this time
Redback will replace the Greenback in similar way ? China is
taking many incremental steps like more trade settlements in
Yuan, Currency Swap, and diversification of its reserves to
internationalize its currency. Along the way there are challenges
of growth with right monetary policy maneuver, exchange rate
stability, financial market and legal reforms which requires
considerable time in coming years. While Pound, Yen are not so
strong currency given their economic and financial size and
structure but Euro is still in the race. Also technically speaking
IMF SDR might be another viable alternative. As the world is
becoming more multi-polar there is less conclusive possibility of
actually Yuan becoming single monopoly reserve currency like
Dollar. After next 15-20 years more probable scenario is that it
will become an internationalized currency and pose as a strong
contender along with Dollar and Euro for reserve

currency option.
DETERMINANTS AND PROCESS FOR BECOMING A
RESERVE CURRENCY
If we look at various financial literature1, there are
several conditions fortifying a reserve currency: the
size of the economy, low inflation, exchange rate
stability, deep and efficient capital markets, political
stability with geo-political strength. One more
important factor is network externalities which
explain why once a currency becomes an
international currency, in a short time period it is
quite implausible to lose its standing2. In general,
market participants would like to stick to their loyal
platform as they have invested substantially over
time to accumulate the knowledge of the platform. As
they use it, further more market participants will find
it comfortable to use that currency and it becomes
more of a self-reinforcing process3 generating a
positive network effect. Internationalization of a
currency is a multi-stepped long-drawn-out process
that involves: at first, becoming a settlement
currency; next, a vehicle currency for third-party
trade or foreign exchange transactions; then, a unit
of account in commodity pricing; and finally acting as
a reserve currency.
CHINESE YUAN INTERNATIONALIZATION POLICY
STEPS AND STANCE
INCREASE USE OF YUAN IN TRADE
Since 2003, the Beijing-based State Administration of
Foreign Exchange has allowed limited use of yuan in
border trade in Yunnan, Heilongjiang, Guangxi, Inner
Mongolia, Xinjiang, Liaoning and Jilin4. Banks in China
began offering banking services in Yuan in 2004,
including, deposits, currency exchange, remittances,
debit and credit cards, and personal checking. The
outstanding Yuan deposits is RMB54. 4 billion at the
end of June 2009, a 348% jump from RMB12. 1 billion
at the end of 20045. In Dec 2008 State Council decided
to launch two pilot schemes to allow selected
companies to settle trade using the Yuan in place of
the dollar6. One scheme is centered on trade between
China's export engines the Pearl River Delta and
Yangtze River Delta and Hong Kong and Macau. The
other scheme covers trade between Yunnan and

Guangxi and the Association of Southeast Asian
Nations (ASEAN). In June 2009, it was also announced
that China and Brazil had reached an initial
understanding to gradually eliminate the dollar in
bilateral trade, which is estimated to reach $40
billion in 20097. A similar agreement to move toward
settling bilateral trade in their respective currencies
was reached earlier in the month between Beijing and
Moscow8. In Jan 2010, China and the Association of
Southeast Asian Nations (ASEAN) kicked off one of the
world's largest free trade area (FTA).By 2015, it is
expected that the policy of zero-tariff rate would be
for 90 percent of traded goods between China and
four new ASEAN members, Cambodia, Laos, Myanmar
and Vietnam9.As of Sept 2010, cross-border Yuan
trade settlement has reached 197.1 billion Yuan
(about 29.5 billion U.S. dollars)10.
YUAN TRADE SUPPORTING INFRASTRUCTURE
To develop an offshore currency market and
supporting Yuan internationalization, the State
Council has also begun to allow financial institutions
registered in Hong Kong to issue Yuan-denominated
bonds11. For the offshore Yuan market, In May 2009,
HSBC and Bank of East Asia became the first foreign
banks to gain approval to sell Yuan bonds in Hong
Kong12. This issuance will give liquidity support for
those Yuan trade settlement. Bank of China (BoC) has
already been selling Yuan-denominated bonds in Hong
Kong since 200713. In June 2009, China launches a new
multilateral net settlement system, which will be run
by the China Foreign Exchange Trade System
(CFETS)14. The CFETS is the foreign exchange and
money-market trading platform of the People's Bank
of China, China's central bank.
CURRENCY SWAP AGREEMENTS
China first used currency swap arrangements to
promote both its economic interests and geopolitical
agenda in 2001, when it signed the first of four swap
agreements with ASEAN nations Indonesia, Malaysia,
Thailand, and South Korea under the Chiang Mai
Initiative15. Most recently China has concluded of six
currency swap agreements with Argentina, Belarus,
Hong Kong, Indonesia, Malaysia, and South Korea,
respectively. Since the G-20 summit in November
2008, the People's Bank of China (PBOC) has signed

bilateral currency swap arrangements totaling
Yuan650 billion (US$95 billion)16. China and Brazil
announced more direct plans on May 18, 2009 to
settle China's imports from Brazil in Yuan, while
Brazil's imports from China would be paid for in real,
bypassing the use of the U.S. dollar17. In November
2010, Russia and China decided to use their own
currencies rather than US Dollar for trade
settlement18.
DIVERSIFICATION OF RESERVE
China is insistently pursuing diversification into
commodities, particularly oil. In early 2009, China
made a deal with Russia which involves a $25-billion
loan from the China Development Bank to Russia's
Rosneft and Transneft in return for secured oil
deliveries for the next 20 years19. In May 2009,
another deal settled with Brazil involving US$10
billion loan to develop oil reserves and for Petrobas to
supply crude to China's oil companies over the next 10
years20. In July 2009, China signed a deal with Ecuador
to secure supplies of oil over the next two years21.
China's National Energy Administration announced
that it would build 8 new strategic petroleum
reserves bases by 2011, making it to total 12 bases22.
China is aiming for 100 days of reserves by 202023.
CHINESE GOVERNMENT APPEAL
People's Bank of China released a paper by Zhou
Xiaochuan24, the central bank's governor, on March 23,
2009. It calls for replacing the dollar as the dominant
world currency and creating "an international reserve
currency that is disconnected from individual nations
and is able to remain stable in the long run". His paper
includes specific steps to reduce China's reliance on
the dollar and implicit references to an increased role
for China's Yuan (i.e., the basket of currencies
forming the basis for SDR valuation should be
expanded to include currencies of all major
economies, and gross domestic product may also be
included as a weighting). Another far-fetched
proposal made by Zhou in his paper that expanded use
of the SDR as a settlement currency in international
trade & financial transactions, including commodities
pricing.
INFERENCE FROM THESE CHINESE STEPS

With increasing trade settlement in Yuan what is
happening is that China is trying to reducing reliance
on Dollar. As far as bilateral trade agreements are
concerned, these agreements seem to be more
oriented at trade finance and political goodwill
rather than spreading or augmenting Yuan use as
reserve. Yuan is not convertible; a Latin American
country like Brazil could not sell Yuan to defend its
currency which is a classic use for foreign reserves.
They can only use these to pay for imports of Chinese
goods, basically a good option while dollar liquidity
remains a problem for many countries during the
current global financial crisis. Another justification
for these currency swaps and trade-financing
agreements is that it will help to lock in China's future
need of raw materials and commodities. Argentina,
Indonesia, Malaysia all these are source for various
commodities. Also Argentina, Indonesia and South
Korea were among the countries that were facing
short-term liquidity problems in 2008 which turned to
China for assistance25. Comparing the trillion dollar
reserve of China, these currency swap deals or trade
statistics are minimal. Also by basic economics, China
can't initiate any major sell-off because the resultant
decrease in Dollar value would only reduce the
valuation of Chinese reserve assets.
According to IMF press release26 to include a currency
in SDR two important criteria is largest export and
freely usable currency. At present there is four
currency in SDR basket but there is no specific
regulation or standard for inclusion of only four
currencies from 1981-98 SDR included five
currencies27. So additionally Yuan can be included if it
deemed fit. On export front China is global leader but
Yuan is not a freely usable currency therefore
inclusion in SDR is not probable; at least not now.
Zhou admits that the reestablishment of a new and
widely accepted reserve currency with a stable
valuation benchmark make take a long time24.
ANALYSIS OF OTHER FACTORS FOR YUAN AS
RESERVE CURRENCY
Going by the economic forecasting from Goldman
Sachs28, PWC29, Standard Chartered30 China is likely to
surpass US economy sometime in 2027, 2030, and
2020 respectively. Very clearly it is largest positive

factor that can lead the Yuan to become Reserve
Currency. But is it sustainable thereafter? We know
keeping the numero uno spot is tougher than getting
there. One crucial element is that China will face the
demographic ageing effect which can slow down the
growth momentum. Another Goldman Sachs report31
suggest that. If the Chinese government changes the
one child policy then matter might look different.
Though China has been able to keep low inflation and
exchange rate stability so far (various economic
statistics shown in Exhibit 1), but it maintains capital
controls and a quasi-pegged exchange rate. Sudden
opening of market have its risks like undesirable
appreciation of Yuan, financial instabilities such as
speculative capital inflows, asset bubbles and shortterm ostensible shocks to employment and business.
China have to opt for plodding currency convertibility
roadmap along with the necessary domestic
institutional reforms i.e. central bank independence,
inflation targeting, changing the state-controlled
credit approach, reducing the NPA of banking
system32, developing a deep and sophisticated capital
market. In Jan 2010 China has just started stock index
trading, margin trade, shorting33. In Nov 2010 China
indicated the gradual realization of capital account
convertibility; also it is focusing stimulating domestic
demand so that economy becomes less exportoriented which will give scope for policy flexibility34.
present in Chinese capital market qualified foreign
funds are allowed to purchase only up to $30 billion35
but trillions of dollars can be sunk into secure U.S.
Treasuries, which have no limits on foreign purchases.
Albeit a long way to go from here, but China is taking
steps and in this process it always has to think of
rebalancing with the other counterpart US.
Let's assume China makes its Yuan fully convertible
today. What could be its share in world's reserve
holding? Referring to an econometric analysis in BIS
research paper36 applying China's data, the Yuan's
share in the world reserve holdings would be 12.7%
according to the linear model and 4.4% based on the
nonlinear model. They suggest that the Yuan's
potential as a reserve currency would be comparable
to the case of the Japanese yen and British pound
should the Yuan become fully convertible today.
Last but not least, though China enjoys so-called

communist & authoritarian political stability, but it
has a poor law & governance image (low ranking in
rule of law, control of corruption, economic freedom
index as shown in Exhibit 2,3) so network externality
factor is in negative side of China. Even talking of
transparency, China still do not report official figure
of its reserve composition to IMF. As long as it
continues to compare poorly with the US and Euro
zone, foreigners will remain reluctant to invest in
Yuan assets.
OTHER MAJOR CONTENDERS OF RESERVE
CURRENCY
Since its inception in 1999, the Euro has advanced to
become a key global reserve currency, second only to
the dollar, and accounting for more than 25% of total
international reserves. Also, while euro area
government securities markets are fairly large, they
are fragmented because of the heterogeneity in
government credit risks. Furthermore, recent debt
crisis, fiscal and balance of payments problems in
some Euro area countries have weaken the position of
euro at the moment. Lately, debate is cooking on
possibility of a new world reserve currency, most
likely building on SDR. This idea has been endorsed by
former World Bank chief economist Joseph Stiglitz37.
Even with the new $250 billion allocation of SDRs just
implemented by the IMF38, total volume of SDR in
existence is less than 5% of global non-dollar
reserves39. It is not enough to make a significant
difference and question of supply flexibility and
managing authority remains. Without an effective
government to back it, a world reserve currency of
this kind would have obscurity attaining a minimal
level of credibility.
CONCLUSION
Success of Yuan's international ambition depends
upon many factors like: realizing full convertibility of
the Yuan, to liberalize and strengthen domestic
financial system and marketplace, flexibility of the
Yuan exchange rate, with necessary adjustment of
the legal system. The network externality is currently
favoring the dollar and the euro. Apart from economic
aspects, geopolitical elements are equally important.
It depend on China's serene rise, Japan's response to
China's growing influence in Asia, and the United

State's reaction to China's rise in the world. IMF Coffer
data shows Dollar is still the leader but its share of
currency reserve is slowly diminishing (Exhibit 4).
Policymakers have learned from the global economic
history that single hegemony is subject to triffin
dilemma and vulnerable to shock and volatility during
crisis and adjustments. As changing economics,
technology and globalization is transforming this
world in a multi-polar structure40; there are
expectations of possible multi-polar reserve currency
LIST OF EXHIBITS
system41 so in future it would be possible for two or

maybe three major reserve currencies to co-exist3.
Looking at the qualitative and quantitative
arguments it is more likely that rather than out rightly
replacing Dollar; in next 15-20 years Yuan will emerge
as one of the internationalized currency with
potential of becoming reserve currency rival along
with USD and Euro. The strength of that system will
depend on the future economic, financial, political
dynamics and development.
Since its inception in 1999, the Euro has advanced to

become a key global reserve currency, second only to
the dollar, and accounting for more than 25% of total
international reserves. Also, while euro area
government securities markets are fairly large, they
are fragmented because of the heterogeneity in
government credit risks. Furthermore, recent debt
crisis, fiscal and balance of payments problems in
some Euro area countries have weaken the position of
euro at the moment. Lately, debate is cooking on
possibility of a new world reserve currency, most
likely building on SDR. This idea has been endorsed by
former World Bank chief economist Joseph Stiglitz37.
Even with the new $250 billion allocation of SDRs just
implemented by the IMF38, total volume of SDR in
existence is less than 5% of global non-dollar
reserves39. It is not enough to make a significant
difference and question of supply flexibility and
managing authority remains. Without an effective
government to back it, a world reserve currency of
this kind would have obscurity attaining a minimal
level of credibility.
REFERENCES
Papaiouannou and Portes 2008, Talvas & Ozeki 1992, Tavlas1991
Papaioannou, E. & R. Portes (2008). Costs and Benefits of Running an
International Currency. European Economy. Economic Papers 348 Tavlas,
George S., 1991, On the International Use of Currencies: The Case of the
Deutsche Mark, Essays in International Finance, No. 181, Princeton
University. Tavlas, George S., and Yuzuru Ozeki, 1992, The
Internationalization of Currencies : An Appraisal of the Japanese Yen. IMF
Occasional Paper, No. 90.
Greenspan, Alan, 2001, The Euro as an International Currency, Paper
presented at the Euro 50,Group Roundtable, Washington, D.C., November
30.
Eichengreen, Barry, 2005, Sterling's Past, Dollar's Future: Historical
Perspectives on ReserveCurrency Competition, NBER Working Paper No.
11336
China Plans to Start Yuan Settlement With Asean Soon (Update3) 30 june 2009
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahO2orD9R
szQ
Renminbi business in Hong Kong, Half-Yearly Economic Report 2009,
Government of the Hong Kong Special Administrative Region,
http://www.hkeconomy.gov.hk/en/pdf/box-09q2-4-1.pdf.
Program helps make yuan a world currency By Ye Tan (China Daily)
h t t p : / / w w w. c h i n a d a i l y. c o m . c n / b i z c h i n a / 2 0 0 9 - 0 1 / 1 9 /
content_7409088.htm
Brazil-China Bilateral Trade in Real and Yuan Instead of US Dollar,
Mercopress, June 29, 2009, http://en.mercopress.com/2009/06/29/brazilchina-bilateral-trade-in-real-and-yuan-instead-of-us-dollar.
Toni Vorobyova, Russia, China to Boost Ruble, Yuan Use in Trade, Reuters,
June 17, 2009, http://www.reuters.com/article/companyNewsAndPR/
idUSLH72167820090617
China-ASEAN
free
trade
area
starts
operation
(Xinhua)
http://www.chinadaily.com.cn/china/2010-01/01/content_9255011.htm
Yu a n t r a d e s e t t l e m e n t b e n e f i t s C h i n a - A S E A N F TA
http://english.peopledaily.com.cn/90001/90776/90883/7175001.html
Hong Kong Companies to Issue RMB Bonds, China Daily, December 16, 2008,
content_7311292.htm.
China says to gradually realize capital account convertibility By Qiang Xiaoji

http://www.chinadaily.com.cn/bizchina/2010-11/04/content_
11502898.html
Shanghai reflects opening-up policy, By Wang Bo (China Daily)
http://www.chinadaily.com.cn/bizchina/2009-11/02/content_
8879691.html
The Potential of the Renminbi as an International Currency
HSBC, Bank of East Asia Win Approval for Yuan Bonds (Update2) By Tom Kohn
and Cathy Chan - May 19, 2009, http://www.bloomberg.com/apps/news?pid
=newsarchive&sid=aSGboFB4M5rE
REFILE-New reserve currency could come quickly-Stiglitz mar 16 2009

http://www.reuters.com/article/idUSN2650403720090326
BOC to sell yuan bonds in HK,Updated: 2007-05-28 13:48

http://www.chinadaily.com.cn/china/2007-05/28/content_881755.htm
Questions and Answers,Special Drawing Right (SDR) Allocations

http://www.imf.org/external/np/exr/faq/sdrallocfaqs.htm
CFETS Today Launches New Foreign Exchange Trading System to Trade RMB
Using Reuters Technology. http://www.highbeam.com/doc/1G1161737604.html
Third World Resurgence , The role of SDRs in the global financial system
http://www.twnside.org.sg/title2/resurgence/2010/234/cover06.htm
The chiang mai intiative, http://www.iie.com/publications/chapters_

preview/345/3iie3381.pdf
Yu a n g a i n i n g c u r r e n c y b e y o n d C h i n a B y R u s s e l l
http://www.atimes.com/atimes/China_Business/KJ29Cb01.html
Hsiao
Brazil and China eye plan to axe dollar, http://www.ft.com/cms/s/0/

996b1af8-43ce-11de-a9be-00144feabdc0.html#axzz19Vp4ipPP
China, Russia quit dollar,By Su Qiang and Li Xiaokun (China Daily)
http://www.chinadaily.com.cn/usa/2010-11/24/content_11601167.htm
PDATE 4-China lends Russia $25 bln to get 20 years of oil
http://uk.reuters.com/article/idUKLH44422920090217
Petrobras sign $10 billion deal with china, http://bestshippingnews.com/
freight-news/petrobras-sign-10-billion-loan-deal-with-china
Ecuador signs contract to export oil to China By Eduardo Garcia Jul 23 2009
http://www.reuters.com/article/idUSTRE56N04820090724
China to bolster oil reserves By Sun Xiaohua (China Daily
content_7524427.htm
China stocks up on oil http://english.cctv.com/program/newshour/
20090822/102608.shtml
Zhou, Xiaochuan (2009), Reform the International Monetary System,
www.bis.org/review/r090402c.pdf
China's Burgeoning Foreign Reserves: Too Much of a Good Thing
http://www.knowledgeatwharton.com.cn/index.cfm?fa=article&articleid=
2249&languageid=1
IMF Determines New Currency Weights for SDR Valuation Basket, Press
Release No. 10/434 November 15 2010, http://www.imf.org/external/np/
sec/pr/2010/pr10434.htm
http://en.wikipedia.org/wiki/Special_Drawing_Rights
China 'will be the world's biggest economy by 2027, 17th November 2009
http://www.thisislondon.co.uk/standard-business/article-23770626-china
will-be-the-worlds-biggest-economy-by-2027.do
http://www.pwc.ru/en/press-releases/2010/Shift-in-World-Economic
Power.jhtml "Convergence, Catch up and Overtaking: How the balance of
world economic power is shifting.
The world's biggest economy, Dating game, When will China overtake
America ? http://www.economist.com/node/17733177?story_id=17733177
&fsrc=rss
Will China Grow Old Before Getting Rich ? www2.goldmansachs.com/ideas/
brics/book/BRICs-Chapter3.pdf
Big Losses Are Hidden on China's Bank Balance Sheets, Sep 23 2009
http://seekingalpha.com/article/162913-big-losses-are-hidden-on-chinas-bank-balance-sheets
China to Start Index Futures, Margin Trade, Shorting (Update2)
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aizB4j2pJ6
3M
The rise of the multipolar world https://microsite.accenture.com/mpw/

Pages/landing.aspx
Concluding Remarks by Dominique Strauss-Kahn, Managing Director of the
International Monetary Fund, at the High-Level Conference on the
International Monetary System, http://www.imf.org/external/np/
speeches/2010/051110.htm
GENERAL
MANAGEMENT
A CRITICAL STUDY OF THE VALUE
ADDITION TO EDUCATION BY
ACADEMIC JOURNALS WITH SPECIAL
REFERENCE TO E-PUBLISHING
PROF. S. P. SINGH
DY DIRECTOR,
INDIRA INSTITUTE OF MANAGEMENT,
PUNE
INTRODUCTION
cademic Performance Indicators (API) in Performance

Based Assessment Scheme (PBAS) by University Grants
Commission (UGC) proposes, research and academic
publications as an important parameter in assessment of
teachers. The All India Council for Technical Education (AICTE)
has also used the 'cumulative impact index' in drawing
equivalence to Ph.D. These and many other factors have resulted
in almost every institute of higher and technical education,
promote and publish academic journal. With this huge number of
academic journals, in print, how can an academic researcher
decide where to publish, as to which journal is good, as all these
journals cannot be taken to be equal in quality. Academic
publishing includes books, academic research findings, student's
projects, theses, conference proceedings, grey literature etc.
(This paper focuses more on journals and other publications than
on books).
There were 612 colleges and 307 institutes affiliated to
University of Pune, as per information on their website, March
2011. If these colleges or institutes on an average publish one
Journal or a Magazine a year, huge paper gets consumed in
prints, raises environmental concerns. How many of these
journals are really getting the subscription or being read by
intended audience.
Mackenzie, C.J. et al 2001, 'The current environment in higher
education drives faculty members towards research and
publication'. 'But who benefits'? Their research included
marketing practitioners and the work stated 'Clear evidence was
obtained that academic marketing journals are

neither read nor recognized by the great bulk of the
sample'. Then what value do they actually provide,
and to whom? How can and how much value, the
academic journals add to existing knowledge? Their
visibility, quality, storage, archive and many similar
aspects needs to be addressed.
mentioned 'ownership of ideas' and 'social

recognition'. Publication is required for professional
development as well as development of profession.
Monetary considerations may also be there for certain
publishing.
WHY ACADEMIC PUBLISHING ?
The paper print has its bag of problems, from

increasing paper cost, cost of printing delays in
process of submission, peer review process, etc..
With so many journals being printed the libraries are
finding the selection of journals for subscription a
major problem. Library budgets are shrinking,
storage space problems and limited search, access (as
journals are locked in wealthy university librariesWikipedia)to end users of the print journals restricts
its visibility.
Academic publishing is simple, with many

standardized formats (e.g. for research paper,
students project reporting, theses and dissertations
etc, there are guidelines and formats available).
Academic publishing is for most reasons, a mandatory
practice. The students and faculties are required to
conduct research and write reports as either a part of
fulfillment of the course or career enhancement.
Academic Performance Indicators (API) proposes
credits points for books and many of these academic
publications categorically.
Huges, C. A. 1998, mentions the core activity of
academic profession as 'advancement of knowledge'
and
credits the 'professional publications' and
'scholarly reputation' to be deciding factor as to who
belongs to this profession.
Other factors includes the information need of self
and peers, satisfaction of creating, adding to existing
body of knowledge. Intense competition amongst
scientist and researchers is also one of the factors for
publications being made.
Correia, A.M.R. and
Teixeira, J. C.2002 have presented that 'researchers
and academics, seeks to free scientific information
and provide unrestricted access to it for all scientist,
students and interested public'. They have also cited
Guedon, 2001, that 'scholarly journals have assumed
functions' of, 'registering ownership', 'establishing
priority of discovery', and 'public registry of scientific
innovation'. They have also mentioned 'author
recognition, author evaluation, Validation of
knowledge and quality control'.
A publication helps gain various intangible benefits
like , time- stamp that gives them priority (Rao, M.K.
2009), with respect to others working in a similar area
of interest. It helps to build a brand for researcher
with respect to his area of expertise. He also
E-PUBLISHING
Almquist 1992 as quoted by Huges, C. A. 1998, has

mentioned use of Information Technology (IT) for
subject identification and proposal development. IT
was also used to acquire familiarity with literature.
These represent earlier stages of research and
publications.
Rao, M.K 2009, has attributed the existence of
electronic journals since 1976, and full- fledged ejournals came to limelight in 1990s.
Highlighting the visibility and impact of E-Publishing
Sahu, D.K(2006), cited the case of Journal of Post
Graduate Medicine (JPGM, www.jpgmonline.com) as
this particular journal was having print circulation of
less than 400 and received less than 180 articles till
2001. Today the online version attracts close to
100,000 virtual visitors with more than 110,000
articles downloads per month. He has further
mentioned the problems and delays in peer review
system of print journals and how online submission
and processing has eliminated the postal, delays and
resulted in considerable decrease in the submission to
decision (turnaround) time. He however highlighted
the need of trained editorial staff, in the process of
electronic peer review system.
Libraries are forming Consortia and subscribing to ejournals at concessional rates Rao M.K , 2009, eg
UGC- INFONET digital library consortium.
Third party aggregators are being used by various

publishers' in order to make available databases, for
access to users. Open Access Initiatives (OAI) are now
providing a new method of scholarly communication.
Dispelling various myths and bringing the facts to light
about Open Access Journals Sahu, D. K has stated
Indian journals as mostly having low impact. Going
online is not costly, Open Access(OA) are peer
reviewed, not all OA charge for publication, free
access may not result in loss of revenue and finally OA
journals do have good Impact Factor.
Junping Qui, 2004, has researched on the Journal

impact factors (JIFs) as determined by the Institute
for Scientific and Technological Information of China
(ISTIC).
Timeliness is an important criterion in evaluation
process, as mentioned on the Thomson Reuters site.
'The evaluation process' and 'How to submit a journal
for evaluation' are detailed on the website along with
address for submission.
However there are
limitations to use of IF factors as inferred from
following,
JOURNAL EVALUATIONS AND RANKINGS

Journals need to be evaluated primarily because,
there is need know the progress, status, of what
others have done in similar area of study or research.
The researcher would turn to the reliable and
authentic source of research findings which he/she
may get from a highly rated journal.
'..impact factor calculated for individual journals

should not be used as a basis for evaluating the
significance of an individual scientist's past
performance or scientific potential. There are
several reasons not to equate the impact factor of a
journal in which the scientist publishes with the
quality of the scientist's research.
The question of journal becoming obsolescence, or

change in name of a journal is also an reason why
ranking and ratings are looked upon as they usually
list only journals in the current year, for considered of
evaluation.
'..Impact factor measures only the frequency of

citations which cannot be assumed to always equate
with quality.', (Russell R. and Singh Dave 2009),
forms the parts of the statement adopted at an
editors roundtable.
Citations, Impact factor (IF) are popular, current and

widely used metrics, Satyanarayana. K. 2010.
Citation rates are used to measures the visibility of a
journal. 'Journals with larger circulations tend to
receive more citations' Starbuck and Mezias (1997) as
quoted by Vincent, A. and Ross, D. (2000). Further one
of the reasons why Citation analysis is gaining
important in evaluation of faculty research,
according to Vincent, A. and Ross, D. (2000) is 'the
availability of databases that provide citation
information'.
Satyanarayana, K. (2010) has listed many known

limitations and deficiencies with citation based
evaluation systems.
Eugene Garfield in 1955 came out with Impact Factor

(IF) which is indicator of the success of journals
contents. The IF is used by researchers, authors,
publishers' librarians etc for making their decisions
about a journal. Nagaraja, A. and Vasanthakumar, M.
have done comparison of Web of science and Scopus
impact factors of Indian journals. According to them
the 'best tools available to select the quality journals
are Journal Citation Report (JCR) and Scimago journal
ranks (SJR) from Scopus data'. Similarly Lu An and
Satyanarayana, K. 2010, listed and discussed

alternative methods of evaluation as compared to
Impact factor. These include Google scholar, Page
Rank, Weighted page rank, h-index, y-factor, Euro
factor, Faculty of 1000 , Eigenfactor etc.
Touzani, M. and Moussa, S. 2010 have researched on
Google Scholar for Marketing discipline and
highlighted the benefits and limitations of same.
Google website describes 'About Google Scholar', for
search of scholarly literature in various disciplines
and sources like books, theses, articles, abstract and
opinions, from academic publishers and professional
societies, online repositories, Universities and other
websites, and has documents ranked.
MANIPULATIVE TENDENCIES
Russell R. and Singh Dave 2009, 'A journals impact
factor can be inflated by certain journal practices

such as publication of many review articles'.
Self citing is a practice which although necessary in
certain cases to an extent, overuse of self citation can
be construed as a manipulative attempt and can
result in journal rejection from evaluation process.
According to Satyanarayana, K. 2010, longer articles,
controversial papers to negate the contents, are used
to boost citations. He has also talked of citation
cartels. A 'recommender system', for peer review
system is quoted in the same paper.
Nordling Linda, 2008, stated that focusing on
numbers from impact factor encourages both
researcher and journals to play games to raise their
impact factor. The research suffers and it becomes a
popularity contest, instead of truth contests. For
online publishing also there are focus on search
engine optimization, rather than on research
contents and quality.
Romano, N. C. 2009, has discussed the editorial
coercive self citation and concluded that it violates
the very spirit of scientific integrity.
VALUE ADDITION
Value in respect to education has many dimensions.
Educational institutes rarely have agenda of
developing any single skill or capability in its student,
many of the skills and knowledge inputs are for
lifelong, skill enhancement. 'The term value
sometimes has a very remote connection with money'
Henry C. Lucas, Jr, (2001). Bennett, (2001) as 'By
value addition we mean what is improved about
student's capabilities or knowledge as a consequence
of their education at a particular college or
university.
An important component to optimize, improve, any
business, process is technology. Value in this context
refers to the effect of services enhancement of the
educational process that has been or could be brought
about by using IT based solutions. Reduction in cost of
acquiring and providing educational service is a good
indicator of value addition.
Vincent, A. and Ross, D. (2000) have mentioned that a
'way of determining the value of work in a discipline is
by studying the impact of that discipline on other

fields'. They have stated with reference to 'Journal
Citation Reports and others like them', to 'provide
valuable information to faculties who are evaluated
on their publishing record, to administrators who
must do the evaluating, and to the journals that are
listed in the databases'.
Value addition of e-publishing can be inferred from
the fact that publishing on internet movement is
'because of a key assumption that scholars and
scientists publish in peer reviewed journals not for
monetary reward but in having their work read, used
built-upon and cited' (Harnd and Hemus 1998) as cited
by Correia, A.M.R. and Teixeira, J. C.2002.
Highlighting the benefits of digital libraries with
respect to theses and dissertations, Correia, A.M.R.
and Teixeira, J.C. 2002, have stated that it 'empowers
universities to unlock their information resources.
Improving graduate education as they inspire and
instigate faculty and graduate to experiment new
mentoring models, empowering students to convey
richer message, lowering cost of submitting and
handling, etc, were listed which signify the value
addition to education.
Huffine Richard, 2010, cited 'value of grey literature',
as 'a mixed bag', with reference to digital age
publishing. 'Non publishers can produce valid
research and publishers can release invalid research
just as easily'. He adds 'in some domains the best
source of information may be grey'.
Digital grey literature according to him includes preprints, blogs, project websites, institutional
repositories, data archives etc.
A research publication helps authors to understand
themselves, their competence and boost confidence
self image.
Open Access helps give visibility to unknown authors
and enhances educational and accelerates research.
The Universities benefit due to researchers' increased
impact and in turn the increase in return on
investment in research. Rao, M.K, 2009. Further it
facilitates sharing of learning's between rich and poor
nations. He concludes that authors will have no
choice but to accept the new means of publishing

over internet.
5.
Nordling Linda, 2008, has stated the value of Open

Access movement as the one that will tear down the
walls between academic publishing and rest of the
internet. However the editors, authors have limited
exposures with the tools and technologies that are
available and can be used judicially for the process of
online, open access publication, archiving etc.
6.
The findings of Theses and dissertations

should be encouraged to be
published in
public domains as they are
capable of great
value addition.
7.
Wikis and the online repository system add value by,

allowing engaging community participation and free
dissemination- Wikipedia.
SUGGESTIONS AND RECOMMENDATIONS
To enhance the value addition by academic
publications the researcher deduces following
suggestions from the above study.
1.
Information Technologies (IT) that are being

used in creation, submission, review of
journals, uploading, archiving and other
aspect of journal communications
needs to
be made available to academic
researchers,
editors, evaluators etc.
2.
Proper training needs to be imparted to the

stakeholders of education and research with
respect to the Information Technology
solutions being used at various stages of
research, e-journals publication,
storage,
retrieval, licensing usage and
relevant
aspects.
3.
4.
paper
There is a need to educate the educational

stakeholders about the prevalent journal
ranking and evaluation systems, their
methodology, and ethics in research
publishing. This is to eradicate the
temptation of malpractices for gaining high
citation or impact.
Authors, editors and others needs to focus
towards the e-publishing options as much as
possible and may follow a hybrid system
(e-publishing and minimum copies in
form for archiving purpose only) to begin
with.
Open Access Initiatives should be promoted

at all levels of research and publications.
types
Regulatory bodies at University and higher

level need to set guidelines for print journals
from individual institutes, so as to control the
rampant printing of journals especially those
which neither gets subscribed nor have any
worthwhile readership.. They may make
provisions of clubbing certain journal
unless an institute can prove the quality and
standard to bring out unique and
substantially significant research work.
Settings minimum criteria and standards for
journal printing before registration may be
framed without hampering the freedom of
research and expression.
CONCLUSIONS
Research and publications are the backbone of
academia. They provide tremendous value to various
stakeholder of education specially, the researcher
who may be a faculty or a research scholar. A research
publication also benefits the educational
administrators, evaluators and the society.
An
academic journal helps the academia to
communicate, identify scope of research, trends and
practices. It also assists, for hiring, promotions and
merit based pay decisions. It helps in ranking of the
faculty, departments and the institutes.
There must be encouragement and motivation for
research in academics either through funded projects
or for expansion of theory. The existing system of
journal evaluation has merits but needs to be used
judicially to avoid abuse of the ranking system and
output. E-publishing is gaining grounds, evolving and
maturing in many aspects of journal communication.
It offers visible advantages over paper or print
journals. Proper awareness and technical expertise
needs to be provided to researchers, editors, and
evaluators in the use of Information Technology
solutions for the same. The following paragraph
appropriates conclusion of this research study.

Huges, C. A. 1998, cites the notion of accumulated
averages or the Matthew effect, i.e. the tendency
for people who have early recognition to receive
increasingly more resources & opportunities for
further recognition and publication, can mediate
many other effects.
REFERENCES
Bennett, D.C. 2001, Assessing quality in higher education- perspectives,
Liberal Education, Vol. 87, No. 2, pp. 40-46.
Correia, A.M.R . and Teixeira, J. C.2002, New Initiatives for Electronic
Scholarly Publishing: Academic Information Sources on the Internet, Paper
published at the RTO IMC Lectures series 24-26 Sept. 2002.
Garfield, E. 1998, The use of journal impact factors and citation analysis for
evaluation of science', paper present at the 41st Annual meeting of the
Council of Biology Editors, Salt Lake City UT, May 4-7.
Henry C. Lucas, Jr. 2001, Information technology for Management, Tata
McGraw- Hill Education Private Limited.
Lu An and Junping Qui, 2004, Research on the Relationships between Chinese
Journal Impact Factors and External Web Link Counts & Web Impact Factors,
The Journal of Academic Librarianship, Vol. 30, No.3, Pg.199-204.
Romano, N. C. 2009, Coercive Journal self citation- manipulation to increase
Impact factors may do more harm than good in long run, Communications of
the association for Information systems, Vol 25, issue 5, Article 5.
Rao, M.K., 'Academic Publishing : Role of University Libraries in the Scholarly
Communication System', ICAL- 2009.
Russell, Richard. and Singh Dave, 2009, Impact factor and its role in
academic promotion: A statement adopted by the International Respiratory
Journal Editors Roundtable.
Sahu, DK (2006) Journal publishing in India: a case study of MedKnow
Publications. National Seminar on Electronic Publications, 23-24 March,,
Hyderabad, India.
Satyanarayana, K. 2010, Impact factor and other indices to assess science,
scientists and scientific journals', Indian Journal of Physiol Pharmacol,
Vol.54(3), Pg.197-212.
Touzani, M. and Moussa, S. 2010, Ranking marketing journals using the search
engine Google Scholar', Marketing Education Review, Vol.20, No.3 (fall
2010), Pg.229-247.
Vincent, A. and Ross, D. 2000, On Evaluation of Faculty Research Impact of
Citation Analysis, The Journal of Applied Business Research, Vol. 16, No.2, Pg
.1-13.
Google Scholar, [online], http://scholar.google.com/intl/en/scholar/
about.html, assessed March 2011.
Huges, C.A. ,1998, Factors related to faculty publishing productivity,
[online], www.iatul.org/doclibrary/public/conf_proceedings/1998/
huges.pdf assessed May 2011
Huffine , Richard. 2010, Value of Grey literature to scholarly research in the
digital age, [online], http://www.elsevier.com/framework_librarians/
Docs/2010RichardHuffine.pdf, assessed April 2011.
Nagaraja, A. and Vasanthakumar, M., 'Comparison of Web of science and
Scopus impact factors of Indian journals', http://findarticles.com/p/
articles/mi_7005/is_2011_Feb/ai_n57336445/ accessed April 2011.
Nordling Linda, 2008, Web Journals narrowing study, The guardian, [online],
http://www.guardian.co.uk/education/2008/oct/28/research-internet,
accessed may 2011.
Mackenzie, C., Wright, S., Ball, D.W. and Baron, P.J. (2001), Marketing
Practitioners : The role of the academic Journal ? Leicester Business School
Occasional Paper No 62, [online] https://www.dora.dmu.ac.uk/xmlui/
handle/2086/4509, abstract assessed May 2011.
Sahu, D. K. Eight facts and Myths about open access journals, [online]
http://openmed. nic.in/3240/01/OAP_Myths.pdf accessed May 2011.
The Thomson Reuters journal selection process [online],
http://thomsonreuters.com/products_services/science/free/essays/
journal_selection_process/, accessed March 2011.
University of Pune webite: http://www.unipune.ac.in/university_files/
about_university.htm, accessed April 2011.
Wikipedia site : http://en.wikipedia.org/wiki/Academic_publishing,
accessed May 2011
GENERAL
MANAGEMENT
GLOBAL RECESSION : MANAGEMENT

CHALLENGES AND STRATEGIES MANAGERIAL PERCEPTION ON
GROWTH, CHALLENGES & STRATEGIES
MS. SHARAYU BHAKARE

HEAD OF DEPARTMENT,
BUSINESS ADMINISTRATION (COMM.),
MODERN COLLEGE OF ARTS, SCIENCE
& COMMERCE, PUNE
PROF. SUBBARAM RANGANATHAN
PROFESSOR & DIRECTOR,
ASMA INSTITUTE OF MANAGEMENT,
PUNE
INTRODUCTION
he past year has seen a dramatic change in the prospects

of developing countries due to the effects of the global
recession. Declines in foreign direct investment, export
revenue, remittances, tourism and other adverse impacts of the
recession will reduce economic growth and, in turn, may unravel
progress towards the Millennium Development Goals (MDGs).
International Monetary Fund forecasts released on 22 April 2009
indicate that global economic growth will contract by 1.3 per
cent in 2009, compared to 3.2 per cent positive growth in 2008.
According to the World Bank, developing countries' combined
growth will fall to 2.1 per cent, or to zero per cent excluding
China and India. (Australian Journal of Management, April'09).
RATIONALE FOR SELECTING THE THEME : GROWTH
CHALLENGES AND STRATEGIES
Global recession has engulfed the entire economy making it
dawdling and sluggish. It has drastically affected all the sectors
and its outcome is severe. Less demand for the goods, increase in
the debts leading to cash flow crunch has led to closure of many
industries, and the sustainability of many is in question today. It
is therefore challenging for an enterprise's owner or manager to
operate in such circumstances. This study endeavors to
elucidate the perceptions of managers in various countries
around the world about the growth challenges and also expounds
the strategies they comprehend as critical to face these
challenges.
GLOBAL RECESSION A PERSPECTIVE
Recession is defined by National Bureau of Economic

Research as a significant decline in the economic
activity lasting for more than a few months. United
States has been worst hit by recession but any country
that has even a remotely similar modern economic
structure has suffered to some degree from economic
recession. The world output is for the first time in 60
years s expected to contract, according to IMF
statistics by 0.5% to 1% in 2009 , US output by 2.6%.A
shrink in the Euro zone's GDP us expected to be 3.2%,
where as Japan's by as much as 5.8%.(HBR July-August
2009)
in a unipolar world is in an economic recession and

financial turmoil following the subprime crisis in
home mortgages, the twin deficits (current and
fiscal) besides a lax monitory policy. While the federal
deficit is gradually narrowing, its reduction to
acceptable levels calls for increased spending
discipline, especially through drastic reductions in
huge expenditure like the Iraq war.US, the wealthiest
nation, which is the biggest borrower, must return to
the basics of prudent macro economics management
by drastically slashing its twin deficits. It should
realize that its currency is destined to lose its primacy
of place sooner than later.
GENESIS OF GLOBAL RECESSION

The global financial crisis has been attributed to the
subprime mortgages which originated in the US
mortgage sector few years back. During the booming
housing market, when low interest rates were
prevailing and the housing prices were continuously
increasing, offering financial assistance to the
subprime borrowers were considered a lucrative
proposition by some banks/ financial institutions
ignoring the inherent risk involved in such activities.
This situation became complex when some
investment banks innovated some complex financial
instruments to investors across the globe. However,
the situation changed dramatically when the
property prices started falling sharply, leading to
significant rise in default in mortgage loans and
foreclosures. One of the latest international surveys
reveals that the top three reasons for this financial
crisis are inadequate risk management practices at
banks, increased complexity of financial instruments
and speculation of financial markets. The crisis
coupled with bank collapse in the US and Europe, has
caused consumer confidence and credit availability
to plummet to new lows.
THREE F'S AND RECESSION
THE FINANCIAL TURMOIL
Besides the huge losses for major investment
bankers, the subprime crisis has caused liquidity and
credit crunch globally. Rising fuel and food prices
have added fuel to the fire. The current scenario
carries with it certain follies. The US, the superpower
The recession has reduced America's trade gap as

consumers are now forced to trim their spending.
Delaying the correction of part excesses by pumping
in more money and encouraging more borrowing is
likely to make the eventual correction more painful.
The US economy needs to display financial prudence
and exhibit resilience and innovation.
THE RISING ENERGY PRICES
The major turbulence has been caused by the steep
rise in the petroleum prices which shot up to 135 $ per
barrel. The OPEC (Organization of the Petroleum
Exporting Countries) attributes this rise not so much
to its cartelization efforts but to the falling dollar.
Many emerging economies have not allowed the
complete pass through of this price rise to the
customers, they have adopted a gradual & marginal
rise in oil prices. However, the effect of rising prices
has passed in the emerging economy by way of
inflation. Inflation management therefore, acquires
the centre stage for these economies. Actions take by
the central bankers may only provide marginal results
and alternative solutions like long term planning that
involves investing substantially. Capital expenditure
for oil exploration programs, development of
alternative sources of energy through renewable
sources can have long term ramifications.
Many economies have to downscale their GDP growth
projections. A price correction may be possible if
dollars depreciation is halted, but it is not a distinct
possibility, as the greenback is bowed to slip further,
following the fundamental weaknesses of the super
powers economy.
AGFLATION (FOOD CRISIS) - ANOTHER MAJOR

SOURCE OF TURMOIL
At present, the world is witnessing supply shortages,
while demand is steeply rising with respect to wheat,
rice, pulses and host of other soft commodities. In
India agflation is causing a major havoc with
dwindling buffer stocks, inadequate imports at very
high prices and general rise in prices of food products.
As per the reports, the situation is no better in US.
There is a demand spurt in India and China because of
rising incomes of the middle class population.
However, globally food production is rising only in
absolute terms and not in percentage terms to meet
the rising demand. Conscious efforts of US to switch
to cultivation of biofuel are one significant reason for
slow rise. Food security has therefore become a
matter of concern for all the economies. Achieving
sustainable food security calls for long term planning
and investments but consecutively the medium and
the short term consequences of agflation have to be
endured by many economies the world over. G8
nations have highlighted three major reasons for
financial turbulence, the subprime crises,
supplemented by fuel prices and food prices.
The bankruptcy and closure of several top finance
firms and industries in US shook the confidence of the
Industrialists and managers. Bankruptcy of Lehman
Brothers, Washington Mutual, WorldCom, Cosceco,
Chrysler, Washington Mutual and Wachovia being
some of the top performing firms of US, undermined
the abilities of similar such firms. Markets across the
globe experienced pain caused by growing defaults on
US subprime mortgages.
IMPACT OF THE GLOBAL CRISIS
The financial downturn has severe impacts on the
various spheres of economy which can be stated in
three levels. The first level impact is uncertainty,
leading to risk aversion and shortage of funds, sharp
decline in stock prices, fall in business sentiments and
Erosion in investor wealth and company valuations.
The second level impact is Loan led demand to remain
low as interest rates remain high, Companies with
highly leveraged balance sheets face shortage of
investable funds, Infrastructure companies saw
project costs go up.

The third level impact is the slow income growth and
job creation and snipped GDP growth.
An obvious manifestation of the global economic
slowdown in developing countries will be increased
unemployment, under-employment and loss of
income. Numbers of working poor are projected to
rise by more than 200 million. For example, many
laid-off formal sector workers will be forced into lowincome jobs in the informal and rural sectors.
The global recession will generate enormous
difficulties for developing country governments.
While needing to help newly vulnerable populations,
they will have less tax and other revenue to fund crisis
responses and to maintain basic services such as
health and education. This places a special
responsibility on donor governments to support
developing country counterparts to generate
employment and help limit the scale of the human
impacts.
The recession is a global challenge requiring global
solutions. G-20 members, including Australia, have
reaffirmed their commitment to achieving the MDGs.
G-20 members have recognised that the current crisis
will impact disproportionately on the vulnerable in
the poorest countries and that there is a collective
responsibility to mitigate its social impact.
The need for policy and regulatory reform to address
the causes of the global recession is widely
recognised. The global recession provides both an
opportunity and a rationale to move more quickly to
address overdue reforms, in areas as diverse as
financial regulation, trade, competition and public
sector improvement.
POSSIBLE EFFECTS OF THE RECENT GLOBAL CRISIS
IN DIFFERENT COUNTRIES
(Ozlem Onaran, EPW March, pg 176)For analyzing the
possible effects of the recent global crisis in different
countries, they have been divided into four groups :
1.
The developed countries
2.
The developing countries
3.
The emerging
Europe.
markets
4.
of
Eastern
Other developing countries.
The developed countries are affected much more

than the previous stock market or banking crisis of
1980s. The effects of the credit crash, particularly in
countries with high household debt (eg US and UK)
will be severe. The multiplier effects of credit crash
as well as the decline in consumption have already
stared to affect the investments. In Germany and
Japan where there is a high degree of dependence on
export markets the contraction will also be rather
severe and the reliance on low wages to expand
export markets will prove to be accurse. In the EI
some countries ability to respond to the shocks will
also be constrained by their fiscal capacity. The
negative effects of the crisis on labor in the
developed countries will work through demand,
bargaining power and path dependency channels. The
decline in the wages in the emerging markets, which
will suffer from the global crisis, will also add further
pressures. Since it is a global crisis, the recovery in
economic activity can last much longer, bringing in
worries about L type recession. In case the
recession persists longer, the pressure on wages and
the bargaining power of labor will intensify.
Many developing countries with a former crisis history
are once again experiencing a crisis led by speculative
capital outflow during this global crisis. Countries like
South Korea and Argentina are suffering from a crisis
which they have not created. The countries with
current account deficit such as Turkey, South Africa)
might suffer through a deeper bust, due to
accumulated fragilities during the speculation-led
boom cycle. There is expected to be a radical and long
lasting decline in real wages and the wage share, and
a sharp hike in unemployment.
The emerging markets of Eastern Europe are also
being threatened by the credit crash and capital
outflows and also a probable currency crisis
accompanying the banking crisis. After a decade of
restructuring and high growth following the initial
transition shock, these countries will once again face
the costs of integration with unregulated global
markets. Hungary, Bulgaria, Romania, Serbia,
Croatia, Baltic countries, Ukraine and Russia are more

exposed than Poland, Czech, republic, Slovenia and
Slovakia. But even the latter group might suffer from
the contagion effects, the slowdown in global
demand, the decline in FDI inflows and the
contraction of remittances. Excessive dependence on
export markets will turn out to be major risk, for non
EU countries the results can be worse. Russia, also
with a former crisis record and a more intense
reliance on market base finance is already under the
pressure of devaluation.
For the other developing countries like China, India
and Brazil although the contagion effects and the
slowdown in global demand will be an important
problem. These countries could manage the crisis
based on their large domestic markets, if they could
make a policy shift away from pure dependence on
export orientation based on low labor costs.
The crisis has created such a situation for the
countries of the world that more innovative financial
system means more risk and a wider contagion;
export market contraction will make recovery harder
and as the previous imbalances of the debt led growth
is now being corrected, it is unclear where their
recovery will come from. Higher interest rates,
double digit inflation, dire fiscal position, slowing
growth, more expensive capital and could hit firm
profitability.
WHY GROWTH CHALLENGES ???
Alan Greenspan, ex chief of the US FED has said I
have made a mistake in presuming that the selfinterests of organizations, specifically banks and
others, were such that they were best capable of
protecting their own shareholders and their equity in
the firms.
18 months after the subprime loan crises broke
through the surface in US, twelve months after the
investment banking firm Bear Stearns was rescued
and six months after Lehman Brothers collapsed,
there is no sign that the people of the world have seen
the worst of crises that now envelopes the global
economy. What started as a financial crisis has
became full blown real economy crises that seem to
spare no corner of the world. The world economy is
expected to contract in 2009, by up to 1%, the first

such contraction since the second world war; open
unemployment is expected to touch 233 million, the
deepest level of fallen ever since 1945 and the world
trade is contracting in an accelerating manner and is
projected to fall by as much as 9% this year, again the
sharpest fall since the numbers began to the tracked
six decades ego.
The crises that began in Anglo-American heart land,
primarily as a financial crises, penetrated in Japan,
German and its periphery quite later, primarily as an
export crises response to slowdown in AngloAmerican heartland. The export crises then fed
through the financial and wider growth problems
through the US governments has been applying the
Collins Powels doctrine of Shock and awe to the
economy throwing every conventional
and
unconventional policy it can think of at the problems ,
yet the numbers from the US economy keep getting
worse. GDP contracted in the final quarter of 2008 at
an annualized rate of over 6%. Industrial production in
Jan 2009 was 10% lower than in Jan 2008. Consumer
confidence is lowest as measured by conference
board since it started. Outcomes in the world's second
biggest economy Japan are worst. Toyota has cut car
production by half; Sony has put most of its labour
force on a part time work and is in the process of
closing at least force factories overseas. Export
orders of machinery fell by 43% in 2008 and domestic
orders by 20%. GDP fell in the last quarter of 2008 at
an annualized rate of 13%.
Germany GDP fell by an annualized rate of 8% in last
quarter of 2008 and the unemployment rate in Feb
2009 showed a rising graph.
Most Asian economies, which had become dependent
or export of manufacturing goods to the west, are
experiencing a big falls in output and increases in
unemployment. South Korea's GDP collapsed in the
last quarter of 2008 at the annualized rate of 21%.
Taiwan's export is in December 2008 were 40%.
Indonesia is experiencing surging unemployment and
however China is the only major economy likely to
significant growth in 2009, besides the fact that
electricity production fell by more than 6% in 2008.
The global magnitude of the shock can be noted from
two indicators.
First, stock market in the last nine months of 2008 lost
a value equivalent to 3000 Euros for every man and
woman and child on the planet. Western European
stock markets lost about 5000 Euros to every
European.
Second, world trade in the four months from Nov2008
to Feb 2009 fell at a faster rate than at any time
during the great depression.
The US budget deficit in 2009 is set to triple to $1.75
trillion, the largest ever from last years figure of $450
billion. The Bank of England has faced the lowest
interest rates since it came into being in 1634.
The largest housing mortgage companies, Freddie
Mac and Fannie Mae, the largest insurance company,
AIG and banks like Citi bank exist because they have
been rescued with hundreds of billion dollars pumped
by the US government.
Smaller economies like Spain, Mexico, Ireland,
Iceland, Singapore, Greece, Ecuador, Hungary,
Latvia, Pakistan and Ukraine are in deep trouble. This
is in spite of massive bailout packages put together by
various governments.
The current crisis will bring down the Capitalist
system, since the financial system is fundamental to
the functioning of the capitalistic system.
Businesses which have been votaries of markets and
minimum government intervention till recently are
unashamedly demanding massive help from the
government. The policymakers have to now bring
about a systemic change. Most policymakers are from
the world of finance and for them saving real
companies is less importance than saving the
financial world.
The crisis has reversed the capital flows from virtually
all developing economies, whether or not their
growth prospects were otherwise diminished. In the
process of protecting their financial system and
ensuring their stability, the capital flows from US and
Europe to the developing world and emerging
markets have come to a hard stop. This has been
further exacerbated by the reduction of global
aggregate demand, which in turn makes exportoriented economies less desirable locations for
investment. Falling demands in America and Europe
affect exports particularly in Asia and Mexico.
THE YEAR ON YEAR % CHANGE IN GDP CLARIFIES THE
MOMENTUM OF INDUSTRIAL PERFORMANCE GLOBALLY
industries;
poor pregnant women, newborn

babies and
infants who may have less access to
appropriate medication and
nutrition; and
Besides the economic impacts, the social impact also

has to be considered by the manager while operating
their businesses. Impact of the global recession will
be felt differently in different countries, with
particular groups more vulnerable in some countries
than others. The most vulnerable groups include :
those just above the poverty line who have

limited access to alternate sources of income
in an economic downturn;
children of poorer households who may suffer

malnutrition, be subject to neglect or
violence or who may need to leave school to
seek work;
those
engaged
in
trade-exposed
conditional cash transfer programs, such as

payments made to parents for children
attending school;
SOCIAL IMPACT
To support those most at risk of falling into

extreme poverty and avoid the risks of lifelong 'poverty traps' social protection
programs may include:
Thus the crisis is not only the fallout of a faulty risk

management strategy, but also a crucial factor like
failure of business strategy. With this economic
backdrop, growth is all the more challenging and
strategists have to be sharp to incorporate it in the
organizations.
marginalized groups, such as ethnic

minorities, the rural poor and people with a
disability.
nutrition and feeding programs in schools or

for pregnant and lactating women and
infants; and
Micro-insurance programs to support

informal sector livelihoods.
With nations involved in such rehabilitation and other

measures to survive the recession, new challenges
are thrown to managements to ensure proper display
of courage and determination to sustain the
onslaught of the growing consequences and impact of
the recession. To this is the newly added horror of the
Dubai Debt' that lists the crumbling of the oil rich
nation.
SIGNIFICANCE OF THE STUDY AND THE RESEARCH
QUESTIONS
In this context the study gains immense importance in
understanding the managerial perceptions of the
emerging challenges and the necessary remedial
actions to be taken so that the business growth is
ensured. The following questions emerge out of these
discussions :
a)
What is the perception of managers across

the world as to the challenges posed by
recession ?
b)
How these perceived challenges are
attributed to an organisation's response to

solve an issue ?
c)
What if the managers' perceptions have

direct impact on their performances
and
d)
What is the future growth of the

organizations ?

The objectives of the study have been in accordance
with the research questions posed :
a)
THE HYPOTHESES ARE SET AS BELOW

Ho= the perception of Indian and Foreign Managers
are independent
To understand the managerial perceptions of

challenges in business growth.
b)
asked to submit their response by email and these

were tabulated to obtain the mean rank and
hypotheses tested at 5% significance level using 'z'
test(critical value: 1.296 at 5% significance) and
statistical inference made. It was seen that the
calculated value (-3.006689) is less than the critical
value as per Table and hence the null hypotheses that
'the perceptions of foreign and Indian managers are
independent' is accepted.
To analyse the perceptions using appropriate

statistic
c)
To discuss the analyzed results in fora of

managers to brief on their possible
futuristic
performance orientation.
RESEARCH METHODOLOGY
A list of 15 statements(as enclosed) has been
prepared and managers
who are employed in
corporates across the world ranging from the far east
to the west in Asia, Africa and USA were asked to rank
order them. The mean of the ranks was divided in two
comparable formats of Indian Managers and Foreign
Managers. Spearman's Rank correlation was used as
statistic to determine the impact the ranking and
necessary correlation study made. This statistic
assesses how well an arbitrary monotonic function
could describe the relationship between two
variables, without making any other assumptions
about the particular nature of the relationship
between the variables. The study was conducted as
part of a research presentation to be made in the
'International Commerce and Management
conference' organized by the Department of
Commerce, University of Mumbai and was conducted
during the last week of Nov'09. Random sampling
method was used to determine the managerial
sample from Australia, New Zealand, South Africa,
Zimbabwe, Dubai, Singapore, Malaysia, USA and
India. Total of 100 managers (as given in Table 1) were
H= the perception of Indian and Foreign Managers

are dependent
TABLE 1 COUNTRY PROFILE OF MANAGERS (N 100)
ANALYSIS
organization they are a part of.
TABLE 3 COMPUTED VALUE TABLE OF SPEARMAN'S

RANK CORRELATION (RHO)
Few managers have commented independently on

the scope of the 'challenges that have emerged' and
have gone a further step to guide the researchers in
order to have more detailed analysis on the subject.
On account of limitations of time, those aspects could
not be taken for study but the information has
provided ample scope for further research on the
topic. The objectives that have been set are thus
achieved by having undertaken the study.
From the above Table it can be seen that the

'perceptions of Indian and Foreign Managers' are
positively correlated though 'z-test' signifies negative
which is less than the critical value as per Table (1.771
at 5% significance) and hence the null hypotheses is
accepted that there is significant independence
between the perceptions of Indian and Foreign
Managers about the 'Business challenges and their
subsequent managerial growth and strategies'.
DISCUSSIONS
The on going discussion as to what constitutes
challenges in the emerged scenario of global
recession and its impact has been vividly understood
by studying the perceptions of managers across the
world. In the given context of information sharing, we
can conclude that the perceptions of managers across
the world are independent depending on the
economic environment that the managers are placed.
Observations reflect that the views of foreign and
Indian managers are independent. Equating excellent
financial results with excellence is not the first
preference of all managers. However, looking at this
situation as an opportunity and venturing into new
business areas is the priority for some managers.
Regular and personal contact with customers is one
preferred perceived challenge whereas using fewest
possible people for the highest possible output is
another. This may be necessarily due to the impact of
external environmental factors on their organizations
and the strategies adopted by these organizations.
Managers are an integral part of the organizations and
their perceptions need to be valued by their
organizations. For example change management and
customer focus are the key challenges perceived by
some managers. Considering these views can make a
vast difference in incorporating a strategy or facing a
challenge. Managers need to be given a platform
where they can express their concerns and priorities
for the organizations, so that any type of growth
strategy is accepted easily and successfully.
Perceptions of managers across the globe may differ,
but they are extremely important for the
CONCLUSIONS
'Men may come and men may go, but an organization
goes on for ever and ever' (Lord Gower).
Organizations have to embark on specific strategies
to combat the onslaught of any recession which is
ultimately due to the actions or inactions of
managers. Managers need to understand that they
have an important role to play in organizational
development vis-a vis their own growth. Where the
interests conflict, as we have seen in the case of
Satyam debacle and the collapse of Lehman, we need
to emphasise the role of modern managers to have
'more concern for others 'since they have a crucial
role in developing an effective organization and
hence an effective and efficient economy. Days are
not far when managers across the world have to
perceive stakeholder interests in a big way thus
paving way for 'peace, prosperity and hence
purposiveness' in human development
ACKNOWLEDGMENTS
The researchers thank the managers who have
responded to the 'email' survey at very short notice
and the Managements of their respective affiliations.
They also thank their family members who were
patient enough to allow them to complete this 'short
term' but purposeful exercise.
REFERENCES
BOOK
Arora P.N, Arora Sumeet, Arora S, Comprehensive Statistical Methods, S
Chand publication,2004
JOURNALS
Asia's Suffering, The Economist, January 31-February 6, 2009, pp 30-34.
Crunch Time, Business Today, November 2, 2008.
Ferguson Nial,The Descent of Finance; Harvard Business Review, July August 2009.
Journal of Australian Management, pp 75-78,April 09.
Kumar Arun, Tackling the Current Global Economic and Financial Crisis:
Beyond Demand Management, Economic and Political Weekly, March 28April 3, 2009, Vol XLIV.
Managing in the downturn, The Economist, November 22-28, 2008, pp1516.
Ottawa, Breaking the deficit taboo, The Economist, 15th November 2008,
pp 45-46.
Ozlem Onaran, A Crisis of Distribution, Economic and Political Weekly,
March 28-April 3, 2009, Vol XLIV, pp 176-178.
Patnaik Prabhat, A democratic agenda of five elements for coming out of
the recession, Economic and Political Weekly, March 28-April 3, 2009, Vol
XLIV,pp 147-148.
Rao Kasturi Nageshwara, Global Financial Turbulence', Professional
Banker, The Icfai University Press, September 2008, pp 51-54.
Redesigning the global finance, The Economist November 2008, pp 60-61.
Rhodes David et al, Seize Advantage in a Downturn, Harvard Business
Review, February 2009.
Srikant Srinivas, None Too Big To Fall, Business World, 13th October, 2008,
pp34-35.
Wade Robert, Steering Out of the Crisis, Economic and Political Weekly,
March 28-April 3, 2009, Vol XLIV
What Next, The Economist, September 20-26, 2008, pp19-20
World Economic Outlook, IMF
NEWSPAPER ARTICLES
Bali Vivek, Business in a tough environment, The Economic Times,
Wednesday, 23rd September 2009.
Chaudhari Saumitra, Remember Lehman's collapse, The Economic Times,
11th September 2009.
Ram Mohan T.T, A new paradigm for management? The Economic Times,
14th April 2009.
Roy Subhasish Managing global financial crisis, The Economic Times,
Thursday, 12th March, 2009.
ONLINE
http://www.merinews.com/article/10-indian-industry-to-do-well-duringrecession
www.imf.org /date visited 27th Nov 09
www.economist .com/date visited 27th Nov 09
GENERAL
MANAGEMENT
ISLAMIC PERCEPTION OF
COMMERCE & BUSINESS
MANAGEMENT
DR. DASTAGEER ALAM

PROFESSOR,
P.A. COLLEGE OF ENGG., MANGALORE
BACKGROUND
n today's world, life have become challenging and at every

facet of one's life, we are faced with dilemmas on how to live
an ideal life, a life that is guided by the Holy Book of Quran
and the Sunnah of Prophet Muhammad (PUBH). This paper tries
to draw inferences from various texts and ancient documents to
present and draw comparisons between what is permitted and
disallowed. It draws comparisons between a Muslim who is
ordained by God to live his life as per the guidances and
principles of the religion and the one who enjoys material
benefits and his behaviour is guided by results and outcomes and
not how it is gained or earned.
ISLAMIC HISTORY
Islam came, conquered and remained glittering for centuries
together. The world derived innumerable benefits of the Islamic
revolution which came on this earth. It was the time when the
world witnessed many discoveries, inventions and rule of
peaceful governance. But after gradual depletion of Islamic
spirit, the Islamic Kingdom also shrunk. Imperialism, Capitalism,
Socialism and other isms overpowered the world but the
humanity could not get relief, equality, peace and freedom
which it cherished during Islamic regime. Over last few decades
Muslims started to reaffirm their conformance to Shariah norms
and restructured their lives on the basis of Islamic principle. It
was a strong feeling and may be blunt reality also that political
and economic dominance of the west, during past few centuries,
has deprived them of divine guidance in almost every field and
especially in the socio-economic fields. Therefore, after
acquiring political freedom, the masses were striving

for the revival of their Islamic identity to organize in
collective life in conformity to Islamic principles.
After the economic recession of 2009 the majority of
the world came to realize that it was the collapse of
capitalism after socialism. American researches
affirmed that the Tsunami's impact of recession would
hamper the least, to those who were practicing
Muslims. The whole world, especially the developed
ones are looking toward Islamic economic system to
rescue the sinking ship of the world economy. But
here, a sensible question raises the doubts as to why
are Islamic theories not relevant to the present
context prevailing in Muslim countries. One very
pertinent reason being given over here is that the
Islamic scholars are un-aware of conventional
knowledge, and those who have conventional
knowledge, do not have sufficient Islamic knowledge
to authoritatively comment on Islamic perspective
and so should not meddle with them and keep a safe
distance. The Ulema, on the other hand, are not
considered suitable to comment on conventional
subjects. This hiatus makes it difficult for scholars on
either side to cross boundaries. Scholars, generally,
choose their own domain to make comments or give
advices. There are some more reasons observed as to
why Islamic knowledge is not supporting the existing
perspective of the Muslim world to prosper or at least
to move in a meaningful positive direction. I think it
should be crystal clear in every mind that Islam is
neither an economic system; nor a business system;
nor a way of accumulation of power; nor a set of rules
for governance, it is purely a religion providing
guidance in every sphere of human life which also
includes economic system, business management and
commerce as well. The holy Quran clarifies the very
purpose of creation of human beings, WAMA
KHALAQTUL JINNA WALINSA ILLA LI ABUDOON. I
created the jinn and human kind only that they might
worship me. In book of traditions Almighty says I
was a hidden treasure, I wanted to be known, so
created creations.
If we analyse the book of Hidayat of mankind i.e "THE

HOLY QURAN, we will find that there are around 6666
verses in it. Out of which Do's and Don'ts are only in
666 verses. Then what is there in dominant 6000
verses, Ulema confirm that 2000 verses discuss the
life hereafter i.e Qabar, Barzakh, HASHR, YOUMAL
QIYAMAH finally JANNAH, JAHANNAM and AERAF. The
other 2000 verses discuss how Almighty created this
universe, the earth, the moon, the mountains, the
sea, the system of plant life, the animal life and how
He exercises control over them. He emphasizes that it
is He who is creator, sustainer, destroyer and absolute
commander. Cause and effect relationships have
been created to facilitate mankind. He can do
anything without cause. Effects of causes may also be
altered instantly without any apparent cause. But He
does not do that in normal course of life.
While the rest 2000 verses discuss that the Almighty
sent 124000 Prophets out which around 25 have been
discussed thoroughly in Quran to drive home the
concept as towhy they were sent, how they fulfilled
their tasks, what reaction and repercussions they
faced; how ultimately Almighty gave them success
over their opponents and finally, how world realized
that Prophet should be followed.
In a nutshell, it can be concluded that out of the 6666
verses of Quran, nearly 6000 are only for shaping the
behaviour of man and making him an Islamic
Rational entity. An Islamic rational man has the
characteristics to become most suitable for every
facet of the human life. If we refer to the lives of
sahabah it will be very clear that they had all the
qualities of an Islamic rational man i.e. a true
believer of Islam or in terms of Quran a Momin.
The characteristic of an Islamic rational man is
being compared here with an Economic Rational Man
to differentiate as to why an Islamic Rational Man
becomes more suitable for different aspects of
human activity.
ISLAMIC RATIONAL MAN
ECONOMIC RATIONAL MAN
1.
Has a clear perception of life given in divine 1.

revelation, his importance for every system of
human life, the do's & don'ts which Islam has
prescribed for him.
Has a clear objective of earning money and

fulfilling the requirements and desires of life.
Has no divine guidance but some traditions,
rituals and values which he bypasses whenever
he gets an opportunity or whenever he feels
monetary benefits in doing so.
2.
Believes that only that material wealth which 2.

has been earned from (HALAL) legitimate
sources (i.e caring the laws of Almighty) will
give success, satisfaction, peace, tranquility &
pleasure, irrespective of quantity, i.e quality
of earning is important.
3.
Almighty
Believes that accumulating wealth

irrespective of mode of acquiring it will give
satisfaction in the proportion of its quantity,
i.e quality of earning is not a matter of
concern.
3.
Man
Material
He does not think any role of Almighty between

him and material. (as shown in above
diagram).
Man
Material
Understands a clear cut role of Almighty
between him and material wealth (as
shown in
above diagram).
4.
Is motivated by economic motives.
4.
Is motivated by divine motives.
5.
Will consider it HARAM to earn money without 5.

doing work.
Will not work if he gets money without doing

work.
6.
Considers work as a duty, fulfillment of which 6.

will lead to salvation on the Day of Judgment.
Considers work as means of earning money and

in no way as a means of salvation.
7.
Fears for the accountability on the Day of 7.

Judgment regarding the way of life and
behavior
Has no fear of accountability on the Day of

Judgment regarding the way of life and
behaviour.
8.
Has to justify his wage in terms of fair day's 8.
work in order to be considered as HALAL
Wants a fair day's wage without justification of

fair day's work.
9.
Exerts himself the least and thinks of passing

hours of work and avoid obligation as there is
no concept of HARAM RIZQ.
Exerts his muscles fully to fulfill the duty 9.

assigned in order to repel HARAM
earning.
10.
10.
Believes illegitimate source of earning

(HARAM) leads to chaos, dissatisfaction,
detracted children, peace-less
environment
and obstructs salvation on the Day of
Believes in earning more and more,

irrespective of source and methods, to amass
materialistic wealth to gain more satisfaction
and pleasures in present life.
ISLAMIC RATIONAL MAN
ECONOMIC RATIONAL MAN
11.
Believes that human values, social values, 11.

ethical values and religious values are ultimate
goals as they lead to create a contented,
secured, respectful happy life and
humane
society.
Believes that human values, social values,

ethical values should be taken care of so long
as economic motives are being fulfilled.
12.
If we have Islamic rational employees the 12.

following benefits we may get.
If we have ERM employees the following

problem we may face:
a.
Minimum or no supervision required to extract a.

work.
b.
More supervision required to extract work.
b.
Quality work possible without much concern of

management.
c.
c.
Working hours fully utilized.
d.
Personal conflicts will be avoided as ego is

d.
sacrificed.
e.
Punching machines and performance target

would be required for proper utilization of
working hours.
Personal conflicts get aggravated due to ego
clashes.
Group dynamics can be achieved easily.
f.
Quality work possible only if extraneous

rewards exist.
Smooth industrial relations and no unionism.
e.
f.
To conclude, to create an Islamic rational man is

indispensable to have fruits of Islam (The sentence is
not explanatory enough). This is the reason why
Islamic do's & don'ts were not given by the Almighty in
13 years of Makkah life and early few year of
Madeenah as well (whose life?). The 6000 verses first
descended and sahabah inculcated and cultivated
theses verses in their faith, style and all spheres of
life. They became fully receptive to the
Commandment of the Almighty. It was just impossible
for them to know a Command of Almighty or a Sunnah
of the prophet (BPUH) and not to obey it. So much so
that the Almighty himself witnessed and praised the
highest degree of their submission. This was the base
for total adoption of Islam. Whatever commandments
were revealed, got obeyed completely in its true
spirit even by the commonest of the common man.
When the verse of Purdah was revealed, a common
lady was working in the field. She sent someone to
Group dynamics becomes a difficult task.

Strained industrial relations and potent
unionism.
bring a thick (Is it necessary to mention a thick sheet

will it not suffice to state sheet of cloth) sheet of
cloth to cover herself to be able to return home as
commanded by the Almighty. There are innumerable
and unbelievable (unbelievable is not the right
word. Consider use of words like astounding,
amazing, etc.) examples in sahaba's life regarding
how they valued Islam and proved their credential of
being a MOMIN (an Islamic rational man).
Coming to the Islamic perception of commerce and
business management or any field of knowledge,
there is no hurdle and not much rigorous research
required.
Of course, the Ulema have to be well-acquainted with
what is happening in different aspects of live and
what would be the proper Islamic injunctions in a
given situation. Taking the case of business
management, it's one of the areas in marketing in
which advertizing is a very important area. If we look

into the present scenario, we find that it has become
anti-social, immoral, obscene, vulgar, unethical and
constantly ruining human culture and traditions.
Islam can never accept these unwanted elements. It
can never be said to be HALAL. But how many Muslims
are accepting and obeying this command. Reason is
clear, they are not Islamic rational. Likewise in every
sphere of human activity Islam has drawn a clear line
and that boundary cannot be crossed by an Islamic
rational man.
The practical solution of the problem is to form a body
consisting of Ulema and experts from diverse
specialities. Whenever some issues crop up, the
matter may be referred to this body for a practical
solution. Through a proper consultative process with
the Ulema, these experts and the leaders at the helm
of affairs, Islamic boundaries can be ascertained.
Islam has no prejudice with any field of knowledge
which is needed to ease the life, smoothen human
activities and provide research for making life
comfortable. Needless to say, that during the rise of
Islam, all type of knowledge and expertise was
developed and they were treated as Islamic in spirit.
Chemistry, physics mathematics, statistics, public
administration, medical science, surgery,
engineering, Navy, geography, Algebra and Algorithm
on which entire modern computer and Information
technology is based on, have been provided by
Muslims. All these are Islamic allied fields of
knowledge. Wisdom is the lost property of believer.
So where ever he finds it he has better right to it.
The fact is that all knowledge is Islamic until they
contradict Islamic faith and cross clear boundaries
drawn by Shariah. In the book of tradition it is stated
wisdom is ultimate goal of believer and where ever
he finds it, it is his prerogative to acquire it, as he
deserves it more than anybody else. Rasulullah BPUH
said seek knowledge even if it were in china. The
important matter is the implementation of
knowledge in true Islamic spirit which is not possible
without an Islamic rational man.
My submission is that it is not the lack of knowledge,
but rather lack of zeal to implement available
knowledge in every field of human activity. This zeal
can only be there in an Islamic rational man who was

pivot of entire efforts of the whole life of the prophet
S.A. For every knowledge, training the people to
implement that knowledge in its true spirit and
perspective is essential. But we do not think that a
Muslim Engineer or Doctor or Expert of any field tries
to know its Islamic boundaries of that knowledge so
that it may be implemented in true spirit and
perspective of Islam.
The crux of the whole paper may be viewed as follows
1.
At first, effort is to be made to create an

Islamic rational man as two-third's of
the life of Rasulullah S.A was spent on it and about
6000 out 6666 versses of the Quran have been
revealed for this purpose. How to do this
needs, is a completely dedicated and
gigantic
task by itself.But every Muslim prior
to
entering in to practical life must
become an
Islamic rational man in order to enjoy
the real
fruits of Islamic knowledge and lit a
candle for others to follow.
2.
To know what would constitute an

Islamic stand on any particular issue in any
domain of knowledge, a body of Ulema
experts of that respective field and the
people at the helms of affairs should
sit
together to discuss and to know
correct view
of shariah. Institute of Objective
Studies N.
Delhi is doing this beautiful job
through
organizing FIQHI seminars on
different issues.
A viable solution would be to
entrust this
work to Dar-ul-ulums and
now in every city
Darul Iftas have come up.
Every Darul Ifta
may have people drawn from
different fields of knowledge. Through this, work
may be diversified and Islamic views on any issue of
practical life, Islamic knowledge may be
communicated to the whole Ummah
very
easily.
3.
Experts of diverse fields of modern

knowledge should do exhaustive and
qualitative research to achieve excellence in
every field of research activity and have
ample share of contribution in every
area so as to have a say in that domain and have
which cross
courage to point out those items

the boundary of Shariah.
Shall feel aptly rewarded if this paper is read

objectively with open mind and with the zeal to
create an Islamic rational man who is of core
importance in the existing perspective.
REFERENCES
1.
Surat Adh-Dhariyat.
2.
Narrated by al aman ajilooni in kashful khifa
3.
Narrated by Abu Nuain in Hilyatil Awliyaa.
4.
Narrated by Al Iman Tirmizi in his book Sunan-e-Tirmizi
5.
Narrated by Imam Baihaqi in his book Ma dkh

Allana Management Journal of Research January-June-2011

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Allana Management Journal of Research January-June-2011

Загружено:

Авторское право:

Доступные форматы

ALLANA MANAGEMENT JOURNAL OF RESEARCH / JAN - JUN 2011 / PAGE NO.

ALLANA MANAGEMENT JOURNAL OF RESEARCH

A JOB? AN EMPIRICAL STUDY

RAVINDER KAUR, RESEARCH SCHOLAR, AMITY BUSINESS SCHOOL, NOIDA

A STEP FORWARD BEYOND THE TIP OF ICEBERG IN CONFLICTS : AN EMPIRICAL STUDY

FINANCIAL FLEXIBILITY AND OPERATIONAL RISK MANAGEMENT IN BANKS

VALUE CREATION IN INDIAN BANKING INDUSTRY : AN ANALYSIS

WILL CHINESE YUAN BECOME THE NEXT RESERVE CURRENCY?

GLOBAL RECESSION : MANAGEMENT CHALLENGES AND STRATEGIES MANAGERIAL PERCEPTION ON

ISLAMIC PERCEPTION OF COMMERCE & BUSINESS MANAGEMENT

ach issue of this journal has played a remarkable role in

NURSES' MOTIVATION IN INDIA : INTRINSIC AND EXTRINSIC MOTIVATION,

A STEP FORWARD BEYOND THE TIP OF ICEBERG IN CONFLICTS : AN EMPIRICAL STUDY

REINVENTING SOCIAL ETHOS [THE DIALECTIC OF ORGANISATION AND SOCIETY IN SOCIAL

FINANCIAL FLEXIBILITY AND OPERATIONAL RISK MANAGEMENT IN BANKS

VALUE CREATION IN INDIAN BANKING INDUSTRY : AN ANALYSIS

WILL CHINESE YUAN BECOME THE NEXT RESERVE CURRENCY?

A CRITICAL STUDY OF THE VALUE ADDITION TO EDUCATION BY ACADEMIC

GLOBAL RECESSION : MANAGEMENT CHALLENGES AND STRATEGIES MANAGERIAL PERCEPTION

ISLAMIC PERCEPTION OF COMMERCE & BUSINESS MANAGEMENT

NURSES' MOTIVATION IN INDIA :

MS. RAVINDER KAUR,

he nurses' crisis has numerous dimensions. There are

study on health workers' motivation and performance

health, human resource management and the

attract and retain staff tend to be those that offer the

employees from two hierarchical levels i.e. Senior

The actual research question on the role and

- Non parametric correlation test was performed.

Ho there is no correlation between senior and the

that they look into while selecting a job.

must protect, promote and build upon the

Alihonou E, Soud T, Houny F. La Motivation et La Performance du Personnel

2001. Health worker motivation in Zimbabwe.

Dolea C, Adams O. Motivation of health care workers: review of theories and

World Health Organization Migration of Health Professionals in Six Countries :

Franco LM, Bennett S, Kanfer R, Stubblebine P. Health Worker Motivation in

Franco L, Kanfer R, Milburn L, Qarrain R, Stublebine P. Motivational

Zurn P, Dolea C and Stilwell B (2004) 'Nurse Retention and recruitment:

A STEP FORWARD BEYOND THE

MS. V. SELVA LAKSHMI

teven V. Thulon quotes that Conflict builds character;

Conflicts can lead to search for solutions. Thus, it is

are inevitable between human

OBJECTIVES OF THE STUDY

Almost 80 percent of workers in Quebec

To find out which factor influences largely on

To study about the association between the

A 2005 UK survey by Roffey Park found that

To study about the association between the

42% of a manager's time is spent addressing

To study whether female members are

To study whether female members are

Conflict in the workplace has clear effect on

Conflict resolution absorbs 30-40% of a

25.8% of Hr personnel spend over 10% of their

This paper helps to take a deeper look into the

To study relationship between compatibility

According to Kirchoff and Adams,1982,

Different views of values, organizational

Ego issues and miscommunication have

Team size is not independent of Post conflict

Age group is not independent of Post conflict