Management & Change

Number 1 & 2

Volume 20

2016

Management & Change

Pavleen Soni Manisha Behal

Advertising in the New Age Media Understanding the Profile of Young Indian Internet Users

Sangeeta Chopra Shivani Khurana

Impact of Variable Pay on Performance : An Empirical Study

Prabhjot Kaur Mahal

Relationship between Psychosocial Factors and Employee Turnover in the Banking Sector

Moumita Acharyya

Reasons for CSR Actions and Organizational Social Performance : Mediating Role of Organizational Identity

Renu Aggarwal Monica Bhardwaj

Mobile Banking Adoption for Inclusion : A Review of Factors

Book Reviews Journal of IILM Institute for Higher Education

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Financial

Management & Change

Editor Dr. Sangeeta Chopra Professor-Organizational Behaviour & Human Resource Management IILM Institute for Higher Education

Journal of IILM Institute for Higher Education (Listed in Cabell’s Directory of IILM Institute for Higher Education Publishing Opportunities, Texas, USA & EBSCO, Ipswich, MA) Email: management.change@iilm.edu

Email: sangeeta.chopra@iilm.edu

EDITORIAL ADVISORY BOARD Gopal, Gurram

Industry Professor, Industrial Technology and Management (INTM), School of Applied Technology (SAT), Illinois Institute of Technology, 3424 S. State Street, Suite 4001, Chicago IL - 60616, United States of America.

Padam, Sudarsanam

Former Dean, Administrative Staff College of India, Hyderabad, India

Raghu Ram, T. L.

Professor of Strategy, XLRI Jamshedpur, Circuit House Area, Sonari, Jamshedpur, Jharkhand, India.

Wadhwa, B D

Senior Director, IILM Graduate School of Management, 16, Knowledge Park – 2, Greater Noida – 201306, India.

Shahi, Sujata

Senior Director & Professor, Organizational Behaviour & Human Resource Management, IILM Institute for Business and Management, DLF Golf Course Road, Sector – 53, Gurgaon – 122003, Haryana, India

Manuscript Submission Contributions are invited in diverse areas of management from interested authors. In each issue of the journal it is normally planned to include research papers, case studies, original conceptual papers/perspectives, short communications, management cases and book reviews. For contributor’s guidelines, authors may refer to the inside back cover. Enquiries should be electronically made to the Editor, Management & Change, IILM Institute for Higher Education or E-mail at: management.change@iilm.edu Frequency and Subscriptions Management & Change is published bi-annually i.e. twice a year (No.1: Summer; No.2: Winter). Annual subscription rates are as follows: Within India – Institutional: Rs. 750; Individual: Rs. 500 Overseas – Asian Countries: $50; Other Countries: $150 (Air mail) Demand Draft should be drawn in favour of: IILM Institute for Higher Education,payable at New Delhi.

Advertisement rates full page Rs. 20,000; half page Rs. 10,000.

Editorial/Subscription Information For editorial queries, please write to the Editor, Management & Change, IILM Institute for Higher Education, Tel: 91-11-40934356, Fax: 91-11-40934335, E-mail: management.change@iilm.edu . For subscription related queries please contact Editorial Coordinator (aarti.sharma@iilm.edu). Order for print copies to be made at management.change@iilm.edu .

Copyright @ 2016 IILM Institute for Higher Education. All Rights Reserved.

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Chronology of Editorial Team of ‘Management & Change’ Volume & Issue (Year)

Editor

Associate Editor

Editorial Coordinator

Vol. 1 No. 1 (1997)

Prof. Debi S. Saini

Sami A. Khan

Zafar H. Anjum

Vol. 1 No. 2 (1997)

Prof. Debi S. Saini

Sami A. Khan

Zafar H. Anjum

Vol. 2 No. 1 (1998)

Prof. Debi S. Saini

Sami A. Khan

Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui

Vol. 2 No. 2 (1998)

Prof. Debi S. Saini

Sami A. Khan

Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui

Vol. 3 No. 1 (1999)

Prof. Debi S. Saini

Sami A. Khan

Zafar H. Anjum

Vol. 3 No. 2 (1999)

Prof. Debi S. Saini

Sami A. Khan

Lincy Sebastian Yusuf Siddiqui

Vol. 4 No. 1 (2000)

Prof. Gautam Bhattacharyya

Sami A. Khan

Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui

Vol. 4 No. 2 (2000)

Prof. Gautam Bhattacharyya

-

Zafar H. Anjum Lincy Sebastian Yusuf Siddiqui

Vol. 5 No. 1 (2001)

Prof. Gautam Bhattacharyya

-

Yusuf Siddiqui

Vol. 5 No. 2 (2001)

Prof. Gautam Bhattacharyya

-

Yusuf Siddiqui

Vol. 6 No. 1 (2002)

Prof. Gautam Bhattacharyya

-

Yusuf Siddiqui

Vol. 6 No. 2 (2002)

Prof. Gautam Bhattacharyya

-

Yusuf Siddiqui

Vol. 7 No. 1 (2003)

Dr. Irfan A. Rizvi

Prof. M.K. Moitra

Yusuf Siddiqui

Vol. 7 No. 2 (2003)

Dr. Irfan A. Rizvi

Prof. M.K. Moitra

Yusuf Siddiqui

Vol. 8 No. 1 & 2 (2004)

Dr. Irfan A. Rizvi

-

Johnson E.P

Vol. 9 No. 1 (2005)

Dr. K.M.Mital

Dr. Siri D. Vivek

Johnson E.P

Vol. 9 No. 2 (2005)

Dr. K.M.Mital

Dr. Rajesh Pilania

Johnson E.P

Vol. 10 No. 1 (2006)

Dr. K.M.Mital

Dr. Rajesh Pilania

Johnson E.P

Vol. 10 No. 2 (2006)

Dr. K.M.Mital

-

Johnson E.P

Vol. 11 No. 1 (2007)

Dr. K.M.Mital

-

Johnson E.P

Vol. 11 No. 2 (2007)

Dr. K.M.Mital

-

Johnson E.P

Vol. 12 No. 1 (2008)

Dr. K.M.Mital

-

Johnson E.P

Vol. 12 No. 2 (2008)

Dr. K.M.Mital

-

Johnson E.P

Vol. 13 No. 1 (2009)

Dr. K.M.Mital

-

Arun Thomas

Vol. 13 No. 2 (2009)

Dr. K.M.Mital

-

Arun Thomas

Vol. 14 No. 1 (2010)

Dr. K.M.Mital

-

Ms. Deepa Khanna Ms. Sarla Rawat

Vol. 14 No. 2 (2010)

Dr. K.M.Mital

-

Ms. Deepa Khanna Ms. Sarla Rawat

Vol. 15 No. 1 & 2 (2011)

Dr. P. Malarvizhi

Mr. George Skaria

Ms. Deepa Khanna Ms. Shipra Jain

Vol. 16 No. 1 & 2 (2012)

Dr. Sangeeta Chopra

-

Ms. Aarti Sharma Ms. Shipra Jain

Vol. 17 No. 1 & 2 (2013)

Prof. Vandana Srivastava

Dr. Sangeeta Chopra Dr. Silky Kushwah

Ms. Aarti Sharma

Vol. 18 No. 1 (2014)

Dr. Vandana Srivastava

Dr. Sangeeta Chopra Dr. Silky Kushwah

Ms. Aarti Sharma

Vol. 18 No. 2 (2014)

Dr. Vandana Srivastava

Dr. Silky Kushwah

Ms. Aarti Sharma

Vol. 19 No. 1 (2015)

Dr. Vandana Srivastava

-

Dr. Moumita Acharyya Ms. Aarti Sharma

Vol. 19 No. 2 (2015)

Dr. Vandana Srivastava

-

Dr. Moumita Acharyya Ms. Aarti Sharma

Vol. 20 No. 1 & 2 (2016)

Dr. Sangeeta Chopra

Dr. Deepika Dhingra

Ms. Aarti Sharma

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ACKNOWLEDGEMENT TO REFEREES Following management professionals acted as referees for contributions made for Management & Change, Vol. 20 No. 1 &2 (2016). Management & Change acknowledges their valuable comments and suggestions for improving papers included in the following issue.

Management & Change, Vol. 20 No. 1 & 2 Bilal Mustafa Khan B K Srivastava

C R Darolia Madhu Vij

Deepika Dhingra

Moumita Acharyya

Sangeeta Chopra

Shivani Khurana

Shuchi Agrawal

Bhavleen Rekhi

Professor, Department of Business AdministrationAligarh Muslim University, Aligarh – 202002, Uttar Pradesh, India.

Professor, Organizational Behaviour & Human Resource Management, International Management Institute, B-10 Qutab Institutional Area,Tara Crescent, New Delhi- 110016, India.

Professor, Psychology, Kurukshetra University,Kurukshetra136119, India.

Professor, Finance, Faculty of Management Studies, Prof N.D. Kapoor Marg, Opp. Kirorimal College, University Enclave, Delhi, 110007, India.

Associate Professor, Finance, Accounting & Control Area,IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003, India.

Associate Professor, Organizational Behaviour & Human Resource Management, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003, India.

Professor, Organizational Behaviour & Human Resource Management, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003, India.

Professor, Organizational Behaviour & Human Resource Management, IILM Undergraduate Business School, 3 Lodhi Institutional Area, New Delhi – 110003, India.

Professor, Organizational Behaviour & Human Resource Management, IILM Undergraduate Business School, 3 Lodhi Institutional Area, New Delhi – 110003, India.

Former Associate Professor, Marketing and Sales,IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003, India.

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Management & Change VOLUME 20

NUMBER 1 & 2

2016

ARTICLES

Advertising in the New Age Media - Understanding the Profile of Young Indian Internet Users

Pavleen Soni Manisha Behal

Impact of Variable Pay on Performance : Empirical Study

An

Sangeeta Chopra Shivani Khurana

Relationship between Psychosocial Factors Employee Turnover in the Banking Sector

and

Prabhjot Kaur Mahal

Reasons for CSR Actions and Organizational Social Performance: Mediating Role of Organizational Identity

Moumita Acharyya

Mobile Banking Adoption for Financial Inclusion : A Review of Factors

Renu Aggarwal Monica Bhardwaj

BOOK REVIEWS Mithas, Sunil (2015). Making the Elephant Dance – The Tata Way to Innovate, Transform and Globalize reviewed by Rahul Mishra.

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Contributors Pavleen Soni

Assistant Professor, University Business School, Guru Nanak Dev University, Amritsar, Punjab, India.

Email: pavleen@yahoo.co.in

Manisha Behal

Research Scholar, University Business School, Guru Nanak Dev University, Amritsar, Punjab, India.

Email: manishabehal@yahoo.co.in

Sangeeta Chopra

Professor, Organizational Behaviour & Human Resource Management, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003, India.

Email: sangeeta.chopra@iilm.edu

Shivani Khurana

Professor, Organizational Behaviour & Human Resource Management, IILM Undergraduate Business School, 3 Lodhi Institutional Area, New Delhi – 110003, India.

Email: shivani.khurana@iilm.edu

Prabhjot Kaur Mahal

Associate Professor, Organizational Behaviour & Human Resource Management,1002, Block- A1, Paras Panorama, Opp. Sunny Enclave, Desumajra, Kharar. Mohali, Punjab – 140301, India.

Moumita Acharyya

Associate Professor, Organizational Behaviour & Human Resource Management, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003, India.

Email: moumita.acharyya@iilm.edu

Renu Aggarwal

Assistant Professor, Finance, Department of Management Studies, NH-2, Sector 6, Mathura Road, Opp. Sanjay Memorial Industrial Estate, Faridabad, Haryana – 121006, India. Email: renuaggarwal77@yahoo.co.in

Monica Bhardwaj

Assistant Professor, Fortune Institute of International Business Plot No. 5, Rao Tula Ram Marg, Opposite Army R&R Hospital Vasant Vihar, New Delhi - 110057, India.

Email: monica29rose@hotmail.com

Rahul Mishra

Professor, Strategy, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003, India.

Email: rahul.mishra@iilm.edu

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From the Editor’s Desk

Management Education: Course of Development and Future Direction The development of management education can be traced back to 18th century and in its runup to the 21st century, its contours have been decidedly shaped by macro trends of globalization, privatization, advancement in information technology, changing demographics and the like. The review of literature in the field of management education has indicated that it has been changing with the changes in business environment for education sector and in response to the demands of its stakeholders. It is imperative to look at management education from the market oriented perspective and take a strategic view to better align business education with the requirement of the global market.

The discipline of 'Management' perse, has evolved from fundamental disciplines of philosophy, psychology, economics, accounting, computer science, mathematics, statistics and industrial engineering. Further, it has been significantly impacted by new developments like growth of entrepreneurship in the last two decades, that spawned programs devoted to entrepreneurship and new-venture creation. While this field is an amalgamation of pure disciplines, its very nature impels it to acquiesce to changes, thereby validating its currency, vibrant nature and continuing relevance. In that sense, management education can be more meaningfully viewed as a process, than a programme, as it endeavours to be experiencebased, active, context-relevant, steered by feedback and action learning.

Having said so, Management education faces the onerous task of keeping pace with the dynamism of the practicing world. A rather few academicians from the management institutions venture outside their discipline to be in touch with the day-to-day reality in organizations, making a majority of them unable to comprehend the implications of the changes taking place in the practicing world. Feedback from the practicing world is often brushed aside by academicians, saying "the practitioners think only short term while we think of students' long term learning requirements". Further, often it eludes neat classification into traditional disciplines like Economics, Behavioural Sciences, Marketing and Finance; an interdisciplinary perspective is required to appreciate and assimilate these changes. The problem seems to go back and forth straddling the two aspects - that of understanding the practical side of business and that of ploughing back the lessons learnt into the programme; both the abilities predicate on adopting an interdisciplinary and practical orientation. Due to a seemingly blocked perception or limited insight, as borne out in the foregoing discussion, only small incremental changes are being attempted in the management education system.

The need for such changes is paramount as this can incrementally contribute to altering the purely Americanized model of management that is adopted, rendering it a more indigenous outlook and approach - a move that can equally benefit both, the 'teacher' and the 'taught'. In this regard, at the risk of sounding rhetorical, there is no gainsaying the fact that the industryacademia interaction needs to be made a central element, like a nerve centre, around which 7

the entire programme design, be it the structure, scheduling, evaluation or curriculum design should rest.

A prototype of this model exemplifying efforts in this direction can be found in German Chambers of Commerce and Industry's initiative to shape its educational programmes at higher education level specifically in the technical domain, through its close involvement right from the initial stages of curriculum and programme design, anchoring it closely to industry requirements, thereby avoiding redundant teaching creeping into the curriculum.

This has the salubrious effect of curbing the monstrous rise of educated unemployment and also underemployment, often seen in societies where what is taught is not readily transferable to what an employer looks for in a new recruit.

Many a researches on management education have lamented the competency gap found in management graduates due to lack of clarity about the desired attributes required on job. Said in simple words the problem of discipline bound orientation is observed in teaching imparted by faculty who teach models and concepts they are best conversant with, unmindful of their relevance and also which may be far removed from what it takes to be successful on job.

Pertinently, in a recent high powered EY-FICCI report 1 released at the 'FICCI Higher Education Summit 2014', it was pointed out that while Indian higher education had gained in terms of capacity creation and enrolment in the last decade, it significantly lagged in terms of "global relevance and competitiveness".

From 1990s such discussion has been around (for instance Working paper 2 by C.M. Reddy of IIM Bangalore) and the same tenor is detected in a very recent editorial 3 by Pritam Singh (former Director, IIM Lucknow) and Subir Verma (former Dean, IIM Ranchi) published in 'The Times of India' which among other things points out the necessity of participation by industry at close range, in the absence of which management education quality may wither and ultimately suffer, that they observed at some of the newly setup IIMs. They went as far as saying that industry and corporates need to be physically located where the Management Institute is situated to facilitate active interchange and likened it to the facility of hospitals attached to medical colleges for purposes of study, research, practice, experimentation and training.

While professions in computing, accounting, engineering, medicine rest more on the body of knowledge coded and documented, management education is more evolutionary, growing 1

The report "Higher education in India: Moving towards relevance and competitiveness" examines Indian higher education system and gives recommendations on how it can be made globally relevant and competitive.

It is available at http://www.ey.com/Publication/vwLUAssets/EY_-_Higher_education_in_India/$FILE/EYhigher-education-in-india.pdf 2 Working paper WP-XI titled 'Management Education in India' published in April 1992 critically examined factors hindering its effectiveness. It is available at https://www.iimb.ernet.in/research/sites/default/files/wp.iimb_.11.pdf 3 The full editorial can be found in The Times of India dated 12 January 2017 (p.18). It focuses on mediocrity of Educational Institutions in India which has negatively affected its global ranking of Institutions of Higher Education.

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with infusion of academic innovations; for instance in the past when manufacturing sector was in forefront and quality the prime driver, concepts like Kaizen, Six sigma, Quality circle, TQM gained momentum, and now digital revolution is spurring subjects like virtual teams, digital marketing, mobile based strategies, social media platform etc., and in the interim there was a block of period when subjects such as rural market penetration, e-commerce revolution and anything to do with technology picked up steam. While an absolute analysis is not the focus or scope of this write up, in some conclusive way it so appears that management education skews more towards being an art than a pure science form.

Infact the editorial referred to above also brings out that due to its fast moving and adaptive nature, this field of education should not be allowed to be directed by administrative mandarins of UGC or AICTE due to their limited understanding of its emergent nature that may unwittingly impede growth in knowledge creation, development and dissemination.

Of late much discussion has taken place on the social role of firms and their responsibilities to society, bringing out the need for a framework to integrate ethics, corporate social responsibility and sustainability dimensions in management education. In this regard, the role of universities and business schools is crucial to shape management students’ attitudes, provide them with the necessary knowledge, skills and direct more attention to implicit dimensions that are unsaid, falling outside the formal curriculum.

On similar ethos, United Nations is actively supporting a voluntary global initiative called PRME - Principles for Responsible Management Education, which aims to extend 'Sustainability' and 'Corporate Responsibility' to mainstream business-related education. The PRME initiative is seen as a key catalyst for transformation of management education, drive changes in business behaviour and steer corporate disposition towards sustainability. Its principal body United Nations Global Compact (UNGC) is doing landmark work outside the glare of pure academia to infuse these globally relevant themes, as also innovation, in management education and practice. One of its recent initiatives, worthy of mention is the 'Breakthrough Innovation Challenge' launched in 2016 (due to conclude in 2017), that sets forth some of the real business challenges faced by leading multinationals, and seeks solutions from young business management professionals, exhorting them to use principles of sustainability, innovation and technology.

This 'Programme', as UNGC refers to it, is so meticulously designed that participants are forced to do some real hard thinking and can't get away with offering mere humdrum ideas wherein lies the real learning for students. Few such business challenges posed are - How a consumer goods company using big data can encourage sustainable consumption and generate opportunities for growth? How can an automobile company using Artificial Intelligence offer mobility solutions to the disabled? What is remarkable about this initiative is that it is co-opted by some of the leading multinationals, guided by an Innovation firm, and is firmly focused on carving a purposeful, strategic direction based on ingenious business models, hatched by students and proposed as solutions.

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Though CSR was always a desired virtue, its presence in mainstream consciousness strengthened following a change in the Company law in April 2014. At present CSR and offshoots such as sustainability are focal areas of management, furthered by strong push provided by the might of UN backed initiative as detailed above. It follows from above that business education can't be left to its own as a pure scholastic venture and lesser still taught using linear mental models or the cut and dried oft-beaten methods; it is too dynamic and complex a field needing careful deliberation, newer pedagogical tools like using group environment or teaching through industry-academia collaboration or facilitating learning by throwing open contests such as done by UNGC in its BIC challenge.

Generally speaking, individuals with an understanding of sustainability and harbouring a positive attitude towards it, can be creative in generating sustainable innovative solutions, addressing the local needs of their communities - whether business related or societal. The management graduates can learn from these diverse themes, initiatives and work as key partners in moving the sustainability agenda forward through their influence over their teams and the organizations they work for.

In this regard, business schools, known for their broad reach and deep impact on business sector, will do well to empower young graduates to work out sustainable business solutions that bring together theory and practice and squarely address the ethical and societal issues, in a manner that serves the rightful, justifiable expectations of stakeholders.

IILM Institute for Higher Education

Dr. Sangeeta Chopra

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ADVERTISING IN THE NEW AGE MEDIA—UNDERSTANDING THE PROFILE OF YOUNG INDIAN INTERNET USERS Pavleen Soni 1 Behal 2

Manisha

Internet, as new age media, touches the lives of young people in a dynamic way as they spend lot of time surfing internet. Thus, they are exposed to advertising on internet along with other content. As these users are seen to spend large sums of money while shopping through e-shopping sites, it is likely that they are influenced by internet advertising.

Therefore, the present study endeavors to understand the attitude of young internet users toward internet advertising and to segment them into distinctive groups. In order to achieve the aforesaid aim, a sample of 714 late adolescents/young adults from schools and colleges of Punjab has been taken. The study uncovered six dimensions that explain attitude of users toward internet ads viz., ‘informative’, ‘manipulative/distorting values’, ‘reliable/hedonic’, ‘good for consumers’, ‘exaggerating’, and ‘materialistic’ and these internet users can be segmented into two clusters—‘Naive users’ and ‘Experiencers’. The findings of the study demonstrate significant differences between these groups of internet users across demographic variables and their internet usage. Implications for marketers for framing media strategies are finally presented.

Keywords: Attitude, Internet advertising, Cluster analysis, Young Internet Users, India INTRODUCTION Internet advertising serves as an important marketing tool. Given the manner in which it is being used, it becomes important to study the effectiveness of internet advertising. A few studies (Ducoffe, 1996) have examined the mechanism of online advertising and have proposed that attitude of individuals towards online advertising serves as an important predictor of online advertising effectiveness. Particularly, young internet users spend enormous time in exploring internet and are exposed to multiple ads along with other content.

Burns and Lutz (2006) describe six formats of online advertising that are commonly used— banners, floating ads, large rectangles, interstitials, skyscrapers, and pop-ups. The graphical elements in horizontal and rectangle shape displayed on web page are regarded as banners.

Pop-ups open another window on users’ browsers and can be removed by closing or minimizing the window. Vertical ads located on the margins of web page are termed as skyscrapers. Between the movements of two content pages, interstitials are automatically presented to the users. It disappears when the requested page loads. Floating ads help to create a layer on the web page with animation by combining flash with hyper text markup language (HTML). This growing exposure to internet ads entails some positive and negative 1

Assistant Professor, University Business School, Guru Nanak Dev University, Amritsar, Punjab, India. E-mail: topavleen@yahoo.co.in 2 Research Scholar, University Business School, Guru Nanak Dev University, Amritsar, Punjab, India. E-mail:manishabehal@yahoo.co.in 11

outcomes. Burns and Lutz (2006) stated that pop-ups and floating ads irritate users whereas interstitials entertain them. Besides, banner ads provide information about products/services to the users.

However, past research on online advertising has been carried out in developed nations and there is a need to study the concerned phenomena in developing countries like India. India is a country where marketers are focusing on spending more of their media budget on various digital avenues. Total digital ad spend in India is nearly $ 568.6 in 2013 and is projected to reach $ 2165.8 in 2019 3. India ranked second largest in Asia pacific region as far as internet users base is concerned. It accounted for 375 million internet users as per January, 2016 with 28 per cent online penetration 4. Moreover, majority of Indian internet users are younger than those in other emerging economies 5 and three-fourth of online population of India is under the age of 35 years in contrast to nearly fifty per cent across the globe (Shiva kumar, 2013). Roy (2009) reported that Indian students surf internet for self development, relaxation and exploring career opportunities. Moreover, they use internet as it is user friendly and gives wide exposure to them. Internet use is high among young Indians and advertising appears on internet concurrently as users are surfing internet, therefore, the present research becomes pertinent to study the role of internet advertising in the lives of young users and particularly aims to: • Uncover dimensions of young Indian internet users’ attitude towards online advertising and • Segment them according to attitudinal dimensions, demographic variables and internet usage patterns.

PREVIOUS RESEARCH Previous studies have examined attitude of internet users toward internet advertising by exploring beliefs about it. Wolin et al.; (2002) explored the belief factors that positively influenced attitude of consumers towards online advertising. These factors were described as informativeness, hedonic /pleasure, social role and image. Yang (2003) discovered the beliefs that predict internet users’ attitude towards the internet advertising. The study observed that eight out of ten beliefs of internet advertising significantly contributed towards prediction of internet users’ attitude towards internet advertising. These beliefs of internet advertising were: good for personal economy and consumer benefits, hedonic/pleasure, materialism, good for economy, consumer manipulation, product information, role in economics, and web economics. Out of these eight dimensions, six dimensions predicted positive attitude of internet users’ towards internet advertising. Wang et al.; (2009) further explored the beliefs about online advertising and examined the relationship of these beliefs with attitude of college students (mean age = 22.85 years) toward online advertising in Romania. The study 3

http://www.emarketer.com/Article/Digital-Takes-Tiny-Share-of-Ad-Spending-India/1012326 http://www.statista.com/statistics/265153/number-of-internet-users-in-the-asia-pacificregion/ 5 http://www.thehindu.com/sci-tech/technology/internet/india-is-now-worlds-third-largestinternet-user-after-us-china/article5053115.ece 4

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explored seven beliefs of online advertising viz., entertainment, information, believability, negative social impact, materialism, economy and persuasion. It was reported that Romanians found online advertising to be informative and scored highest on this particular belief. This belief was found to be a significant predictor of their attitude towards online advertising followed by providing entertainment, believability, economy and materialism. Azeem and Haq (2012) found that five beliefs about internet advertising–entertainment, information, credibility, economy and value corruption were significant predictors of students’ attitude towards internet advertising in India. Of these five beliefs, economy was found to be the most important predictor of attitude towards internet advertising followed by credibility, information, entertainment and pro-value. The study concluded that overall students depicted positive attitude towards internet advertising. Suchitra (2014) found that majority of Indian internet users liked internet advertising and agreed that such advertising informs them about latest trends. Furthermore, she concluded that in general, Indians demonstrated positive attitude towards internet advertising and used internet ads as a source to make purchase decisions. Kiran et al.; (2008) reported that online advertising significantly influenced consumers to buy online. In a recent study conducted in India, Venkatalakshmi and Sachin (2016) studied the impact of mobile in-app advertisements on youth. They reported that youth found these ads to be informative but job related ads influenced them the most.

Some researchers have explored the attitude of internet users toward internet ads in cross-cultural settings. An and Kim (2008) through a cross–cultural study in Korea and America tried to uncover the attitude of undergraduates toward internet advertising. They considered four aspects of attitude towards internet advertising—informational, entertainment, trustworthiness and irritation. In the context of informational aspect of internet ads, Americans were likely to be more supportive regarding the utility of ads as compared to Koreans. The study reported that students in both countries did not consider internet advertising as really entertaining. Furthermore, trustworthiness of internet advertising extensively affected positive attitude of Korean users than Americans. On the whole, the study concluded that overall perception of undergraduates toward internet advertising was negative in both cultures. Cardoso et al.; (2011) confirmed the scale developed by An and Kim (2007) through the primary responses of adolescents aged 13 to 17 years in Portugal.

The study confirmed the applicability of four constructs—informativeness, entertainment, irritation and trustworthiness of adolescents’ attitude towards internet advertising.

Furthermore, the findings of the study depicted that adolescents generally reported neutral to negative attitude towards internet advertising.

Sun and Wang (2010) investigated the relationship between consumers’ (aged 18 years and over) beliefs about online advertising and their attitude towards online advertising through a comparative study in United States and China. The study explored five beliefs towards online advertising namely, information seeking tool, entertainment, credibility, economy and value corruption for Chinese and U.S. internet users. Out of these beliefs, information, economy and value corruption beliefs were found to be the significant predictors of consumers’ attitude towards online advertising both for Chinese as well as for U.S. internet users. However, U.S. internet users considered entertainment as a significant predictor of 13

their attitude as compared to Chinese counterparts. The study concluded that internet users who held positive attitude towards online advertising were more likely to be persuaded by online advertising and correspondingly buy more through online channels. But such relationship was more prominent and strong for U.S. consumers than for Chinese ones. Wang and Sun (2010a) tried to explore the impact of culture on attitude of consumers (Chinese and U.S.) towards online advertising. Results of the study depicted significant differences among Chinese and U.S. samples with respect to three beliefs — information, credibility and economy. As compared to Chinese users, Americans considered online advertising to be more informative, more trustworthy and less economically beneficial. On the other hand, Chinese demonstrated lower trust towards online advertising and believed that online advertising to be more economically beneficial. Wang and Sun (2010b) in a comparative study, attempted to explore the attitude of consumers towards online advertising in three nations—U.S., China, and Romania. The study concluded that Romanians considered online advertising as more informative and credible as compared to Americans and Chinese. Therefore, they held more positive attitude towards online advertising. Celebi (2015) found that young individuals’ most prominent motivation to use internet was to indulge in interpersonal communication. They used social media to participate in discussions and meet new people which influenced their attitude towards internet advertising positively. Similarly, Dufflett (2015) found that young adults who used Facebook more frequently depicted favorable attitude towards advertising on Facebook.

Previous literature also suggests that attitude of young internet users towards internet advertising is influenced by demographic variables (Korgaonkar and Wolin, 2002; Wolin et al.;, 2002; Wolin and Korgaonkar, 2003; Yang, 2003). For example, older internet users hold more positive attitude towards internet advertising and find these ads to be informative as well as entertaining. More so, internet users who belong to higher income families hold more positive attitude towards internet advertising and considered these ads as a source of providing information on recent lifestyles to them. In addition to this, internet usage among these young users also predicts their attitude towards internet advertising (Yang, 2003). Wang et al.; (2009) reported that heavy users tend to have more positive attitude towards online advertising than light internet users.

Some researchers have also examined internet users’ attitude towards online advertising (e.g. Schlosser et al.; 1999). However, previous studies on internet users’ attitude toward online advertising have treated internet users as a homogeneous group without considering within-group differences (Ducoffe, 1996; Mehta and Sivadas, 1995; Schlosser et al.;, 1999). As a result, these studies failed to examine the difference in attitudinal dimensions that could carry both theoretical and practical implications. In addition to this, previous research laid more emphasis on measuring attitude of young viewers towards TV advertising and not internet advertising which is an emerging media especially in India. Hence, it is of significance to examine the attitude of young Indian internet users towards online advertising and to present a profile of young Indian internet users to better guide marketers in framing their online advertising campaigns.

Specifically, this research addresses the following research questions— 14

RQ1: What are the dimensions of young internet users’ attitude towards online advertising?

RQ2: How will clusters of young internet users differ in their attitude towards online advertising?

RESEARCH METHODOLOGY Data have been collected from three cities of Punjab (India)—Amritsar, Jalandhar and Ludhiana as these cities represent three traditional regions of Punjab—Majha, Doaba and Malwa respectively. A sample of 800 was administered to students (young internet users) who were enrolled in classes ranging from matriculation to post graduation, incorporating sample as per population proportion in age category 15 to 24 years with respect to these three cities (Census, 2001). D.A.V. schools and colleges were approached to collect the data as they run schools and colleges across all cities of Punjab and enroll students from diverse socioeconomic and culture backgrounds. With the permission of Principal of each school and college, data have been collected personally from students in their respective classrooms through pretested, non-disguized and structured questionnaire. 800 questionnaires were distributed and 714 usable responses were received (89.25% of the sample), which form the basis of the present study. In the sample, majority of respondents (51.40%) belong to the age category of 15 to 19 years, most of them are boys (51.3%) with weekly pocket money ranging from INR 251—500 (46.8%), with monthly family income less than INR 50000 (59.8%). The respondents reported that mothers are their primary caregiver (61.6%). Also, 48.7% mothers of young media users were graduates while 44.4% fathers were graduates.

MEASURE USED In order to measure attitude of young internet users toward internet advertising, a 24-item scale developed by Yang (2004) has been used. The scale consists of items pulled from various dimensions to measure attitude. It includes measurement of internet ads as being informative (e.g. Internet is a valuable source of information), materialistic (e.g. Internet advertising promotes a materialistic society), hedonic (e.g. Internet advertising is interesting and enjoyable), manipulative (e.g. Internet advertising persuades people to buy things they should not buy), distorts values (e.g. Internet advertising promotes undesirable values in our society), exaggerating (e.g. Most Internet advertising is misleading), and good for consumers (e.g. Internet advertising is essential). Responses were measured on a 5-point likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). Internal consistency of the scale (Cronbach’s alpha) is 0.858 which is adequate (Funfgeld and Wang, 2009) and acceptable (Hair et al.;, 2003).

Exploratory factor Analysis, Confirmatory factor analysis, Cluster Analysis and Chisquare test have been used to analyze responses using SPSS and AMOS 19.0.

DATA ANALYSIS This section has been divided into two parts. First part ‘Assessment of attitudinal dimensions of internet advertising’ exhibits the results of descriptive statistics and exploratory factor 15

analysis and confirmatory factor analysis. The second part reports the segmentation profile of young internet users on the basis of attitudinal dimensions, personal characteristics and internet usage pattern and is referred as ‘Profiling of young internet users’.

ASSESSMENT OF ATTITUDINAL DIMENSIONS OF INTERNET ADVERTISING The resulting statistics revealed in Table 1 depict that majority of young users consider internet advertising as a valuable source of information about products/services (S3, 86.7%), local sales (S2, 83.8%) and latest fashion (S1, 82.6%). They also express that internet advertising is interesting as well as attractive (S14, 68.0%) and helps in raising their standard of living (S10, 63.1%). Besides, they view that internet advertising is essential (S9, 58.8%) and provides valuable information relevant to personal tastes of individuals (S12, 57.6%). On the other hand, they also acknowledge the negative effects of internet advertising and report that internet advertising promotes a materialistic society (S6, 57.6%) as well as makes people live in a world of fantasy (S8, 63.2%). Furthermore, they express that because of internet advertising, people buy a lot of things that they do not really need (S20, 60.4%).

EXPLORATORY FACTOR ANALYSIS Since the scale is recently developed, factor analytical technique has been applied in order to verify the dimensionality of attitude of young users toward internet advertisements. On executing principal component analysis, using varimax rotation, the analysis resulted in six factors, explaining 54.80% of total variance. However, S5 ‘Internet advertising provides information on what is cool’ had to be deleted as it did not load on to any factor (factor loading was less than 0.45). Thereafter, factor analysis was run again on the remaining 23 items. The analysis yielded six factors that accounted for 55.58 % of total variance. Careful analysis of items under factor one through six in Table 1 manifests attitude towards internet advertisements namely, informative (F1), manipulative/distorting value (F2), reliable/hedonic (F3), good for consumers (F4), exaggerating (F5) and materialistic (F6).

The first factor ‘informative’ suggests that respondents perceive internet advertising to serve as a valuable source of information about latest fashions, discount offers, local sales and availability of product/services. It describes internet advertising’s role as an important information purveyor.

Internet ads as ‘manipulative/distorting’ values is another important factor which suggests that respondents feel that internet advertising insults the intelligence of internet users by showing ads in complex language as well as tends to promote undesirable values in the society. It is also believed to distort values of young internet users. Besides, internet advertising contradicts the values that a society cherishes. They also consider that internet ads persuade them to buy things they should not buy.

Through the third factor, ‘reliable/hedonic’, young internet users find internet advertising to be very enjoyable. They think that noticeable characteristics of internet advertising lie in its multimedia capacities, which entertain them as well as bring fun and 16

enjoyment to their lives. Moreover, young internet users consider that internet ads are interesting and attractive and even more enjoyable than other media.

Table 1: Dimensionality and Reliability of Attitude Towards Internet Advertising Factors Loadings** Labels

Statements

F1

F2

F3

F4

F5

F6

Commo -nalities

Agree ment

Disagree ment

Internet Advertising…

S2

….is a valuable source of information about local sales

0.81 9

0.719

598 (83.8)

38 (5.3)

S3

….is a valuable source of information about products/ services

0.78 8

0.718

619 (86.7)

28 (3.9)

S4

….helps me keep up to date with products/services available in the marketplace

0.69 2

0.570

566 (79.3)

45 (6.3)

S1

…. is a valuable source of information about latest fashion

0.66 1

0.530

590 (82.6)

50 (7.0)

S23

….promotes undesirable values in our society*

0.79 4

0.673

302 (42.3)

165 (23.1)

S24

….distorts the values of our youth*

0.75 8

0.628

281 (39.4)

170 (23.8)

S22

….persuades people to buy things they should not buy*

0.68 7

0.543

349 (48.9)

145 (20.3)

S21

….insults the intelligence of the average consumer*

0.60 1

0.451

306 (42.8)

137 (19.2)

S13

….provides accurate information about products/services

0.536

358 (50.2)

140 (19.5)

0.70 0

17

S14

….is interesting attractive

and

0.67 5

0.547

486 (68.0)

73 (10.3)

S15

….are even enjoyable than media contents

more other

0.66 3

0.516

376 (52.7)

126 (17.6)

S16

…. I like to think about what I see on Internet advertising

0.49 8

0.420

359 (50.3)

148 (20.7)

S9

….is essential

0.74 1

0.613

420 (58.8)

92 (12.9)

S10

….helps raise standard of living

our

0.69 2

0.598

450 (63.1)

86 (12.0)

S11

….results in better products for the public

0.64 1

0.578

407 (57.0)

107 (15.0)

S12

….is a valuable source of information about how to establish personal taste

0.45 0

0.460

411 (57.6)

87 (12.1)

S17

….does not provide a true picture of the product advertized*

0.73 6

0.583

347 (48.6)

97 (13.6)

S19

….is misleading*

0.69 6

0.536

309 (43.3)

138 (19.3)

S18

….is an impersonal way of selling*

0.65 3

0.487

370 (51.8)

113 (15.8)

S20

….people buy a lot of things that they do not really need*

0.46 2

0.428

431 (60.4)

117 (16.4)

S8

….makes people live in a world of fantasy*

0.67 5

0.545

451 (63.2)

81 (11.3)

S7

….encourages people to buy something to impress others*

0.67 0

0.592

522 (73.1)

60 (8.4)

S6

….promotes materialistic society*

0.63 4

0.513

411 (57.6)

70 (9.8)

a

18

Eigen Values

5.60 3

2.43 8

1.34 4

1.27 6

1.11 6

1.00 7

Percent Variance

10.9 6

10.1 6

10.0 3

9.06 9

7.99 9

7.35 4

Cumulative Variance

10.9 6

21.1 2

31.1 6

40.2 3

48.2 2

55.5 83

Cronbach’s Alpha

0.78 8

0.73 0

0.68 0

0.74 2

0.60 5

0.60

∑12.784

“Source: Researcher” Notes:*indicates statements are reverse coded; n = 714; Eigen value > 1; ** indicates factor loadings ≥ 0.45; Figures in parenthesis represents percentages.

The factor labeled as ‘good for consumers’ indicates that internet advertising is seen to raise standard of living of people by providing better products/services to the society. It is also seen to provide valuable information relevant to personal tastes of individuals.

The factor labeled as ‘exaggerating’ reflects that internet advertising does not provide a true picture of the products advertized. Moreover, young internet users consider that internet advertising misleads them and forces them to buy many things that they do not really need.

The last factor labeled as ‘materialistic’ constitutes the view of young internet users who think that internet advertising promotes materialism among youth. It encourages internet users to buy products with the intent to impress others and drives youth to live in a world of fantasy. This dimension demonstrates that internet advertising creates desires to buy and to own things which were not required sometimes.

A confirmatory factor analysis using maximum likelihood estimation has been conducted to examine the validity of the constructs explored through exploratory factor analysis. In order to assess whether the hypothesized model fits the data, model fit indices have been calculated and presented in Table 2.

19

Table 2: Model Fit Indices of the Six-Factor Model Model Fit Indices

Measurement Model

Absolute Fit measures (AFM) Normed χ2 /df

2.324

Goodness of Fit Index (GFI)

0.952

Root Mean Square Error of Approximation (RMSEA)

0.043

Incremental Fit Measures (IFM) Adjusted Goodness of Fit Index (AGFI)

0.935

Comparative Fit Index (CFI)

0.941

Badness of Fit Measures Root Mean Square Residual (RMR)

0.035

Source: Researcher From Table 2, it is seen that all the values are clearly closed to the threshold values recommended in the literature (Hair et al.;, 2003). AVEs (Average variance extracted) and composite reliabilities of these four constructs are greater than 0.50 and 0.70 respectively.

Thus, it is proved that the present six-factor model with twenty three items is sufficient to explain attitude of young internet users towards internet advertising in the Indian context.

PROFILING OF YOUNG INTERNET USERS In order to segment attitudinal groups of young internet users who are alike in their responses towards internet advertising, cluster analysis has been used. The attitudinal dimensions of internet advertising–informative, manipulative and distorting values, reliable and hedonic, good for consumers, exaggerating, and materialistic confirmed through confirmatory factor analysis have been used as input variables for cluster analysis. An overall score for each attitudinal dimension of internet advertising has been calculated by adding the scores for each included item and dividing this by the number of items in the dimension (Funfgeld and Wang, 2009), so that the young internet users could be segmented on the basis of these factor scores.

Table 3 shows the descriptive statistics and inter-correlations of each of the attitudinal constructs of internet advertising explored through factor analysis.

In order to perform cluster analysis, firstly, the existence of outliers has been assessed using Mahalanobis distance square measure (d2), which indicated non-existence of outliers. This was necessary as cluster analysis is sensitive to outliers (Schaufeli et al.;, 2009). Secondly, segments were formed using Average linkage method in hierarchical clustering approach with squared Euclidean distances as the dissimilarity measure for defining an initial cluster solution (Davis and French, 1989). Two natural clusters were identified based on the highest 20

percentage change in the agglomeration coefficient (1.618%) for the shift from two to one cluster as well as on the basis of dendograms produced. Thirdly, non-hierarchical cluster analysis i.e. K means method was used and the results obtained from K-means cluster further reconfirmed the existence of two cluster solution. Afterwards, one-way ANOVA was carried out and the analysis found that each attitudinal factor significantly contributed to clusters, and respondents were also evenly segmented into two clusters (see Table 4).

Similar to the process of naming the factors that resulted from factor analysis, the next step in the analysis was assigning names and characterizing the two clusters of young internet users that emerged from the analysis.

Table 3: Means, Standard Deviations and Inter-Correlations among Attitudinal Factors of Internet Advertising S.No.

Attitudinal Factors of Internet Content

Mean Values

S.D.

1

1.

Informative

4.09

0.64

2.

Manipulative and distorting values

2.72

0.73

0.164**

3.

Reliable and hedonic

3.77

0.52

0.815**

2

3

4

5

0.319* *

4.

Good for consumers

3.85

0.53

0.854**

0.288*

0.969* *

*

5.

6.

Exaggerating

2.54

Materialistic

2.29

0.63

0.66

0.140**

0.400**

0.432* *

0.345*

Source: Researcher **

Correlation is significant at 0.01 level

21

*

0.248*

0.228*

*

*

0.667*

0.701*

*

*

0.257 **

SEGMENTATION PROFILE The young internet users have been grouped into two clusters viz., Naive users and Experiencers on the basis of unique characteristics of the two segments. The grouping of respondents has been revealed through final cluster centres. Table 4 presents an overview of the characteristics of the two clusters.

Table 4: Profile of Young Internet User Clusters (Based On Final Cluster Centres) And F-Test Results Clusters S.No.

Attitudinal Factors of Internet Advertising

f-value

N=366 (51.26%)

Experiencers N=348 (48.74%)

Naive users

1

Informative

3.69 (Low)

4.51(High)

462.995*

2

Manipulative and distorting values

2.41 (Low)

1.96 (Low)

116.952*

3

Reliable and hedonic

3.39 (Low)

4.15 (High)

791.532*

4

Good for consumers

3.45 (Low)

4.24 (High)

828.130*

5

Exaggerating

2.24 (Low)

1.93 (Low)

61.766*

6

Materialistic

2.09 (Low)

1.46 (Low)

398.416*

Source: Researcher Note: *p< 0.01 The cluster of ‘naive users’ is comprized of nearly fifty one per cent respondents and represents respondents who are low on positive as well as negative attitudinal dimensions of internet ads. It reflects that these set of internet users do not pay attention to ads while they are working on internet. They are indifferent towards internet ads and do not know about the positive effects of these ads. Those respondents who score high on positive attributes of internet ads i.e. who view them as informative, reliable/hedonic and good for consumers but score low on negative attributes of internet ads such as manipulative/distorting value, exaggerating and materialistic. The second cluster comprises of ‘experiencers’ representing approximately forty nine per cent of respondents. These users perceive internet ads as a positive tool as they think about it as a source of information, entertainment, and a reliable as well as a useful tool to do imaginative work.

PROFILING OF YOUNG INTERNET USERS’ ATTITUDINAL CLUSTERS OF INTERNET ADVERTISING In order to study the differences between attitudinal clusters of young internet users across demographic characteristics and internet usage, Chi-square (χ2) test has been used. Table 5

22

presents the profile of internet usersâ&#x20AC;&#x2122; attitudinal clusters based on demographic characteristics and internet usage.

Table 5: Profiling of Young Internet User Clusters

Variables Age 15-19 20-24 Gender Male Female Family income Less than 50,000 50,001-1,00,000 More than 1,00,000 Mother education Under-graduation Graduation Post-graduation And higher Working status of mothers Working Non-working Mother occupation Housewife Govt. service Private service Profession/Business Father education Under-graduation Graduation Post-graduation and higher Father occupation Govt. service Private service Profession Business Agriculture Primary caregiver Mother Father Grandparents/Siblings Internet usage per day Less than 1 hour 1-2 hours 2-3 hours More than 3 hours According to need

Attitudinal clusters of Internet Advertisements Naive users Experiencers N % N % 214 152

30.0 21.3

153 195

21.4 27.3

177 189

24.8 26.5

202 146

28.3 20.4

216 99 51

30.3 13.9 7.1

211 107 30

29.6 15.0 4.2

102 184 80

14.3 25.8 11.2

124 164 60

17.4 23.0 8.4

85 281

11.9 39.4

61 287

8.5 40.2

281 36 28 21

39.4 5.0 3.9 2.9

287 16 27 18

40.2 2.2 3.8 2.5

105 158 103

14.7 22.1 14.4

123 159 66

17.2 22.3 9.2

93 46 13 203 11

13.0 6.4 1.8 28.4 1.5

86 36 20 195 11

12.0 5.0 2.8 27.3 1.5

228 117 21

31.9 16.4 2.9

212 126 10

29.7 17.6 1.4

42 78 55 46 127

5.9 10.9 7.7 6.4 17.8

60 96 31 44 135

8.4 13.4 4.3 6.2 18.9

Source: Researcher 23

Chi-square (Ď&#x2021;2) 15.023* 6.719***

5.363***

5.698***

3.557***

7.556***

9.077*

2.687

4.367

11.579**

Note: *chi-square value significant at 1% level of significance; **chi-square value significant at 5% level of significance, ***chi-square value significant at 10% level of significance.

The results as shown in Table 5 indicate that there are statistically significant differences in internet usersâ&#x20AC;&#x2122; age, gender, family income, education status of parents, working status and occupation of mothers and internet usage patterns between these two attitudinal clusters/segments.

Compared with naĂŻve users, experiencers are older. Nearly twenty seven per cent experiencers are aged above nineteen years as compared to only 21.3% of the naive users. On the other hand, nearly 21% of the experiencers are less than 19 years old, compared with 30% of naive users.

As regards gender of internet users, 24.8% users are male naive users, in contrast to the female experiencers who account for 20.4% of the total sample. In addition to this, female naive users represent nearly 27% of the total sample whereas the male experiencers account for 28.3% of the total sample. This implies that majority of naive users are females while experiencers are males.

As regards family income of internet users, majority of both experiencers as well as naive users belong to families with monthly family income less than Rs. 50000. But, the difference between these two clusters is visualized in the upper band of family income, i.e. for income more than Rs. 100000. In this income group, naive users account for 7.1% of the total sample as compared to experiencers who account for just 4.2% of the total sample. This suggests that richer users are naĂŻve ones.

As far as education status of mothers is concerned, 25.8% mothers of naive users have obtained a graduation degree, whereas only 23% of the mothers of experiencers are graduates. Moreover, there are small proportions of internet users among experiencers (8.4%) and naive users (11.2%) whose mothers have obtained a post graduation degree or higher.

As regards working status of mothers, children in a greater proportion (11.9%) are naive users in families where mothers work outside home. But, children are seen to be experiencers (40.2%) if mothers do not work outside home. This suggests that mothers of naive users are working women while mothers of experiencers are housewives.

As far as occupation status of mothers is concerned, 2.9% mothers of naive users are in business/profession in contrast to 2.5% mothers of experiencers who are in business/profession. Moreover, 2.2% mothers of experiencers are in government service in contrast to 5% mothers of naive users who are government employees. This reflects that mothers of naive users are government employees while mothers of experiencers are working in private organizations.

With respect to education status of fathers, 14.7% fathers of naive users and 17.2% fathers of experiencers are undergraduates. In addition to this, 9.2% fathers of experiencers in contrast to 14.4% fathers of naive users have obtained post-graduate degree and higher. This states that fathers of naive users are more educated as compare to fathers of experiencers.

As regards internet usage of these clusters, 21.8% of naive users use internet for up to two hours daily in contrast to 16.8% experiencers. In addition to this, nearly 14% experiencers surf internet for more than three hours daily in contrast to just 10% naive users who use internet for more than three hours daily. However, 18.9% naive users report to use 24

internet according to need in contrast to 17.8% of experiencers who use internet according to the need. It reflects that naive users are light users and use internet whenever they need it.

DISCUSSION AND IMPLICATIONS Findings of the present study reiterate the findings of Yang (2003; 2004) and Azeem and Haq (2012) who reported that users generally hold positive as well as negative attitude towards internet advertising. The present study also shows that young internet users agree on both positive as well as negative effects of internet ads and reveal mixed attitude towards these ads, as they find these ads to be informative as well as exaggerating. Six dimensions namely, informative, manipulative and distorting values, reliable and hedonic, good for consumers, exaggerating and materialistic have been explored which collectively form attitude of young internet users towards internet advertising. Out of these factors, three factorsâ&#x20AC;&#x201D;informative, reliable and hedonic, good for consumers depict positive attitude of internet users towards internet ads. Similarly, Yang (2003) explicated that internet advertising provides information about latest life style trends as well as entertain users simultaneously. While the other three factorsâ&#x20AC;&#x201D;manipulative and distorting values, exaggerating and materialistic explicate their negative attitude towards these ads. Some authors are of the view that internet advertising is used to impress others and drive youth to live in a world of fantasy which further make them more materialistic (Yang, 2004; Wang et al.;, 2009). Two distinct segments of internet users have been identified within this cohort, based on attitudinal dimensions, demographic characteristics and their internet usage. Findings suggest that there are some significant differences between the clusters with respect to their attitude towards internet advertising.

Out of the two groups identified, the naive users represent those respondents who are unaware about the positive attributes of internet advertising and accord same weightage to both positive and negative attributes of internet ads. These users are light users and surf internet whenever they need it. At this stage, marketers should not rely solely on internet to reach and communicate with young audience as it would prove to be ineffective. Rather, they should lay emphasis on developing integrated communication strategies in which both interactive media technologies as well as traditional media channels can be used.

On the other side, experiencers relates to the respondents who have adequate knowledge about the positive and negative attributes of internet ads and consider internet ads as a positive tool. They are heavy users and surf internet for more than three hours daily.

Moreover majority of them are older males. Older males are heavy users and more receptive to newer technology but some of them indulge in part time jobs alongside pursuing higher education. Due to this, they find less time for physical shopping and therefore prefer to shop online. Also, on account of low family income, they surf internet more to get more discounts and best deals. So, this is an opportunity for the marketers to grab attention of these users in order to serve society at large and frame their media campaigns to fulfill the diverse needs of these users. These days online shopping sites such as snapdeal.com, jabong.com, yebhi.com, fipkart.com etc. have become popular and have been providing the users with lucrative offers.

Consequently, both the parties i.e. marketers as well as audiences are getting benefitted.

25

The above discussion presents that attitudinal differences are particularly worth noticing between naive users and experiencers. Therefore, the present study provides justifications for marketers to treat internet users as a heterogeneous group. The use of internet advertising along with other content continues to spread. So, in order to frame media campaigns, marketers need to integrate diverse needs of internet users. Also, at the same time, in order to make media campaigns more effective, marketers should consider specific needs of cluster as outlined in the present study. Besides, attitudinal dimensions of internet ads would guide marketers in incorporating the dimensions on which internet users behave positively or to be careful about those dimensions on which they behave negatively in order to make media campaigns more effective. They should plan advertising messages which are not misleading and also do not distort values in youth. Moreover, the findings of the present study also reveal that heterogeneity among internet users could alert future researchers to go beyond demographics to understand internet users i.e. they should compare young internet users across values, lifestyles, cultures etc. in order to examine important research issues related to internet advertising. The present study, therefore, underlines the heightened relevance of a customized approach to understanding attitudinal dimensions of internet advertising.

Limitations and Directions for Future Research The findings of the study are constrained by some limitations. First, the present study was based on cross-sectional data. Second, chances of personal bias cannot be ruled out as responses were gauged through self-reports by respondents. Third, the study has been confined to three cities of Punjab (India). Future research can extract a sample from Metro city such as Delhi in order to enhance the generalizability of findings. In future research, other methods such as observations or experiments can be used to examine the same issue.

Also, comparative studies can be planned to understand the attitude towards media by incorporating other media viz., television, print media etc. Besides, the longitudinal studies can be also pursued to investigate the change in attitude towards internet advertising.

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28

IMPACT OF VARIABLE PAY ON PERFORMANCE: AN EMPIRICAL STUDY Sangeeta Chopra 1

Shivani Khurana 2

Organizations are increasingly adopting variable pay compensation systems to motivate employee performance that contributes to achieving business level goals. Theoretically, it is referred as 'New variable pay' and is derived from 'New Pay' philosophy conceived by noted compensation theorist Edward E. Lawler III. This study is focused on Short term variable pay plans (STVPP) that are linked with achievement of annual business target goals. The larger objective is to link employee fortunes with organization's performance results (that are essentially variable) which requires employees should have a line of sight with business goals. Literature and practice bring forth the limited knowledge available on STVPP's impact on performance, notwithstanding an increase in expenditure on variable pay budget. This study is conceptualized in the context of Indian Software Industry as this industry pioneered the use of variable pay systems in Indian Industry. The impact has been studied on middle manager segment as their salary has increasingly been exposed to variable pay. The list of companies is sourced from 'PROWESS' database of CMIE from which a sample of 15 organizations of the 'Software Consulting and Supply' sector has been selected. Perceptually, not much support is found in favour of short term variable pay plan's impact on managers' performance, indicating need for introspection as to how to enhance its motivational value. Findings based on objective measures show managers easily surpassed the threshold level performance, thus there is a need to make these compensation plans more dynamic.

The study concludes with conceptualization of 'variable pay plan choice model' that facilitates wider employee choice, increased empowerment as also transparency in execution of variable pay plans. Additionally, it contributes a 'line of sight' 3 model linking individual roles with the overall performance framework. The theoretical contribution of the study provides compensation designers the insight to enhance STVPP's motivational impact.

Keywords: Variable Pay, New Pay, New Variable Pay, Middle Managers, Indian Software Industry, Short Term Variably Pay Plan, Design and Implementation Systems of Variable Pay Plan, Strategic Compensation, Pay for Performance.

1

Professor, Organizational Behaviour & Human Resource Management, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi â&#x20AC;&#x201C; 110003, India. Email:sangeeta.chopra@iilm.edu 2 Professor, Organizational Behaviour & Human Resource Management, IILM Undergraduate Business School, 3 Lodhi Institutional Area, New Delhi â&#x20AC;&#x201C; 110003, India. Email:shivani.khurana@iilm.edu 3 Lawler(1990) has discussed 'Line of Sight' concept.

29

INTRODUCTION Variable remuneration has become entrenched in the remuneration practices of top performing companies ('Hewitt study', 2008; Steenburgh & Ahearne, 2012). A 2015 study reported 12.9% budgetary increase on account of variable pay and 2.9% increase on account of basic pay (Aon Hewitt, 2015). Reports have shown a trend of rising importance of variable pay in the total compensation package ('Compensation & benefits', 2006; Cotton, 2013; Fraza, 2002; Miceli & Heneman, 2002). Surveys have perpetually indicated its wide use across levels, across functions (eg: Wilson, 2007) and even across sectors – according to Hewitt India Annual salary increase survey 2005-2006 (Singh, 2006). Variable pay is the key strategy adopted by ‘New Pay’ systems, that are aimed at achieving business outcomes by ensuring reward strategies remain continually aligned with business strategy and with other systems of organization. Variable pay systems are more closely related to employers’ ability to pay, allowing the pay bill to adjust more quickly to changing economic circumstances, implying transfer of risk to its participants.

Literally, the term ‘variable pay’ refers to the amount of payout that varies based on whatever criteria the organization chooses (Worldatwork, 2003b). For the purpose of this study, variable pay is defined as the component of pay that varies with some measure of individual performance, group performance or organization performance (or a combination thereof).

Practice of variable remuneration percolated to levels below the executive level in 1980s, amidst conditions of intensifying competition that fuelled the need for higher productivity and also requirement of higher profits. The stress of competitive pressures led to the insight that employees were not merely disempowered production assets, and that they deserved to be treated as individuals on whom the company could depend (Lussier & Achua, 2001).

Surveys found that 83% organizations used variable pay programmes for employees lower than executive level (“Companies revise”, 2005). Flannery, Hofrichter, Platten (1996, p.105) highlighted "organizations found they could begin turning their entitled cogs into empowered people who......not only improved their performance, but took on more responsibility for it".

Belcher (1996) further emphasized the need for 'Employee Involvement' in order to achieve the desired benefits due to STVPP. While substantial investment is made in variable pay programs (Scott, McMullen, and Sperling, 2006) which has steadily increased 1, discernible trends show these systems are not producing clear-cut results. Also, there is a prevailing reluctance among industry folks to evaluate the effectiveness of variable pay plans 2. A second area of concern is that the industry uses variable pay plans mainly for its cost control ability (Abosch, 1998) while literature exhorts its use for achieving business objectives (Lawler, 1990; Belcher, 1996; Schuster 1

According to Hewitt’s survey of 1056 large organizations (“Compensation & Benefits”, 2006) variable pay spending increased from 9.5% to 11.4%.

2 A respondent of preliminary study Gyanendra Singh (Royal Bank of Scotland, IDC) remarked “Companies do not evaluate the impact of variable pay systems, since they do not perceive themselves (ie the companies) to be budget-constrained”. Further, many respondents were surprized at researcher’s choice of subject, as they felt it was just a policy matter; they were not aware of its strategic implications.

30

&Zingheim, 1996; Zingheim & Schuster, 2000) and for forming partnership between employees and organization (Armstrong, 2002). There is an apparent disconnect between its literature and its practice. Partly, it can be ascribed to its literature that is predominantly based on experience of American organizations (IIMA, 2008), and its experimentation in organizations bred in the American culture (Macalister, 1994). Abosch (1998) described it as action that preceded careful planning. Pertinently, Lazear (2000, p.410) lamented that literature in personnel economics regarded variable pay as an "incentive generator". Further, Ducharme and Podolsky (2006) contended that these schemes were used more for their 'incentive character' than 'empowerment' to cause motivation.

Supporting a similar view, the preliminary study indicated that variable pay was not regarded any differently from incentives, and there was lack of awareness of the 'psychology of ownership' motive and an absence of 'employee involvement' mechanisms. Cox averred (2000, p.5) it was not "... satisfactorily explained on a theoretical level" and Abosch 3 (1998) found confusion in perceiving its objective as some considered it strategically (Cotton, 2013) while others emphasized its cost control (or risk mitigation) ability. Lazear (2000, p.411) established that "...responsiveness of pay to output measures was too low", a sentiment echoed by Michael Jensen and Kevin Murphy (1990).

The mainstay of this research is to ascertain the performance impact of STVPP on middle managers. Secondly, as a consequence of indepth study carried out within the design framework, to contribute to conceptual dimensions, so as to achieve higher employee buy-in of variable pay plans.

This study is planned and conducted in context of Indian Software & Services sector.

Software industry is one of the oldest users of these systems. In an increasingly knowledge and service based, skill and talent-short economy, it is even more critical that reward arrangements support business strategy (Brown & Perkins, 2007). Motivating middle managers is important as they actually implement strategies developed at higher levels (Frakas & Wetlaufer, 1996) and face pressures to show performance results (Dhall & Nair, 2008). A Hay group study found that while 6% middle managers' salary was variable in 1990, it scaled up to 11% in 1994, showing a steady rise in proportion of variable pay for middle managers. The need for studying middle manager performance is further brought out by findings that managers' potential is either untapped or not fully utilized (Dixon, 1995).

The current state of research has provided little direction for understanding short term variable pay plans and also, how these impact performance results of employees other than top executives. Research into the effectiveness of variable remuneration practices indicates that if leveraged well, these systems can purposively enhance business performance (Keegan, 2002; Sefrin, 2016). McAdams & Hawk (1992) in their survey of 432 variable pay plans carried out in North America, strongly urged that these plans be viewed by their organizations as business strategies.

3

This finding was made in a survey of 200 mid-to-large sized organizations who contributed to Hewitt Associates' VCM database.

31

This study is built around the hypothesis that a variable pay plan has the ability to impact performance results through its design and implementation systems. Employee involvement and Employee understanding are key system variables which moderate the impact of variable pay plan process. The process variables in developing and implementing variable pay system, that are important for understanding its impact on performance results, are shown in figure 1.

REVIEW OF LITERATURE Anfuso (1995) examined organizational variable pay plans to understand if variable pay led to enhancement of performance by way of improvement in motivation of employees (Jones and Kato, 1993; Kaufman, 1992 ; Kruse, 1993; Poole and Jenkins, 1990) or through promized amount of variable pay. Belfield and Marsden (2003) found that the evidence for its effectiveness in improving employee performance was less clear cut, as different studies reached rival conclusions on the matter. Empirical research into evaluating the productivity effects of these practices found that these schemes work better if there is employee participation and if the variable component represents a sizeable share of an employeeâ&#x20AC;&#x2122;s compensation (Collins, 1998; Weitzman and Kruse, 1990). A related study points to the positive impact of employee involvement in determining performance measures and in setting targets (Burritt et al.; 1920; Njanja et al.; 2013). Amidst confusion over what causes work improvements in variable pay plans, whether it is the role of participation & involvement or whether it is the impact of financial incentive, Rosenberg and Rosenstein (1980) tested these two explanations empirically (Bullock & Lawler, 1984). Using longitudinal models of productivity, they found that productivity increases were more a function of increases made to participation than a result of financial bonuses. This however, has been countered by researchers like Geare (1976) who attributed plan results to economic motivation, than to role of participation or self-actualization.

Lawler (1990) concluded too much attention is focused on reducing pay costs and too little on increasing benefits of the pay system. Lawler (1990) highlighted the critical role of 'design' aspects and later Thorpe & Bowey 4 (1998) found similar types of

4

Thorpe and Bowey (1998) studied compensation programmes of 73 listed companies in New Zealand and reported the stated conclusions.

32

Understanding of the ‘purpose’ of variable pay plan.

‘Variable pay plan’’ design and implementation Business characteristics & company structure

Contingency factors: Economic and Organizational environment

Understanding of the ‘working aspects’ of variable pay plan.

‘Employee Involvement in design and implementation’ of variable pay plan.

Other changes in operating systems and control systems, introduced by management

Extent or the degree of line-ofsight with business goals

Causal influences: Variable pay plan design and implementation, and other changes introduced

Intervening variables: Employee understanding of variable pay plan and employee line of sight.

Changes to employee performance

Changes to organization performance

Outcomes of variable pay plan

Figure 1: Model of Processes and Factors Influencing The Outcome of A Variable Pay Plan Source: Adapted from Thorpe and Bowey (1988, p.19) 33

Actual Payout amount

Employee satisfaction with variable pay plan

schemes producing good results in some organizations and those same schemes producing poor results in others. Crucially, a recent study found a common pattern across multiple studies of metaanalyses that variable pay affected even intrinsic motivation, if these were designed well (Sefrin, 2016). These findings confirm that the differentiating factor is the specific manner in which variable pay plans were designed and implemented.

Surveys have clearly found that the practice of variable pay is more prevalent in the software sector compared to its use in the general industry (Macalister, 1994; Rastogi, 1994). The software sector is one of the fastest growing sectors, and this market in India is expected to grow at 12.8 per cent to reach $5.3 billion in 2016 (Bhargava, 2015). A typical software firm spends most on its human resources (Banerjee, 2003); some estimates have put the compensation cost figure at 40% of the operating costs. Role of middle managers has become highly important due to complex changes (Stenvall et al.; 2010; Uhl-Bien et al.; 2007; Grint, 2010; Haveri et al.; 2009; Tuurnas et al.; 2014) and moreover, manpower and skill shortage are a major problem in this sector.

Another advantage of using variable remuneration is that it is often seen as a preferable alternative to employee layoffs (Belcher, 1996). Ratio between variable pay and fixed pay will likely continue to increase (Nasscom, 2005). According to the Nasscom survey, 81% of participating organizations confirmed use of short term incentives in the form of cash based variable pay plans. The foregoing discussion on the attributes of software sector underpins the choice of this sector for studying short term variable pay plans.

RESEARCH METHODOLOGY The goal of this research study shall be achieved by studying and answering the following question: What is the impact of short term variable pay plans on middle managers’ performance?

This research has ‘design and implementation system of a variable remuneration plan’ as the independent variable, and ‘outcome of variable remuneration plan’ as the dependent variable.

The subject has been dealt with in the context of Indian Software Industry since this industry was the first one to adopt such a remuneration system, that happened as a ruboff of its parent companies that were often MNCs. The study uses survey method as its principal form of enquiry. CARS 1(Consortium for Alternative Reward Strategies) used survey approach to examine the effectiveness of 750 variable pay plans in its first 3 studies – viz: CARS I (19901993), CARS II (1993-1995) and CARS III (1995-1996) and various studies on pay plan effectiveness used this approach (Ex: Cable and Judge, 1994). Preliminary study brought out the inability to use 'before-after design' 2 and non-feasibility of longitudinal study as these plans are frequently revised, often annually.

1

CARS was formed in 1990 by Jerry McAdams (former rewards practice leader at Watson Wyatt ) and Elizabeth Hawk, kicking off more than a decade of extensive research in the field of compensation.

2

Vice president - Human Resources Mr. Kalyan Singh of HCL Comnet shared that large setups like HCL, Wipro, Satyam, TCS, Infosys pioneered STVPPs while the new firms, 34

In order to adequately answer the research question, the following null hypotheses have been tested in the study (Table 1).

Table 1:List of Null hypotheses H01

Short term variable pay plan has no impact on managers’ performance, as perceived by Human resource personnel.

H02

Short term variable pay plan has no impact on managers’ performance, as perceived by Finance personnel.

H03

Short term variable pay plan has no impact on managers’ performance, as managers themselves perceive it.

H04

There is no significant difference among the perception of managers, Human resource personnel, and the Finance personnel as regards the impact of STVPP on managers’ performance.

The survey instrument was self developed, as it has wide acceptance for study specific data needs (Scott et al.; 2004; Chartered institute of Personnel and Development, 2006). Semi structured questionnaires were developed and pilot tested. Likert scale is typical of compensation research (Beer & Katz, 2003; Scott et.al, 2004). Questionnaire for middle managers was pilot tested on 15 respondents (10% of sample size), questionnaires for 'human resource' and 'finance' groups were tested on 3 professionals in each of the two categories. Difficulties associated with assessing the impact of variable pay plan on productivity are widely reported. Lawler studied 500 plans and found only 33 had sufficient detail to assess productivity, and even then it was difficult to find the cause (Roy and Dugal, 2005). Suryanarayanan & Chandra (2003) defined its impact in terms of percentage of target goals achieved. Considering lack of consistent findings on impact of pay systems, to which Belfield and Marsden (2003) found different studies reaching rival conclusions, this method offers a reasonably certain platform for assessing performance impact.

Employee performance data has been collected using objective and perceptual methods. Data on percentage of targets achieved in years 2013-14, 2014-15 is taken. Comparison was made with threshold goal and target goal. In addition, perceptual data has been sourced to assess impact on employee performance. Similarly, Eskew and Heneman (1996) in their case study analysis, and IOMA(2002) used perceptual data to understand type of its impact.

Sample Selection Knowledgeable personnel in the field were approached to determine the criteria of selecting the sample as such a line of reasoning has wide support (Scott et. al., 2004). Considerations such as plans with formal design and implementation processes, process maturity, Performance measurement maturity (Vivek Punekar, Vice President – Human Resources, usually launched by ex-personnel of the industry, incorporated variable pay component in their compensation structure since inception.

35

HCL technologies ltd, Personal Communication, February, 2014) and whether to consider software sector (Vineet Soni, Consultant, Hewitt Associates, Personal Communication, February, 2014; Gyanendra Singh, Human Resources Manager, RBS, Personal Communication, March, 2014) or the BPO sector (Amit Bajaj, Corbus India Ltd, Personal Communication, April, 2014) were weighed and evaluated.

The selection criteria was thus concluded as organizations having similar revenue size, similar business, history of positive revenue and positive profit for 3 to 5 years (Jay R. Schuster, Personal communication, June 2014) and plan age of minimum 3 years (Tom Wilson, Personal communication, January, 2014).

A list of organizations of the Indian Software Industry was sourced from the PROWESS database of CMIE, as on 23rd September’2015. Economic Activity Classification ‘Computer and related activities (no.72)’, sub-activity ‘Software consulting and supply (no.

722)’ was selected. It was checked if Revenue and PAT (profit after tax) performance for identified financial period ie 2011-12, 2012-13 and 2013-14 was positive. 122 organizations out of 382 were found eligible. The sample size determination requires an estimate of the standard deviation of population 3 that is to be estimated from past experience (Kothari, 2004). Due to non availability of performance information at the pilot study stage, S.D. w.r.t. this dimension could not be calculated. Also, due to inability to attribute performance outcomes solely to STVPP, the only possible quantification was to determine whether threshold target was achieved or not. Since the broad result is not in nature of an absolute value, it would be inappropriate to use S.D. statistic in this case. Sample size based on practical criteria (Lenth, 2001) and after discussions with authors in the field 4 was determined at 15. Around the point of average revenue of 445 cr., tentative selection of 8 companies above and below this point was made 5. The sample composition in terms of organizations' geographic profile is depicted in Figure 2. For preserving anonymity, organizations are coded as C1, C2, C3, in this manner till C15.

Sample size (n)=z2xNxσ2p/(N-1)e2+z2σ2p 4 Repeated dialogue was held with Jay. R Schuster and Tom Wilson through email, who were kind enough to share their experience with the researcher.

3

5

Due to skewed nature of distribution of companies along the range of annual turnover (most were less than 100 cr.), it was decided not to use the positional average.

36

NCR (National Capital Region) 7%

Hyderabad 13%

Mumbai 26% Bangalore 27% Pune 27%

Figure 2: Geographic Distribution of Sample Organizations

Sample composition Three different groups of respondents are considered within sample organizations.

These are - The Human Resource group (represented by Head of Compensation & Benefits, the Finance group (represented by Chief Financial Officer) and middle managers (10 nos). In all there were 12 sample respondents in each sample organization (10 Middle managers + 1 CFO + 1 Head C & B). Total sample size worked out to be 180. Opinion of experts was sought on adequacy of sample size (Tom Wilson, Wilson inc., Personal communication, May, 2014).

Middle managers, having been employed for minimum 2 years in their current organization were considered. Stratified sampling was used, and preferably those managers who experienced change of variable pay plan, were selected. An industry perspective of role of middle managers was prepared basis ‘Nasscom-Hewitt Total Rewards Study-2005, Benefits Base Report: IT industry’. Analysis of role-based responsibilities of key jobs, helped to select organization levels that closely represent middle managerial levels.

One-to-one interviews provide better response rates (Moore, 1983), thus were conducted on 180 respondents. Qualitative interviews were conducted (Perkins, 2006). As Pennings (1993) notes, the extent to which pay plans are motivating depends upon the meaning people attach to these (Salancik and Pfeffer, 1977), understanding of which requires opportunity for intensive investigation. Data has been analysed using descriptive statistics and one sample ttests, one way ANOVA and Pearson’s correlation coefficient.

FINDINGS The design and implementation aspects of STVPPs examined through a first-hand investigation of key entities involved in its preparation, finalization& execution, are detailed 37

in Table 2, Annexure 1 (specific to individual level payout) and in Table 3, Annexure 2 (specific to organization level payout) giving details of structural elements of variable pay plans used by the 15 sample organizations.

Performance data of managers for 2 years (Table 4) has been studied and impact of STVPP found out. The surplus goal achievement (or deficit) between ‘threshold level construct’ and ‘goal achievement’ has been calculated for the two year period. Significantly, the finding shows how much an organization achieves over and above its minimum (target) expectation.

Whether STVPP has a positive impact on managers’ performance, in perception of human resource personnel :

H01 HA1

:

Short term variable pay plan has no impact on managers’ performance, as perceived by Human Resource personnel.

Short term variable pay plan has a positive impact on managers’ performance, as perceived by Human Resource personnel.

Following is the output of a one-sample t-test. The mean impact value, as perceived by the human resource group, is compared with value 3, which is the position of ‘indecision’ or a non-committal view that connotes ‘no impact' (Table 5).

Table 5:One-Sample Statistics for H_IEP

H_IEP

N

Mean

Std. Deviation

Std. Error Mean

15

3.4333

.55474

.14323

The mean value for the sample of human resources personnel is 3.4, which is slightly higher than the pre-considered value 3. In view of HR personnel, STVPP has had a moderately beneficial impact on managers’ performance. The t test results in Table 4 show that there is failure to reject the alternative hypothesis and thus the null hypothesis is rejected. Although the results are statistically significant, the support for the hypothesis is very feeble.

Table 6:One-Sample Test (between calculated H_IEP and the ‘no-impact’ value) Test Value = 3

T H_IEP 3.025

Df 14

Sig. (2tailed) .009

Mean Differenc e .43333

95% Confidence Interval of the Difference Lower .1261

38

Upper .7405

Basis the above result, it is safe to assume that in view of the HR personnel, a lot more needs to be reformed or value-added to STVPP, in order for the system to exert positive impact of a higher order on managers.

Whether STVPP has a positive impact on managersâ&#x20AC;&#x2122; performance, in perception of finance personnel H02:

Short term variable pay plan has no impact on managersâ&#x20AC;&#x2122; performance, as perceived by Finance personnel.

HA2:

Short term variable pay plan has a positive impact on managersâ&#x20AC;&#x2122; performance, as perceived by Finance personnel.

39

Table 4:Middle Managers' Performance data in sample organizations (in years 2013-14 and 2014-15) Following table gives performance information of middle managers, for the 2 year period covered in the study, and contrasts it with their threshold level goal.

Performance data of Middle Managers over the period, 2013 to 2015 (figures are in terms of % goals achieved) C1 Managers M1

2013 -14 90%

2014 -15 90%

C2 201 2014 3-14 -15 88% 83%

M2

97%

98%

82%

92%

M3

80%

90%

88%

M4

90%

92%

M5

95%

95%

M6

95%

M7

98%

M8 M9

C3

C4

C5

C6

C7

Organizations C8 201 201 3-14 4-15 100 102 % % 88% 93%

201 3-14 90%

C9 201 4-15 98%

97%

98%

103 % 92%

C10 201 201 3-14 4-15 65% 70%

C11 201 201 3-14 4-15 85% 90%

C12 201 201 3-14 4-15 75% 85%

94%

95%

95%

90%

95%

80%

85%

75%

68%

70%

75%

95%

95%

85%

95%

98%

80%

90%

80%

82%

67%

76%

95%

86%

80%

88%

101 % 92%

99%

97%

80%

88%

96%

92%

98%

89%

96%

70%

95% 88%

95% 92%

95% 90%

98% 95%

97% 96%

97% 98%

80% 98%

75%

98%

90%

90%

95%

97%

98%

78% 65%

80% 65%

93% 70%

105 % 98% 70%

92% 70%

96% 70%

90% 70%

92% 70%

13%

15%

23%

28%

22%

26%

20%

22%

201 3-14 90%

201 4-15 95%

201 3-14 85%

201 4-15 95%

201 3-14 95%

201 4-15 98%

201 3-14 75%

201 4-15 85%

201 3-14 90%

89%

85%

85%

85%

85%

95%

105 % 93%

85%

85%

75%

93%

100 % 85%

105 % 89%

102 % 85%

102 % 98%

100 % 98%

85%

93%

100 % 88%

201 4-15 100 % 102 % 98%

95%

95%

85%

87%

94%

85%

85%

95%

75%

75%

98%

88%

95%

98%

94%

85%

85%

95%

75%

75%

98%

100 % 93%

98%

105 % 85%

102 % 100 % 98%

85%

83%

100 % 98%

85%

94%

98%

85%

95%

98%

95%

75%

85%

98%

90% 98%

98% 88%

83% 97%

95% 85%

85%

85%

95%

85%

92% 110 % 90%

75% 85%

80%

85% 100 % 85%

75% 75%

98%

85% 102 % 90%

95% 95%

M10

95% 102 % 95%

101 % 90% 98%

75%

Average level of achievement Threshold level

94% 70%

94% 70%

88% 70%

92% 70%

94% 70%

94% 70%

89% 75%

91% 75%

95% 70%

98% 70%

Average Overachievement (goal achieved - threshold) Overall average achievement

24%

24%

18%

22%

24%

24%

14%

17%

25%

28%

Overall average threshold Overall average achievement

69% 22%

91%

Source: Author's Compilation 40

C14 2013- 201414 15 95% 75%

95%

C13 201 201 3-14 4-15 95% 102 % 95% 100 % 80% 95%

85%

90%

95%

83%

85%

90%

95%

85%

90%

88%

95%

90%

75%

90%

92%

80%

90%

95% 88%

97% 93%

86% 85%

90%

95%

83% 70%

85% 102 % 101 % 87% 70%

88% 70%

13%

17%

18%

C15 201415 85%

100%

100%

100%

103%

2013 -14 100 % 100 % 85%

90%

95%

98%

88%

89%

100 % 95%

85%

85%

88%

92%

100%

100%

85%

93%

95%

99%

92%

83%

89%

90% 92%

100 % 95% 95%

97% 98%

100% 100%

90% 98%

85% 88%

86% 95%

80%

90%

98%

92%

99%

99%

87%

97%

91% 70%

83% 65%

90% 65%

94% 60%

96% 60%

97% 70%

94% 70%

21%

18%

25%

34%

36%

27%

24%

89% 67.50 % 22%

91% 67.50 % 25%

100% 85%

Table 7 gives the descriptive statistics of sub-hypothesis HA2 Table 7: One-Sample Statistics for F_IEP

F_IEP

N

Mean

Std. Deviation

15

3.2500

.77344

Std. Error Mean .19970

The mean value of 3.25 indicates that the finance personnel are not confident of STVPP’s positive impact on managers’ performance. The S.D. value .8 indicates presence of views that disagree with the view about positivity of STVPP impact, and at the same time, it also points to presence of highly favourable views that have shown significant support for the above view.

Table 6 below gives the t-test value of comparison of mean finance’ perception about impact on managers’ performance with a point of no-impact on managers’ performance.

Table 8:One-Sample Test (between calculated F_IEP and the ‘no-impact’ value) Test Value = 3 95% Confidence Interval of the Difference T F_IEP

1.252

Df 14

Mean Difference

Sig. (2-tailed) .231

.25000

Lower -.1783

Upper .6783

In the above test the p value being higher than .05, there is failure to reject the null hypothesis, and thus the alternative hypothesis is rejected. According to the above test results, STVPP has no impact on managers’ performance, in view of the finance personnel. Statistically, test results show that the null hypothesis can’t be rejected. However, the test results are not of significance since the calculated value of p which is .231 is not less than the predetermined significance value of .05. Thus, while null hypothesis is not rejected, the results are not statistically significant.

41

Whether STVPP has a positive impact on managers’ performance, as perceived by them H03:

Short term variable pay plan has no impact on managers’ performance, as they themselves perceive it.

HA3:

Short term variable pay plan has a positive impact on managers’ performance, as they themselves perceive it.

There are two parts of the output. The first part gives descriptive statistics for the variables (Table 9). Mean perceived impact of STVPP on managers’ performance is 3.4 and the standard deviation is .644. The standard error of the mean (the standard deviation of the sampling distribution of means) is .0526 (.644/square root of 150 =.0526)

Table 9:One-Sample Statistics for M_IEP

M_IEP

N

Mean

Std. Deviation

Std. Error Mean

150

3.3907

.64437

.05261

The second part of the output gives the value of the statistical test:

Table 10:One-Sample Test (between calculated M_IEP value and the ‘no-impact’ value) Test Value = 3 95% Confidence Interval of the Difference

M_IE P

T

Df

Sig. (2-tailed)

Mean Difference

7.425

149

.000

.39067

Lower

Upper

.2867

.4946

The test results show that the calculated value being less than the predetermined significance value of .05, we reject the null hypothesis and conclude that the results are statistically significant. This leads us to conclude that based on test results, according to managers’ group, STVPP exerts impact on their performance results. It is reiterated that the results are statistically significant, and that our theory does not match the data. The null hypothesis is rejected resulting in the acceptance of the alternative hypothesis. Statistically there is support for the hypothesis 42

that a short term variable pay plan has positive impact on managers’ performance. This can be proved since the mean score for impact on performance stands at 3.3907. This figure tells us that according to managers, on an average, there is somewhat agreement that the impact of STVPP on their performance is positive.

Since the average managers’ view is lower than 3.5, it shows managers have given a cautioned verdict showing lack of complete confidence in STVPP’s ability to exert positive impact on their performance. It follows from the above that according to managers there is ample scope for enhancing the motivational power of a STVPP.

Comparison of perception held by human resource personnel, finance personnel and the managers, w.r.t. perceived impact of STVPP on managers’ performance The perceived mean impact according to three groups is 3.43, 3.25 and 3.4 respectively.

Statistically significant results have been found to support that STVPP does indeed exert a positive impact on managers’ performance, in view of HR personnel and managers. In case of Finance personnel, it has been found that STVPP has no impact on managers’ performance.

Difference among perception of Managers, Human Resource personnel, and Finance personnel, with regard to impact of STVPP on managers’ performance.

H04: There is no significant difference among the perception of Managers, Human Resource personnel, and that of Finance personnel, about the impact of STVPP on managers’ performance.

HA4: There is a significant difference among the perception of Managers, Human Resource personnel, and that of Finance personnel, about the impact of STVPP on managers’ performance.

One-way ANOVA test has been used to find if there are significant differences among the mean scores of the three groups with regard to their perception about impact of STVPP on managers’ performance (Table 9). Test of null hypothesis that there is no difference between the 'means', is performed with an F statistic.

43

Table 11:ANOVA on Middle Managers, HR and Finance Groups Concerning Their Perception about Impact of STVPP on Managers’ Performance

Sum of Squares

Df

Mean Square

F

Sig.

Between Groups

.312

2

.156

.371

.691

Within Groups

74.550

177

.421

Total

74.862

179

The test statistic is the F value of .371. Since the test statistic is much smaller than the critical value (2.51), there is failure to reject the null hypotheses at the 0.05 level. It is concluded that there is no (statistically) significant difference among the population means.

Post-hoc analysis has been carried out to look for patterns not specified a priori (Table 12). The objective was to find patterns in the three subgroups of the sample. Student-Newman-Keuls test was administered to make all pair wise comparisons.

Table 12:Post-Hoc Analysis Subset for alpha = 0.05 Group

N

1

3

15

3.2500

1

150

3.3907

2

15

3.4333

Sig.

.625

Means for groups in homogeneous subsets are displayed.

Group 1 represents middle managers, Group 2 represents HR personnel and Group 3 the finance personnel. The Newman-Keuls test confirms that statistically all three groups perceive the impact of STVPP on managers’ performance in a similar manner. They all agree in affirmative and attest to the positive impact of STVPP on middle managers’ performance, but display only tentative belief. The Human resource personnel (M= 3.43) rank little higher than middle managers (M = 44

3.39) followed by Finance personnel (M= 3.25). The ensuing differences are imperceptible, giving no concrete basis to establish differences in their viewpoint. In light of above results, the review of hypotheses is presented in Table 13.

Table 13:Review of Hypotheses S. No.

Hypotheses

Result

H01

Short term variable pay plan has no impact on managers’ performance, as Rejected perceived by Human resource personnel.

H02

Short term variable pay plan has no impact on managers’ performance, as Failed perceived by Finance personnel. reject

H03

Short term variable pay plan has no impact on managers’ performance, as Rejected they themselves perceive it.

H04

There is no significant difference among the perception of managers, Human Failed resource function, and that of Finance function, about impact of STVPP on reject managers’ performance.

to

to

Comparison between ‘managers’ actual performance’ and the ‘applicable threshold goal’, in reference to their past performance

Average Performance of Managers

100% 90%

Percentage of target goal

80%Threshold level Over achievement

70% 60% 50% Over achievement

40% 30% 20% 10% 0% C1

C2

C3

C4

C5

C6

C7

C8

C9 C10 C11 C12 C13 C14 C15

Sample organization code

Figure 3: Average Performance of Middle Managers at Sample Organizations, During Year 2013-14 45

The actual performance data of managers was compared with their threshold level goal to assess excess achievement (over and above the threshold benchmark), for the two year period: 2013-14 and 2014-15. The pattern of managersâ&#x20AC;&#x2122; performance is depicted in Figure 3 and Figure 4 for the sample period.

The average performance achievement of middle managers for the year 2013-14 stands at 89.8% of target. The average threshold for these organizations for the same year is 69%. There is a clear case of overachievement of performance to the extent of 20.8% of target (Figure 3). Clear inference is that the stretch level packed in threshold level can be intensified. More milestones need to be setup to showcase advancement, each of which needs to be reinforced by a higher reward value for the performance stretch between any two intervals. This would achieve performance differentiation and render STVPP the character of a more responsive and creditable compensation mechanism.

Likewise, comparison between threshold and achievement-level for the subsequent year i.e.

2014- 15 has been performed and its findings depicted in the chart presented below (Figure 4).

Average performance of middle managers at sample organisations, during 2014-15 year 2006-07 100% 94%

92%

94%

98%

98%

96%

91%

87%

90%

Percentage of target goal

70% 60%

91%

90%

94%

91%

80%

Over achievement

80%

96%

92%

Over achievement

75% 70%

70%

70%

70%

70%

70%

70%

70%

70%

65%

70% 65%

67. 5

0%

60%

50% 40%

Average Performance of Managers

30% 20%

Threshold level

10% 0% C1

C2

C3

C4

C5

C6

C7

C8

C9

C10

C11

C12

C13

C14

C15

Sample organisation code

Figure 4: Average performance of middle managers at the sample organizations, during 2014-15

46

The average performance of middle managers for the year 2014-15 is at 92.3% of target. The average threshold for organizations for the year is 69%. There is a clear overachievement of performance by middle managers to the extent of 23.3% of target. Average performance of managers increased in year 2014-15 by 2.5% over the previous year. Since the level of threshold remained same across organizations for the period, the level of average overachievement too increased by 2.5%.

The average performance of middle managers, considering the two year period, is 91% across organizations, while the average threshold level across organizations is 69%. Based on these figures, the average level of overachievement of managers (achievement – threshold) is 22%.

Clear suggestion is that organizations can consider this performance range for tinkering with the threshold level performance. The measure will pose challenge to high performers, and come across as a genuine motivation tool for the mediocre performers, since they would be able to perceive extra reward for surpassing each milestone.

CONCLUSION AND RECOMMENDATION The results of this study answer some of the crucial questions pertaining to its impact on performance. After studying the short term variable pay plans of 15 sample organizations that were geographically dispersed across key IT hubs of India, it was established that these plans varied across organizations, with differences that were more in terms of the figures used, than in terms of differences in methodology adopted. It is therefore inferred that customization of STVPPs is not a regularly used feature in the Indian Software Industry.

It is concluded that perceptually, variable pay plans have had a positive impact on managers’ performance; only the finance group is little less optimistic about this result. A probable reasoning to understand such passive leverage of STVPPs may be found in effective/ineffective use (or even neglect) of communication mechanisms associated with its design and implementation systems, which could be a possible subject of future study. Examples of successful variable pay plans like that of Eli Lilly's Basingstoke Plant, bring out the attribution made to emphasis on communications and involvement.

Middle managers' performance shows 20% overachievement above the threshold level, however causation can’t be established. Going by Locke’s (1968) goal-setting theory, goals are motivating when they are specific, challenging and accepted by employees. It would be wise to spread out performance-payout schedule across a range, with significant differentiation, thus offering employees additional economic and trophy value attached to it.

Employee Involvement is central to a variable pay plan 1 (Worldatwork et al.; 2003) and has wide support (Heery, 1996; Lawler, 1981; Bullock,1983). According to the study, there is 1

This is evidenced in a Worldatwork survey of 793 member organizations that found 12% pursued it as the primary objective of variable pay plans 47

complete receptivity about the idea of proposed managers’ involvement among the HR personnel and also within the circle of middle managers. Like McAdams and Hawk (1994) said, satisfaction with variable pay program can make or break a program, this step would be in the direction of increasing managers’ receptivity towards the programme. Their perceived impact on performance (3.39) shows lack of confidence in STVPP's ability to exert positive impact.

Theoretical Contribution On studying the structural elements of STVPPs and interacting with sample respondents, the following model, called the variable pay plan choice-model, is suggested (Figure 5). Three of its key features are – a) Providing for a basket of short term variable pay plans b) Freedom to choose the suitable variable pay program, and c) Open communication about the pay plans and the ensuing calculation processes.

Payout mechanism

Increasing level of Transparency

Points and Status

Awareness and access

Figure 5 : The variable pay plan choice-model Source : Author's own The model has three levels that are described below: Awareness and access - At this level, information about various short term various pay plans is detailed and is freely available. The details thus provided, offer managers the freedom to choose the type of pay plan they desire. The specific ‘variable pay-to-fixed pay’ proportion may be predetermined, so as to avoid any conflict of interest between employees and management. The choice would essentially be among the levels of aggregation, to which the payout amount is tied.

For instance – Different kinds of variable pay structure can be carved out, each having varying

48

percentages of organization-linked component, Business unit linked component, team linked component, and the individual-liked component.

Points and Status - At this level, it would be explained, how points would be calculated for varying levels of performance. At all times, a certain indicator or a metric (something like sensex reflecting the health of a company) would be readily calculable, reflecting managers’ performance results, according to the predefined variable pay structure. This would be a composite performance index, culled out from performance results at all levels of aggregation.

Knowledge of such performance result would readily give managers status of their performance, at any given point of time.

Payout mechanism - At this level, it would be shown how points can be converted into rewards.

Different formulae may be used for each level of aggregation. Actual amount of reward would depend on level of performance.

Conceivably, an even higher level of choice could be the option to choose one's salary mix. This means – freedom to determine proportion of fixed and variable components. In other words, an employee could decide for himself the mix of 100% fixed pay with no component of variable pay. Such a move would earn variable pay system a more benevolent image, unlike the present one, where variable pay systems are often seen as coercive systems bullying employees into forcible acceptance.

Researchers and practitioners, often reflect symptoms of obsession with ‘business alignment’ (Beatty, 1994), yet one rarely hears about how to motivate employees to draw out what John Purcell calls ‘discretionary commitment’, which drives goals in our modern service economy (Purcell, 2003). It is a question worth thrashing out, that considering our speedy transformation into the service economy, aren’t instruments like STVPP needed to draw out the discretionary element from the employees. The broader issue is that organisatons’ systems in entirety, need to practice initiatives, to motivate employees to deliver a little extra, which may be referred as untapped potential or discretionary element or their commitment. One such initiative would be to enhance managers’ line-of-sight, shown diagrammatically in Figure 6.

49

Variable Payout Structure

It has to be shown how targets fit into organisation’s performance framework.

Line of

Sight

Organisation’s Performance Results

Performance Targets

Possible through Employee Involvement Intensive communication Employee education

Figure 6: Variable pay system linkages that enhance employee line-of-sight Source : Author's own

It is clear from above that the above equation that aims to enhance line-of-sight, results in creation of ‘psychology of ownership’ (McAdams, 1996) and positively impacts employee buy-in, thus plugging the gap between theory and practice.

The results of the study are particularly relevant at this time due to promized growth of the Indian IT industry. The Indian IT industry is poized to grow to touch revenues of $225 billion by 2020, and it is also identified that there is additional potential worth 150 billion dollar provided various measures are taken, namely transforming business environment, infrastructure development and talent development (“IT-BPO revenue”, 2009). The finding is based on a joint report by Mckinsey and Nasscom, which is considerably futuristic and is titled – Perspective 2020. Of the three measures cited, talent development is apparently controllable or influenceable, towards which compensation is a recognized and established contributor. Variable pay use, in light of the findings of its ability to positively influence performance results, could aid in combating some of the recognized threats to India’s economy, primary one being shortage of employable talent. Studies on how to appropriately design and implement variable pay plans, by leveraging Employee Involvement and Employee Communication mechanisms, towards enhancing performance impact, will be useful additions to body of knowledge on variable pay.

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ANNEXURE 1 Table 2:StructuralElements of A Short Term Variable Pay Plan (Individual Specific) Org. code

Variable % of variable pay pay as a structuring proportion of (in relation salary (CTC) to base pay/ salary) Expressed 23% of CTC as % of CTC

Payout structure (considering a base of 100)

Level(s) of aggregation at which payout structure is defined

Threshold level target, at individual level (the percentages given below are in reference to the target variable payout)

67% on revenue 1 At performance, and level 33% on behavioral assessment.

Individual - Threshold at 80% for revenue performance.

No threshold for behavioural performance component.

C2

Expressed Ranges 2 between Entirely linked to At as % of 7.5% to 12% of individual level CTC CTC performance results.

Individual On a rating scale of 1 to 6, threshold lies at rating 3, and rating 1 is the most desirable.

C3

Expressed Ranges between Equally linked to At Business unit 70% performance as % of 13% to 16% of unit performance level, and threshold, both

C1

1

is for

Variable payout schedule (Figures below represent ‘% of target variable payout’)

Freque ncy of payout

Form of payout deliver y

Revenue linked payout schedule: Threshold perf.- 80% payout Upside potential– 110%. payout (In between, payout is pro rata).

Behavioral performance linked payout : No threshold Maximum payout – 100% payout Rating Payout 1 & 2 – No payout 3 – 60% payout 6 – 100% payout No upside potential (in between the intervals, payout is pro rata) Similar payout schedule is used for overall organization and for

Annual

Cash

Annual

Cash

Quarter -ly

Cash

Revenue performance is part of every employee’s responsibility, in this particular organization.

This range refers to the target variable pay that managers at different levels of middle management are entitled to. It does not refer to the minimum or the maximum amount of payout.

2

57

Org. code

Variable pay structuring (in relation to base pay/ salary) CTC

% of variable pay as a proportion of salary (CTC)

CTC

Payout structure (considering a base of 100)

Level(s) of aggregation at which payout structure is defined

(wt.

0.5) and organization organization’s performance level performance (wt.

0.5).

C4

Expressed 28.5% of CTC as % of CTC

50% linked to company performance, 25% each linked to unit performance and individual performance.

Ranges between Entirely linked to 1.25 lakh to 2.25 individual lakh annually. performance results.

At individual level, business unit level and organization performance level.

C5

Expressed as lumpsum amount, forming part of

At level

individual

Threshold level target, at individual level (the percentages given below are in reference to the target variable payout)

Variable payout schedule (Figures below represent ‘% of target variable payout’)

Freque ncy of payout

organization (Wt. 0.5) and individual business units. for business unit (Wt. 0.5).

Performance parameter - PBIT Threshold level – 70% PBIT Payout 71 to 80% – 90% payout 81 to 90% – 95% payout 91 to 100% – 100% payout 101 to 110% – 110% payout 110 to 120% – 120% payout, (capped at 120%) - For unit-linked-component Individual-linked component – Quarter and for individual-linked Threshold – Operating Profit -ly component, threshold is Margin of 28% fixed at ‘28% of accrued Max payout – capped at 115% profit margin’.

Rating scale is the basis, ranging from 1 to 4. Threshold is at 2, and 4 is the maximum.

70% of individual Different payout schedule is used Annual performance for different levels of management.

Generalized schedule – Threshold – 70% performance Performance Payout

58

Form of payout deliver y

Cash

Cash

Org. code

Variable pay structuring (in relation to base pay/ salary) CTC.

% of variable pay as a proportion of salary (CTC)

C6

Expressed as lumpsum amount, outside salary amount.

C7

Expressed 20% of CTC as % of CTC

Payout structure (considering a base of 100)

Level(s) of aggregation at which payout structure is defined

Ranges between Entirely linked to At 1.35 lakh to 2.25 individual level lakh annually. performance results.

60% linked to individual performance and 40% linked to company performance results.

Threshold level target, at individual level (the percentages given below are in reference to the target variable payout)

individual On a scale of 1 to 5, where 5 is the maximum, threshold is at rating 2.

At individual level and organization performance level

For individual component, threshold rating is 2 on a scale of 1 to 4, where 4 is the maximum rating.

Threshold w.r.t. organization-linked parameter is at 80% level.

59

Variable payout schedule (Figures below represent ‘% of target variable payout’)

Freque ncy of payout

100% of target – 100% 125% of target – 115% payout 140% of target – 135% payout Annual Rating Payout 1 0% of lumpsum 2 87% of lumpsum 3 45000 to 75000 (midpoint of the range is the lumpsum amount) 4 200% of lumpsum 5 300% of lumpsum For individual linked component Quarter – ly Rating Payout 1 0 2 (threshold) 70% 3 85% 4 100% For organization linked parameter, 80% performance level is threshold.

At 130% performance, payout is 150% At 150% performance, payout is 200%

Form of payout deliver y

Cash

Cash

Org. code

C8

C9

Variable pay structuring (in relation to base pay/ salary) Expressed as % of total package

% of variable pay as a proportion of salary (CTC)

Payout structure (considering a base of 100)

5% of Gross Entirely based on package 3 + 20% individual savings from performance results.

Project Additionally, 20% of accrued project savings.

Expressed 20% of CTC as % of CTC

20% linked to organization performance, 30% linked to business unit performance, and 50% linked to project performance.

Level(s) of aggregation at which payout structure is defined

Threshold level target, at individual level (the percentages given below are in reference to the target variable payout)

Variable payout schedule (Figures below represent â&#x20AC;&#x2DC;% of target variable payoutâ&#x20AC;&#x2122;)

Freque ncy of payout

For individual-performance Rating 4 Payout Annual linked component, threshold 1 0 is at 50% level. For project 2 50% 3 85% - 100% savings, no explicit 4 105% to 120% threshold level was defined and disclosed.

5 135% to 140% For project savings, schedule of payout is not predetermined, hence not communicated.

At project level, Threshold level is at 90% Threshold ranges between 80% Annual business unit level for organization-linked to 90% of performance, across all and organization component and same for the levels. business-unit level. linked 50% of payout is the committed component. No threshold sum. level is determined for the - Payout is 100% at target. individual-linked - Beyond that, it is component. proportionately defined, till 125% of target - Payout capped at 125%. of target At individual level, and at level of project performance.

3

The gross package includes yearly components of statutory bonus, Gratuity and Performance bonus (the term the company uses, to refer to variable pay) in addition to all of monthly gross.

4 The rating schedule is actually in form of adjectives, that describe varying degrees of performance. Conversion into rating is done, purely for convenience, without losing its intended meaning. The original PMS is detailed in annexure 2, that provides the detail.

60

Form of payout deliver y

Cash

Cash

Org. code

Variable pay structuring (in relation to base pay/ salary)

C10

Expressed Ranges between 80% linked to as % of 25% to 30% of individual CTC CTC. performance and 20% linked to company performance results.

C11

Expressed

% of variable pay as a proportion of salary (CTC)

Payout structure (considering a base of 100)

Level(s) of aggregation at which payout structure is defined

Threshold level target, at individual level (the percentages given below are in reference to the target variable payout)

At individual level and at organization performance level.

For individual-linked component, no threshold level is determined (considered implicitly known to employees). Also, no threshold level is determined for organization performance .

Ranges between Entirely linked to At

business 60%

61

threshold

Variable payout schedule (Figures below represent ‘% of target variable payout’)

Freque ncy of payout

Different performance-based Annual categories are defined in form of following 6 quadrants.

Quadrant Payout Q1B 95% Q1T 95% Q2V 75% Q2S 60% Q3H 0% Q4 0% Quadrants present mix of ‘potential’ and ‘performance’, where the two are combined in combinations of ‘low’ and ‘high’.

Payout percentages represent tentative limits, minor modifications are admissible, without perceived loss of sanctity. for Level /Grade Lumpsum Annual

Form of payout deliver y

Cash

Cash

Org. code

Variable pay structuring (in relation to base pay/ salary) as lumpsum, outside salary amount

% of variable pay as a proportion of salary (CTC)

Payout structure (considering a base of 100)

Level(s) of aggregation at which payout structure is defined

1 lakh to 1.25 division level goals. lakh annually

division level.

(Individual performance criteria not explicitly used but implicitly applied) Ranges between Entirely linked to At Individual 50,000 to 75,000 individual level level annually. goals.

C12

Expressed as lumpsum amount, and forms part of CTC.

C13

Expressed Ranges between 50% to 80% (range) as % of 12% to 20% of linked to individual CTC CTC. level goals.

20% linked to company level goals.

At individual level, at Line of business level and at organization performance

Threshold level target, at individual level (the percentages given below are in reference to the target variable payout)

Variable payout schedule (Figures below represent ‘% of target variable payout’)

Freque ncy of payout

established divisions and (annually) 50% threshold for newer Grade G (Asso. Mgr) – 1 lakh divisions.

Grade H (Team leader) – 1 lakh Grade I (Mgr) – 1.25 lakh (Variable payout is approx. 10% to 12% of CTC) Rating 2 (equiv of 60% to Rating Annual 70% achievement), on a Lumpsum scale of 1 to 5, where 5 is 1 25000-52000 the maximum.

2(60% to 70% ach.) 35000 62000 3(70% to 80% ach.)

3500062000 4(80% to 90% ach.)

4200070000 5 (90% to 100% ach.) 5000075000 Company-linked and Line of business-linked components have a threshold between 85% to 90%. At individual level, rating 3 on a scale of 1 to 9

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For individual-linked component.

Rating Payout % 1&2 None 3 60% 4 65% 5 70%

Quarter -ly

Form of payout deliver y

Cash

Cash

Org. code

Variable pay structuring (in relation to base pay/ salary)

% of variable pay as a proportion of salary (CTC)

Payout structure (considering a base of 100)

Level(s) of aggregation at which payout structure is defined

Threshold level target, at individual level (the percentages given below are in reference to the target variable payout)

Variable payout schedule (Figures below represent â&#x20AC;&#x2DC;% of target variable payoutâ&#x20AC;&#x2122;)

Freque ncy of payout

Form of payout deliver y

0% to 30% range22- level. linked to line of business goals.

C14

Expressed 15% of CTC as % of CTC

is threshold, where 9 is the 6 80% maximum rating.

7 90% 8 100% 9 110% LOB performance figure is supplied by accounts department.

Schedule of payout on account of organization performance is detailed in Table 3.

50% linked to At individual Threshold is at 70% level, Similar payout schedule is Individual level and team applicable to all levels of applied, for individuals as well as level. aggregation. performance for Business units.

50% linked to Performance payout Business unit / team 70% 70% 100% 100% Performance 125% 125% In between the above specified points, payout calculation is done prorata.

63

Cash Annual (for individ ual linked paramet er) and biannual (for BU /team linked paramet er)

Org. code

Variable pay structuring (in relation to base pay/ salary)

% of variable pay as a proportion of salary (CTC)

C15

Expressed 20% of CTC as % of CTC

Payout structure (considering a base of 100)

Level(s) of aggregation at which payout structure is defined

Threshold level target, at individual level (the percentages given below are in reference to the target variable payout)

40% linked to individual performance result and 60% linked to company performance result.

At individual level and organization performance level.

For individual linked component, threshold is at 60% level of performance, denoted by rating C on a scale of A to D, where A is the maximum.

64

Variable payout schedule (Figures below represent ‘% of target variable payout’)

Freque ncy of payout

For individual linked component Annual – Rating Payout A (90% to 100% ach.) – 100% B (75% to 90% ach.) – 80% C (60% to 75% ach.) – 40% D (less than 60% ach.)

–0 Payout on account of company linked parameter is influenced by a multiplier that reflects individual performance. (Table 3 shows how individual performance affects payout, on account of company performance too )

Form of payout deliver y

Cash

Annexure 2 Table 3: Organization level Performance parameters (with reference to period 2012 to 2015) (figures are in terms of % of target goal) Orgn. Performance Code Parameters

Threshold level Goal

Organization-level variable payout schedule

C1

Turnover

75%

75% payout at organization threshold level. 100% payout at 100% goal accomplishment. No upside potential available .

C2

Revenue

Information not available 1

Information not available

Profit After Tax (PAT)

Information not available

C3

PBIT of Business unit 70% (0.5)

PBIT of organization 70% (0.5) C4

Revenue

At 70% of target and below, there is no payout , at 71% to 80% perf - 90% payout , at 81% to 90% perf - 95% payout, at 91% to 100% perf - 100% payout, at 101 to 110% perf - 110% payout, at 110% - 120% perf - 120% payout (capped at this level ) .

For Unit-linked component, maximum payout delivery in a single financial year is capped at 125%.

For company-linked component, current yearâ&#x20AC;&#x2122;s payout amount is capped at 125% of target payout; any excess flows into a variable pay kitty.

For company- linked component, 90% payout is assured. 10% remaining component is later evaluated for adequacy of results, and accordingly payout is made. There is no laid-out rule for threshold of company-linked-component.

1

In some casesorganization refused to reveal the figures due to reasons of confidentiality. In such cases, conventional industry practice has been considered.

65

Orgn. Performance Code Parameters

Threshold level Goal

Organization-level variable payout schedule

C5

PBT

85%

For 85% to 100% perf - payout is between 85% to 100% of target payout, for 100% to 120% of target, payout is correspondingly between 100% to 120% of payout.

C6

Turnover

80%

The linkage between performance goals and payout is linear. There are 3 broad slabs of performance - 70% to 85% of target, 86% to 100% of target and 101% to 120% of target; for all there is a linear linkage with payout (in terms of % of target payout).

C7

Revenue (.5)

80%

PAT (5)

80%

From threshold to target, there is linear linkage with payout. Thereafter it is in increasing proportion - at 130% target achievement, payout is 150% and at 150% of target, payout is 200%.

In between, pro rata payout calculation is done.

Revenue

50%

PAT

no threshold

Revenue (.33)

90%

Linkage between performance and payout is linear. For performance between 90% to 110% of target, payout is between 90% to 110% of target payout. Likewise, payout at other levels of performance is determined.

no threshold

Between 60

no threshold

% to 85% of performance, payout ranges between 100% to 110% of payout 2Complete payout schedule is not available.

C8

C9

PAT (.33) EPS (.33) C10

Sales ( .6 to .7)

PAT (.3 to .4)

Regardless of quantum of profit, payout delivery is done. For Revenue levels ranging between 70% - 85%, payout is 86% to 100%, for revenue between 86% to 120%, payout is 100%. Upside potential is capped at 120% of revenue.

2

Payout schedule was not explicitly mentioned. The schedule mentioned here is culled outfrom past 3 year performance information of organization.

66

Orgn. Performance Code Parameters

Threshold level Goal

Organization-level variable payout schedule

C11

Revenue (.5)

60%

Linear linkage between performance and payout.

No upside potential is defined.

PBT (.5)

60%

Revenue (.5)

no threshold

PBT (.5)

no threshold

Revenue (.4)

75%

PAT (.6)

75%

C14

PAT (PAT)

75%

Linear linkage between performance and payout uptill the target. Upside potential is defined till 125%. Even for this excess stretch, the linkage between performance and payout remains linear.

C15

Overall Revenue 75% Growth (.33)

For performance between 70% to 100% of target, payout is between 86% to 100% of target payout, and for performance levels beyond 100%, payout is not defined.

C12

C13

Profitable Revenue 75% Growth in offshore business (.33) EBITDA Growth (.33)

It is implicitly believed that minimum performance expectations are being met. For this reason, variable payout is paid on a monthly basis. No threshold is set at organization level. At organization level, variable pay budget is not shown as a distinct component. Such bifurcation into fixed and variable is only at individual level.

Below threshold payout is 0, from threshold upwards to target performance, payout bears a linear linkage, and at performance higher than target - payout is discretionary.

75%

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RELATIONSHIP BETWEEN PSYCHOSOCIAL FACTORS AND EMPLOYEE TURNOVER IN THE BANKING SECTOR

Prabhjot Kaur Mahal 1 Employee turnover in banking sector is becoming a matter of concern these days, as high turnover rate is problematic and has a negative impact on an organization’s performance.

Banking sector is highly prone to employee turnover and lack of employee engagement due to lack of fulfillment of psychosocial factors. Hence, the present research is mainly inclined to study the influence of psychosocial factors on employee turnover among the employees working in the banking sector. As we know that employee engagement is not only important to give competitive edge to the employees, but it also helps them continue their association with the organization for a long time. For this purpose, the study observes four psychosocial factors as probable antecedents of employee engagement and their influence on turnover intentions among 255 bank employees toward their organization. The results show that psychosocial factors namely Psychological empowerment, POS, Rewards and Recognition lead to increase in employee engagement. Results also disclose that greater employee engagement contributes significantly towards decrease in employee turnover.

INTRODUCTION Indian banking system has emerged as a vibrant sector in Indian economy and has grown at a compounded annual rate of 51% since 2001 (Anjum & Tiwari, 2012). It is a well known fact that the success of any organization largely depends upon the availability of skill and knowledge in an organization. However, the availability of requisite skills and knowledge in an organization is not possible without managing and retaining promising employees, considering them as a means of achieving competitive advantage among the organizations (Walker, 2001). It is equally challenging to manage these skilled employees so that they can accomplish efficiently, energetically and successfully achieve organizational goals (D’abate & Eddy, 2007) by engaging them in their work and with the organization. Therefore, to retain key employees in an organization, employee engagement has become an important tool.

The topic of employee engagement has gained tremendous attention from practitioners due to its favorable outcomes (Stroud, 2009). It refers to the positive, affective, psychological workrelated state of mind that leads employees to actively express and invest themselves emotionally, cognitively, and physically in their performance (Catlette & Hadden, 2001; Rurkkhum, 2010; 1

Associate Professor, Organizational Behaviour & Human Resource Management,1002, BlockA1, Paras Panorama, Opp. Sunny Enclave, Desumajra,Kharar. Mohali, Punjab – 140301, India.

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Schaufeli, Salanova, Gonzalez, & Bakker, 2002), characterized by vigor, dedication and absorption. Vigor refers to high levels of dynamism and mental resilience while working, the willingness to invest effort in one's work, the ability to avoid being easily fatigued, and perseverance in the face of difficulties, Dedication refers to direct involvement of an employee in one's work accompanied by feelings of enthusiasm, significance, and a sense of pride and inspiration. Absorption refers to the state in which individuals are fully strenuous and absorbed in their activities, as with the passage of time they find it difficult to detach themselves from work (Schaufeli, Salanova, GonzĂĄlez, & Bakker, 2002).

Research shows that psychosocial factors greatly influence employee engagement, that further impact employee turnover among the bank employees. Psychosocial factors refer to interactions between and among work environment that influence health, employee engagement and employee turnover. Research in many countries during the last two decades has produced a large amount of research on psychosocial factors. While in India, a limited number of reports are available on this subject, more surprisingly, only a few examples with negative effects are reviewed on the topic.

Researchers found that perceived organizational support (POS), employee commitment, rewards and recognition, and organizational justice are important antecedents of employee engagement, which leads to reduce the inclination of intention to quit (Hackman & Oldham, 1980; Hakanen et al., 2006; Saks, 2006; Xanthopoulou et al., 2007). In a meta-analysis, employee engagement is positively associated with customer satisfaction, customer loyalty, productivity and profitability, and negatively associated with employee turnover (Harter, Schmidt & Hayes, 2002), and displays proactive job behaviours, higher levels of employee psychological well-being, and increased individual job and organizational performance (Demerouti & Cropanzano, 2010). It is notable that only a few antecedents and consequences of employee engagement have been identified (Macey & Schneider, 2008; Maslach et al., 2001; Saks, 2006) in relation to banking sector.

From the viewpoint of banking sector, studying psychosocial factors among employees is essential not only from the point of view of an employeeâ&#x20AC;&#x2122;s engagement with his/her career, but also for reducing employee turnover. Though it is indispensable for the bank to improve employee retention because of its relationship to bank performance, it is also necessary to expect that employee turnover will be related to psychosocial factors like perceived organizational support, psychological empowerment, reward and recognition and employee participation in decision making in relating to employee engagement, which are equally important for decisions such as whether to stay in the organization or not. Over recent years, the concept of employee engagement has gained tremendous impetus in the banking sector, yet the industry has been slow and late in studying it, leading to a lack of research in employee engagement (Macey & Schneider, 2008) and the study of psychosocial factors in relation to the employee engagement in the above said sector is limited and demands further exploration. Therefore, the present study finds its need and relevance.

69

The main purpose of the present study is to determine if psychosocial factorsare predictive factors of employee engagement among bank employees. The second goal is to determine the relationship between employee engagement and employee turnover. Instead of examining the relationship between facets of employee engagement, the present research focuses on considering the overall employee engagement.

LITERATURE REVIEW Psychological Empowerment Psychological empowerment of employees has become a topic of great interest to many organizational researchers (Conger & Kanungo, 1988; Thomas & Velthouse, 1990; Hancer, George, & Kim, 2005; Spreitzer, 1995). It may be defined as a fundamental personal belief that employees have about their role in relation to the employing organization (Spreitzer & Quinn, 2001), their ability to successfully perform the tasks, sense of autonomy and capacity to influence the results of work (Spreitzer, 1995; Thomas & Velthouse, 1990).

Psychological empowerment beliefs are organized into four dimensions that are developed independently: meaning, self-determination, competence, and impact (Spreitzer, 1995). Selfdetermination is the amount of freedom and discretion people have in the workplace, meaning is having a personal connection to work, competence is the confidence about oneâ&#x20AC;&#x2122;s abilities to perform work responsibilities, and impact is the ability to make a difference in the work organization (Spreitzer, 1995).

Literature shows that empowered people are more active and productive than individuals who are not empowered (Thomas & Velthouse 1990), consequently they have complete knowledge about their work, so they help to plan and schedule their work and prepare them to identify and resolve obstacles for their performance (Cook, 1994). Hence, the attainment of organizational goals may not be possible without empowering employees psychologically, as when employees are psychologically empowered, there will be a corresponding positive change in attitude, cognition and behavior, and this will lead to a positive change in value orientation, ability to postpone indulgence of oneâ&#x20AC;&#x2122;s desires, improved self-esteem, self-efficacy as well as better psychological well-being which will all be brought into work (Oladipo, 2009).

Researchers claim that Psychological empowerment is viewed as an antecedent to work engagement because it leads to various positive job outcomes such as increased commitment, better decisions, improved quality, more innovation, increased job satisfaction (Spreitzer, 1995; Stander & Rothmann, 2008; Spreitzer, 1995; Spreitzer, DeJanasz, & Quinn, 1999), organizational citizenship behavior (Onyishi, 2006), organizational commitment (Manz & Sims, 1993), and performance (Collins, 2007; Dickson & Lorenz, 2009; Hechanova, Alampay, &Franco, 2009; Kirkman, Rosen, Tesluk, & Gibson, 2004; Mohd et al., 2009). It can be concluded that when employees experience empowerment at the workplace, it can lead to foster

70

a fit between their expectations and their working conditions, and they would be more engaged in their work (Greco, Laschinger & Wong, 2006).

After studying the literature, it is plausible to think that psychological empowerment has a relationship with employee engagement. Hence, the following hypothesis is proposed: H1: Psychological empowerment will have positive impact on employee engagement Perceived Organizational Support Perceived organizational support originates from organizational support theory (Eisenberger et al., 1986) that itself builds on social exchange and attribution processes (Blau, 1964).Perceived organizational support refers to the belief that employees form about the extent to which the organization cares about their wellbeing, fulfills their socio-emotional needs, values their contribution and its readiness to reward the same (Eisenberger et al., 1986; Shore & Shore, 1995; Rhoades et al., 2001). It can be understood from the definition that employees see their employment as a reciprocal exchange relationship that reflects relative dependence and extends beyond a formal contract (Eisenberger, et al., 2001; Erdogan, & Enders, 2007) and they feel the necessity to determine whether, and to what extent, an organization will recognize and reward their effort, support their socio-emotional needs, and help them on request.

Organizational support theorists argue that POS is strengthened when the employee has favorable experiences of the work environment (Eisenberger et al., 1986; Eisenberger et al., 1997). This theory also emphasizes that when the organization values employees' cooperation and efforts and pays attention to their welfare, it leads to a feeling of organizational support (Eisenberger & Eder, 2008). It can be understood that POS is a response to the organization as a whole, it is also considerably influenced by attitudes, policies, procedures, and decisions of the organization (Shore & Tetrick, 1991).

A meta-analysis study by Eisenberger and Rhodes (2002) suggested that four major work antecedents of POS are organizational rewards, working conditions, support received from supervisors, and procedural justice. Similarly literature suggests that favorable working conditions and rewards are related to POS, such as developmental skills allowing employees to expand their skills, (Wayne, Shore & Linden, 1997). POS is expected to reduce excessive psychological reactions (strains) to stressors by indicating the availability of material aid and emotional support when needed to high demands at work (Robble, 1998).

POS is pertinent source of socio-emotional event that create a feeling of engagement among the employees ( Rhoades & Eisenberger, 2002) and also contribute to lessen the intention to quit the job, burnout, organizational commitment, job involvement, performance, strains, positive mood, employee performance, affective commitment, better productivity, strong customer service, and meaningful work (Kalliah &Beck, 2001; Benson, Finegold, & Mohrman, 2004; Rhoades &

71

Eisenberger 2002; Eisenberger et al., 1986; O'Driscoll & Randell 1999; Keyes, Hysom, & Lupo, 2000; Fredrickson & Dutton, 2008) In support of above literature Eisenberger, Fasolo and Davis (1990) elaborated that employees who feel supported by their organization and care about the organization would engage in activities that help to achieve organizationâ&#x20AC;&#x2122;s goals.POS and employee engagement were empirically tested and found that POS is positively related to employee engagement (Saks & Rotman, 2006) that may contribute to increase their attachment to their organization.

The effect of POS on employee engagement of an employee as indicated in the literature leads to setting up of the following hypotheses.

H2: Perceived organizational support will have positive impact on employee engagement Reward and Recognition The terms rewards and recognition are used interchangeably and refer to all categories of ďŹ nancial benefits, tangible services and beneďŹ ts that an employee receives as part of employment relationship with the organization (Bratton & Gold, 1994). When employees are paid suitable rewards and recognition in the organization, they show positivity towards their organization by contributing their efforts. Even compensation professionals appreciate the importance of compensation as a means for aligning pay, programs with the business strategy and the interest employees have in understanding how they were paid (Scott, et al., 2008; Scott et al., 2007; Shields et al., 2009).In any organization, rewards play an important role in building and sustaining the commitment among employees that ensures a high standard of performance and workforce constancy (Wang, 2004).

Literature shows that not only recognition reinforces good performance, but it enables employees to feel that their time, efforts, and ingenuity are worthwhile, which lead to employee engagement (Brown, 2011). Similarly studies conducted by Koyuncu, Burke, and Fiksenbaum, (2006) Maslach and Leither, (2008) Brown, (2011), Gruman and Saks, (2011)found that autonomy, rewards, recognition, feedback, and fairness lead to good performance and engagement.

On the basis of the above literature, following hypothesis can be formulated: H3: Reward and recognition will have positive impact on employee engagement Employee Participation in Decision Making Participative decision-making (PDM) has attracted academic attention in the last 20 years (Black & Gregersen, 1997; Kim 2002; Leana, Locke et al., 1990; Ladd & Marshall, 2004). Participative decision-making is an organizational process, in which individuals are involved and have influence on relevant decisions of an organization (Brownell, 1982). It can be considered as an 72

organizational mechanism, giving employees the right to make decisions and the matching amount of responsibility, so that they feel aware of contributing to organizational performance and fulfillment of individual and organizational goals (Higgins, 1982; Ardichvili, Page et al., 2003). The dimensions of employee participation in decision making include an opportunity for employees to achieve their goals, to seek ideas among the employees, and to assign responsibilities to employees (Gibson et al., 1992).

PDM involves the process of sharing important information between managers and employees, to generate new ideas and possible alternatives, plan processes and evaluate results to achieve an organizationâ&#x20AC;&#x2122;s objectives (Scott et al., 2006), to encourage the involvement of manpower at all levels of an organization to analyze problems, develop new strategies, and implement solutions (Helms, 2006).

Employee participation in decision making is positively related to performance and greater commitment in carrying out the course of action decided upon during organizational meetings (Rosenberg & Rosenstein, 1980; Sagie & Koslowsky, 1996). Moreover, employee participation in decision making leads to skills development and reduction in job-related stress, increased satisfaction and job performance (Lam, Chen & Schaubroeck, 2002). However, the relationship between PDM and employee engagement is more effective when an organization takes steps to encourage participation rather than attempt to force it (Stohl & Cheney, 2008). Remarkably, it is organizational task to recognize employee participation opportunities and nurture their facilitation accordingly (Nelson, Zaccaro & Herman, 2010).

Literature shows that employees are more likely to become psychologically engaged in environments where they are able to express their thoughts, feelings, and beliefs without the fear of punishment (Kahn, 1990). Moreover, Hinkel and Allen (2013) found that PDM is related to employee engagement, as when individuals feel adequately safe to participate in their meetings, they are more likely to become engaged in the ideas (Kahn 1990).In conclusion, engaging employees in decision making will help organization to reduce turnover, absenteeism, the number of grievances, and will result in a more cooperative relationship between employer and employee (Massarik & Tannenbaum, 1999).

Thus, consistent with these ideas and above research, the following is hypothesized:H4: Employee participation will have positive impact on employee engagement Employee Engagement Employee engagement is a multi-faceted construct (Kahn, 1990). It has been understood that employee engagement is the result of two-way relationship between employer and employee, pointing out that there are things to be done by both sides(Robinson et al., 2004).

73

Aleweld and Von Bismarck (2002) described that engaged employees have three distinctive characteristics, namely they say positive things about their organization to other employees and customers, exhibit a desire to â&#x20AC;&#x153;stayâ&#x20AC;? in an organization; and serve an organization by exerting additional and discretionary effort. Hence, organizations should focus on creating an environment where positive emotions such as involvement and pride are encouraged, as it may lead to increase in organizational performance, lower employee turnover and better organizational health (Robinson, 2006). Literature shows that when employees are engaged, then they are able to think in a more flexible, open-minded way and are also likely to feel greater selfcontrol, cope more effectively and be less defensive in the workplace (Lockwood, 2007).

In support of above study, Cook (2008) used Hewitt engagement model by outlining that employee engagement leads to decrease in turnover rate, absenteeism rate, increased passion, more productive, profitable, customer focused (Bakker, Schaufeli & Howe, 2003), as engaged employees are likely to have a greater attachment to their organization and a lower tendency to leave their organization (Schaufeli & Bakker, 2003).

The above literature led to the formation of the following hypothesis: H5: Higher the employee engagement, lower the employee turnover RESEARCH DESIGN AND METHODOLOGY The main purpose of the present study is to empirically investigate the relationship among psychosocial factors and employee engagement and between employee engagement and employee turnover. Specifically, this study examines whether four psychosocial factors influence employee engagement and whether employee engagement affects employee turnover. Therefore, a correlational design with single group multi measures was used to answer these questions.

Sample The data were collected from 255employees working in five most profitable private banks of 2016 (HDFC Bank, ICICI bank, Axis bank, Kotak Mahindra Bank and Yes Bank ) located in Northern India. The reason of including all these banks is their positive and prominent growth in recent years in Northern India. For this purpose convenience sampling technique was used to sample the participants. The selected employees were assured of confidentiality and were informed that the information would be used solely for academic and research purpose. The survey questionnaire captured background data of the study participants.

Sources of Data The present study is empirical in nature and relied on both primary and secondary data. Primary data were collected with the help of questionnaires and discussions with the employees. In addition to this, secondary data were collected through research journals, magazines, reports, and websites of the respective banks.

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Measures Psychological empowerment was assessed via 11 items - psychological empowerment scale developed by Chiang and Hsieh (2012) having 4 dimensions: meaning-3 items, competence-3 items, self-determination-2 items and impact-3 items. Responses were operationalized using a Five point Likert scale ranging from strongly disagree to strongly agree. Respondents rated their agreement with statements such as ‘The work I do is very important to me’. Scale scores were obtained by calculating the average of the 11 responses, such that higher scores indicated greater Psychological empowerment. The internal reliability of the Psychological empowerment scale is well documented in earlier studies.

Perceived organizational support was assessed via 8 items of perceived organizational support scale by Rhoades et al. (2001). Responses were operationalized using a Seven point Likert scale ranging from 1=strongly disagree to 7=strongly agree. Respondents rated their agreement with statements such as ‘Help is available from my organization when I have a problem’. Scale scores were obtained by calculating the average of the 8 responses, such that higher scores indicated greater Perceived organizational support.

Compensation was measured with the help of two items from Job Diagnostic Survey by Hackman and Oldham (1974) on five point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). Respondents rated their agreement with statements such as ‘The amount of pay and fringe benefits I receive’ and ‘the degree to which I am fairly paid for what I contribute to this company’.

Employee participation in decision making was measured with the help of 3 items from Job Diagnostic scale given by Hackman and Oldham (1975). All the items given in questionnaire are developed on seven point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree).

The index score is determined by adding the responses of Employee participation in decision making scale. Lower scores indicated lower Employee participation in decision making.

Cronbach’s alpha of this scale has been found to be 0.94.Respondents rated their agreement with statements such as ‘My suggestions are considered here and they are also implemented’.

Employee engagement was measured with the help of scale developed by Saks (2006). The scale contains two dimensions, namely job engagement and organizational engagement. The job engagement scale consists of five items, each subject indicates the extent to which he/she agreed with statements such as ‘I really “throw” myself into my job’. The organizational engagement scale consists of six items, such as ‘Being a member of this organization is very captivating’. In this scale, items were measured on a 4-point scale (1 = strongly disagree to 4 = Agree).

Employee Turnover was measured using the three items developed by Colarelli’s (1984). The responses to these items were measured on Seven point Likert scale (1 = strongly disagree to 7 = strongly Agree). A sample item of the scale was “I am planning to search for a new job during the next twelve months”.

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Prior to the finalization of the instruments, pre-testing of the questionnaires was also done on twenty per cent of the total sample to know the validity and reliability of the questionnaires.

Consequently, the language of some of the questions was simplified. For data collection, visits were paid to employees in the banks who were personally instructed about the objective of the study and all queries of the participants were explained. The participants were also assured about the privacy of their responses in order to get the accurate responses. The details of the demographic profile of employees from each stratum are exhibited in Table 1.

Table 1: Demographic Profile

Sr. No.

Category

No. of respondents

Gender

Male

136

Female

119

< 2 Yrs

3

2-5

33

5-10

116

>10

103

UG

2

Graduation

75

Post-Graduation

178

<25

2

25-30

38

30-35

164

>35

51

Experience

Education

Age

As shown in Table 1, the demographic profile of respondents revealed that majority of the respondents were in the age group of 30-35 (164), 116 had more than 5-10 years of experience, and 178 respondents were Post- Graduate.

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RESULTS AND ANALYSIS Table 2 presents the mean, standard deviation and Cronbach alpha of the different variables used in the present study. The reliability of items was assessed by computing the coefficient alpha (Cronbach, 1951), that measures the internal consistency of the items. For a measure to be acceptable, coefficient alpha should be above 0.7 (Nunnally, 1978). Results include the descriptive statistics of determinants of psychosocial factors and the employee turnover. The mean for perceived organizational support was 44.27 (SD = 4.64), for Psychological Empowerment 43.56 (SD = 4.90), for Employee engagement 32.43 (SD = 3.86), for reward and recognition8.06(SD = .891), and for Employee participation in decision making 12.78 (SD = 1.57). The total mean of the employee turnover was 10.88 (SD = 1.76).

Table 2: Descriptive Statistics

Variables

Mean

SD

Cronbach alpha

Psychological Empowerment

43.56

4.90

.78

Perceived Organizational Support

44.27

4.64

.82

Rewards and recognition

8.06

.891

.81

Employee participation in decision making

12.78

1.57

.94

Employee engagement

32.43

3.86

.75

Employee turnover

10.88

1.76

.84

Correlation Analysis Correlation between psychosocial factors, employee engagement, employee turnover and demographic characteristics of respondents are given in Table 3. Results display that psychological empowerment had a significant relationship with gender (r = 0.211, p < 0.01), and education (r = .139, p < 0.05). POS had significant positive correlation with gender only (r = .193, p < 0.05). ). Employee participation in decision making had significant positive correlation with experience (r =.268, p < 0.01) with education experience (r = .214, p < 0.01) and with age (r=.226, p<0.01). Results also show that reward and recognition had significant positive correlation with experience (r = .158, p < 0.05) and with education experience (r = .196, p < 0.01). It can be said that greater the experience, age and education, more will be employee participation in decision making. Employee engagement had significant positive correlation with 77

experience (r = .256, p < 0.01) and with education experience (r = .294, p < 0.01). It can be noted that employee turnover had significant negative correlation with gender (r = -.143, p < 0.05), with education experience (r = -.136, p < 0.05) and significant negative correlation with age (r = .235, p < 0.01).

Table3: Correlations of Demographic Variables with Psychosocial Factors, Employee Engagement And Employee Turnover

Variables

Psychosocial Variables

Employee Engagement

Employee Turnover

Psychological empowerment

POS

Rewards and Recognition

Employee Participation

Gender

.211**

.193*

.045

.096

.081

-.143*

Experience

.071

-.014

.158*

.268**

.256**

-.066

Education

.139*

.094

.196**

.214**

.294**

-.136*

Age

.015

-.008

.117

.226**

.088

.235**

* p<0.05; **p<0.01 Table 4 shows that all the psychosocial factors were positively and significantly correlated with employee engagement. Results show that Psychological empowerment and reward and recognition had highest positive correlation with employee engagement (r = 0.828, p<0.01; r = 0.873, p<0.01 respectively). The analysis also revealed significant correlation ranging from -.515 to 0.978 (p<0.01) between perceptions regarding psychosocial factors, employee engagement and employee turnover. All four psychosocial dimensions, viz., Psychological empowerment, POS, Reward and Recognition and employee participation, had correlation with employee engagement. Furthermore, results also indicate that employee engagement has a significant negative correlation with employee turnover (r=-.748,p<0.01).

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Table 4: Inter Correlations Amongst Psychosocial Factors, Employee Engagement and Employee Turnover

Variable

Psychological empowerment

POS

Rewards and Recognition

Employee Participation

Employee engagement

Psychological empowerment

1

POS

.978**

1

Rewards and Recognition

.838**

.812**

1

Employee Participation

.811**

.753**

.850**

1

Employee engagement

.828**

.793**

.873**

.759**

1

Employee turnover

-.738**

-.712**

-.515**

-.546**

-.748**

Employee turnover

1

* p<0.05; **p<0.01

Two multiple regression analyses were conducted to predict the influence of independent variables on dependent variables. These are given in the Table 5 and 6.

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Table 5: Multiple Regression Analysis — Criterion Variable Employee Engagement Significant Predictors of Employee Engagement

Standardized Coefficients

t

p

Psychological empowerment

.728

4.55

.001

POS

.368

2.562

.011

Rewards and Recognition

.660

10.643

.001

Employee Participation

.115

1.88

.060

Adjusted R2 = .796 F value = 248.805 Total Variance Explained = 79.6%

Regression analysis results given in Table 5suggested that out of four psychosocial factors, three variables significantly predicted employee engagement of bank employees with Adjusted R2 = 0.796; F = 248.805, p< 0.00). In the results, β value of 0.728 (p<0.00) indicated maximum influence of psychological empowerment on employee engagement followed by reward and recognition with a β weight of 0.66 (p<0.00). Perceived organizational support also significantly influence employee engagement with β value of 0.368 (p<0.00). Results also indicated that employee participation didn’t significantly predict the employee engagement. Hence, our hypothesis H1, H2 and H3 is supported, whereas H4 is not supported.

Table 6: Multiple Regression Analysis — Criterion Variable Employee Turnover Significant Predictors of employee engagement

Standardized coefficients

t

p

Employee engagement

-.748

-17.906

.001

Adjusted R2 = .557 F value =320.638 Total Variance Explained = 55.7%

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Table 6 shows that β value of 0.748(p<0.001) indicated the influence of employee engagement on employee turnover. Hence, it can be inferred that employee engagement was the significant predictor for employee turnover and explained 55.7 percent variance (F = 320.638, p<0.001).From these results it can be concluded that our H5 predicting that increase in employee engagement lowers employee turnover is accepted.

DISCUSSION The first hypothesis postulated a positive relationship between psychological empowerment and employee engagement. The results of the study also support the hypothesis. The results show when banking employees feel a sense of perceived control, competence and goal internalization in an organization, that affect his/her willingness to exhibit optimum efforts. Results also show that when employees are psychologically empowered, they will realize a change in attitude, cognition and behavior, which most assuredly will lead to positive change in their value orientation, increase patriotic actions, ability to postpone gratification of one’s desire, increase self-esteem, self-consciousness as well as psychological wellbeing which will cultivate a feeling of engagement among the employees in an organization. Hence, organization should create autonomy-supportive work climates by taking employees’ perspectives into account, providing greater choice, and encouraging self-initiation (Gagne & Deci, 2005) among them.

The second hypothesis of study stated that perceived organizational support is a significant correlate of employee engagement. This is borne out by the results. Results show that perceived organizational support plays a significant role in endorsing employee engagement. Hence, banking sector must raise the concept of perceived organizational support in all their systems and procedures by providing a supportive climate for their employees to keep them engaged. Based on social exchange theory, when employees receive POS, they are intrinsically encouraged towards exerting considerable higher of effort. Norm of reciprocity also indicates that employees tend to feel obliged to those who have helped them (Gouldner, 1960) in an organization are ready to display higher levels of self-determined motivation and work engagement.

The third hypothesis of study stated that reward and recognition is a significant correlate of employee engagement. It can be derived that the organization’s total reward strategies have a positive effect on employee engagement. Employee also feel, to be provided with requisite benefits and compensations, as a way of enhancing their engagement levels, as engaging employees through appropriate reward programs can reduce employee complaints about pay fairness. The findings therefore lead to the conclusion that employees would work harder if they are properly rewarded in an organization. The results are in agreement with the findings of Maslach et al., (2001), Brown, (2011) Gruman & Saks, (2011) Maslach & Leither, (2008)

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Results show that individual characteristics (education and gender) show an influence on psychological empowerment. The present study contradict the findings of Kanterâ&#x20AC;&#x2122;s (1977), where he found that gender and experience has a small and statistically non significant relationship with psychological empowerment.

Demographic factors, gender, education and age have a relationship with the employee turnover and in fact, these factors change the employee turnover levels in a significant manner.

Additionally, results also show that there is a requirement of rewarding and recognizing an employee, with a change in experience and education. Hence, there is a significant positive relationship between pay, bonus, fringe benefits, promotion, appreciation, and empowerment.

These findings indicate that with the increase in experience and education, employees receive more reward and recognition in an organization and show that when employees have more appreciation and acknowledgement, they will try more, and show participation in the decision making of the organization and involve themselves in the achievement of organizational goals.

Furthermore, with increase in education and age of an employee, the intention to change a job is reduced.

Another hypothesis indicates that there is a negative relationship between employee engagement and employee turnover. The acceptance of this hypothesis indicates that an increase in the level of employee engagement leads to decrease in employee turnover. This suggests that when employees exhibit more engagement, they show less inclination to change an organization. The results are supporting Coffman, 2000; Towers, 2003; Bates, 2004; Gubman 2004.

To conclude, since employees are such a valuable resource to the organization, management must invest significant resources in improving their psychological and social factors, to maximize the quality of service delivery and reduce employee turnover.

IMPLICATIONS The present research gives insight into the importance of psychosocial factors with regard to employee engagement and their impact on employee turnover in the Indian context. Banking sector needs to provide psychological empowerment, organizational support and rewards which would lead to a highly engaged workforce. They need to pay attention to empowerment of employees psychologically, and to observe its effect on employee engagement. Results also show that employee engagement can be considered to be one of the organizational strategic priorities for organizational success. Organizations should examine the sources of employee turnover and recommend the best approach to fill the gap of the source, so that they can be in a position to retain employees in their organization to enhance their competitiveness in this world of globalization. Managers must understand that employees in their organizations must be treated as

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the most liquid assets of the organization which would make the organization withstand the waves of globalization.

LIMITATIONS AND AREAS FOR FUTURE RESEARCH Although the present study took a positive approach in reviewing previous literature of psychosocial factors and employee turnover and the analysis of the relationship among them using advanced statistical tools, there are some limitations worth acknowledging. These include issues about a limited number of variables considered to examine the effect of psychosocial factors on employee engagement. Further research can be conducted by focusing on more psychosocial factors, to check their impact on employee engagement. The sample size for this study is 255. Increasing the sample size and increasing the scope of the study may give interesting generalizable results. The findings of this study may not be generalized to other industry; research in other settings or geographical areas might yield different results. Further, mediator analysis of employee engagement, can give richer insights, which future studies can look into. Future research may also examine how employee engagement mediates the relationship between psychosocial factors and employee turnover, it may give interesting results.

New research attempting to determine relationship between psychosocial factors and employee turnover may elaborate on the findings of the present study. Expansion of the present study may include a larger sample size, including both public and private banks, and a more geographically diverse sample.

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REASONS FOR CSR ACTIONS AND ORGANIZATIONAL SOCIAL PERFORMANCE: MEDIATING ROLE OF ORGANIZATIONAL IDENTITY. Moumita Acharyya 1

Purpose: The purpose of this paper is to examine the relationship between reasons for CSR actions and organizational social performance. The paper also understands if organizational identity mediates the above relationship effectively.

Design / Methodology: Inductive in nature, this paper uses exploratory research design. The study adopts a quantitative approach to analyse the relationships among the research variables. Various research tools like correlation, regression and discriminant function analysis have been used to establish the relationship significantly.

Findings: The results indicate that certain reasons for adopting CSR actions have a strong and effective impact on the corporate social performance of the firms. Also, Organizational Identity significantly mediates the relationship.

Research implications / limitations: The paper focused only on two organizations of the power sector, because of which the study cannot be generalized. Further, comparative studies across the sector would shed more light on the determinants and importance of CSR actions and CSP. On the research front, the paper indicated a number of useful insights from the different CSR actions and their implementation within the organization.

Originality / Value: By empirically relating the CSR actions with ethical and social performance the study contributed to one of the limited empirical evidence of measuring the ethical and social impact on the organizational performance through effective CSR activities.

Keywords: Corporate social responsibility, Organizational identity, Organizational social performance, Sustainability

INTRODUCTION During the beginning of industrial revolution, the primary objective of the business houses was to pursue economic reason, which was to earn profits. With time our country has fostered 1

Associate Professor, Organizational Behaviour & Human Resource Management, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi â&#x20AC;&#x201C; 110003, India.

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through various socio-political and technological changes including the democratic system of governance. With sovereignty the society has started being more aware about their own rights and responsibilities. There is an increasing demand on the businesses to be responsible towards the society and hence accountable to their own actions. The organization’s long term value depends primarily on its relationship with the stakeholders; society (customers) being the most important among them. Because of this highly interdependent relationship between the society and the organization, the latter should contribute immensely to enhance the welfare of the society. The basic idea of corporate social responsibility is that business and society are interconnected and not distant parties and therefore the society expects the businesses to behave in a very responsible manner.

The new Companies bill, 2013 has asked companies to expand their corporate agenda for social developments. With the mandatory requirement for the companies to invest (2%) in CSR activities, they have realized that they cannot ignore the societal demand for a broader responsibility (Nijhof.A, 2007). The companies have realized not only external society but they themselves can also benefit from CSR. Working effectively on CSR requires organizations to consider additional values and responsibility for long term sustainability and also to get ahead with the expectation of all the parties involved. CSR have found a strategic position in most of the organizations where the type of CSR activities being carried is related with company’s image and reputation (Auguilera Castro, 2012). CSR implementation is not a one-time activity rather a process which requires a company’s philosophy to be re-oriented and merged with the core business strategy for effective results. Organizational support is very important for an effective CSR strategy, and such a reorientation of company philosophy will provide scope for new relations to be formed, new values to be defined and new strategies to emerge so that corporate responsibility can be redefined to implement CSR successfully (Nijhof.A, 2007). Having an integrated business approach to CSR eases the implementation process of CSR, but it is also important for the organization to be concerned about CSR competence within firms, because CSR is not an isolated process and cannot be implemented by individuals alone (Nijhof.A, 2007). CSR can be termed as a collective competence and requires a collective mind that expresses shared values, coordinates behaviour and subordination. According to Weick and Roberts (1993) collective mental processes are crucial in situations which require continuous operational reliability. The research indicates that CSR relates to employee outcomes (Kenneth, D.R, 2014). Many firms have now realized the importance of maintaining a balance between profitability and representing a positive public image through shouldering more social and environmental responsibility (Mozes, 2011). Employees are one of the key stakeholders in building an effective CSR and their attitude and responses have an important implication for firm success (Rupp, 2006). If companies act in a socially responsible way the employee’s identity with the firm will be affected which will further threaten their psychological needs. A responsible business movement requires a large scale interaction of the organization with the society which involve situations which are much more uncertain in nature and require high amount of inter dependency within the members for the effective processes of contribution, representation and 92

subordination. Group members determine their actions (contributing) in the light of joint task (representing) and subservient to their social systems (subordinating) (Asch, 1952). Members of a collective mind possess the ability to converge individual actions into a joint action and according to (Sandelands.L.E, 1987), connections between actions are important for a collective mind than connections between people. According to (Nijhof.A) one of the important requirements for building effective CSR competency is that CSR needs to be attached with employee’s specific organizational identity. The positive image of the organization contributes for a stronger organizational identity among employees (Dutton, 1994) which results in various positive individual level consequences such as greater cooperation among employees, stronger organizational citizenship behaviour and higher level of job satisfaction with lower intention of disassociation (Dekanlon and Trivellas, 2014). Albert and Whetten (1985) define organizational identity as the central, distinctive and enduring characteristics of an organization. The term organizational identity is derived from the member’s shared belief and meanings, and answers the question “who are we?” as posed by the organization (Dutton et al.; 1994) (Foreman P. A, 2002). Organizational Identification is the cognitive process through which members align their individuals and social identities with the organization’s identity (Ashforth & Mael, 1989, 1996; Dutton 1994; (Heald M. , 1957) (Kreiner and Ashforth 2004).

The premise is supported by Peterson (2004) who found a positive relationship between CSR and organizational commitment (which is a similar construct to organizational identification) and Sen & Bhattacharya (2001) who found a positive relationship between CSR and organizational identity. The present study addresses the relationship between reasons of CSR actions and corporate social performance and how effectively the same is mediated by perceived organizational identity. The following section discusses the concept of CSR, reasons for adopting CSR actions and social performance of the firm. The paper concludes with a discussion of the results and implications of the findings of the study.

CORPORATE SOCIAL RESPONSIBILITY The term ‘corporate social responsibility’ had gained popularity during 1970’s. Many organizational practices such as support for the community, employee volunteerism, workforce diversity, environmental initiatives etc., have been initiated since then as CSR activities (Semeniuk, 2012). Corporate social responsibility (CSR) is a very dynamic concept and till now there has been no unanimous definition in this context. CSR has different meanings for different people. The social responsibility of firms is a topic that has attracted great interest in management literature in last few years. The research suggests that communication with stakeholders is very important for effective social responsibility (Valentine-Auguedo. M.J, 2015).

The demand for heightened corporate attention to CSR and making it a strategic component has come from disparate groups such as customers, employees, community and NGO’s (Choi, 2009).

To make CSR a strategic CSR companies must focus on the approaches or actions of CSR which 93

is introduced in the firms to enhance the corporate performances. According to (Michelon, 2012) companies must check whether the prevailing approaches to CSR allow the firms to enhance their stakeholder relationship and whether they are advantageous in terms of corporate performance (Dobers, 2010). It was found that (Diltev-Simonson, 2011) the limitations of the present CSR approach coupled with the economic crisis had pushed managers to develop more meaningful approaches to CSR that maximize profit by increasing corporate goodwill. It is true, that no business can solve all social issues and therefore it is important to choose which social problems to address. Each company must select issues that intersect with its particular businesses and other social agendas must be left to other institutions who are better positioned to address them (Porter.M, 2006).Within the CSR continuum, legal compliance is there at one end and the other end is pure philanthropy. It is not enough to be philanthropic in action and not strategic in terms of stakeholder interest. Also, legal compliance may introduce coercive and competitive actions which aside the real interest of CSR. Therefore, CSR has to be very carefully planned, designed and implemented keeping in mind the specific organization and the issues relevant to them. A proper thought process is required to understand the demands that can be made upon the organization as a corporate citizen by all its relevant stakeholders. The stakeholders range from employees to suppliers to customers to community.

Corporate social responsibility has implications not just for individuals but also as members of community and society at large (Jatana.R, 2007). The organizations have started realizing to be responsible in their business conduct either by experience or by observation. However, the fact that society has become very much aware of their own rights and responsibilities cannot be ignored. With increased pressure from the stakeholder to be socially responsible the organizations are coming forward and accepting their responsibility. Societies alone cannot actively convince the organizations to be socially responsible. The various industrial associations and most importantly the linkage with the great Indian philanthropic tradition has contributed to the current state of organizational transformation. Among organizations, despite of the philanthropic thought what is becoming more important is the need to be more strategic and less ad-hoc in implementation of the CSR activity.

REASONS FOR ADOPTING CSR ACTIONS CSR practices have drawn substantial interest from practitioners and academicians from all over the world. However, the motives behind those practices have received very little attention in the literature ((Babiak.K, 2011). Matten & Moon (2008) identified that while shaping CSR the motives of the key stakeholders are highly incorporated as it is considered vital in the understanding and practice of CSR initiatives. According to one of the study conducted by (Windsor, 2001) has shown that social responsibility is achieved when the organization confirms to the prevailing norms and expectations of social performance in a given society. CSR behaviours are not always charitable and discretionary and the firms engaging into CSR must understand that the specific business functions, characteristics and management, organization size, industry etc. influences highly the type of CSR activity being implemented (Smith M. A., 94

1991). A study by Smith (1991) found that the organization involved into heavy manufacturing and chemical production are more closely associated with environmental protection activities as compared to other companies. Similarly, companies in the power sector are mostly engaged with environmental protection, energy conservation and rehabilitation programmes extensively as compared to other firms as these are very much synonymous with the organizationâ&#x20AC;&#x2122;s core business strategy which is power generation. The literature also discusses that legitimacy being the most desired reason for implementing CSR practices (Suchman, 1995),(Rao.H, 1994). The organizations differ variedly in their reasons for developing and implementing CSR actions. The literature argued that a more close and aligned fit between companyâ&#x20AC;&#x2122;s core strategy and CSR efforts will further help the organizations to build upon their reputational capital (Porter & Kramer, 2006, Fombrun et al.; 2000). Mostly, the companies practice CSR for business reasons where they link CSR efforts with a positive influence on the organizational financial performance.

The literature suggests that there exist a split in the approaches of analysing the motives for CSR practices where few consider it to be externally driven and few other believe it to be internally driven(Muller, 2009). The literature have emphasized on some external factors which influence the firmâ&#x20AC;&#x2122;s decision to engage into CSR activities (Muller and Kolk, 2009) such as stakeholder demands, regulation or peer pressure, the need of media attention (Deegan, 2002). Many scholars have also pointed on the role of government as a significant driver of influencing firms to be socially responsible (Aguilera, 2007)(Moon J., 2008).

However, there are also studies which emphasize that CSR practices are being influenced by both internal and external drivers. (Husted, 2006) identified three categories which motivated the CSR concept and they were a) strategic CSR, where firm expects financial returns from engaging into CSR, b) coerced CSR, where firms adapts CSR practices when they are compelled by regulatory mechanisms and c) altruism where company engages into CSR actions because it believes it is the right thing to do. On the other hand, (Bansal, 2000) suggests that firms engage in CSR practices for three important reasons such as a) competitiveness, b) legitimacy and c) ecological responsibility.

The current study considers the classification given by Haberberg & Mulleady (2004). They grouped the various reasons for which organizations engage in CSR activities into two important dimensions of internal and external stimulus. The five major CSR actions identified by them are; Normative, Coercive, Competitive, Enlightened self-interest and Philanthropic. Of these, philanthropic CSR and Enlightened self-interest CSR were viewed as having internal stimulus for implementing CSR actions. The competitive, normative and coercive CSR actions were considered to be having external stimulus. These are further discussed in the method section.

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ORGANIZATIONAL IDENTITY The concept of identity is based mainly on ¬the study of Social Identity Theory (SIT) in the field of social psychology. Social identity can be defined as “an individual’s self-concept which is derived from the knowledge of membership of a social group together with the emotional significance attached to that membership” (Tajfel, 1974). There have been various theories and concepts developed on the foundation of SIT, such as Social Cognitive Theory (Turner, 1978), Organizational Identity (Albert, 1985) and Organizational Identification (Ashforth B. A., 1989).

However many scholars recognized the effects of SIT in a group context (Oakes, 1980)(Tajfel.H, 1982) but it was finally coined by Albert and Whetten in 1985 and they defined Organizational Identity as “the organizational attributes perceived to be Central – the core of an organization, Distinctive – the attributes of an organization that differ from those of other organizations (Albert & Whetten 1985) and Enduring – maintaining same character over time”. The study by Albert and Whetten (1985) on “Organizational Identity” emphasized on three important characteristics of Organizational Identity such as – Enduring, Central and Distinctive. The enduring represents the extent to which the dimensions of organizational identity last over a period of time. The centrality represents the extent to which the dimensions are of central importance for the organization. The distinctive represents the degree to which the dimensions of Organizational Identity are unique and different from other organizations.

The increased interest in the study of Organizational Identity is due to the fact that it helps understand the link between individuals and their employing organization. Various attempts have been made by many scholars to measure Organizational Identification (OID). There is a lot of disagreement in defining the concept of OID (Edward & Pecci 2004) and also it is uncertain about how to measure it. All the scales being developed suffered from a number of problems, mainly because of the reason that the scales exhibited a weak linkage between how the concept was conceptualized and how it is operationalized in practice. However, there is a lack of clear understanding of the concept of organizational identity which can hinder further empirical progress in the field. Edward & Pecci’s (2004) work on OID attempted to contribute to this field by giving a clearer picture of the conceptualization and operationalization of OID. Edward and Pecci (2004) have used some specific dimensions of OID from the literature and have integrated them together in the concept development. According to Edward (2005) OID is defined as “a psychological process between the individual and the organization whereby the individual feels a deep, self-defining affective and cognitive bond with the organization as a social entity”. They have also identified three main sub-components which can define the strength or depth of individual’s affective and cognitive bond with their employing organization. The three main subcomponents are as follows; (Edward and Pecci, 2004) a)Self-categorization and Labelling b) Sharing organizational goals and values

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c) Sense of attachment and belonging to the Organizational Identity is a concept which finds place amidst various challenges and problems such as employee satisfaction, retention, decision making etc. The increased pressure to this field is due to the increased exposure of the organization to various negativisms of frauds and unethical conduct. Due to intense competition between the companies and the increasing problem of corporate irresponsibility various problems are arising such as; • Firms are encouraging media to intervene and as a result they are exposing the private lives of the organization.

• The employees when they are customers, investors or local community members carry their knowledge of internal business practice beyond organization boundary.

ORGANIZATIONAL SOCIAL PERFORMANCE CSP evaluations of the firms are affected by the inappropriate usage of CSR activities which may further result in invalid conclusion on the relationship with corporate financial performance (Carrasco-G et al.; 2016). Wartick and Cochran’s (1985) definition of the CSP model represented advancement within the research of business and society. But, as identified later few problems were unaddressed. They further proposed that the model be divided into the following three dimensions; •

Principles (CSR reflecting a philosophical orientation)

•

Processes (corporate social responsiveness, reflecting an institutional orientation)

•

Policies (social issues management, reflecting an organizational dimension)

Their (Wartick and Cochran) model represented a conceptual advancement to the concept but some problems were unaddressed. Few of those problems can be listed below as; 1)

The topic CSP speaks for performance which is about actions and outcomes, and not of interaction and integration.

2)

Social responsiveness cannot be examined as a single process rather it should be addressing a set of institutional processes.

3)

The final component of the model which is the ‘policies’ is too restrictive. Measuring the CSP through policies is only one possibility. Policies are formal and mostly in written format but are not reflected in behaviours and programs which require informal and unwritten policies.

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If these problems are taken care and adjusted then the three facet model of CSP will address the intended; a. Motivating principles b. Behavioural processes c. Observable outcomes of corporate and managerial actions.

The above components when taken care of can produce a definition of CSP as “a business organization's configuration of principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm's societal relationships” (Wood.J, 1991).

The CSP model was further developed and reformulated by Wood.J (1991). In her reformulation of the model, she emphasized mainly on the ‘outcome’ aspect of the model. Diane Swanson extended Wood’s model on elaborating the dynamic nature of principle, processes and outcomes of CSP model. In her reformulated model of CSP she linked CSP with the values and ethics of managers and employees. She proposed for the first time in this model, that executive’s sense of morality can highly influence the policies and programs of environmental assessment, stakeholder management, and issues management carried out by employees. Therefore, her major contribution lies into integrating Ethics with CSP. The figure (1) below explains the framework of CSP as formulated by Wood.J, 1991.

Models of Corporate Social Performance (CSP)

Figure 1: The Corporate Social Performance Model Source: Wood.J, (1991)

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The above figure (1) explains the various aspects of CSR for measuring the impact of CSR actions by the organization.

Principles of CSR:The first section represents the fundamental truth which motivates people to act. The first principle of legitimacy explains that legitimacy and power are granted to the organizations by the society. The principle considers that power must be used in a responsible manner else the organization tends to lose it because the organization holds obligation to the society for existence. The second principle broadens the focus of behavioural parameters for the organizations. This principle considers that the organizations are responsible not only to a narrow set of stockholders and broadens the area of involvement with the society by emphasizing the ‘public responsibility’. The third principle acknowledges the importance of managers as moral actors. It is being argued that manager’s action are not always guided by organization rules and procedures and the possession of discretion enables them to be personally responsible for social welfare activities irrespective of any rules, policies or procedures (Berthoin, 1990)(Ackerman, 1975).

Process of Corporate social responsiveness:The second section represents the processes of corporate social responsiveness. Corporate social responsiveness can be defined as the capacity of a corporation to respond to social pressures (Frederick.C.W, 1978). The first process in this section that is environmental assessment considers organization survival through adaptation to environmental conditions. The basic premise of this process rests on the fact that organizations must know something about the external environment in order to respond or adapt to it (Bourgeois, 1980). Since the environment is always changing, considerable attention must be given to social, political and legal environments along with the economic and technological environments. The second process emphasizes the relationship between external stakeholders and organizational functions. It considers various mechanisms through which stakeholders can be effectively managed for effective results.

The third process that is issues management which emphasized on the policies developed to address social issues (Wartick.L.S, 1985). The process involves designing and monitoring internal and external processes of organization to manage the organization’s response to social issues with the purpose of minimizing threats (Brown, 1979)(Wartick.L.S, 1985).

Outcomes of corporate behaviour:The third section represents the outcomes of corporate behaviour which are further divided into three types. The first type is the social impact which considers the effect of organizational actions on the moral behaviour of the organization. The second outcome represents the programs the organizations use to implement responsibility. The third outcome represented by policies. It indicates the extent to which organizations handle social issues and stakeholder interests through company policies to achieve socially responsible motives.

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METHODOLOGY The present study attempts to understand how actions can drive social performance of the organizations. It also proposed that organizational identity will mediate effectively to drive higher organizational social performance. The study attempts to identify the primary reasons for adoption of CSR initiatives. The reasons for CSR action range from philanthropic to normative, competitive, coercive and enlightened self-interest. Specifically, our objective was to understand whether there was a significant relationship between the social performance of the firm and the reasons why firms adopt CSR actions and whether perceived Organizational Identity can be an effective mediator between these reasons for CSR actions and organizational social performance.

An attempt was also made to explore whether the organizations that are perceived high on social performance were likely to demonstrate different reasons for CSR actions when compared with organizations that are perceived low on social performance.

In this study corporate social performance is conceptualized as having few important dimensions such as health & safety, employment and community development. The concern of the organization towards addressing the employment issuesby providing vocational training, counselling sessions, health & safety by opening hospitals, clinics, conducting medical campaign in villages and community development by protecting overall community is of interest in the study. The dimensions were referred from the study of Thomson Reuters Asset 4 data set.

However the current study does not completely adapt the measure of the construct from the dataset. The relevance of the dimensions lies on the fact that the social performance pillar of the dataset includes various social factors important for the company which must be addressed. The dimensions of social performance as described by Thomson Reuters Asset 4 can be defined as; a) Employment Quality b) Health and Safety c) Training and Development d) Diversity and Opportunity e) Human Rights f) Community g) Customer / Product Responsibility h) Rationale for selecting Power sector The power sector in India is a highly regulated sector, and for this it has been traditionally dominated by public sector companies (as given in Figure 2 )under the central government as well as individual state government (Public sector enterprises in India- catalyst for growth, ICC, Deloitte &Touche 100

Consulting India Pvt. Ltd, 2010). An industry analysis of the power sector in India can be represented in Figure 2 below.

Figure 2: Power generation in India Source: NTPC Annual Report

Figure 3: Ranking of power sector companies in India Source: Company Annual report

As per the above industry analysis given in Figure 3 it can be interpreted that NTPC is the power major among the PSEâ&#x20AC;&#x2122;s and TATA POWER among the private sector companies.

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The power sector have a lot of potential for CSR studies as it involves a closer and direct interaction of the firm with the society due to many reasons such as land takeovers, pollution considerations, employment opportunities, educational prospects etc.

The Study: Data Collection and Sample The data for the main study was collected from 370 employees from two organizations in Delhi, India. Both the organizations selected for the study belonged from the power sector. Company A was a public sector undertaking and Company B was a private sector firm. The sample for the study comprized managers and executives selected on the basis of a non-probability incidental sampling technique. The questionnaires were distributed personally to the employees of the two organizations.

Variables Perceived organizational identity The concept of Organizational Identity was operationalized in terms of the following three dimensions; a)Self-categorization and Labelling – it refers to the process by which individuals categorize themselves as members of the organization in the social category and also, effectively label themselves as organizational members (Ashforth & Humphery 1997). b) Sharing organizational goals and values – it refers to the extent to which the employees share the values and goals of the organization and integrate them into their own belief system (Ashforth & Mael 1989, Hall et al 1970, Patchen 1970, Pratt 1998). c) Sense of attachment and belonging to the organization – it involves the affective attachment of the individual to the organization. It refers to the extent to which employees experience a sense of attachment and belongingness to their employing organization.

Reasons for adopting CSR actions The categorization proposed by Haberberg and Mulleady (2004) was followed in the present study to classify the reasons for CSR actions. These are;  Normative CSR – The managers who practice CSR not always necessarily have that degree of internal belief while doing so. Sometimes, they do so because it is the norm in their profession or social group. This is Normative CSR.  Competitive CSR – Sometimes firms are pushed into CSR by the act of outside stakeholders. Where most firms in an industry have strong policies on the environment or high profile charitable activities, their competitors may feel compelled to follow for fear of losing customers, this is competitive CSR. 102

 Coercive CSR – Sometimes socially responsible policies are forced upon organization by outside pressure groups, this is Coercive CSR.  Philanthropic CSR – Involves giving funds, goods or services, sometimes serving as advertisement. Some criticise philanthropy for not incorporating the strategy directly into the core business of the organization. Philanthropy is not always tracked from a social accounting perspective, making it difficult for these efforts to be audited or held accountable to external benchmarks.  Enlightened self-interest – “Do well by doing good”. This reasons rests on the philosophy of ethics which states that persons who act to further the interests of others, ultimately serve their own self- interest.

Questionnaires Used Perceived organizational identity The Organizational Identity questionnaire was developed by Edward and Pecci (2007).

The questionnaire consists of 6 items, which can be grouped into three categories namely Selfcategorization and labelling, Organizational values and goals, and Belongingness and membership to the organization. The Cronbach alpha score for Organizational Identity is presented in Table1.

Self-categorization and labelling: items deal with the way an individual categorizes themselves as an organization member. It reflects the sense of self while claiming them as part of the organization.

Organizational values and goals: items deal with the extent the individuals share the same values and goals with the organization. It reflects the degree to which the individuals feel associated and are closely linked with the organizational values such as mission, vision, philosophy etc. and the organizational goals.

Belongingness and Membership: The sense of belongingness and membership to the organization reflects the importance individuals attach to the belongingness of their organization.

The organizational identity questionnaire can be used to understand the degree to which the organization has been able to build a high level of Organizational Identity within the employees of the organization. The instrument also provides an insight into the understanding of individual values and the extent to which the individual values been integrated with the organizational values and goals.

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Reasons for adopting CSR actions questionnaire The 14 item questionnaire was developed to assess the extent to which the organizations practice CSR for different motivations such as philanthropic reason of CSR action, normative reason, competitive reason, coercive reason and enlightened self-interest reason. After several rounds of refinement based on the discussions with the industry experts the final questionnaire was prepared. The five point Likert scale was used to record the responses, where rating 1 indicated that the respondent ‘strongly disagrees’ the statement and a rating 5 indicated that the respondent ‘strongly agrees’ the statement. The questionnaire was pretested to establish the reliability score.

The number of items, the range of possible scores for each of the CSR action and the Cronbach alpha score of all the reasons for CSR action are presented in Table1.

Organizational social performance The questionnaire consisted of 11 items which reflected the inclusion of several social needs.

The variables included in the study which revealed the social needs are education, health and safety, community development and customer responsibility. However, the variables were selected from the dataset on the basis of the extent to which these issues are important, relevant and applicable to the organizations selected for the study. The issues relevant to the organizations were identified through the secondary reports and discussion with the leaders of the organization.

The questionnaire initially consisted of 12 items when presented to the leaders of the organization. After the review they were of the opinion that the items required more clarity and understanding. Keeping in view their response the questionnaire was slightly modified to include few examples and removal of an item which appeared to be repetitive.

The present version of the Social Performance questionnaire was then administered to 40 executives from across the industry sectors for determining the reliability of the questionnaire.

The Cronbach alpha score was found to be 0.903 which was indicative of a good and reliable instrument.

The questionnaire followed a five (5) point rating scale. Thus, the maximum score possible on the scale was 55 and reflected high level of Social Performance for the selected organizations.

RESULTS AND DISCUSSIONS Reliability Testing The reliability of the questionnaires was ascertained using Cronbach’s Alpha co-efficient. George and Mallery (2003) provide the (Table 1) rules of thumb for Alpha coefficient; 104

The reliability coefficients for all the 31 elements are given in Table 2.

The data was analysed using descriptive, correlation and multivariate statistics. The results showing the mean and S.D values are presented in Table2.

Descriptive statistics: The Table 3 presents the mean and standard deviation scores of the research variables for the study. The results as presented in Table 3 explain that the most dominant reason for adopting CSR actions by the organizations in the present study was ‘philanthropic’ (Mean=12.6, N=370) closely followed by ‘enlightened self-interest’ and ‘normative reasons’. Therefore, it is evident that the firms adopt CSR actions for different reasons. However, it appeared from the results that Competitive CSR action (Table 3; Mean score = 9.13) and Coercive CSR action (Table 3; Mean score = 4.4) were not considered much for CSR implementation within the firms. This reflected that the organization does not do CSR for competitive reasons and are neither forced by other pressure groups to implement CSR within firms.

The perceived social performance of the organizations was high (Mean=47.0). The respondents believed that the organization was catering to the societal needs and requirements.

Correlation Analysis Pearson product moment correlation was calculated to understand the relationship between different reasons for CSR actions and overall social performance. There was a positive correlation between philanthropic CSR action and Social Performance (Table 4, r = 0.640, n = 370, p = 0.00). When self-enlightened CSR action was compared with Social Performance a positive correlation was revealed (Table 4, r = 0.542, n = 370, p = 0.00). The Normative CSR action was also positively correlated with Social Performance (Table 4, r = 0.316, n=370). However, when competitive CSR action was compared with Social Performance, it appeared that there was a negative correlation between the two (Table 4, r = -0.052; n=370, p = 0.314). The coercive CSR action when compared with Social Performance a significantly negative correlation emerged between the two variables (Table 4, r = -0.232, n = 370, p = 0.00). So, overall the results reveal that all the CSR actions except competitive CSR action and coercive CSR action were strongly correlated with Social Performance.

The findings suggest that forcible reasons for adopting CSR actions within firms are not integrated with the core business strategy. This fragmented approach does not give the employees a perception of a holistic view of the organization as there is no connect between the company efforts and the impact on society. Such organizations are unlikely to be viewed as high on social performance. On the other hand when the organizations adopt CSR actions out of a genuine concern for society or because being socially responsible is the norm or

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when the organizations believe that doing good for the society ultimately results in the benefit of the firm, the societal goodwill and acceptance will be high and valued.

A pearson coefficient correlation was computed to assess the relationship between the dimensions of Organizational Identity and Social Performance of firms. The first dimension of Organizational Identity namely self-categorization and labelling when compared with Social Performance of firms a strong and positive correlation appeared between the two variables (Table 5, r = 0.532, p = 0.00). The second dimension of Organizational Identity namely Sharing organizational goals and values when compared with Social Performance of firms a positive correlation appeared between the two variables (Table 5, r = 0.623, p = 0.000). When the third dimension of Organizational Identity namely Belongingness and membership of the organization was compared with Social Performance of firms a positive correlation emerged between the two variables (Table 5, r = 0.623, p = 0.00). So, overall there was a strong and positive correlation between all the dimensions of Organizational Identity with Social Performance of firms.

Regression Analysis To understand the key predictors of social performance, stepwise regression analysis was conducted with Organizational Identity and reasons for CSR actions as the predictor variable.

The results of regression analysis are presented below in Table 6.

Organizational Identity explained the maximum variance of 43% to the grouping variable i.e. social performance (Step I: F=281.08; p=0.00, df=1,368). The results suggest that organizational social performance has a significant relationship with organizational identity which explains the extent to which employees share same values, goals and belongingness within the organization. That is, if the organization employees categorize themselves highly with the organization, shares common goals and values with the organization and have a strong belongingness towards the organization, the social performance of the firm will be higher and effective. The results may be explained with reference to the research which has shown that individualâ&#x20AC;&#x2122;s identification with an organization may influence the social exchange process (Jean-Pascal Gond, 2010). Social exchange theory proposes that social behaviour is the result of an exchange process where potential benefits and risks of social relationships are weighed leading to abandon certain relationships and continue with other relationships which provide fun, friendship, companionship and social support to the individuals (Cherry). It is believed that purely economic and calculative relationship between employees and their organization prevent employees from strongly identifying with their organizations. Without strong Organizational Identity employees may only result into a restricted social exchange least affecting employee attitude and social behaviour.

It is also found from the results that two reasons of CSR actions, that is, philanthropic and enlightened self-interest CSR are strongly predicting the social performance of the firms 106

(Step III: F=158.66; p=0.00, df=3,366). The results suggest that social performance of the firm has a significant relationship with the two CSR actions. The results revealed that employees consider CSR actions being practiced within the firms as an important factor for improved social behaviour of the organization. The consideration for philanthropic action is even more within the employees as it has been the tradition of the organizations to do charity for the society and empower them. Philanthropic CSR action is concerned with pure societal enablement involving actions like charity, donation, funding etc. but with no sustainability.

However, organizations are accepting the need to have a sustainable approach towards societal responsibility and impending to enlightened self-interest workforce.

Discriminant Function Analysis Corporate social performance represents a business organizationâ&#x20AC;&#x2122;s configuration of principles of social responsibility, processes of social responsiveness and policies, programs and observable outcomes as they relate to the firmâ&#x20AC;&#x2122;s societal relationships (Carroll, 1991). Given the importance of social performance within the organizations and its close relationship with CSR, a Stepwise Discriminant Function Analysis was conducted with Social Performance as the grouping variable, for both the organizations selected for the study. The purpose to do the discriminant function analysis was to understand how the employees, who perceived the social performance of their organization high, would differ from those who perceived that their organization was characterized by low level of social performance. From the total sample of 370 cases, 30% of the upper and 30% of the lower extreme scores on Social Performance was identified. In order to identify the variable which would maximally differ between these two groups a Discriminant Function Analysis was conducted. The results of the Discriminant Function Analysis are presented in Table 7. The chi-square value was 149.9 and was significant at p<0.001. This suggests strong support for the ability of the discriminant function to discriminate group membership on the basis of the variables that entered the function. These variables were Organizational Identity, Philanthropic reason of CSR action, enlightened self-interest reason of CSR action and Coercive reason of CSR action. From the mean values (Table 7) it becomes evident that employees who perceived the organization to be high on social performance (Group II) also reported that the organization had higher organizational identity and also engaged in CSR actions for philanthropic and self-enlightened reasons significantly more than the organizations perceived to be low on social performance (Group I). The higher the Organizational Identity the more the employees will experience organization success and failure as their own prompting the individuals to adapt certain attributes and behavior that support the organizationâ&#x20AC;&#x2122;s interest (Knippenberg.V & Sleebos, 2006; Dutton & Dukerich 1991; Ashforth 1989; Dutton 1991).Philanthropic reason of CSR action has a long history of giving fund, donation, and other charitable activities aimed at serving the society and increasing the image of the organization in the society and also adding value to the overall corporate citizenship strategy (Haberberg & Mulleady, 2004). Self-enlightened reason of CSR action is an upcoming CSR practice which is being increasingly adapted by the organizations and 107

whose philosophy revolves around furthering the interests of others. This CSR action focuses on increasing the extent of social and environmental awareness among the employees for overall community development.

CONCLUSION The study emphasizes that organizations pursue CSR actions for multiple reasons, ranging from philanthropy to enlightened self-interest. However, one or two dominant reasons for CSR actions are likely to have implications for the social performance of the firms. It was found from the study that philanthropic reason for CSR action and self-enlightened reason for CSR action are the most preferred reasons for CSR implementation within firms. On the basis of the correlational analysis it was found that all CSR actions namely normative CSR action, philanthropic CSR action and self-enlightened CSR action were positively correlated with the outcome variables such as Organizational Identity and Social Performance except for competitive CSR action and coercive CSR action which were found to have negative correlation with the outcome variables. All the dimensions of Organizational Identity were found to have a strong and positive correlation with Social Performance of firms. Employees who perceived their organization to be high on social performance were also having high Organizational Identity, philanthropic motive of CSR action and self-enlightened CSR action. The study further suggested that perceived Organizational Identity is the true mediator between reasons for CSR actions and social performance of firms. That is, the organizations must try to create higher Organizational Identity through the implementation of various CSR actions which will further result in higher social performance of firms.

MANAGERIAL IMPLICATIONS The study has practical implications for organizations, as well as for those who formulate various policies within organizations. The outcome of this research paper should enable the organization policy makers to take a deeper look into how to create a better linkage among CSR, corporate social performance and organizational identity for creating a sustainable corporate culture which would influence individualsâ&#x20AC;&#x2122; citizenship behaviour towards the organization. Emphasis on reasons for adopting CSR actions would change the corporate reputation in a significant way in creating a stronger Organizational Identity which will have a reflection on the type of impact the organization creates in the society. The present study focused only on the two organizations of the power sector. Organizations from other sector were not included as part of the study. A comparative study from a group of organizations across the sector may further enrich the findings.

The study emphasized the role of CSR actions to attain higher social performance. Further, the model on the reasons for adopting CSR actions can be tested on other sectors as well for better generalization. Further studies may be undertaken to establish a relationship between social performance and financial performance. The present study only focused on the different types of CSR actions to create a relationship with social performance of firms. There is a 108

need to also focus on the various other motivations and causes influencing the CSR process which may result in even higher level of social and ethical performance of firms. Few methodological limitations of the present study include data limitations, measurement issues and generalizability of the findings.

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112

APPENDICES Table1: Reliability test coefficients >.9

Excellent

>.8

Good

>.7

Acceptable

>.6

Questionable

>.5

Poor

Table2: Items and Cronbach alpha of the Research variables Research Variables

Number of items

Cronbach alpha

Range of scores

Normative CSR action

3

0.55

3 - 15

Philanthropic CSR action

3

0.77

3-15

Competitive CSR action

3

0.65

3-15

Coercive CSR action

2

0.58

2-10

Self-enlightened CSR action

3

0.76

3-15

Organizational Identity

6

0.92

6-30

Social Performance

11

0.90

11-55

113

Table3: Means and standard deviations of the variables (N=370) Variables

Mean

S.D

Range of scores

Normative

10.9

2.3

3-15

Philanthropic

12.6

2.2

3-15

Competitive

9.13

2.32

3-15

Coercive

4.4

1.8

2-10

Self-enlightened

11.7

2.2

3-15

Social Performance

47.0

6.6

11-55

Organizational Identity

25.9

3.6

6-30

Reasons of CSR Actions

Table 4: Correlation between CSR actions and Social Performance of firms CSR actions

Social Performance (r)

Sign value â&#x20AC;&#x201C; 2tailed (p)

Philanthropic CSR action

0.640

0.000

Self-enlightened CSR action

0.542

0.000

Normative CSR action

0.316

0.000

Coercive CSR action

-0.232

0.000

Competitive CSR action

-0.052

0.314

Table 5: Correlation between Organizational Identity and Social Performance of firms Organizational Identity

Social Performance (r)

Sign value â&#x20AC;&#x201C; 2tailed (p)

Self-categorization and labelling

0.532

0.000

Sharing organization values and goals

0.623

0.000

Belongingness and membership of the organization

0.623

0.000

114

Table 6: Relationship of Social performance with Organizational Identity and Reasons for CSR Actions.

Step Number

Predictor variable

I

II

III

Standardized Beta

F value

Adjusted R2

P value

Degrees of Freedom

Organizational Identity

0.658

281.08

0.432

0.00

1,368

Philanthropic CSR

0.402

222.4

0.546

0.00

2,367

Organizational Identity

0.441

Self-enlightened CSR

0.165

158.66

0.562

0.00

3,366

Philanthropic CSR

0.330

Organizational Identity

0.402

(Reasons for CSR actions, Organizational Identity )

Table 7: Results of Discriminant Function Analysis with ethical performance as the grouping variable Group Means Step number

Variables entered

Group I (Lower 30%)

Group II (Upper 30%)

I

Organizational Identity

23.11

28.32

151.9 0.00

0.56

II

Philanthropic CSR

10.8

13.9

101.8 0.00

0.41

III

Self-enlightened CSR

10.2

13.02

71.6

0.28

F

Chi square: 149.9, P<0.001

115

p

0.00

Standardized DF Coefficient

MOBILE BANKING ADOPTION FOR FINANCIAL INCLUSION: A REVIEW OF FACTORS Renu Aggarwal 1

Monica Bhardwaj 2

India is one of the biggest and fastest growing economies of the world, but the growth is more clustered towards specific segments or areas. After 60 years of Independence, there still exists big segment of nation that lies out of formal banking services and a major chunk of this population resides in rural or semi urban areas. As a result there has been amplification of financial instability and impecuniousness. The RBI had reported the impact of financial exclusion leads to the loss of GDP amounting up to one percent in economy. Hence it becomes imperative to explore the means to make the financial access possible to all segments of the society. Therefore the objective of this paper is to ascertain the antecedents that influence the adoption and use of mobile phones for banking services by customers. As mobile banking is a cost effective channel and has widespread proliferation, it creates a profitable and promising avenue for the economic development of the country and financial institution’s success. It is of paramount importance for marketers to understand how and why the customers develop adoption intention for this innovative, cost-effective and efficient form of banking services. So the present paper proposes a conceptual framework for mobile banking adoption intention in India. The knowledge of this process and its factors may be pertinent for academicians and practitioners.

Keywords: Mobile Banking Adoption , Innovation Diffusion Theory, Technology Acceptance Model, Social Influences, Compatibility, Perceived Risk

INTRODUCTION Financial inclusion defined by Sarma and Pais (2011) is “a process that ensures availability, the ease of access, and usage of the formal financial system for all members of an economy” (Rahman, M. A., Qi, X., & Islam, M. T., 2016). The limitations of banks to reach broader geographic coverage such as rural, remote areas owing to high operational costs has left big segment of population out of formal banking system (NurAlam Siddik et al.; 2014). The entire world is witnessing a technology driven financial revolution happening not in developed countries like US, UK but in the slum areas of Nairobi, markets of Kisumu (Mas, 2010). This 1

Assistant Professor, Finance, Department of Management Studies, NH-2, Sector 6, Mathura Road, Opp. Sanjay Memorial Industrial Estate, Faridabad, Haryana – 121006, India.

Email: renu_aggarwal77@yahoo.co.in 2 Assistant Professor, Fortune Institute of International Business, Plot No. 5, Rao Tula Ram Marg, Opposite Army R&R Hospital, Vasant Vihar, New Delhi - 110057, India.

Email: monica29rose@hotmail.com 116

revolution is mobile banking, use of mobile devices to conduct financial transactions (Klein and Mayer, 2011). India in recent past has observed growing tele-density as shown by Telecom Regularity Authority of India (2015) report. It can be inferred that there is deep diffusion of mobile technology in rural as well as urban regions and this can be leveraged towards addressing issues of financial inclusion much efficiently (Behl, A., & Pal, A., 2016). It has already been validated by the extraordinary success of Safaricom’s M-PESA in Kenya that the economic development of low and medium segment people is possible through mobile banking by vanishing the limitations of geographic, demographic, and institutional barriers to financial inclusion (Rosengard, Jay K., 2016).

Through mobile banking the customers can have anywhere and anytime access to banking services via a mobile device; tablet or mobile phone. This shifting paradigm has altered the behavior patterns of consumers while interacting with their financial institutions and eventually altering the rules of buying and selling. Mobile banking provides means to rural poor to access much-needed banking services. It enhances people’s income and offers better avenues to conduct savings (UK Commercial Banking Report Q1, 2010). Besides this, the banks get opportunity to retain their existing, customer base and attract new customers by presenting such value-added, innovative services. Mobile banking allows them to generate additional revenues and if used strategically that may serve as an instrument of differentiation (Tiwari et al.; 2006). Many banks around the globe have launched m-banking services in an attempt to provide ubiquitous accessibility to banking services. Hence, the major focus of banks is on the implementation of mobile banking services that enables costs reductions, provides sustained competitive advantage, offers greater convenience to users, and serves the ‘unbanked’ customers. Hence a model of supply and demand is developed that requires critical balancing where the financial institutions and banks act as service providers and consumers are the service receivers.

MOBILE BANKING Mobile banking (in general) is defined as “a channel through which the customer interacts with a bank via mobile device, such as mobile phone and Personal Digital Assistant (PDA)”. It allows users to check account balances, make inquiries on transaction history, transfer funds, pay bills, to do trading of stock and manage asset portfolio (Suoranta and Matila 2004). It eliminates space and time constraints from banking activities such as checking account balances, or transferring money from one account to another (Ahmed et al.; 2011).

LOCAL BANKING SECTOR IN INDIA As technological innovation was found to be one of the ways to achieve competitive advantages, thus it is not surprising that Indian banking institutions are competing with each other as well, to embrace their mobile banking services. India is the second largest mobile market in the world.

The growth in the subscriber base in the telecom sector has been phenomenal. “At the end of the financial year, the subscriber base was 996.49 million out of which 969.89 million were wireless subscribers. During the year, wireless subscriber base recorded an increase of 65.38 million, 117

while the overall tele-density increased from 75.23 to 79.38. The year also saw increase in rural tele-density from 43.96 to 48.37 while the urban tele-density also increased from 145.78 to 148.61â&#x20AC;? (TRAI Annual Report 2014-15)

Figure 1: Wireless Subscriber (in million) Source: TRAI(Annual Report 2014-15) The mobile phone penetration stands to touch 100% by the year 2015 (Refer Figure 2). As per Assocham report (2011) major retail transactions in India are cash based where credit card, debit card, or any other non cash mechanism is used in very low numbers by Indians. A combination of nearly 100% mobile penetration in India and growing mobile customer base makes mobile phones the perfect medium to enable non-cash retail transactions in India.

Figure 2: Mobile Phone penetration in India

While mobile banking service is an extension of internet banking, the acceptance and popularity of global m-banking is not as widespread and massive as internet banking even within developed markets where mobile devices have become nearly ubiquitous (Western Europe and North America). The usage of mobile banking is a debatable issue because of the risk involved in such transactions. Where some people argue that transaction based on internet and other technologies are not safe, and might lead to fraud, other people find it safer, flexible and convenient to access 118

anywhere and anytime. Cost and availability are the other factors which influence the use of mobile banking. The skepticism also is driven by lack of availability, poor wireless product quality (compared to the wired world) and insufficient technology.

The study on financial and savings habits of low-income level people by Nandhi (2012) explored the everyday use and effects of EKO (a partnership between the financial services startup company EKO and the State Bank of India (SBI)) mobile banking services in Delhi. The study brought forth that EKO mobile banking service is valued as a boon for small savers and users who depended on risky informal savings practices. Major reason for use of this mobile banking option was to act as a means to save for emergencies. The EKO services were found to be easier and more accessible in making payments and deposits and EKO mobile money accounts appeared to improve efficiency and regularity of other savings mechanisms. Hence the technology has already knocked and is trying to make its way out in India in the low income and financially excluded segments as well.

Increasing number of banks in India are offering mobile banking services via Third Generation (3G) mobile phones and wireless application protocols (WAP) in order to shift customers to these alternative modes. But customer readiness for these channels has not been captured and needs to be explored. Thus, it is necessary to have an in-depth analysis to identify the factors influencing the usages of mobile banking.

OBJECTIVES OF THE STUDY The objective of this paper is to develop a new conceptual framework to understand the reasons pertinent for mobile banking adoption by the higher education students. So the research question is: What are the factors that influence the attitude towards adoption of mobile banking in India?

IMPORTANCE OF THIS STUDY The study would be of immense value for the banks and other financial institutions related to banks. The findings can provide banks with vital information regarding the potential customers and help them understand the behavior of this potential segment and devise effective strategies accordingly. The banks may be able to target their potential segment, armed with clear view of factors having significant influence on their preferences and choices. It may help the banks to understand the inhibitors and motivators that may lead to innovations.

RESEARCH METHODOLOGY The current study is based on secondary sources drawing the research papers, articles and reports. The study was conducted based on the literature review. Total of 215 papers were selected. The papers were filtered and only those papers were retained that were available in full119

text. The papers that were more technical and based on infrastructure study such as wireless network infrastructure, mobile middleware, wireless user infrastructure etc. were not considered for the study. To search the relevant papers on m-banking adoption, various databases such as Science Direct, Emerald, Springer, IEEE, Inder science, Taylor & Francis, Wiley etc were used.

Since this phenomena is new particularly in developing countries so papers from the local databases were also considered. The papers were chosen on multiple keywords search including: financial inclusion, poverty, low income segment, technology adoption, technology acceptance model, mobile banking, perceived risk, trust, social influence, and compatibility, diffusion of innovation theory, wireless banking, and youth. The final search yielded 169 papers from 100 journals, reports and books. Each of the 169 studies was carefully reviewed. Maximum papers were from journals MIS quarterly (12), Computers in Human Behavior (9), Information & Management (8), International Journal of Bank Marketing (6) and Electronic Commerce Research and Applications (5). The major focus areas in these papers were Mobile Banking (57), Internet Banking (6), Mobile Commerce (5), Mobile Internet (4) and Technology Acceptance (3).

LITERATURE REVIEW Early studies on adoption of mobile banking have been very narrow and limited. Various factors have been taken and tested to identify the framework of technology adoption by users.

Researchers globally have been trying to develop understanding of adoption patterns of internet, electronic and mobile banking adoption. According to study by Wu and Wang (2005), perceived risk, cost, compatibility, and perceived usefulness significantly affect adoption and use of mobile commerce. Table 1 highlights some researches carried out to identify the factors of mobile banking adoption in various cultures and backgrounds.

Table 1: Empirical and Theory-Based Empirical Researches in Mobile Banking Adoption Authors

Theories

Sampling and Countries

Main Findings

Sharma ,A.(2011)

Innovation attributes and Rogers’ diffusion model

100 respondents surveyed on a

Significant factors were factor risk and security The focus was on service content other then technological features. The hindrance to adoption was Functionality of a mobile phone.

Innovation attributes and knowledgebased trust

Survey of 368 respondents including students , mobile banking customers

Lin, H.F.(2010)

questionnaire in Ghaziabad in U.P(India)

120

Main significant factors •

•

perceived relative advantage • ease of use, compatibility of mobile banking with their

provided by one public and three private banks in Taiwan

Beiginia et al.; (2011)

â&#x20AC;˘ Perceived benevolence Adoption of Internet banking. The decomposed theory of planned behavior (DTPB) better explains behavioral intention, attitude toward the behavior, and subjective norm constructs two other models

Theory of reasoned action, theory of planned behavior, and decomposed theory of planned behavior

Random sampling with 425 Questionnaires filled by EN Bank customers in Tehran

extended

53 respondents using convenience sampling, India

Main significant factors for online banking adoption were Perceived usefulness, perceived ease of use, subjective norm, consumer awareness and perceived risk

Use of shopping mall intercept method to collect feedback of 441 respondents based on a structured questionnaire in Taiwan.

Main significant factors influencing intention to adopt mobile banking were Social influence, perceived financial cost, performance expectancy and perceived credibility

Focus group discussions of 97 unbanked rural dwellers in Ghana

Main significant factors were Perceived usefulness, Perceived ease of use, Economic factor and Perceived Trust. Affordability and convenience were identified as determinants of perceived usefulness and mobile knowledge, age and gender were found to affect perceived ease of use.

Safeenaet al.; (2011)

TAM Model

Yu (2012)

UTAUT Model

Tobbin (2012)

â&#x20AC;˘

values, experience and needs, perceived competence and integrity Behavioral Intentions regarding adopting (or continuing to use) mobile banking tend to be based on their attitude.

Insignificant factor

Extended TAM

Behavioral intention can be predicted by intention to use internet banking, introducing relative advantages, explaining features of mobile banking, and emphasis on the non-complexity of using them.

Factors in projecting the actual behavior were Individual intention ,facilitating conditions ,Insignificant factors were Effort expectancy and perceived self-efficacy

The present paper formulates the conceptual research model in Indian context (Figure 3) which is drawn from two theoretical frameworks Technology acceptance model (TAM) and Rogersâ&#x20AC;&#x2122;s 121

innovation diffusion theory (IDT). To understand user acceptance of IT/IS the Technology Acceptance Model was formulated by Davis (1989) that has been very widely used and adopted.

The TAM model identifies how a user adopts and uses a technology. As defined by Davis (1989), two basic determinants â&#x20AC;&#x201C; perceived usefulness and perceived ease of use are instrumental in explaining the usersâ&#x20AC;&#x2122; intention and behaviour towards the use of new technology (Figure 1).

Figure 1: The original Technology Acceptance Model (Davis, 1989) TAM model was built on basis of perceptions rather than real factors. The model suggested that when a person comes across new technology there are two factors that affect the decision of how he will use and when he will use it .The two factors were perceived usefulness (PU) and perceived ease of use (Peou).

Rogers (1995) stated that to diffuse and adopt the innovation quality of an innovation, peer to peer communication and understanding of the need of different user segments is important. Rate of adoption of innovation includes five perceived attributes of innovations namely relative advantage, compatibility, complexity, trial ability, and observability. These attributes help in explaining the user adoption and decision making process. They also help in prediction of the implementation of new technological innovations and elucidate their inter relatedness. However, research has suggested that only the relative advantage, compatibility, and complexity are consistently related to innovation adoption (Agarwal and Prasad, 1998). Relative advantage is similar to perceived usefulness in TAM, and the complexity is similar to perceived ease of use.

High compatibility, however, will lead to preferable adoption (Sonnen wald et al.; 2003). These three factors, in addition to social influence are posited to have a direct influence on the prediction of mobile banking adoption.

Conceptual Model: Figure 3 represents the conceptual model for the present study. The model extends TAM and integratesit with IDT.

122

Perceived Ease of Use H1A H1B

Perceived Usefulness

Perceived Risk

H1C

H4

Attitude

Behavioural Intention

Social Influence H3 Compatibility

H2

Figure 3: Conceptual Model PERCEIVED EASE OF USE AND PERCEIVED USEFULNESS Perceived Usefulness refers to the degree to which a person believes that using a particular system would enhance his or her job performance (Davis, 1989). Perceived Ease of Usefulness is defined as “the degree to which a person believes that using a particular system would be free of effort” (Davis, 1989). In the perspective of mobile banking, there has been extensive research that provides evidence of the significant effect of perceived ease of use on intention to use mobile banking directly or indirectly through its effect on perceived usefulness. Perceived usefulness and perceived ease of use have significant impact attitude and behavioral intention to use (Schepers and Wetzels, 2007) mobile banking services. The study by Chung and Kwon (2009) considered perceived usefulness and perceived ease of use in analyzing why and how someone forms an intention to use mobile banking on a continuous basis. The findings signified that both perceived usefulness and perceived ease of use are important determinants of a mobile banking intention to use by customers.

It is often perceived that technology is for tech-savvy people however the successful adoption and use of technology products such as mobile devices, ATMs etc demonstrate that it’s only a matter of user perception and operative knowledge on how to use the technology that results in formulating an adoption intention and simultaneous use. Migrant workers, for example, represent the segment that is unable to open bank accounts due to lack of collaterals. For them m-banking brings the opportunity to have an alternative to accessibility to banking services. Moreover, even if the individuals have bank accounts, they often are unable to operate it due to big geographical distances between the bank branches and their areas of residence. Typically for people who work as laborers, daily wagers etc., it is a costly affair to visit bank to send money back home. If they do, they need to leave a day’s work to complete the bank transaction. So mobile banking allows access to financial services anytime anywhere even to otherwise financially excluded 123

individuals. If the individual is residing in rural area or in a remote area where the bank branches are not available, mobile banking acts as a highly useful cost effective and convenient alternative to a bank. If the individual finds mobile banking is easy to use his perception about its usefulness is also influenced.

Thus, following hypotheses is postulated: H1A. Perceived ease of use positively affects perceived usefulness.

H2B. Perceived usefulness and perceived ease of use positively influence attitude towards behavioral intention.

COMPATIBILITY Rogers (1995) defines compatibility as “the degree to which an innovation is perceived to be consistent with existing values, past experiences and the need of potential users”. Compatibility is one determinant of Rogers’s diffusion of innovation (DOI) theory that has been extensively used in studies examining what facilitates the diffusion of innovative systems. Mobile banking is the most recent and promising innovative service and compatibility may trigger its diffusion if the user identifies it related with his lifestyle. Compatibility has significant effect on behavioral intention to use and is the second most important effect on the actual use (Wu and Wang, 2005).

Study by Lu and Su (2009) show that by enhancing the compatibility with the values, lifestyle, and needs of the customer, his intention can be obtained. The impact of compatibility have been established in the past researches, such as in study by Akturan and Tezcan (2010) compatibility was found to have a significant effect on adoption intention. Potential consumers look for mobile banking to be compatible with their individual lifestyle, to form a more positive attitude towards adopting mobile banking (Kadušić et. al., 2011). In study by Rezaeidolatabadi et. al. (2013) factors such as perceived usefulness (PU), perceived ease of use (PEOU) and compatibility were found to be positively related with the intention to adopt mobile banking services. The findings revealed that not only compatibility had a strong direct effect on mobile banking adoption but it was also identified as an important antecedent for perceived ease of use and perceived usefulness. So if mobile banking perceived by customers is being consistent with their own existing beliefs, values, lifestyle and past experience, there is greater possibility to use these services such as Eko, Mpesa by Vodafone are the m-banking services in India projected towards the low income level people who lack access to banks or prefer convenience of out of bank transactions. As these services become compatible to their lifestyle, their attitude towards its adoption is also influenced.

Thus, the following hypothesis is postulated: H2. Compatibility has positive significant relationship on attitude towards behavioral intention.

SOCIAL INFLUENCE Social norms were found to have a strong positive correlation towards the intention to adoption of mobile banking services (Riquelme and Rios, 2010). Social Influence includes the impact of 124

external environment on decision making of an individual. People want to form a positive image in front of other people, and if the modern kind of doing business can provide them the desired social image, they will be enthusiastic to use it (Kadušić et. al., 2011). Puschel and Mazzon (2010) further asserted that social norm is one of the most vital determinants that manifest the user to adopt mobile banking. Empirically, this has proven by Schepers and Wetzels (2007) with the same findings where social norms found to have significant relationship with behavioral intention.

Thus, the following hypothesis is postulated: H3. Social norms have positive significant relationship on attitude towards behavioral intention

The present framework encapsulates constructs perceived ease of use, perceived usefulness that are derived from the technology acceptance model (Davis, 1989) and its expanded version (Venkatesh and Davis, 1996) as they have been recurrently found to be good predictors in adoption of technology studies. Also the theory of innovation diffusion (Rogers, 1983) is used to explain impact of construct perception of risk.

PERCEPTION ON TECHNOLOGY AND RISK The findings of study by Saleem and Rashid(2011) showed that mobile banking adoption should be technologically efficient and it should have cheap, reliable and secure technology development. To ensure that customers adopt mobile banking, the technology must be efficient and quick and easy to understand and use. Effective use of technology improves productivity of service firms, enables firms to offer new services and provide new ways of instilling control mechanisms allowing suitable modifications in their offering that helps customer to derive better value. However choice of technology determines nature of functional relationships between employees, consumers and markets. In the study to identify factors influencing the intent to use mobile banking services in SMS banking, the highest deciding factor was the perceived risk rate (Taleghani et al.; 2011). To minimize the lack of customer adoption risk, Kadušićet. al. (2011) proposed a collaboration model permitting the set up of a single technology standard for mobile payments based on integration of various types of providers like telecom, retailers, mobile device manufactures. Sjursen, H.(2008) emphasized need of collaboration between the banks and the mobile providers that leads to increased functionality. The usage of mobile banking services can be increased by ensuring the security of mobile banking and familiarizing customers with how to use the service (Bamoriya and Singh, 2012).The mobile financial services growth depends not only on technological advances, but also on the confidence of consumer in the provided services (Weber and Darbellay, 2010). Perception of risk is the major internal factor that has significant influence on consumers for mobile banking usage (Huiliand Chunfang, 2011).

H4. Perceived risk has negative significant relationship on attitude towards behavioral intention

125

This study is oriented towards youth population and is thus centered on college and university students as major constituent. The primary reasons for choosing this segment in this study are as follows: 1. The students have keenness and positive attitude towards new technologies 2. Students are conscious about their image and are ready to learn and adopt new devices to portray a lifestyle and self image 3. Ease of understanding of features of mobile phones through extensive informal chatting and communication amongst the students 4. The presence of mobile phones as the best means of communication with family and friends.

The potential of this technology appears promising for this market segment for various reasons namely A major proportion of the students either has a bank account or is aware of basic banking transactions. Also considerable student segment also avails education loans.

Hence overall they constitute large market segment of the Indian banking industry and that makes them a potential market for mobile banking.

1. Also with enormous penetration of mobile phones and increasing dependence for daily activities, the student individuals too have tendency to use a mobile phone, hence creating a prospect to use mobile phone as a banking channel.

2. The student segment is prospective drivers of nationâ&#x20AC;&#x2122;s economy in future years by serving in diverse fields in their career. The change of status, from students to employed individuals may significantly influence their co-workers' and colleaguesâ&#x20AC;&#x2122; adoption of mobile banking in the respective fields. Hence familiarity and expertise in such services today makes a promising future tomorrow for such technological innovations.

DISCUSSION AND IMPLICATIONS The conceptual model presented in this paper is distinctive since it encapsulates the TAM variables along with perceived risks, social influence and compatibility in assessing the decision to adopt m-banking. Extant literature supports that perceived ease of use and perceived usefulness play a major role in influencing consumer attitude towards using m-banking particularly for people who otherwise lack access to financial services. Perceived ease of searching, finding information and executing transactions facilitates positive and swaying individual experience. Also the type of information delivered through m-banking is deliberated as worthy impetus that forms a favorable and positive attitude towards this service. The practical implications of the study are that it enhances the understanding of mobile banking through consumerâ&#x20AC;&#x2122;s behavior perspective and, hence, becomes a valued background for banks. When the user perceives mobile banking as useful, its attitude towards mobile banking adoption will be more encouraging. Hence m-banking ought to be informative regarding new offerings and needs 126

to prove usefulness for consumers particularly for the specific segments it is designed for. The practitioners may incorporate more training and end user support for the financially excluded segment that lacks awareness or knowledge about this service and its usage. The banks should adopt push strategy to attract more customers by promoting its usability and efficiency through its awareness campaigns, bank tellers and customer service staff along with other forms of marketing. They should promote mobile banking prominent features highlighting its properties of time saving, convenience, ubiquity, cost effective and availability of information. It is important to provide mobile banking service that is designed easy to operate and is user friendly.

The customer must recognize their efficiencies in time spent on transactions vis a vis other means and its contribution in offering anywhere anytime services cost effectively. The accessibility to banking services provided to people who are unbanked and out of formal banking services and convenience for those who are banked but prefer quicker and effortless services.

Moreover the marketers should give due focus on design of the website and app for existing user.

The social influences emanating from word of mouth from friends and social reference groups influences individuals significantly particularly for the new users. So the marketers must recognize that advertisements in print or press media have far less impact than the social influences. Tan and Teo (2000) advocated four reasons that make people develop trust in electronic commerce websites which are social indicators, understanding, communality and personal experience. Social indicators represent the certifications or similar efforts on www that people majorly accept. Communality forms the trust on something that is trusted by individualâ&#x20AC;&#x2122;s friends and family. So, marketers and banks must ascertain creating positive experiences for its existing customers since that develops much deeper impact on its adoption (Baraghani, N. S., 2008).

Perceived risk has also significant influence on use of virtual banking platforms. The model indicates that banks must identify strategies that aim at risk reduction engendering greater degree of security leading to confidence development in potential customers. Security comprises of data transmission, authentication and authorization (Pousttchi and Schurig, 2004). Large number of risks are associated with virtual transactions where the data encryption is absent at gateway creating security concerns for mobile banking. Likewise in cases when bank shares their processes with third party providers, risks emerge. Consumers perceive lack of security while sharing their passwords and other details with unknown third parties and that too in virtual environment. SMS banking has emerged grabbing more focus and has been more popular particularly in Asian countries. SMS banking lacks end-to-end encryption that increases perceived risk. In addition other security breaches are prevalent simultaneously including SMS spoofing attacks, virus attacks, Trojan horses, and malicious codes. Security can be increased through various mechanisms like using biometrics authentication. Biometrics may be face recognition, voice recognition and finger prints. Finger prints are unique and more appropriate and user friendly (Bilal, M., and Sankar, G., 2011) form of security instrument that may be used by banks to make their systems robust and trustworthy. Alternatively, more the banks focus on 127

inhibiting conduct of intruders, deception and stealing individual’s identity more it would be able generate instruments that lead to greater trust to entice the customers. These instruments would be long lasting customer service, issuance of guarantee statements with each consecutive transaction and digital certificates on company policies and receipts and have secure controls augmented while crafting and updating banking applications.

This will enable the providers to develop pull based strategy by collaborating with its partners in mobile banking service generation and delivery. MNOs, Banks should also solicit partnerships with government and industry regulators to achieve high quality internet infrastructure to enable non-breakage in service availability and delivery. Also there must be efforts towards inception of electronic laws to delimit consumer’s perceived risks. The marketers must toughen and advertise their security efforts on their websites and other mediums to deter the reluctance in users in using mobile banking (Baraghani, N. S., 2008).

The theoretical implication of this study are to provide a strong contribution to the existing mobile banking literature by extending TAM by including perceived risk, compatibility and social influence. Previous TAM studies with reference to mobile banking have ignored the impact of risk on the adoption which could have overlooked vital factor influencing adoption (Khasawneh, 2015).

CONCLUSION Inclusive growth is the key issue entire world is struggling with. Mobile banking has appealed the focus of practitioners and academicians. Specifically, research work in mobile banking has increased significantly in recent years. It can be observed that it has become an increasingly pervasive. This paper identified 169 articles on mobile banking. Though this review is not claimed to be exhaustive, it does offer a judicious insight into the state-of-the-art in m-banking research. The findings have provided some important implications:  Although not many articles were found on mobile banking and its impact on financial inclusion, this may not represent the actual situation. It is believed that few articles on this subject have been published.  Since the search descriptor was limited to certain keywords such as mobile banking, financial inclusion etc., some articles on such subjects as the wireless banking, inclusive banking, inclusive growth, cell phone banking etc. may not have been searched, as mobile banking may not have been mentioned explicitly in these articles.  The research on the impact of culture on mobile banking has been limited. The study of impact of Culture on adoption of mobile banking may be an interesting area for investigation.

Apart from the above implications, it is observed that the innovation in technology has brought a paradigm shift in banking and channels of banking, affecting both the lives of people and the business environment. The use of mobile banking can make basic financial services more accessible to people from urban and rural area in high to low-income group, minimizing time and 128

distance to the nearest retail bank branches. The significance of this study is that financial providers cannot assume that consumers are homogeneous with respect to their perceptions towards mobile banking services offered by various banks. There is a unique opportunity to provide social and financial services over the mobile network due to outstanding growth of mobile sector and banking technologies particularly to the financially excluded individuals who need it the most. Hence the financial providers need to emphasize the factors like value and benefits sought by customers, the ease in handling the transaction over the mobile device and impact of social norms on individuals. Also the compatibility of individuals need to be identified so as to make them more comfortable and synchronized with the new technology and its use.

Finally the perceived risk has significant impact on mobile banking adoption. However for people who are more techno savvy and are frequent users, perceived risk has positive influence.

FUTURE SCOPE Being at primary stage, this study identifies factors that collectively influence the adoption intention. To develop understanding of these factors in m-banking perspective is imperative to evolve a precise understanding of its impact. In future work, the impact of interfaces and devices on specific m-banking services can be explored. Also the influence of the mediators in motivating the adoption can be estimated.

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Book Review

Mithas, Sunil. Making Elephant Dance – The Tata Way to Innovate, Transform And Globalize. Penguin Books India (2015), ISBN-10: 0670088285, ISBN-13: 978-0670088287.

Making elephant dance – The Tata way to innovate, transform and globalize is a good introduction to explain the plausible reason of the monumental growth of Tata group in the last two decades. The last two decades in Indian economy have seen old business groups losing the prominent positions and new companies gaining because of India’s economic reforms. The Tata group has held the preeminent position in the list of the biggest business group in India. The author of this book is Dr. Sunil Mithas, professor at Robert H. Smith Business School at the University of Maryland, and is a leading expert on strategies for managing innovation and excellence for corporate transformation.

In seeking reasons for the growth of the biggest conglomerate in India, Dr. Mithas has uncovered the very practical aspect of management operating system which has led to the growth and expansion of Tata group of companies. There is a weakness to the book as it doesn't look at the weaknesses of the group. Despite very good operating framework, many companies have not been able to perform and shine.

The book does try to provide road map using the important parameters of business excellence, innovation and globalization by elaborating Tata group's transformation from 5.8 billion dollar Indian firm in 1992 to 103 billion dollar global powerhouse in 2014 with 67 percent revenue coming from outside India. As of now, the group operates in 150 countries with half a million plus employees in 100 odd diversified businesses from software to hotel to automobiles. The sheer scale of operation makes the Tata group sort of “GE of India" for the outside world . This is remarkable achievement for the 140 year old business group which is still going strong despite increasing competition in India. Tata’s strategy to globalize its business has seen several acquisitions around the world. Dr. Mithas has gone beyond the obvious headlines and dug deeper so as to find the moving force behind this transformation.

The book starts with a very candid foreword by Ratan Tata who remained in forefront of this transformation. He has given some clues how he went about transforming the group to a global company with Indian roots. The book tries to create management wisdom about how to transform a business in the face of changing technologies and economic conditions. Mr. Tata acknowledges that one of the milestones of the transformation journey has been creation of JRD QV award which led to the adoption of Tata Business Excellence model (TBEM) by each Tata group company.

The strength of the book is to uncover this Tata Business Excellence Model (TBEM) which has worked almost like an operating system underlying its growth and expansion. The book goes into 136

lot of details about that model and linkages with other initiatives. TBEM was also linked to creating ties among companies by giving unified Tata identity. The process of institutionalizing this, unified Tata identity through Group executive office (GEO) rather than personalized mechanism. The key idea of this GEO was to focus at the group level on issues such as strategic restructuring, entry into new sectors, setting stretch goals for globalizing the group, developing new products and setting goals to address climate change.

Ratan Tata ascribes the global expansion of Tata group companies to TBEM approach to management. He writes "It is possible to have excellence without globalization but very difficult to successfully and profitably globalize without excellence". Thatâ&#x20AC;&#x2122;s where there is so much emphasis on Tata Business excellence Model (TBEM) as an operating system of the group. He goes on writing â&#x20AC;&#x153;The true power of the TBEM arises because of the discipline that it provides in the form of a framework while leaving sufficient autonomy to each individual company within group which face different markets. The framework allows us to leverage our common name, shared heritage, shared values and principles while empowering us to pursue strategies and initiatives that work across industries and geographiesâ&#x20AC;?. In that sense The TBEM has become an institutionalized way to approach excellence and innovation.

The book is divided into two parts. The first part is about the context of transformation and the second part is about business excellence and Innovation initiatives. The first part describes the context of change in terms of economic reforms in India and opening up of Indian economy and the imperatives of change and developing a vision of quality and excellence and global competition. In the second part of the book, the author has gone for a case study like analysis of the performance of each important company of the group, like Tata steel, Tata Motors, TCS, Indian hotels, Tata chemicals and others. He looks at the history and their evolution and current challenges. The companies are evaluated on the basis of metrics, that are : 1. Adding value and growth, 2. Differentiating, 3. Reducing costs, 4.Optimizing Risks, 5. Improving industry structures (also innovating with products and services), 6.Transforming Business models and processes for continued relevance in a changing landscape. Because of this, the analysis is sharp and precise. He goes on evaluating each company on these parameters that give a good comparative picture of performance of these companies. While discussing about the strategy, the book is about measurement of performance and how Tata group companies have evolved their understanding of measurement of business performance and excellence.

The TBEM model is inspired by the criteria set by the Malcolm Baldrige National Quality award but also includes additional requirements focused on Innovation, safety, corporate Governance, Climate change as well as other aspects. Malcolm Baldrige programme started in US in 1987 as public private partnership in response to rising Japanese dominance and concerns about national competitiveness. The criteria for evaluation are based on the set of core values, such as visionary leadership, public responsibility and citizenship, customer driven excellence, organizational and personal learning, valuing employees and partners, agility, focusing on the future, managing for 137

innovation, management by fact, focusing on results and creating value and a systems perspective.

The author has not focused on the areas where Tata group is facing problems. The recent developments in the group focus on that. Tata group has not been able to get good foothold in India’s telecom market despite some early advantages. There is no in-depth analysis of Tata steels’ acquisition 'Corus' not doing well because of overcapacity of steel production in China.

There is no discussion about transformation of industry structure of global steel industry and its impact on Tata Steel and Corus. There are no new grand initiatives in terms of e-commerce and biotechnology from the group. There is also no discussion about the eternal question or the constant concern - should Tata group prune its portfolio of business to increase its profitability?

On comparative framework only TCS and Tata Motors (Land Rover and Jaguar) are doing pretty well. These questions are not addressed. These are relevant questions which need to be asked while congratulating the group and its visionary chairman Mr. Ratan Tata about great success in last two decades.

Given the controversy of Mr.Cyrus Mistry, Chairman Tata group, who got removed because of serious differences in the approach to run the Tata group with Mr. Ratan Tata, this book becomes a required reading. It goes in details of why Mr. Ratan Tata was successful in transforming the group but it does not dwell much on the weaknesses of the group. The Book is recommended reading for anyone keen on knowing transformation of India’s biggest business group.

Rahul Mishra, Professor, Strategy, IILM Institute for Higher Education, 3 Lodhi Institutional Area, New Delhi – 110003, India. E-mail:rahul.mishra@iilm.edu

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ISSN NO. 0974-0902

RNI NO. 67689/97

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