about the journal - iitm janakpuri · 2020. 5. 4. · volume 10, issue 2 • july-december 2019 1...

IITM Journal of Management and IT is a Bi-Annual Research Publication of Institute of InformationTechnology and Management (NAAC, NBA Accredited & ISO Certified) which is instituted andgoverned by Mata Leelawati Sikshan Sansthan, New Delhi. It is a blind peer reviewed journal withan objective to disseminate experiences, ideas, case studies of professionals in Management andInformation Technology to propagate better understandings.

Its focus is on empirical, applied research and reflections that are relevant to professionals of Managementand Information Technology with academic standards and rigor within purview.

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The Institute aims to be a Centre of Excellence promoting Value Based Quality Education in theemerging areas of advanced professional studies in Information Technology & Management.

Mission

The Institute endeavors to contribute towards meeting the growing demand for competent and trainedInformation Technology Professionals, Software Engineers and the World Class Researchers determinedto achieve excellence.

Editorial Board

Patron

Shri J.C. SharmaChairman

Editor In Chief

Prof. (Dr.) Prerna MahajanDirector & Professor

Editor(s)

Dr. Renu ChoudharyAssociate Professor

Dr. Pankaj Kumar VarshneyAssociate Professor

Editorial Team

Prof. (Dr.) Sudhir Kumar SharmaProfessor

Dr. Gopal Singh LatwalAssociate Professor

Dr. Sandhya MaitraAssociate Professor

Dr. Malavika SrivastavaAssociate Professor

Dr. Ramandeep KaurAssociate Professor

Ms. Tamanna GoelAssistant Professor

Editorial Advisory Board

Prof. (Dr.) Krishna S. DhirResearch Professor of Management Science,Szechenyi IstvanUniversity of Gyor, Hungary.

About The Journal

Prof. (Dr.) Sushila MadanProfessor, Lady Shri Ram College, DelhiUniversity, New Delhi.

Dr. Rajesh BhattSenior Programmer,Computer Services Centre, IIT, Delhi.

Prof. (Dr.) B.S. NagiProfessorEx-Director Research Council of SocialDevelopment, New Delhi.

Prof. (Dr.) Madhu VijProfessor, Faculty of Management Studies,University of Delhi, Delhi.

Prof. (Dr.) Sanjeev MittalDean & Professor-University School ofManagement Studies, Guru Gobind SinghIndraprastha University, New Delhi.

Prof. (Dr.) V.A. EshwarProfessor and Managing Director, SaaiConsultants, New Delhi.

Prof. (Dr.) P.D. KaushikEx-Pro-Vice Chancellor,Teerthanker University, Moradabad, (U.P.)

Dr. Anupam NarulaAssociate ProfessorFORE School of Management, New Delhi.

Dr. Indu UpretyAssociate ProfessorSchool of Management Gautam BuddhaUniversity, (U.P)

Dr. P.K. SinghProfessor, Course Director,Master of Banking & Insurance,University College of Commerce & ManagementStudies, Mohan Lal Sukhadia University, Udaipur,Rajasthan.

Prof. Som DeoFormer Dean, Faculty of Commerce, Universityof Rajasthan, Jaipur, Rajasthan.

ISSN (Print): 0976-8629 www.iitmipujournal.org

ISSN (Online): 2349-9826

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IITM Journal of Management and ITVolume 10 Issue 2 July-December 2019

CONTENTS

Research Paper & Articles

• The Missing Middle: Bridging the Gap of Financing Needs for Women OwnedSMEs in India 1

Sana Moid & Shailja Dixit

• Is there Information Diffusion in India from Asian Stock Markets? A QuantileRegression Approach 13

Swati Khanna & Ashish Kumar

• Islamic Principles as a Predictor of Investment Behaviour of Muslim Investors inDelhi/NCR 21

Shweta Goel, Suchita Dwivedi & Neha Jain

• Delineated Segmentation of Factors on Employee Attraction in Entrepreneurial Firms 30Shivangi Saxena & Suman Shokeen

• Words Transform World: Impact of Faculty Language Patterns and CommunicativeStyle in Tertiary Education- A Study Conducted in Higher Education Institute inNational Capital Region- India 37

Deeksha Thakur

• Impact of Organizational Culture on Employee Engagement and Effectiveness inIndian Manufacturing Company 42

Suneet Soni

• Crowd Funding in India 53Chhavi Singhal Kandoi, Sakshi V Jain & Abhishek Venkteshwar

1Volume 10, Issue 2 • July-December 2019

Dr. Sana Moid*, Assistant Professor, Amity BusinessSchool, Amity University, Lucknow CampusDr. Shailja Dixit**, Associate Professor, AmityBusiness School, Amity University, Lucknow Campus

Introduction

Small firms are engine of innovation and economicgrowth (Acs and Armington 2006; Baumol 2002). Asper the report of OECD (2016) economies aretransiting, small and medium enterprises (SMEs)account for at least 45% of total employment and 33%of GDP. According to International FinanceCorporation (IFC 2012), SMEs account for more thanhalf of all formal jobs worldwide, and their share of

aggregate employment is comparable to that of largefirms.

Women entrepreneurs make remarkable contributionto the Indian economy. There are nearly three millionmicro, small, and medium enterprises with completeor partial female ownership. Communally, thesewomen-owned enterprises contribute 3.09 percent ofindustrial output and employ over 8 million people.Women entrepreneurship is largely slanted towardssmaller sized firms, because approximately 98 percentof women-owned businesses are micro-enterprises.Apart from being under-represented in enterprises ofall shapes and sizes, bigger is the firm lesser is the

The Missing Middle: Bridging the Gap of FinancingNeeds for Women Owned SMEs in IndiaSana Moid* & Shailja Dixit**

Abstract

Globally, a woman in entrepreneurial activity share is lesser as compared to men, with littleprogression over time. The gap in early stage entrepreneurial activity rate between men andwomen is highest in India in comparison to other BRICS nations (GEM, 2014). The Gender GEDIIndex has ranked India’s second to last, behind Egypt and Morocco out of 17 countries. Womenowned businesses in India are undercapitalized with a financing gap of Rs. 6.37 trillion with 73%of the total finance demand among women owned business in India remains unmet. (IFC report,2013).The gender gap in entrepreneurial activity and capitalization can be because of differenteconomic, financial and socio-cultural factors effecting the business environment for entrepreneurs.Lending to women-owned micro, small, and medium enterprises (MSMEs) is still not explored ascompared to lending to MSMEs in India. Due to absence of segmental focus and with greaterperception of risk, formal financial institutions have not contributed much to understand thissegment. For growth and development of nation it is mandatory to bridge the credit gap forwomen-owned SMEs across the developing world.

This paper aims at understanding how accessibility to finance for women owned MSMEs differsfrom men-owned MSMEs by mapping women-owned MSMEs worldwide along with their capacityin accessing finance, to present the best practices for promoting growth of women-owned MSMEsby providing access to finance, and for building fact base in enabling policy discussions. Thefindings of a paper are based on secondary research and recommends potential interventionsby financial institutions for closing the credit gap in women owned SMEs. It is concluded thatimproved access to credit is most effective when tied with strong institutional environments; effortsshould be made to establish more vigorous institutions and favorable business conditions.

Keywords: Credit Gap, Economic Growth, Financing needs, Women Entrepreneurs, WomenOwned SMEs,

2 IITM Journal of Management and IT

chance that it will be headed by a woman. Societalattitudes and norms prohibit women from evenconsidering starting a business, while systemic barriersmull over that many women entrepreneurs stay curbedto very small businesses resulting in operation in theinformal economy. Access to finance is oftenconsidered as one of the major obstacles that affectSMEs disproportionately (Ayyagari et al., 2012).Research from the International Finance Corporation(IFC) and Goldman Sachs estimated that as many as70% of women-owned SMEs in developing countriesare unsersved or underserved by financial institutions– a financing gap of about $287 billion. It is clear thatcreation and growth of small firms is facilitated incountries with a supporting environment, includingbetter access to finance. Financial market imperfectionsare particularly restricting for small entrepreneurs wholack collateral, credit histories, and connections. Manyof these entrepreneurs in developing countries arewomen.

In terms of access to finance, it is evident that womenentrepreneurs have disadvantages as compared to theirmale counterparts. As per the reports of IFC (2011b)across the developing world, more women-ownedSMEs cite access to finance as major hindrance thanSMEs with no women ownership. The importance forclosing the lending gap for small women-ownedbusiness in emerging markets is clear as it would boosteconomic growth, labor force participation, drive upper capita income and strengthen GDP growth.

Literature Review

Using firm level data from OECD countries, Watson(2002) and Fairlie and Robb (2009) presents thatperformance of female-owned businesses on mainparameters, like profit, size, and productivity is loweras compared to male owned businesses. Sabarwal andTerell (2008), in their study covering Eastern Europeand Central Asia and present that female ownedenterprises are minor in terms of size of assets andemployment. These findings have been reflected inColeman (2007) as in case of 1998 US Survey of SmallBusiness Finances. Using World Bank EnterpriseSurvey data, Bardasi et al. (2011) shows missing genderdifferential in value added per worker and total factorproductivity while controlling the industry in which

they work. However, Bardasi et al. (2011) shows thatfemale-owned firms are less productive in both EasternEurope & Central Asia and Latin America but not insub-Saharan Africa. Using the Survey data of WorldBank Enterprise for the sub-Saharan African region,Aterido et al. (2011) pointed out a significant gendergap in labor coefficient and 12% productivity gapbetween male and female-owned firms. Watson (2002)documents that poor performance of female-ownedenterprises in Australia is because of lower initial start-up capital.

Although access to formal finance is often consideredas most pressing obstacle to the growth of small andmedium enterprises (SMEs), existing literaturehighlights women-owned enterprises particularly sufferfrom problem in obtaining credit from formal sources(Berger and Udell 2006). Previous literature also showsthat women-owned firms have lower loan approvalrates from formal sources indicating credit marketdiscrimination (Muravyev et al. (2009). Using crosscountry data from the Business Environment andEnterprise Performance Survey (BEEPS), Muravyev etal (2009) scrutinize that women entrepreneurs facelower chance of receiving loans and result in payinghigher interest rates. As a result, women arediscouraged from entrepreneurship and runningbusiness on an efficient scale. The reasons for theobserved gender gap in accessing financial services mayarise from both the supply and demand sides. Thedemand-side factor stresses the lower number of creditapplications from women-led businesses due to fearof rejection. Lower demand for credit by women-owned firms rise due to certain features like small sizeof business, risk aversion, perceiving themselves to beless creditworthy (Watson and Robinson 2003),perceiving financial obstacles that do not exist, lack ofself-confidence (Scott and Roper 2009), and sector ofactivity. Coad and Tamvada (2012) used firm-level datafrom the third census of registered small-scale firmsand discovered that firms led by females grow slowerafter controlling other factors. De and Nagaraj (2014)have also used data from Indian manufacturing firmsshow that firms with better liquidity turn out to bemost productive. In a study of micro womenentrepreneurs in the city of Ahmadabad ,Kantor(2005) reports that there is no effect of access to crediton the value added. Among the highlighted obstacles


faced by these firms, access to finance is considered tobe the most pressing obstacle (Sharma 2014). In thiscontext, policymakers have realized the requirementof providing a support to this sector and haveundertaken various initiatives like credit guaranteeschemes, promotion of women entrepreneurship, andmarketing assistance for accelerating the growth in thissector.

Research Gap and Problem Statement

It is noted that there is a body of literature in SMEsupport and development space that sought to bringthe challenges, dynamics and funding issues faced bysmall enterprises. Furthermore, there are governmentpolicy programmes moved towards the support andfunding of small enterprises through various fundingagencies and institutions. However, it is still not knownthe extent to which these initiatives have beensuccessful in addressing the funding and supportchallenges faced by women owned SMEs and mappingthe credit gap that exist between the demand andsupply side.

Study Objective

The study seeks to understand available literature onfinancing requirement of women owned SMEspecifically in the emerging economies. Therefore, themain objective of the paper is to assess and measurethe credit gap on the demand side and supply sidealong with discussion support provided by financialinstitutions to women owned SMEs in India.

Women as Key Drivers for Economic Growth

Women’s participation in economy is a game-changerstrategy with the capacity of transforming the entireeconomy. Few nations have made women’s economicparticipation also known as womenomics, an integral

part of economic stimulus agenda. Yet it is observedthat many women founders struggle in accessing thecapital, technology, networks and knowledge that theyneed to establish and grow their businesses.

While there have been some advantages in female laborparticipation rates over past few years, however resultsvary for each country, and overall there is stillsubstantial room for improvement. Research ofGoldman Sachs (2014) on closing the credit gap forwomen owned Smes has also shown that one of thebest environments for investment in human capital isan environment where major income is in the handsof women. With increase in female labor participationrates increases, countries can reap the benefit of ‘dualdividend,’ given that women are more likely than mento use their increased bargaining power to buy goodsand services in improving the family’s welfare. Thisincreased bargaining power has the looming in creatinga virtuous cycle as female spending supports thedevelopment of human capital, which in turn willstimulate economic growth in the years ahead.

Women Owned SMEs in India: An Overview

As per International Financial Corporation (2016)around 3.01 million women-owned enterprisesrepresent approximately 10 percent of all MSMEs inthe country. Collectively, they contributeapproximately 3.09 percent of industrial output andemploy over 8 million people. The estimated numberof enterprises actually managed by women was9,95,141 (9.46 %). In Mizoram, Orissa, Karnataka,Goa, Lakshadweep, Kerala, Tamil Nadu andPondicherry, the share of women employment wassignificantly more than 20 %. The position of womenentrepreneurships and women enterprises is givenState-wise in the table given below” (https://www.dcmsme.gov.in/ssiindia/census/ch11.htm)

(Contd...)

Table 1: Participation of Women in Management/Ownership in SSI Sector, State-Wise

Name of State/ UT No. of Enterprises Managed By Women No. of Women Enterprises

Jammu & Kashmir 5640 5742

Himachal Pradesh 3515 3722

Punjab 30190 29068

Chandigarh 2059 2243

Uttaranchal 8706 8804


Source: https://www.dcmsme.gov.in/ssiindia/census/ch11.htm

Around 78 percent of women enterprises is of servicessector. Women entrepreneurship is largely tiltedtowards smaller sized firms, as almost 98percent ofwomen-owned businesses are micro-enterprises.Approximately 90 percent of women-owned

enterprises are in the informal sector. Women’s equalaccess and control over economic and financialresources is imperative for achievement of genderequality and empowerment of women as well asequitable and sustainable economic growth anddevelopment.

Table 2: Geographical Distribution of Women Owned MSME

Prevalence of Women-owned

Business

State-wise Share (Percent)

Number of States/Union

Territories (#) State/Union Territories Combined

Share (Percent)

High >10.00 4 Kerala, Karnataka, Tamil Nadu, West Bengal 51.9

Medium 5.00-10.00 2 Andhra Pradesh, Madhya Pradesh 11.5

Low 2.00-4.99 7 Rajasthan, Maharashtra, Punjab, Gujarat, Odisha 26.7

Very Low <1.99 20 Rest of India 9.9

Source: International Finance Corporation Report on Improving Access to Finance for Women Owned SMEs in India

Haryana 10087 9620

Delhi 13368 14383

Rajasthan 29785 36371

Uttar Pradesh 54491 72667

Bihar 38170 49443

Sikkim 30 98

Arunachal Pradesh 131 150

Nagaland 207 179

Manipur 9168 10745

Mizoram 3076 3700

Tripura 631 863

Meghalaya 3658 3580

Assam 11189 11757

West Bengal 71847 69625

Jharkhand 7271 7865

Orissa 33274 38233

Chhattisgarh 11766 10034

Madhya Pradesh 62351 68823

Gujarat 55361 53703

Daman & Diu & Dadra & Nagar Haveli 167 213

Maharashtra 80662 100670

Andhra Pradesh 77347 77166

Karnataka 101264 103169

Goa 677 810

Lakshadweep 61 67

Kerala 137561 139225

Tamil Nadu 130289 129808

Pondicherry 1089 1065

Andaman & Nicobar Islands 53 110

All India 995141 1063721


As with remaining sector, access to finance is thebiggest roadblock to growth and development forwomen-owned MSMEs. As a result, there continuesto be a total dependence on informal sources of financefor seed capital and working capital requirements. Thefunding options for women-owned MSMEs arepresented below:

Table 3: Access to finance of women owned SMEs

Funding Source Share (Percent)

Formal financial sources 3.1

Semi-formal financial sources 4.8

Self, family, friends or informal sources 92.1

Source: International Finance Corporation Report on Improving Accessto Finance for Women Owned SMEs in India

Although the financing requirement for women-ownedenterprises is not practically much different from thatof male-owned enterprises, the level of financialexclusion is higher due to multiple factors. Also, thesocial status of women and prevalent social norms inIndia influence perceptions of financial institutions andthe capability of women entrepreneurs to accessfinance. The key demand and supply side constraintsspecific to women entrepreneurs’ ability to accessfinance are presented in table below:Table 4: Demand side and Supply side barriers in access

to Finance

DEMAND SIDE SUPPLY SIDE

Limited financial awareness and understanding about financial products/ services:

Requirement of support from male family members:

Low on confidence or hesitation to approach financial institutions:

Perception of higher risk profile due to absence of collateral security and guarantee/support by male family member

No real attempt to customize products/services as per the needs of the woman entrepreneur:

Perception that bank branches are non supportive to women customers:

High transaction costs given the small size of women-owned MSME firms:

Lack of reliable information about financial management makes the women entrepreneurs less attractive to financiers

Source: http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0102-311X2007001200003

Barriers: Supply Side

Gender Stereotyping: Relationship of Womenentrepreneur with financiers suffer due to genderstereotyping and discrimination. Access to financialresources and its size (usually in terms of numbers of

individuals employed) are correlated. It is argued thatstereotyping about women-owned businesses beingsmall not because of lack of financial resources, butrather due to deliberate or socially induced choice ontheir part.

Perception about high risk: Commercial banks aremostly cagey of small businesses because of

the thinking that SMEs are high risk borrowers.Furthermore, banks have inaccurate perceptions ofwomen’s borrowing and entrepreneurial behavior.Women, who typically lack collateral security, areconsidered as high risk clients in most countries.

Higher Lending Cost: The cost of administration andservicing of small loans is higher as same loanprocessing and documentation is required forenterprises of all sizes, which is not required for suchloans. Additionally, the credit risk assessment process,which generally is sophisticated, is common for loansof each sort of denominations.

Weak financial system: An improper developedfinancial market in various developing countries acts

as a structural barrier for accessing financing facilitiesby women entrepreneurs, that makes designingfinancial services for women entrepreneurs even morechallenging.

Inadequate Knowledge and Capacity of FinancialInstitutions: The knowledge of management infinancial institutions is not adequate as far as natureand financing needs of WOEs in concerned. As aresult, differentiating treatment to their requirementsis missing in general, both in developing and developedcountries, with some exceptions.

Rigidity in Financial Product Design: Banks oftendepends on personal profiles and track records forreviewing loan applications. Those are often not strongin case of women entrepreneurs, often due to improperrecords of such relationships. There is inadequatedeliberate efforts by the financial institutions fordesigning tailored financial products for WOEs.

Barriers: Demand Side

Barriers to access to finance by WOEs from a demandperspective can be classified in to three main groups:

1. Society and Law;


2. Personal background of entrepreneurs; and

3. Type of business.

Nature of Role in Family and Society: Mostlywomen start businesses with an intake of lesser capitalthan their male counterparts because of limitations inincome and lack of knowledge about the availabilityof institutional funding. They are less likely to usebank loans compared to men at start-up due toproblem in mobility as well. Women tend to borrowfrom family and friends and mostly usenontraditional or non-institutional lending optionsdue to lack of access to formal channel and for fearof Unknown, which means that women incur highersearch and transaction costs (Haynes and Haynes1993). They also face problems in obtaining fundingdue to family responsibilities.

Informal Entity: The majority of the SMEs,particularly women owned, are operating informallyin the market. Registration systems are limited tocompanies, excluding most SMEs, which are not incorporate form. Women prefer to operate informallydue to hassle of the registration procedure and alsodue to the type of their venture. However, there is littlepossibility for institutional financial support forinformal entities. This situation is prevailing mostlyin developing and least developed countries, especiallyin rural and suburban areas.

Lack of Collateral: The majority of SME-owners, whodo not look for bank credit talks about

“excessive collaterals”, which is a major barrier for themto access bank loans. The kind of collateral usuallyconsidered by banks are appropriate security in formof land or buildings, security papers, deposit, insurancecertificate etc which must be owned by theborrower,.This presents a problematic situation forwomen, who rarely have property in their name, andfor young entrepreneurs who may stand to inheritproperty but not the current title. It is also worthmentioning that bankers are generally not interestedin taking farm land as collateral indicating that theywould only consider land owned in the municipal area.

Women’s property ownership: While additionalsecurity is the main criterion for mainstreamingcommercial banking credit, the ownership of assets stillremains a specific problem for women in many

transition economies, developing and least-developedcountries. Sometimes, the ownership pattern is infavour of a male counterpart because of tradition, insome cases due to religion. In many countries in South,parallel succession laws have been implemented,however, these laws are not mandatory.

Analysis of Access to Finance Gap for Women-owned Enterprises estimating demand forfinancing for women-owned businesses

The small enterprises segment leads the demand forfinancing, followed by micro and medium enterprises.The total debt requirement by women-owned MSMEsis estimated at around Indian rupees 6.10 trillion ($111billion) and equity at Indian rupees 2.58trillion ($47billion). Financing requirements by segment and thesplit between debt and equity by segment, is providedin table 4 below:

Table 5: Financing Requirement of Women OwnedSMEs

Total Demand

in Indian Rupees Trillion

($ Billion)

Demand Share

(Percent)

Debt Demand in

Indian Rupees Trillion

($ Billion)

Equity Demand in

Indian Rupees Trillion

($ Billion)

Micro 2.05 (37.36) 24 1.64

(29.89) 0.41

(7.47)

Small 6.42 (116.70) 74 4.31

(78.44) 2.10

(38.26)

Medium 0.21 (3.75) 2 0.14

(2.50) 0.07

(1.25)

TOTAL 8.68 (157.80) 100 6.10

(110.82) 2.58

(46.98)

Sou rce : http://serials journals.com/serial journalmanager/pdf/1435297532.pdf

Supplying Finance to Women-owned Businesses

Total formal finance extended to women-ownedMSMEs in 2012 was approximately around Indianrupees 2.31 trillion ($42 billion).This credit supplycame from different types of financial institutions likepublic sector banks, non-banking financialcorporations, and self-help group-bank linkageprograms. Breakdown of types of institutions financingwomen-owned MSMEs is given in table 5.


Table 6: Supply of finance to women owned MSMEs bydifferent institutions

Source Financing Supply Share (Percent)

Public sector banks through microcredit 30

Public sector banks to small scale industries 38

Prime minister’s Rozgar Yojana 2

Swarna Jayanti Shahari Rozgar Yojana 1

Swarna Jayanti Gram Swarozgar Yojana 4

Private sector banks 19

Foreign banks 5

Source: International Finance Corporation Report on Improving Accessto Finance for Women Owned SMEs in India

4.1.4 Lending Gap in Women-Owned Business

Formal sources of credit supply include public sectorbanks, non-banking financial companies, and self-helpgroup-bank linkage programs. Women entrepreneur-ship is largely concentrated towards smaller sized firms,as almost 98 per cent of the businesses are micro-enterprises. Together, these enterprises are contributingapproximately 3.09 per cent of industrial output. Thelending gap for women-owned micro, small andmedium enterprises (MSMEs) businesses in India isaround Rs.6.37 lakh crore ($116 billion) as per a studyby World Bank Group member IFC.

There are differences in the ways by which women andmen SME owners approach, access and use credit forinitiating and expanding their businesses. In view ofthese differences, it should be a matter of apprehensionto incorporate women-specific solutions into thesystem for improving credit access in the SME sector.Closing the credit gap requires the following terms:

More suitable credit terms: Offering loans with termsand conditions that are better aligned with the actualrisk that women represent, rather than perceived risk,would make bank credit more attractive for femalebusiness owners. Offering alternative options forfulfilling collateral requirements, as well as long termloans for investment purposes rather than shorter-termloans to manage working capital, could also provebeneficial.

Better assessment of credit risk: In contradiction tosome common belief, the experience of lending towomen in developing countries through microfinance

and other more traditional methods suggests thatwomen are reliable borrowers with better repaymentrecords. As such, means to assess the credit risk ofwomen accurately at the individual level are neededfor ensuring that wrong impression does notunnecessarily impede access to loans for women-ownedSMEs.

Profitable lending models for women-owned SMEs:The debt market for women-owned SMEs indeveloping countries is mostly unexploited whichrepresents a substantial opportunity for financialinstitutions and other providers also encouraging otherparticipants in entering the market.

A wide range of surveys suggest that SMEs reportaccess to credit as their biggest constraint in both thedeveloped and the developing world. Evidence alsoshows that, in general, women-owned businesses havemore restricted access to external finance than male-owned businesses (Powers, Magnoni, 2010; GPFI andIFC, 2011).

Global Financing Practices in Women OwnedSMEs: Few Examples

Ethiopia

Women business-owners of SMEs consider access tofinance as one of their major challenges. In Sub-Saharan Africa, about 45 percent of women-ownedenterprises are denied credit. In September 2008,USAID signed a DCA Agreement with BOA foroffering loan financing assistance specifically forwomen entrepreneurs and Diaspora members. TheAgreement included a guarantee, which was in additionto agreements signed with three other Ethiopiancommercial banks—Awash, Dashen, and NibInternational—targeting Diaspora members and SMEsin manufacturing, agriculture, and tourism.

UAE

In the United Arab Emirates (UAE), small andmedium-sized enterprises (SMEs) comprise around80% of the overall economy, and its support becamea national priority. Government, women businessorganization and banks are working together increating an environment propitious for thedevelopment of women-led businesses. The National


Bank of Abu Dhabi plays a leading role in this effort.In the UAE, women entrepreneurs are voicing the sameconcerns as the other SMEs in the country. For manyof them, establishing a SME is not just a problem offinding loan, it is also about culture, more specificallya “risk culture”. Government initiatives in encouragingsmall businesses include the SME 100, a ranking ofthe 100 top-performing small businesses based on anumber of financial and non-financial evaluationcriteria, and Abu Dhabi’s Khalifa Fund for EnterpriseDevelopment, designed to foster Emiratientrepreneurship through training, development andconsultation. The Khalifa Fund for EnterpriseDevelopment was initiated in June 2007 as anindependent agency of the Government of Abu Dhabi.

The NBAD supports women entrepreneurshipthrough trend-setting, coordination and thedevelopment of specific programs destined for women-led businesses. It also participates in consultingactivities in cooperation with the DBWC. NBAD hastwo formal women’s programs, both launched in 2012.These programs were developed in close cooperationwith women business associations like DBWC.“Velvet”, exclusively for women, combines personalizedglobal private banking with commercial bankingservices. Velvet aims at empowering women withfinancial knowledge and investment tools. It offersonshore and offshore banking services includingsavings accounts, wealth management, and inheritanceplanning in line with cultural sensitivities. Last but notleast, Velvet private advisers are also female.

JORDAN

The practices of two local Jordanian banks, CapitalBank of Jordan and Jordan Islamic Bank, may providehints about the current situation with access to financeof women-led businesses in Jordan. Since its inceptionin 1995, Capital Bank has grown to become one ofthe top financial institutions in Jordan, offering theJordanian market a comprehensive set of commercialand investment banking services tailored as per therequirements of individuals and corporate clients alike.As per a study conducted by the World Bank in 2013,job creation and economic inclusion is the priority forJordan. In this regard, the encouragement of women-led business becomes a policy of public interest. Themajor contributors for the Jordanian economy are

SMEs, since they are the greatest employmentgenerators. In credit market, limited access by womenprecludes learning about their potential performanceas borrowers, including their capacity to repay. Socialnorms exacerbate this problem. Through its gendermainstreaming, the MSME Development for InclusiveGrowth Project will contribute in promoting women’seconomic empowerment. This is especially vital in themicrofinance sector, as women entrepreneurs accountfor 71 per cent of all microfinance clients. The projectboth mainstreams gender through the maincomponents, as well as, directly targets women throughsome innovative sub-components like designing newproducts that target women, encouraging banks tohave special windows for women, especially in themarginalized governorates where there are more socialbarriers.

For the moment, banks are slow in realizing thepotential represented by women-led businesses. Banksin Jordan do not have specific products for womenbut there are as such no limitations or any barriers tofinance any women project through bank normalproducts and programmes within bank policies”. Thepolicy of the banks towards women-led business is thesame as towards SMEs in general.

Both Capital Bank of Jordan and Jordan Islamic Bankare providing loans to women-led businesses.

Both CBJ and JIB are examples of new opportunitiesfor women entrepreneurs represented by thewillingness of local banks to introduce schemes andproducts to finance women-led businesses on a smallscale. Both banks however do not foresee thedevelopment of specific financial products designed forwomen-led businesses in the near future and continueto consider them as part of larger scheme of SME’sfinancing

NIGERIA

The Federal Government launched in 2012 the PublicWorks and Women/Youth Empowerment Scheme(PW/WYE). The programme which is a componentof the Subsidy Re-investment and EmpowermentProgramme (SURE) is targeted at generating about370,000 jobs across the country. The PW/WYE isintended in creating employment opportunities forwomen and youth in labour-intensive public works


and is expected to generate 50,000 skilled jobs and320,000 unskilled job opportunities.

Policymakers need to establish an enablingenvironment that will facilitate in accessing to financialservices for women entrepreneurs, through thedevelopment of a supportive legal and regulatoryframework, and development of education andtraining opportunities that are more aligned with thespecific needs of women.

The Bankers’ Committee, which comprises of theCBN, Nigerian Deposit Insurance Corporation(NDIC), Deposit Money-Banks and Discount Housesdeclared 2012 the year of “Women EconomicEmpowerment”. The Bankers’ Committee also nowhas a dedicated sub-committee focused on womeneconomic empowerment headed by the ChiefExecutive Officer of Standard Chartered Bank(Nigeria) Limited. One of focus areas of this sub-committee is to facilitate the decision of the Bankers’Committee in ensuring that women occupy moreleadership positions in the industry.

INDIA

The MSME ecosystem in India is overflowing well ofinnovative ideas and creative solutions for a numberof problems. But the number of women entrepreneursand business owners is much lower as compared tomale entrepreneurs with only 13.76 percent of the totalentrepreneurs in India are women, according to databy Startup India. There are just around 8 millionfemale entrepreneurs, but the number of maleentrepreneurs has crossed 50 million.

Governments at the central and state levels havelaunched financial schemes for micro units, which couldgo a long way in boosting women entrepreneurship.

Mudra Yojana Scheme

This general government scheme for small units is alsoapplicable on women who are willing in starting a smallenterprise like beauty parlour, tuition center, tailoringunit, etc. It is also useful for a group of women wishingto startup together. Loans from Rs 50,000 onwardsand upto Rs 50 lakh are sanctioned under this scheme.Collateral and guarantors are required only when loanamount exceeds Rs 10 lakh.

TREAD (Trade Related EntrepreneurshipAssistance and Development) Scheme

This scheme aims at empowering women by providingcredit to projects, conducting specific training andcounseling, and eliciting information on relatedrequirements. The scheme provides for governmentgrant of upto 30 percent of the total project cost asappraised by lending institutions. These institutionswould finance the other 70 percent.

Mahila Udyam Nidhi Scheme

Offered by Small Industries Development Bank ofIndia, this scheme provides financial assistance of upto Rs 10 lakh in setting up a new small-scale venture.It also assists with upgrading and modernization ofexisting projects. The loans are to be repaid within 10years, and this includes five year moratorium period.Further, interest rates on these loans vary according tomarket rates.

Annapurna Scheme

This scheme is applicable to women entrepreneurs whohave started a food catering unit. They can take loanof up to Rs 50,000 for purchasing kitchen equipmentlike utensils and water filters. A guarantor is requiredto secure the loan. After securing the loan, it can berepaid in 36 installments. Further, interest rates underthis scheme as per prevailing rates and assets will betaken as collateral by the concerned bank.

Stree Shakti Package for Women Entrepreneurs

It is offered to women who have majority ownership(over 50 percent) in a small business. The women alsoneed to be enrolled in the EntrepreneurshipDevelopment Programmes (EDP) organised by theirrespective state agency. Under the scheme, an interestconcession of 0.05 percent can be availed on loansabove Rs 2 lakh.

Dena Shakti Scheme

This scheme provides loans up to Rs 20 lakh forwomen entrepreneurs in agriculture, manufacturing,micro-credit, retail stores, or similar small enterprises.There is a concession of 0.25 percent on rate of interest.


Under the scheme, loans up to Rs 50,000 are offeredunder the microcredit category.

Udyogini Scheme

Women entrepreneurs between the ages of 18 and 45,who are involved in agriculture, retail and similar smallbusinesses, can avail loans up to Rs 1 lakh under thisscheme. Further, her family’s annual income shouldbe below Rs 45,000 for availing the loan. However,no income limit exists for widowed, destitute ordisabled women.

Cent Kalyani Scheme

Offered by the Central Bank of India, this scheme isfor women business owners in multiple areas such asagricultural work or retail trading. Under this scheme,loans up to Rs 1 crore are sanctioned and no collateralor guarantors are required. Interest rates on loansdepend on varying market rates.

Closing the credit Gap: Concluding Remarks

Closing the credit gap in women-led SME sectorshould boost long-term macroeconomic performance,particularly in low-income countries and should bringbenefits with higher gender equality and socialcohesion. While microfinance institutions have beenquite successful in providing unserved and under-served women entrepreneurs by providing them accessto short-term loans for meeting their working capitalneeds, microfinance has been less successful atdeveloping products meeting women’s investmentcapital needs. Following points can be implemented:

One size does not fit all: Approaches and the rationalefor supporting women’s self employment andentrepreneurship differ in the developed anddeveloping worlds. The growth approach emphasizeswomen as an untapped source of growth, as a solutionto unemployment, and as a potential for innovationfor the economy as a whole. On the other hand,poverty reduction rationale emphasizes self-employment as an economic survival tool for poorwomen and their families. Efforts to promote women’sentrepreneurship stem also from a commitment towomen’s empowerment.

Adopting a “bottom-up” approach: A “bottom-up”approach may be more relevant than a “top-down”approach. The nation-wide push for legislation andresearch promoting women’s entrepreneurship in theUS in 1970s grew out of the momentum of thewomen’s movement and the civil rights movement.Similarly, the Local Enterprise Agencies (LEAs) in theUK emerged “bottom up” as a grassroots phenomenonthat started in the private sector as a response to locallydefined needs and problems. In Bangladesh, largeNGOs like the Grameen Bank and BRAC are nowaddressing the problem of access to finance for the“missing middle”, filling the gap in the existingfinancing mechanism

Improvements to financial infrastructure: Financialinfrastructure surrounding the institutions, physicalstructures, technology and networks that allow for aneffective exchange and holding of information andcapital. It includes things like collateral registries, creditbureaus and payment and settlement systems.Enhancing financial infrastructure in developingcountries would make financial services accessible towomen.

Benchmarking: Benchmarking is very important toachieve progress. Developing a system of datacollection on a regular basis, information gathering andresearch on women entrepreneurs, their access tofinance situation by types of products and institutions,can serve as the basis for effective policy design andimproving the system. For addressing the definitionproblem, it would be important to add additional dataon size (in terms of capital and number of employees)and gender (of owner) of each kind of entrepreneurship.

Profitable lending models for women-owned SMEs.The loan market for women-owned SMEs indeveloping countries is relatively untapped andrepresents a substantial opportunity for financialinstitutions and other providers. Aside from anecdotalevidence that women may be better-performingborrowers than men, they may also be more loyalcustomers once they have secured and purchasedmultiple products from banks. Identifying andimplementing profitable SME financing models for thefemale market would be mutually beneficial both forfinancial institutions providing loans and for theenterprises being served.


Conclusion and Scope for Future Research

There are many things which policy makers andresearchers still have to understand for removingbarriers of financing. It is still to be clarified whetherwomen lack negotiating skills, the expectation ofwomen from banking relationships, level ofunderstanding about worth of its own business by thewomen owners, understanding of the mechanisms ofborrowing for purposes other than asset financing(working capital, receivables financing, exportfinancing etc.) and importance of injecting capital intotheir business, etc. Government need to foster public-private dialogue by including business women’sorganizations in decisions on economic and regulatorypolicy and funding for economic development.Increase in women’s ability to own and leverage assetsas collateral, addressing issues such as property, housingdeeds, bank accounts and inheritance. Ensuringrelevant laws, policies and government-supportedfinance opportunities affecting women business ownersare transparent and easily accessible to the public. Thepresent study can be conducted using the first handinformation gathered directly by interviewing thewomen entrepreneurs for a direct insight on mappingthe credit gap.

References

• Aldrich, H. (1989), Networking among WomenEntrepreneurs. In: Hagan, O., C. Rivchun andD. Sexton (eds.), Women-Owned Businesses,New York, Praeger, pp. 103-132.

• Alsos, G. and E. Ljunggren (1998), “Does theBusiness Start-up Differ by Gender? ALongitudinal Study of Nascent Entrepreneurs”,Frontiers of Entrepreneurship Research.Wellesley, Mass: Babson College.www.babson.edu/entrep/fer.

• Ayyagari M., Demirgüç-Kunt A., MaksimovicV. (2012) ‘Financing of Firms in DevelopingCountries: Lessons from Research’, World Bank.

• Bellucci A., Borisov A., Zazzaro A. (2009) ‘DoesGender Matter in Bank-FirmRelationships?Evidence from Small BusinessLending’, Money & Finance Research Group.

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differences in access to a small enterprisedevelopment fundin Peru.” World Development18( 5): 695-705.

• Chopra V.K. (2004), Innovations in SMEFinancing. ficci.com/ficci/media-room/.../sep/banking/Session 5/V K Chopra.pdf. Coleman,S, (2000). “Access to capital and terms of credit:A comparison of men and women-ownedbusinesses.”Journal of Small BusinessManagement 38: 37-52.

• Demirgüç-Kunt A., Klapper L. (2012)‘Measuring Financial Inclusion: The GlobalFindexDatabase’, World Bank (database).

• Dixit, S., & Moid, S. (2017). Closing the CreditGap in Women Owned SMEs for SocietalTransformation: A Theoretical Assessment ofIndian Scenario. Aweshkar ResearchJournal, 22(1), 31–45. Retrieved from https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=124266515&site=ehost-live

• European Central Bank (2013) ‘Survey on theAccess to Finance of Small and MediumSizedEnterprises in the Euro Area’

• Ernst & Young/IFC. 2012. “SME GenderBaseline Estimation for IFCs FinancialInstitutions Portfolio”, (Internal Guide)

• Fairlie, R. and Robb, A. 2008 “Why Do Female-Owned Businesses Have Lower Survival Rates,Profits, Employment and Sales than Male-Owned Businesses?” Working Paper.

• Global Partnership for Financial Inclusion andIFC (2011). Strengthening Access to Finance forWomen-Owned SMEs in Developing Countries.GPFI and IFC.

• Hundley, G. 2001. “Why women earn less thanmen in self-employment.” Journal of LaborResearch 22: 817-829.Sabarwal S., Sinha N.,Buvinic M. (2010) ‘How Do Women WeatherEconomic Shocks? AReview of the Evidence’,World Bank

• International Finance Corporation, (2014)Women-Owned SMEs: A Business Opportunityfor Financial Institutions.

• International Finance Corporation (2011),Strengthening Access to Finance for WomenOwned SMEs in Developing Countries.


• IFC (2011b). Strengthening Access to Financeby Women Owned Enterprises in DevelopingCountries. IFC, Washington, DC

• International Finance Corporation (2013a)‘Access to Credit Among Micro, Small, AndMedium Enterprises’

• International Finance Corporation (2013b)‘Banking on Women: Changing the Face of theGlobal Economy’

• International Finance Corporation (2013c)‘Closing the Credit Gap for Formal andInformal Micro, Small, and Medium Enterprises’

• OECD (1999), “Financing for Women-ownedSMEs: Trends and Issues”, OECD, Paris

• OECD (2012).Women in Business: Policies toSupport Women’s EntrepreneurshipDevelopment in the MENA Region. OECDPublishing.

• OECD (2012), “Share, size and industry ofwomen-owned enterprises”, in Entrepreneurshipat a Glance 2012, OECD Publishing.

• International Finance Corporation (2016),Improving Access to finance for Women ownedBusinesses in India.

• Lawson S., Gilman, D. (2009) ‘The Power ofthe Purse: Gender Equality and Middle Class.

• McKinsey & Company (2007), Women Matter:Gender Diversity, a Corporate PerformanceDriver, McKinsey & Company.

• Sabarwal S., Sinha N., Buvinic M. (2010) ‘HowDo Women Weather Economic Shocks?AReview of the Evidence’, World Bank

• Stein, Peer, Tony Goland, and Robert Schiff(2010). Two trillion and Counting: Assessingthe Credit Gap for Micro, Small, and Medium-size Enterprises in the Developing World. IFCand McKinsey & Co., Washington, DC.

• World Bank (2012) ‘World DevelopmentReport 2012: Gender Equality andDevelopment.

• World Bank (2013) “Developing micro, small& medium enterprises in Jordan: the route toshared prosperity”, Quick Note Series, n° 88,March 2013, available online at: http://documents.worldbank.org/curated/en/2013/03/1 8 1 0 7 3 7 3 / d e v e l o p i n g - m i c r o - s m a l l -mediumenterprises- jordan-route-shared-prosperity

• Xavier S., Kelley D., Kew J., Herrington M.,Vorderwülbecke A. (2012) ‘Global Entrepreneur-ship Monitor: 2012 Global Report’, GlobalEntrepreneurship Monitor


Swati Khanna* Assistant Professor, Research Scholar,University School of Management Studies, GGSIPUniversity, New DelhiAshish Kumar** Assistant Professor, UniversitySchool of Management Studies, GGSIP University,Dwarka, New Delhi

Introduction

Economic connections and associations among thecountries all over the world are established andrecognized through business operations, investmentsand financial markets. Digitalization and globalizationtrim down limitations of time and distance andincrease financial integration among the economies ofthe world. Economic efficiency marked by financialexpansion, stability, risk sharing, optimum resourceallocations were improved by financial integrationamong the nations. (Katsikas, 2007; Khuong, Nguyenand Bellalah, 2008; Hussainey, Oscar Mgbame and

Chijoke-Mgbame, 2011) On the other hand economicintegration among the financial markets alsoaugmented the potential for cross-border transmissionof shocks consequently paving way for instability instock markets. (Jorion and Schwartz, 1986; French,Schwert and Stambaugh, 1987; Hamao, Masulis andNg, 1990) The prospect of this exploration is todiscover the level of cointegration and informationtransmission between the Asian stock markets and itsdegree of Influence on the Indian stock markets usingGranger causality tests and Quantile RegressionApproach. To conduct this study seven major Asianstock market indices have been chosen namely Sensexof India, Shanghai Composite Index of China, Nikkei225 of Japan, Jakarta Composite index of Indonesia,Taiwan weighted Index of Taiwan, Tadawul All ShareIndex of Saudi Arabia and Kospi 100 of South Korea.These are the top seven Asian countries according toGross Domestic product as per the list sourced by

Is there Information Diffusion in India fromAsian Stock Markets? A Quantile RegressionApproachSwati Khanna* & Ashish Kumar**

Abstract

Digitalization and globalization trim down boundaries of time and distance and increase financialassimilation among the economies of the world. Present research scrutinizes the extent, constructionand dimension of interconnection and alliances between India and emerging Asian stock marketsof China, Japan, Indonesia, Taiwan, Saudi Arabia, and South Korea by means of quantileregression technique and Granger causality test. Results of quantile regression approach provethat South Korean, Japanese, Indonesian and Taiwanese stock markets significantly influenceIndian stock markets in lower and upper quartiles. Bidirectional causality is observed betweenstock markets of India - South Korea, India -Japan and India - Saudi Arabia. Unidirectionalcausality is observed between bourses of India - China, India - Indonesia and India - Taiwan.Present study distinct itself from other studies as it applies quantile regression which has manymerits over the traditional OLS technique. The results of our study have implications for thepolicy makers, investors, academicians and researchers as it provides valuable insight into theinterdependence of stock markets in the same region which are developing and are also marredby informational efficiencies and behavioral biases.

Keywords: Market interdependence, Granger Causality Test, volatility spillovers, InformationTransmission, quantile regression.


International Monetary Fund in the year 2017. Thestudy of interdependence of the economies which aregrowing and also opening up is valuable in manyrespects as it throws light on the interdependence ofstock markets at different quantile levels which willhelp the portfolio managers in constructing theportfolios which will provide them diversification andalso secure them from any risk coming from theoverseas stock markets. Due to rising interdependenceamongst the economies all around the world it isfurther imperative to understand and examine thenature, quantum and direction of feedback effect. Ourstudy intends to answer all those questions whichemerge due to the growing interdependence betweenthe stock markets in present era of globalization andliberalization.

In this backdrop, we intend to execute our study. Thenext part of our study is related with review of literaturewhich will be immensely helpful in understanding thepresent level of knowledge in the area, methodologyused by different researchers, empirical results obtainedand research gaps in the literature. The subsequent partof the study explains the objectives of the study, datasources; methodology used in the study and after thatanalysis of the outcomes have been presented. Finalpart of the manuscript deals with conclusions andpolicy implications.

Review of Literature

Globalization, Digitalization, and privatization amongdifferent sectors have led to an enormous flow ofinformation all over the world. Informationtransmission leads to volatility and returns spilloversacross international stock markets. Stock marketinformation and its transmission are observed amongmajor Asian stock markets (Ahn, Bae and Chan, 2001;Hashmi and Xingyun, 2001; Mukherjee and Mishra,2008; Joshi, 2011; Chow, 2017). Study of informationdiffusion, instability of stock markets, volatilityspillovers and association among Asian Stock marketshas become an area of major research. Many researchershave examined stock market return and spillover effectin major Asian stock markets (Calvi, 2010; Natrajan,2014; Jebran, 2016). Volatility spillovers have also beenexamined among the US and Asian stock market.(Yang, 2013; Thao, Daly and Ellis, 2013).

Globalization, economic regulations, financialinnovations, Regional economic integration, andspeedy reforms are not the only factors that influenceinformation transmission and stock markets linkages;it is also influenced by financial economic crisis anddigitalization in almost all the sectors these days. Inthe course of the last decennium, researchers havescrutinized and investigated the impact of various tradeand industry crises on stock markets all over the worldusing Quantile Regression Approach. (Mensi,Hammoudeh, Reboredo and Nguyen, 2014; Rejeb andArfaoui, 2016; Ilyas, 2017). World’s largest financialdeadlock which originated from the United States aftermid-2007 adversely affected the world of commerceglobally. The global financial meltdown of 2008manifested by globalization and digitalizationencompass a noteworthy, mammoth and continuousimpact on the network of Asian stock markets (Kumarand Khanna, 2018; Wang, 2014; Aswani, 2017). Stockmarkets of Asia responded immediately to the financialcrisis of 2008 as stock returns were critically affected.Many researchers have examined the shock ofcomprehensive economic turmoil on theprecariousness of stock markets return by comparingpre and post-crisis era (Dungey and Martin, 2007;Chen, 2009; Yilmaz, 2010; Engle, Gallo and Velucchi,2012; Singhania and Anchalia, 2013). The literaturealso provide a valuable input that differentmethodologies have been applied by researchers forstudying the respective interdependence of differentstock markets of the world. But the studies usingquantile regression for examining interdependence ofthe stock markets are not much and moreover suchstudies in context of Asia and India are scarce.Therefore, the study proposes to fill this huge gap byattempting an empirical analysis of select Asian stockmarkets and dependence of India on them.

The yet another purpose of this piece of research is toinvestigate the impact of Asian stock markets on Indianstock markets in the digitalized Era marked by thefinancial meltdown in 2007 to 2009 for a study periodfrom January 2000 to April 2018.

Research Methodology, Data collection, andObjectives of Study

This segment details the approach to research used toquantify information connections among top seven


Asian economies according to Gross DomesticProduct. To determine information flow associationand to achieve imminent into the forecasting processcointegration technique, Granger causality andquantile regression approach have been used.

Data Collection

Data for daily indices of 7 Asian stock markets havebeen amassed from Bloomberg for a time epoch of 18years beginning from 20th January 2000 and lastingup to 26 April 2018.Table 1: Specimen Bourses and Their Indices: 20/1/2000

to 26/4/2018

Asian Nation Stock Market Index

India Sensex

China Shanghai Composite Index

Japan Nikkei 225

Indonesia Jakarta Composite Index

Taiwan Taiwan Weighted Index

Saudi Arabia Tadawul All Share Index

South Korea Kospi 200

Objectives of Study

1. To study the dependence of Indian stock marketson sample Asian stock markets using a QuantileRegression Approach.

2. To study information transmission among Indianand sample Asian stock markets using GrangerCausality test.

Descriptive Statistics

Descriptive statistics comprises of summary ofmeasures of central tendency for understanding thebasic nature of data, skewness for exploring theasymmetric nature of data, Kurtosis and Jarque Berameasure for identifying peakedness of the data andnormality of the series respectively have been reported.

Unit Root Test

The daily closing values have been made more reliableand lesser skewed by computing returns of daily closingindex values for all the sample stock markets by usingthe following equation:

푅푡 = ln푝푡 − ln 푝푡−1 ...(1)

Further, to ensure the stationarity of data the studyhas employed Augmented Dickey-Fuller (ADF) Test.This test has a null hypothesis that the series has aunit root or in other words is not stationary. We havetested the stationarity of the data with ADF test at a1% level of significance. It may also be submittedthat unit root test has been applied on return seriesand not on the values of indices for all the time seriesused in the study.

Granger Causality Test

The direction of causality is determined between two-time series variables using Granger Causality technique.Cause and Effect relationship is determined bycausality. A variable T is causal to Z if T is the causeof Z or if Z is the cause of T.

Linear Autoregressive model of two variables X and Yis given by the following equations

푋(푡) = ∑ 퐴11 , 푗푋(푡 − 푗) + ∑ 퐴12 , 푗푌(푡 − 푗) + 휖1(푡)푝푗=1

푝푗=1 ...(2)

푌(푡) = ∑ 퐴21,푗푋(푡 − 푗) +푝푗=1 ∑ 퐴22 , 푗푌(푡 − 푗) + 휖2(푡)푝

푗=1 ...(3)

Here p is the highest numerical interval annotations.X and Y are the time series variables. 휖1 and 휖2 areethe residuals.

Quantile Regression

To obtain robust and accurate results Quantileregression technique that is an extension of linearregression analyses is used in research. To conduct thisstudy we have confined our analysis to three quartileslower quantile at 0.05 middle quantile at 0.50 andupper quantile at 0.95, theoretically there are sevenquartiles.

The equation for quantile regression as used in thestudy is given below:

푄푖푦(푍 푥⁄ ) = 푖푛푓표{푏|퐹푖푦(푏 표푥) ≥ 푍⁄ } = ∑푘휔푘(푍)푥푘 = 푥휔(푍) ...(4)

Where the dependent variable is denoted by iy and ispresupposed to be linearly dependent on x.

Fiy(b/x) is the function of iy given x and is conditionallydistributed Y(t), t [0,1] represents the quantileregression coefficient which determines the dependenceof Indian stock markets on selected sample stockmarkets in lower, middle and upper quantiles.


Dossier Breakdown

Descriptive Statistics

Table 2: Descriptive Statistics: 20/1/2000 to 26/4/2018

R_SENSEX R_SHANGHAI R_NIKKEI R_KOSPI R_JAKARTA R_TADAUL R_TAIWAN

Mean 0.070977 0.029255 6.86E-05 0.03758 0.082653 0.053563 0.005673

Med. 0.107074 0.057904 0.000483 0.06840 0.138064 0.128914 0.038846

Max. 17.26119 14.78458 0.106891 16.4115 20.70342 16.59024 13.60969

Min. -18.10774 -13.23935 -0.191495 -17.2625 -16.79675 -17.66450 -10.43488

Std. Dev. 2.065354 2.151517 0.019836 2.0696 1.911979 1.941666 1.811538

Skew. -0.335271 -0.225647 -0.813833 -0.47800 -0.460985 -0.995131 -0.088056

Kurtosis 15.27593 8.385236 11.19262 12.5140 18.89914 15.65324 8.866676

Jarque-Bera 16361.77 3161.380 7552.426 9897.30 27455.74 17760.11 3729.093

Prob. 0.000000 0.000000 0.000000 0.00000 0.000000 0.000000 0.000000

Obs. 2598 2598 2598 2598 2598 2598 2598

Source: Authors’ Calculations

Measures of Central tendency along with statistics ofJarque Bera and Kurtosis of the time series data ofsampled Asian stock markets have been presented inTable 2. In agreement with the results of earlier studieslowest average returns has been observed for Japanesestock markets which is (0.000006) on a daily basis,and same is highest in case of Indonesian stock marketswhich stands at (0.082653), in a digitalized epoch.Volatility has been measured with the help of standarddeviation in the daily return data series. Standarddeviation for the Shanghai Composite Index is (2.15)which is highest among all the markets and the loweststandard deviation is observed in the Nikkei 225 indexwhich is (0.019). Volatility is almost equal in SouthKorea and India (2.06). For this reason, we mayarticulate that the investments in securities listed underthe Nikkei 225 index are secure. Data is negativelyskewed when the mean and median are less than themode. Sample bourses are negatively skewed for marketreturns which are by and large not considered good asit leads to higher risk. Normality of the time series datais checked through Jarque-Bera test. According to thecalculated Jarque-Bera values of sample bourses valuesare large enough to reject the null hypothesis of anormal distribution. To comprehend the shape ofdistribution kurtosis statistic is used, the calculatedvalues of kurtosis is greater than 3 for all the data series

hence series are leptokurtic. This signifies and predictslarger fluctuations for investors.

Unit Root Test

Table 3: A result of Unit root Test: 20/1/2000to 26/4/2018

Stock Markets Stationarity P-Value of ADF Statistic

Sensex Stationary 0.0001

Shanghai Composite Index Stationary 0.0001

Nikkei 225 Stationary 0.0001

Jakarta Composite Index Stationary 0.0001

Taiwan Weighted Index Stationary 0.0001

Tadawul All Share Index Stationary 0.0001

Kospi 200 Stationary 0.0001

Source: Authors’ Calculations

To make effective and accurate forecast ofinterdependence with the help of quantile regressionit is imperative to ensure the stationarity of the returndata else results will not be reliable and regressioncoefficients shall be spurious. For this, the studyemploys ADF unit root test. Calculated values of unitroot test are shown in Table 3. ADF Test proves thatreturn series of all the indices are normally distributedand statistical properties of these series are stable.Hence we may assume that mean-variance andautocorrelation are all constant over time.


Results of Granger-Causality Test

Table 4: Results of Granger Causality Test: 20/1/2000 to 26/4/2018

Pair Null Hypothesis F- Statistic Probability Causality Direction

1 China does not Granger cause India India does not Granger cause China

2.6512 1.6906

0.0708*** 0.1846

Unidirectional

2 South Korea does not Granger cause India India does not Granger Cause South Korea

3.5585 11.0203

0.0286** 0.0000*

Bidirectional

3 Japan does not Granger cause India India does not Granger Cause Japan

6.6937 13.7345

0.0013* 0.0000*

Bidirectional

4 Indonesia does not Granger cause India India does not Granger Cause Indonesia

2.0790 10.2542

0.1253 0.0000*

Unidirectional

5 Taiwan does not Granger cause India India does not Granger Cause Taiwan

52.1335 0.9737

0.0000* 0.3778

Unidirectional

6 Saudi Arabia does not Granger cause India India does not Granger Cause Saudi Arabia

2.2988 3.5894

0.1000*** 0.0277**

Bidirectional

Source: Authors’ Calculations *, **, *** means results are significant at 1%, 5%, 10% level of significance

Table 4 examines the causal relationships amongmarket pairs, obtained by conducting the GrangerCausality test. From the above results followingobservations are wrapped:

(a) In connection with India and China, Chinesestock market returns contain useful informationto predict Indian stock market returns but Indianstock markets are not useful in predicting Chinesestock market returns.

(b) India and South Korea provide useful informationto forecast returns, information transmission isbidirectional between the two stock markets

(c) India and Japan also offer constructiveinformation to anticipate returns. So, InformationTransmission is bidirectional in these countries.

(d) In India and Indonesia, information transmissionis unidirectional as India offers constructiveinformation to Indonesia but Indonesia does nottender return information to India.

(e) In case of India and Taiwan, Taiwanese stockmarkets tender information to Indian markets butIndian stock markets do not endow withinformation to Taiwanese stock market whichproves that information transmission between thestock markets is unidirectional.

(f ) Lastly in the case of India and Saudi Arabiainformation transmission is bidirectional. Butinformation flow from Saudi Arabia is significantat 10 percent level of significance whereas fromIndia it is significant at 5 percent.

Results of Quantile Regression

Table 5: Results of Quantile Regression: 20/1/2000 to 26/4/2018

Q 0.05 Q 0.50 Q 0.95 β R_Shanghai 0.007432 0.048724* 0.091326*

(0.8558) (0.0082) (0.0012) β R_Kospi 0.175178* 0.190446* 0.205378*

(0.0000) (0.0000) (0.0000) β R_Nikkei 19.13187* 12.70931* 16.78596*

(0.0005) (0.0000) (0.0000) β R_Jakarta 0.377613* 0.257096* 0.277807*

(0.0000) (0.0000) (0.0000) β R_Taiwan 0.214920* 0.154255* 0.105582**

(0.0000) (0.0000) (0.0101) β R_Tadaul -0.004181 0.032818 -0.003317

(0.9079) (0.2028) (0.9551) -2.574710* (0.0000) 0.067036* (0.0087) 2.343491* (0.0000)

Pseudo R2 0.245295 0.167164 0.203097

Source: Author’s Calculations (figures in parenthesis are p-values) *, **, *** means results are significant at 1%, 5%, 10% level of significance


Figure 1

-3

-2

-1

0

1

2

3

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Quantile

C

-.10

-.05

.00

.05

.10

.15

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Quantile

R_SHANGHAI

.08

.12

.16

.20

.24

.28

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Quantile

R_KOSPI

5

10

15

20

25

30

35

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Quantile

R_NIKKEI

.15

.20

.25

.30

.35

.40

.45

.50

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Quantile

R_JAKARTA

.00

.05

.10

.15

.20

.25

.30

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Quantile

R_TAIWAN

-.15

-.10

-.05

.00

.05

.10

.15

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Quantile

R_TADAUL

Quantile Process Estimates

Table 5 shows the results of the quantile regressionanalysis. Here the Indian stock market is the dependentvariable and China, South Korea, Japan, Indonesia,Taiwan, and Saudi Arabia stock markets are consideredas independent variables. It can be observed from theTable 5 that the regression coefficients of South Korea,Japan, Indonesia and Taiwan stock markets aresignificant at all the quantiles i.e. lower, middle andupper thus these markets have significant influence onIndian stock markets under all the conditions. SaudiArabian stock markets do not influence Indian stockmarkets in lower, middle as well as upper quartiles thusindicating that study of Saudi Arabian stock market isnot useful in predicting the future values of Indianstock markets. Chinese stock markets on the otherhand does not insert any influence on Indian stockmarket under lower quantile but the effect of China is

found to be significant under middle and upperquantiles. This information is highly useful in effectiveforecasting of Indian stock market. It also provides achance for portfolio diversification as markets of SaudiArab are not related with each other. The results arealso as per expectation and real trade data as India doesnot have much trade with Saudi Arab whereas the traderelations with rest of the nations are robust andinterdependence is relatively more. All this is reflectedin our results as well.Further, values of regression coefficients for all thevariables for all the three quantiles have also been shownin figure1 for visual explanation. The figure shows thatthe estimates of coefficients vary at different quantileswhich means that market reacts to different independentvariables in a peculiar way at different quantiles. Thisfinding is also supported by the literature.


Conclusions

The study concludes the interdependence of Indianstock markets on sample Asian stock markets exceptSaudi Arab with which our dependence is not foundto be significant as indicated by the empirical resultsobtained with the help of Quantile Regression at lower,middle and upper quantile levels. Research also showsinformation transmission among Indian and sampleAsian stock markets as indicated by the results ofGranger Causality test. The results of quantileregression are significant at three different levels forall the countries except China at lower quantile andSaudi Arab at all quantiles. The results of GrangerCausality hints at bidirectional causality between stockmarkets of India - South Korea, India -Japan and India- Saudi Arabia. Unidirectional causality is observedbetween stock indices of India - China, India - Indonesiaand India - Taiwan. The results of both techniquesapplied corroborate each other which suggests therobustness of the empirical results obtained.

Our results have useful implications for the regulators,portfolio managers, investors, researchers andacademicians as it provides valuable insight about theinterdependence of Indian stock markets with its otherdeveloping peers in the Asian region in the present eraof digitalization, globalisation and liberalisation wheninterdependence of economies is growing on oneanother. The results are also useful for the portfoliomanagers as these will help them in identifying themarkets with which there is comparatively lesser degreeof integration of Indian stock market so as to seek thegoal of diversification by investing the stock marketswhich have less degree of correlation with each otheras it will help them in reducing their risk significantly.(Mensi et al, 2014; Aymen and Mongi, 2016; Ilyas,2017)

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Dr. Shweta Goel*, Associate Professor, New DelhiInstitute of Management, New DelhiDr. Suchita Dwivedi**, Assistant Professor, NewDelhi Institute of Management, New Delhi.Dr. Neha Jain***, Assistant Professor, IITM, NewDelhi

Introduction

A change has been observed in the pattern ofinvestment behavior across the world since last twentyyears. Religion is deep rooted force while involvingsocial or investment behavior. Just as man is socialby nature, he is also religious. Religious beliefs andpractices have a large impact on ethical, social,demographic, economic, saving and consumerbehavior of people and influence their life on aroutine basis. This study investigates the influenceof religiosity on the investment behavior of theIndian Muslim investors in Delhi/ NCR. Inparticular, the study explores adherence of IndianMuslim investors to Islamic laws while investing andtheir atti tude about interest income, ethicalinvestment, conventional banking and risk aversion,investment in equity shares, mutual funds and lifeinsurance schemes.

Culture and Religion

“Culture is defined as those traditional beliefs andvalues that cultural, religious and social groups spreadas it is from generation to generation”. We all feel thatwe have a culture that we belong to and that makes uswho we are (example, French, Spanish, Indian, Italianetc.). Culture is influenced by the dominant religionof a society. Human beings differ from each other interms of personality and culture. One’s personality isbound with one’s culture. The cultural difference iscrucial to understand religion (Nye, 2003).

The two key aspects with which religion can beassociated are religious affiliation and religiosity.Religious affiliation refers to the specific religious groupto which an individual belongs (Lehrer & Chiswick,1993). On the other hand, religiosity is defined by(Worthington, Hight, McCullough, Berry, & Ripley,2003) as “the degree to which a person adheres to hisor her religious values, beliefs, and practices and usesthem in daily living. The supposition is that a highlyreligious person will evaluate the world throughreligious schemas and thus will integrate his or herreligion into much of his or her life.”

Islamic Principles as a Predictor of InvestmentBehaviour of Muslim Investors in Delhi/NCRShweta Goel*, Suchita Dwivedi** & Neha Jain***

Abstract

Investment by Muslim investors should be based upon ‘shariah’ (Islamic Principles). Religiousbeliefs and practices have an impact on the personal lives of Muslims around the world. This isa little researched area in behavioural finance particularly in India. A research gap was foundthat whether religious beliefs drive investment decisions of Muslims and to know the extent towhich Indian Muslims stick to the Islamic laws of investment. Results of this study state that thereis impact of Islamic religious principles on investment behaviour of Indian Muslims but strengthof this relationship depends on level of religiosity of individual Muslim investor and influence ofother Indian religion prevalent in society on lifestyle of Muslims.

Key words: Investment Behaviour, Religiosity, Shariah, Islamic laws, Muslim investors, interestincome, risk.


Religion gives meaning to life. It shapes the life.Furthermore, it is suggested that those who are stronglycommitted to religion are both attitudinally andbehaviorally capable of making decisions consistentwith moral conscience (Delener, 1994). A positiverelationship exists between religiosity and ethicalbehavior and between religiosity and risk aversion(Hess, 2012). These relationships provided ahypothetical foundation for the focus of this study.Christian bible and Muslim Quran also supports theabove relationships.

The most followed non-Indian religion is Islam. Theyare about 14% of India’s population. Islam is theworld’s second largest religion with 46 countries havingmajority Muslim populations and many more havingsignificant Muslim minorities.

Islamic laws ‘Shariah’

Wealth must be earned through “good”, “productive”and “beneficial” work. This type of work is specifiedby the Shariah which defines the methods of earningwealth lawfully and also the types of economic activitywhich are prohibited are outlined. The Shariahspecifies non-permissible professions and trade andeconomic activity which may lead to unlawfullyacquired wealth. Even within each profession, theShariah specifies proper and improper practices. Unlawfully acquired or accumulated wealth for its ownsake is condemned as “corruption” and retrogressionto the basis of all human negative qualities, i.e., greed(Wani, 2006). Investment permissibility for Muslimsis decided by Islamic laws (shairah).

Interest & Islamic Banking

Interest is defined in the Oxford English Dictionaryas, “Money paid for the use of money lent (theprincipal), or for forbearance of a debt, according toa fixed ratio.” In Islam, interest is forbidden (haram)in all its form. Muslims must engage in trade andcommerce in accordance with the Islamic Shariah. Noother issue has been condemned so strongly in theQuran as has usury. Usury is act of lending money atan exorbitant rate of interest. Quran speak againstinterest income.

Interest has become so completely institutionalized andaccepted in modern economies that it is almost

impossible to conceive that there are some whocompletely oppose it. But there are devout Muslimswho refuse to deal in interest.

Reason behind opposition to interest is that if anindividual wishes to use his money to make moremoney, then he must be willing to put his money atrisk. In other words, he cannot guarantee for himselfa fixed return (whose amount keeps growing over time)regardless of the result of the investment that his moneyis used for. If he puts his money at risk, he is deservingof some share of the profits. However, this also meansthat he must accept losses if losses occur. This is asystem that is based on justice.

The concept of Islamic banks brought in India in 2010by Kerala government in Kochi. Islamic banks havethe same purpose as the conventional banks except thefact that Islamic banks works as per the Islamicprinciples ‘shariah’. Islamic banks are not operatedunder guidelines of RBI and cannot issue cheques.These banks do not have the status of conventionalbanks as do not provide interest and can be specificallycalled as financial institutions.

Equity and Debt Financing in Islam

Quran speak against carrying debt (Hess, 2012).According to Usmani (1999), Muslims can invest inequity shares pursuant to three states of affairs. First,a Muslim can only invest in companies whose mainbusinesses are compliant with Islamic Shariah (A fewexamples of businesses that are not Shariah compliantinclude companies that provide interest-based loans,insurance companies, companies that manufacture orsell intoxicants, pork, companies involved in gambling,nightclubbing nightclubbing, pornography, etc.). Thisprohibition extends to all facets of such activities andis not restricted to the supplier/manufacturers, but allinvolved in the supply chain. Hence, Muslims areforbidden to engage in certain activities in any mannerwhat so ever and therefore investing in such companiesinvolves a direct involvement with the forbiddenactivity.

Insurance in Islam

Under common interpretations of Islamic law,conventional insurance is forbidden in Islam. Islampoints out that paying money for something, with no


guarantee of benefit, involves high ambiguity and risk.One pays into the program, but may or may not needto receive compensation from the program, whichcould be considered a form of gambling.

Risk Taking in Islam

Muslims are risk averse and thereby their investmentbehavior can be said to have some similarities with theMarkowitz model and Islamic laws. In respect of“religious” Muslims, their investment behavior is moreassociated with Islamic culture than the assumptionsunderlying the Markowitz (1952, 1959) portfoliotheory.

Literature Review

Little empirical evidence related to impact of religiosityon financial/ investment decisions were established.Religion affects the way in which people behave(Sadler, 1970), and it is perceived that it may affectan individual’s perception (Eum, 2011). Religion helpsthe way to do things and serve a platform for socialbehaviour (Delener, 1994). Religion affects investmentbehaviour indirectly by shaping demographicbehaviours (Choi J. S., 2001). Religion influences theway and attitude of people evaluating characteristicsof the products (Choi, 2010; Delener, 1990, 1994).It is claimed that religion would affect individualbehaviour directly through development of code ofconduct (Sood and Nasu 1995). Culture affects thejudgment or decision made by individual (Choi J. S.,2001). Inferring the social implications of religion bythe social scientists started with the Karl Marx and MaxWeber (1950).

Dan W. Hass found that there is a positiverelationship exists between religiosity and ethicalbehaviour (Hess, 2012).

Farhana carried out a study in Bangladesh and saidthat Islamic capital market products, Islamic depositsand credit products have become increasingly popularin Muslims. Also Shariah does not allow Muslims topurchase insurance products, particularly life insurance.It is further advocated that Muslim consumers’ buyingattitudes are positively influenced by their religiosity.That is, devout Muslims place greater importance onShariah -compliant financial products than less religiousconsumers (Farhana, 2016).

Haron and Wan Azmi found Islamic banking abidesby the principles of ‘shariah’. Contrary to the results,Islamic banking customers place profit motive abovetheir religious motive when making economic decision(Haron and Wan Azmi, 2008).

Kaur & Vohra identified various factors affectingindividual investment behaviour from available literatureon it (refer table i). Personal values affecting individualinvestment behaviour include socially and religiouslyexpressive characteristics that determine attitude ofinvestors towards controversial stocks (Kaur & Vohra,December 2012). It is supported by observation thatpersonal values such as socially and religiously expressivecharacteristics affect stocks owned by individual investor(Hood, Nofsinger, & Varma, 2011).

Lakshmeshwar found that investment in stocks ofalcohol, pork or tobacco is not permissible in Islam(Lakshmeshwar, 2010).

Muhamad and S. Susela Devi observed that there isinfluence of religiosity on the investment behaviourof Malay Muslims. Speculative gains are mainlyavoided by Malay Muslims. They ensure ‘shariah’compliance in their investment decisions (RusnahMuhamad, 2005). They concluded that the Islamreligion had an impact on investment behaviour ofMalay Muslims in Malaysia. Highly religious Musliminvestors do not invest for speculative gains and ensure‘shariah’ compliance before investment (RusnahMuhamad, 2005).

Shakeel M. observed that religion strongly influencesan individual‘s emotional experience, thinking,behaviour, and psychological well-being (Shakeel, 2015). Relationship between Islamic religion and Muslim’sinvestment behavior were examined outside India,particularly in a Islamic and Gulf countries but not inIndia except the study done by Shakeel, M. (2015).

Tahir & Brimble concluded that Islam does influenceinvestment behaviour. It is found Muslim investors inwest comply less with Islamic laws, more with commonlaw prevalent in west. However, the extent to whichthe Muslim adheres to the Islamic investmentprinciples depends on their level of religiosity. Muslimculture does play an inûuential role in the investmentbehaviour in some of its religious adherents, it mustbe stressed that not each and every Muslim, abides by


Islamic law as some Muslims did choose, for example,to invest in banks, which is not permissible underIslamic law. In respect of ‘religious’ Muslims, theirinvestment behaviour is more associated with Islamicculture than the assumptions underlying theMarkowitz (1952, 1959) portfolio theory. Conversely,Muslims who are not religious behave like non-Muslims; therefore, their investment behaviour appearsto be more aligned with the Markowitz model. It isevidenced that Islamic investors consider factors otherthan the risk, return, and religious concerns whenmaking ûnancial decisions (Tahir Imran, 2011). Ifmain business of the company is in ’shariah’compliance but company earns some interest on itsaccounts, the Muslim investor doesn’t retain theproportion of interest income included in the dividendreceived. This is called dividend purifying process. IfMuslim shareholder sells the stock of such company,then also he give away the proportion of interestincome from the stock price, he receives. Companiesin Muslim countries mostly rely upon equity financingas debt financing is debarred in Islam. Speculative gainsare prohibited in Islam (Tahir & Brimble, 2011).

Tao, Eric, & Johan found that geographicalheterogeneity in religious beliefs is an important forceshaping up financial decisions in modern finance world(Tao, Eric, & Johan, December, 2009).

It is concluded from above literature that religiosityinfluences individual’s investment behaviour (RusnahMuhamad, 2005) (Tahir Imran, 2011), demographicand economic behaviour (Lehrer, 2004), socialbehaviour (Delener, 1994), ethical behaviour and riskaversion (Hess, 2012).

Further, religion affects individual behaviour (Sood andNasu, 1995), consumer behaviour (Choi Y. , 2010)and saving behaviour (Haron & Wan Azmi, 2008).Socially and religiously expressive characteristics ofinvestors influence their decisions of investment instocks (Kaur & Vohra, December 2012). But how farreligious affiliation affects investment decision ofindividual in particular constituted the major concernof this study. To fulfil this research gap, the presentresearch is an attempt to study influence of Islamicprinciples and beliefs on investment behaviour ofMuslim investors in India with reference to Delhi/NCR.

Little empirical evidence related to impact of religiosityon financial/ investment decisions were established.This provides an opportunity for the present study toexplore the effect of Islamic principles on the individualinvestment behavior in India with geographicalrestriction to Delhi/ NCR. To fulfill this gap, the presentresearch is an attempt to study religious influences inIslamic investment behavior in Delhi/ NCR.

Research Methodology

Objectives of Study

• To determine impact of Islamic beliefs andpractices on investment behavior of Musliminvestors.

• To find out factors influencing decision makingof investment among Muslim investors.

Research Design

This study used both qualitative and quantitativeresearch design.

Data Collection

Data collection for qualitative study is done throughfocus group discussions and in depth interviews withMuslim investors in Delhi/ NCR. Muslim investors,learned academicians and researchers from departmentof comparative religion studies, Islamic studies, andMuslim professors from Commerce, and Economicsand Management departments at different reputeduniversities of Delhi & NCR were the respondent ofin-depth interviews and focus group as they wereconsidered to have comprehensive and thoughtfulawareness on Islam as well understanding of individualinvestment behavior.

For quantitative study, data was collected through fieldsurvey based on the structured questionnaire filled byindividual investors in Delhi/ NCR.

Tools for Data Analysis

Qualitative study was analyzed using ethnographystudy and content analysis.

Data collected for quantitative study was tested fornormality, validity and reliability. Independent variable


religious affiliation was on nominal scale (categorical).Dependent variables were on nominal and ordinalscale. To check the normality of data, Shapiro-Wilk’stest was applied and to check whether the sample istrue representation of population or not, Kolmogorov-Smirnov (K-S) one sample test was applied.Concurrent validity was checked based on literaturereview. Value of Cronbach Alpha coefficient wascalculated to test reliability of instrument. Data is notfound to be normally distributed. Therefore, non-parametric tests were used for data analysis in the study(Coopers & Schindler, 2013, 12th Edition).

To check whether individual investment behavior isindependent of Islamic Laws, test of independencetwo- way chi square test was used. Descriptive statistics,histograms, frequencies and Cross tabulation,percentage, pie chart, plots and bar chart were used todescribe respondent’s characteristics, frequency ofresponses of each variable and comparing the responsesreligion wise.

Sampling Design

Judgmental sampling method was used to getstructured questionnaires filled as people hesitate toshare their religious emotions and often reluctant todivulge their investment details. Sample size for surveywith structured questionnaire was 315 individualinvestors out of which 117 were Muslim investors.Sampling area was Delhi/ NCR.

Data Analysis

The data analysis is performed in two steps; qualitativeand quantitative. Both studies are complimentary toeach other. Qualitative study is based upon analysis ofpersonal interviews and focus group while quantitativestudy based upon analysis of survey of structuredquestionnaire. Quantitative data analysis is furtherdivided into data coding, demographic profile ofrespondents, cross tabulation and its graphicalrepresentation, construct validity and reliability, testsof normality and hypothesis testing. Hypothesis testingwas done using Chi Square test. Analysis is precededwith interpretation of all sections. Test of normalityincludes Kolmogorov- Smirnov test and Shapiro- Wilktest. Qualitative study by way of one to one interviewand focus group discussion were considered to be

enriched source for obtaining the information oninvestment behavior so as to bring facts and reality inresults (See table 1 to 4).

Findings

1. Muslims in Delhi/ NCR have less practice ofinvestment as compared to investors of otherreligious affiliation do.

2. Muslims are forbidden to have income frominterest, as a result of it, they do not invest inconventional banks, insurance, recurring andfixed deposit, mutual funds, shares of companieswhose main business is not as per ‘shariah’. Theycan invest in gold and real estate but as comparedto other religions, Muslims rarely invest. But fewMuslims keep their money in bank which is notpermissible under ‘shariah’ which is alsosupported by Tahir & Brimble, 2011.

3. Few Muslims keep their money in bank which isnot permissible under ‘shariah’ (Tahir & Brimble,2011). This study contradicts the results.

4. Muslims are risk averse and their investments arefound less in accordance with Markowitz modeland more with Islamic laws. Muslims do notinvest in shares of companies engaged inbusinesses are said to be not in compliant with‘shairah’.

5. Impact of culture, society and lifestyle prioritiescan be seen in modern Muslims which decreasethe adherence of Islamic laws on Muslim’sinvestment behaviour. Indian Muslims are foundto behave differently than those in Gulf countriesas religious commitment differs from one cultureto another. Results are supported by study of Tahir& Brimble that Most Muslims in the west do notadhere with the Islamic laws rather they followcommon law prevalent in the west. Muslimculture plays a considerable role in influencinginvestment behaviour but not all Muslims abideby Islamic laws.

6. Speculative gains, gambling and profit fromtaking risk is debarred in Islam. Debt is prohibitedunder Islamic principles. This finding is alsoevidenced in Muslim Quran speaking againstcarrying debt (Hess, 2012). The Muslims in the


west take home loan (Tahir & Brimble, 2011)which is in contradiction of the finding. This isunderstandable from above conclusions that Islamdoes influence the investment behaviour, andhowever, the degree to which it does dependsupon religiosity of investor and influence ofIndian culture.

Contribution/ Implications of the Study

Behavioural finance theories are extended that not onlythe market information structure but the religiousaffiliations of the Muslim individual investor alsoinfluence the investment decisions/ patterns. As interestis prohibited, money lending and interest basedinvestments are not encouraged in Islam whereby flowof money in Indian economy may hinder and it mayresult in negative effect on development of India. Thisstudy facilitates the fund managers to designinvestment products according to the need of theMuslim investors. Muslim investors should be providedwith the investment solutions in adherence to theaforesaid laws.

An important implication of the study is to motivatethe Muslim community who invest less in comparisonto other communities. Islamic banking should bepromoted in India. Such products are available infinancial markets of Muslim countries.

This study can be proved as an opportunity for Indianbanks and financial institutions to design ‘shariah’compliance investment products. From a private clientportfolio management perspective, once prepared withShariah -permissible products, an investmentcommittee at an Islamic private wealth firm would facethe same issues as any other, namely, how to develop,implement and monitor an investment policyconsistent with a client’s objectives. They may explorethe market of shariah- compliant instruments exist inIslamic countries which may be proved helpful fordesigning Islamic products.

Managing assets in accordance with Islamic preceptswill be unique in that the practice is sociallyaccountable investing with the unique specification ofavoiding interest bearing investments of any kind.

Because borrowing and setting aside excess funds inshort-term, low-risk, interest-bearing instruments are

integral to corporate finance, the application of Islamiclaw to corporate finance poses some challenge for fundmanagers.

Portfolio constructors need to be aware of the degreeof variance in religious adherence of Muslim investors.Additional challenges exist, namely the lack ofsecondary market for these products and the lack ofuniform standards in the selection process across theMuslim world.

Limitations of the Study

The time and the resource constraints of present studyhave imposed the following restrictions:

1 The study has geographical restrictions to Delhi/NCR.

2 Reluctance of the respondents to provide thecomplete information being a sensitive issue canaffect the reliability of the responses.

3 The sample size of quantitative study was limitedto 315 respondents only, even though 450 wereserved.

4 Possibility of external validity issue may be alimitation.

5 Impact of demographic variable and Cultural andsocietal influence was not controllable and couldaffect results.

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APPENDIX

Table 1: Data Coding Scheme for Dependent Variables

Constructs Variables Response Coded Value

Preferred investment Avenues

Saving bank account Recurring deposit

Fixed deposit

PPF/ NSC

Insurance Shares

Mutual funds

Precious metals/ gold

Corporate bonds

Real estate

Never Rarely

Sometimes

Often

Frequently

1 2

3

4

5

Other factors influencing investment decisions

Attitude towards savings

Attitude towards debt

Attitude towards interest.

Attitude towards donations to poor or needy. Attitude towards insurance.

Attitude towards risk tolerance.

No

Neutral

Yes

1

2

3

Objectives of Investment

Safety of principal money Return/ Interest

Save income tax

Future Security

Strongly Disagree Disagree

Neutral

Agree

Strongly Agree

1 2

3

4

5

Financial obligations Education of children Marriage of children

Buying house

Health security

Retirement planning

Strongly Disagree Disagree

Neutral

Agree

Strongly Agree

1 2

3

4

5

Mode of fulfilling financial obligations

Prefer to fulfill financial obligations through savings

Prefer to fulfill financial obligations through loan

Prefer to fulfill financial obligations through savings and loan both

No

Neutral

Yes

1

2

3

Table 2: Relability Statistics

Cronbach's Alpha Cronbach's Alpha Based on Standardized Items Number of Items

.756 .759 315


Table 3: Tests of Normality

Variable Kolmogorov-Smirnova Shapiro-Wilk

Statistic df Sig. Statistic df Sig. Saving Bank Account .238 315 .000 .825 315 .000 Recurring Deposit .211 315 .000 .838 315 .000 Fixed Deposit .190 315 .000 .884 315 .000 PPF/ NSC .242 315 .000 .840 315 .000 Insurance .248 315 .000 .891 315 .000 Shares .289 315 .000 .795 315 .000 Mutual Funds .282 315 .000 .809 315 .000 Precious metals/ gold .173 315 .000 .910 315 .000 Corporate Bonds .374 315 .000 .675 315 .000 Real Estate .154 315 .000 .889 315 .000 Attitude towards savings .244 315 .000 .787 315 .000 Attitude towards debt .356 315 .000 .714 315 .000 Attitude towards interest .341 315 .000 .727 315 .000 Attitude towards donations to poor or needy .392 315 .000 .664 315 .000

Table 4: Results of Chi-Square Tests for Influence of Religious Affiliation on Individual Investment Behavior

Variable Value of Test

Result χ2 Value Degree of Freedom p value

Saving Bank Account 173.444 12 .000 Significant Recurring Deposit 77.193 12 .000 Significant Fixed Deposit 117.243 12 .000 Significant PPF/ NSC 71.619 12 .000 Significant Insurance 95.650 12 .000 Significant Shares 102.538 12 .000 Significant Mutual Funds 175.847 12 .000 Significant Precious metals/ gold 146.951 12 .000 Significant Corporate Bonds 56.594 9 .000 Significant Real Estate 104.897 12 .000 Significant Attitude towards savings 42.158 6 .000 Significant Attitude towards debt 77.189 6 .000 Significant Attitude towards interest 89.167 6 .000 Significant Attitude towards donations to poor or needy 51.031 6 .000 Significant Attitude towards insurance 52.856 6 .000 Significant Attitude towards risk tolerance level 48.019 6 .000 Significant Safety of principal money 65.916 9 .000 Significant Return/ Interest 104.821 12 .000 Significant Save Income Tax 85.340 12 .000 Significant Future Security 24.748 6 .000 Significant Education of Children 50.554 6 .000 Significant Marriage of Children 46.359 6 .000 Significant Buying House 126.956 9 .000 Significant Health Security 100.045 9 .000 Significant Retirement Planning 71.044 6 .000 Significant Prefer to fulfill financial obligations through savings 31.731 3 .000 Significant Prefer to fulfill financial obligations through loan 150.733 6 .000 Significant Prefer to fulfill financial obligations through savings and loan both 34.377 6 .000 Significant


Ms. Shivangi Saxena*, Research Scholar,G. D GoenkaUniversity, New DelhiDr. Suman Shokeen**, Assistant Professor, G. DGoenka University, New Delhi

Introduction

The economic development of any country of anycountry is strongly supported by the entrepreneurialbusiness setup of that country. It is observed that start-up helps in job creation and positively contributes inthe nation’s economic growth (Czarnitzki, Rammer,& Toole, 2014). Job creation contribution from newfirms are much more than the contribution from theold firms. The setting up of incubation centres are alsodone with the intention to promote the concept ofentrepreneurship in the youth of the country.

The EDP programmes held by the government andthe universities at different levels plays a key role inthe developing market sentiments for the founder ofthe start-ups. These start-ups help in the creation ofjob opportunities as well as the economic developmentof the country(Aldrich, 1990).

The entrepreneurial firms of service industry play apivotal role in the job creation and economic growth

of the society. Service industry has grown on a veryfast pace in the last five decades. This sector is evenattracting the foreign investments. In India’s economicgrowth, the service sector is the key driver.The sectorhas contributed 54.17 per cent of India’s Gross ValueAdded at current price in 2018-19. Net service exportsstood at US$ 60.25 billion in April-December 2018(IBEF report 2019).

Though there are strong government policies insupport of the entrepreneurial firm development, yetonly government support could not ensure the successof any entrepreneurial firm. The firms should take theirown initiatives, including to take the step together withthe government policies. The investors from within thecountry and the foreign investors are even responsiblefor the availability of funds and capital (Sharma, &Wadhawan, 2009).

The service industry of any country is constituted withmany different industries working in it such as tourism,banking, retail, education and social services. Theeconomic growth and development of any countrydepends largely on the service industry of that country.In the last few decades it is observed that with theimprovement in cost and time effective transfer of

Delineated Segmentation of Factors onEmployee Attraction in Entrepreneurial FirmsShivangi Saxena* & Suman Shokeen**

Abstract

In the last five decades there have been a rise in the culture of the entrepreneurship.The EDPprogrammes held by the government and the universities at different levels plays a key role inthe developing market sentiments for the founder of the start-ups.The success of any firm dependsupon the talented and devoted employees of the entrepreneurial firm. The talent attraction processof any firm is dependent on many factors and policies of the firm. The human resource policiesfocus on the employees’ entire journey in the organisation. An employee journey in the organisationstarts from the talent attraction to the quitting decision. Employee attraction plays an importantrole in the employees’ journey with the organisation. This study is an attempt to understand themajor factors that should be kept in mind while formulating an effective talent attraction approach.

Keywords: Entrepreneurial firms, Talent attraction, Cluster analysis, Human resource policies,Start-ups.


information and the drastic improving in thetransportation services has helped the service industryin blooming.

Literature Review

Literature review is done with the purpose of havingan insightful view in the previous researches done.While digging the literature it is observed that humanresource policies on any organisation plays the pivotalrole in the success of the organisation. Looking on theentrepreneurial firms, it is even more importantbecause the success rely in the shoulders of theworkforce itself (Barrett, & Mayson, 2007).

The human resource policies focus on the employees’entire journey in the organisation. An employeejourney in the organisation starts from the talentattraction to the quitting decision. Employee attractionplays an important role in the employees’ journey withthe organisation (Wagar, 1998).

Resource Talent

The performance and the success of an entrepreneurialfirm highly depends upon the talented workforce ofthe organisation. The employee with the best suitableknowledge, clear vision, strong communication anddedicated to work can do wonders for the business bykeeping the peers motivated (Lles, chuai, & Preece,2010). An entrepreneurial firm aims to step the successladder at a faster pace, and this is only possible whenthere is correct combination of the employee servingin the key positions. In this highly competitiveenvironment with the new emerging technologies,human minds play important roles in the perfectexploitation of the technology.

With the rapid change in the technology it is observedthat many entrepreneurs come to the market but onlya few of them make a mark to the success stories. Thereis a thin line of difference between the success and thefailure of these organisations, and that is defined bythe human resource practices of the organisation(Kotey, & Slade, 2005). This technology era allowsthe inflow of latest technology on the rapid speed, andthere may be different organisations working on thesame technology but in different ways. The best useof the technology depends upon the human minds inthe organisation. The maximum exploitation of the

technology and the opportunity related to thetechnology highly depends upon the talent pool of theorganisation.

The knowledge, training and experience of the ownerand the core team members of entrepreneurial firmmakes it up to the success of the firm.This can be wellexplained by the analytical skills, judgemental skills,intelligence, creativity and vision of the entrepreneuras well as the team members.

Talent Attraction

It can be defined as the continues process of matchingthe right talent with the requirement (Rousseeau,1990).While talking about the entrepreneurial firms thisprocess becomes more complex and critical becauseof the limited financial resources. Talent attractionmade a prominent mark with the end of the chaptercalled talent acquisition. There are many factors thatshould be kept in mind before going for any talentattraction process (Rynes,1989). Talent attraction hasbecome an altogether different picture with the shiftingof power from the hands of employer to the hands ofemployee. These days it is rather difficult for anemployer to keep updated for the employee to findthem attractive and comfortable to work for.

Factors to focus for Talent Attraction Process

Any organisation, while going with the talent attractionphase must understand the needs and the expectationsof the employees. Every employee joins an organisationwith certain level of expectation, and it acts as themilestone in the job satisfaction and performance,ultimately effecting the employees’ journey with theorganisation (Sackett, &Roth,1996).

There are few factors that should be kept in mindbefore formulating the talent attraction process andthey are explained as:

The Process

The process for the application should be simple andapproachable for the candidates. In this technologicalera,it should be kept in mind that the process should inless paperwork, rather more of digitisation may help.The application process should be quick and easy tounderstand (Turban, & Keon,1993).


Lucid Process

The more is the process lucid, the easier it is for thecandidates to understand and accept. A very clearunderstanding of the working environment, cultureand the policies prevalent in the organisation shouldbe given to the candidates at the time of the recruitment.Apart from all the duties that are expected from theemployee, the organisation should also give a clearpicture about the rights that are enjoyed by the candidatein form of remunerations (Taylor, & Collins, 2000).

Market Insight

A well formulated market analysis and the knowledgeof the potential candidate may do wonders for thetalent attraction process. A constant touch with theones who are actively looking for job shift as well aswith the ones who are not, can help the organisationin maintaining the talent pool that can be reached atthe time of need (Posner,1981).

The Competitive Edge

Understanding the competition is an important factorand the critical key to solve with. Understanding andanalysing the benefits that the competitors in the sameindustry is offering to their talent pools, may help inthe effective talent attraction process (Rynes,1989).Making a mark with the attractive and beneficialcompensation policy prevalent in the market, can helpthe organisation in attracting the best talent in theindustry (Barber, & Bretz,2000).

Need Forecast

A perfect forecast on the need of the talent is the keyto a useful talent attraction process, as it helps theorganisation in maintaining the talent at the right timeof need. It also increased the efficiency of therecruitment process by avoiding the unnecessary andsurplus hiring (Cohen, &Pfeffer,1986).

Flexibility

Employees theses days focuses more on the work lifebalance. The modern age employers should keep inmind the employee’s expectation of the work-lifebalance, and provide them with basic facilities toperform accordingly (Trank, Rynes & Bretz,2002). The

flexibility in the time and the geographical region towork for, is what the modern age talent is looking for.

Feedbacks

Feedbacks are always important for any process to beimproved. The assessment of the whole process fromthe candidate’s end should be done to get a clear pictureabout the perception of the candidate towards theorganisation (Ashford, & Cummings,1983). The talentattraction process involves in lot of monetary andhuman investment and so it is important to understandthe utility and the effectiveness of the process.

Networking

Networking is an important activity from the point ofview of an entrepreneurial firm, as it provided theorganisation with the visibility. For any new organisationthe biggest challenge faced is the visibility of the brand,as the highly talented people will not be able to recogniseand trust a new brand name. Networking plays the keyrole in keeping the talent pool in touch and thus helpingin the talent attraction (Quinn,1992).

Talent Attraction as an Important Function

Asset to Organisation

Employee is the real asset to the organisation. The wellbeing of any business, from the identification of theopportunity to the execution of the plan and makingthe success depends upon the smart workforce of theorganisation (Half, 1993). The intellectual workforcekeeps ahead the organisational goals and fulfil themin the restricted time frame.

The Business Builders

In this technological era, it is observed that the realsuccess of any business depends upon the experiencesand skilled employees in the organisation (Andrews,& Wann,2009). Dedicated and self-motivated are theones who are satisfied by their jobs and ultimately helpsin the business on grow on a faster pace.

Face of Organisation

The image of any organisation in the industrydepends upon the employee’s satisfaction and


association level with the organisation. When theemployees are satisfied and loyal towards theorganisation, they createa good image of theorganisation in the market (Powell, 1984).


This study focuses on the delineated segmentation offactors on employee attraction in the entrepreneurialfirm. The study tends to classify the major segmentswhich acts as a base in the talent attraction process inany entrepreneurial firm. To study the talent attractionprocess in the entrepreneurial firms, a survey wasconducted, and the primary data was collected. Thearea of research chosen was Delhi/NCR Region. Theage of the firm chosen was from 2-10 year. The size ofthe employees in the firm vary from 20-150 employees.The firms belonging to the service industry was chosen.The Demographic characteristics of the respondentsare shown in table below:

Table 1: Respondents Profile

Characteristics Number Percentage (%)

Gender

Male 55 55

Female 45 45

Total 100

Age (year)

25-30 45 45

30-35 25 25

35-40 20 20

40 and above 10 10

Total 100

Educational Qualification

Graduation 50 50

Post-Graduation 30 30

Others 20 20

Total 100

Job Position

Lower Management 30 30

Middle Management 50 50

Upper Management 20 20

Total 100

Questionnaire Development

Taking the base of the different hierarchical level inthe entrepreneurial firms and the attraction strategies,the questionnaire was developed. The questionnairewas aimed to study the talent attraction factors, thedevelop the “delineated segmented view of the factorsresponsible for talent attraction in the entrepreneurialfirms”. The three main cluster indicating the items are:Learning and development, Job analysis and Otherfactors. The questionnaire developed was with 66 itemsin it.

Before the collection of the data through questionnaire,the respondents were explained the meaning of eachquestion. The respondents were then asked to fill thequestionnaire based on their experience, knowledgeand judgemental ability. The scale used in thequestionnaire is the five-point Likert scale signifying1 as strongly disagree to 5 as strongly agree (Clark, &Watson, 1995).

Research Technique

Cluster Analysis

Cluster analysis is the statistical tool used for thegrouping of the data. These groups are called as clustersand the items in one cluster reflects similar pattern,whereas the two different clusters have different pattern(MacQueen, 1967). The characteristics of each clusteris explained in detail with the help of the K-meansclustering. Cluster analysis runs with the principal ofselecting initial cluster centre and then iterativelyrefining them. The algorithm in the K-different clustersare initiated by creating K-different clusters and thenmeasuring the distance between samples of the samecluster.

Three clusters were observed after performing thecluster analysis on the 66 items of the questionnaire.These three clusters were named as learning anddevelopment, Job analysis and Other factors. Thenames to the clusters were given based on the itemsthat fell in each cluster.

Analysis

Delineated Segmentation of factors on EmployeeAttraction in Entrepreneurial Firms.


Figure 1: Delineated Segmentation

The Delineated segmentation of the factors onemployee attraction in entrepreneurial firms suggeststhat the three main clusters in which the items areclassified are: Learning And development, Job Analysisand Other factors.

Table 2: List of factors in each Cluster

Cluster Factors

Learning and Development

Learning opportunities

Exposure

Analytical Independence

Job Analysis

Job Description

Remuneration

Challenging Roles

Job Profile

Other Factors Experience

Location

Results of Cluster Analysis

Table 3: Number of Cases in each Cluster

Cluster

1 23.000

2 117.000

3 110.000

Valid 250.000

Missing .000

Figure 2: Graphical Representation on cases

Table 4: Final Cluster Centers

Final Cluster Centers

Cluster

1 2 3

Happy_coming_work_everymorning 4.22 3.09 4.11

Freedom_prioritize_work 4.52 3.28 4.22

Often_tea/coffee_breaks 3.78 3.60 3.83

Yourself_important_organisation 4.04 3.48 4.55

Irritated_work pressure 1.39 3.66 2.85

Comfortable_communicating_seniors 4.91 3.52 4.51

Enjoy_working_collegues 5.00 3.43 4.06

Accountibility_task 3.87 3.41 4.24

Work_timely_recognised_appriciated 4.57 3.26 4.25

Stressed_role ambiguity 1.74 3.54 2.96

Perform extra 3.43 3.61 4.53

Rarely_disscuss_work_manager 4.22 3.62 4.34

Openly_disscuss_taskallocation 4.13 3.44 4.28

Review meeting_regular_interval 3.43 3.55 4.05

Challenging jobs 3.13 3.53 4.13

Involve_crucial_decision making 3.74 3.36 4.12

Ample_training opportunities 3.48 3.35 4.34

Carrier_Counselling_appropriate 3.13 3.30 3.78

Awareness_performance measurement tools 1.65 3.38 3.85

Timely_performance_review 3.61 3.71 4.15

Compensation_policies_explained 3.30 3.60 3.74

Perk_basket_upto mark 1.91 3.11 3.53

Job_secured 4.26 3.47 4.22

Adequate_reason_to stay 4.83 3.37 4.25

Aware_exit_interview_procedure 4.04 3.56 4.23

Aware_rehiring_strategies 2.09 3.24 3.56

Free_communicatipn_griviences 2.65 3.32 3.38

Clear_ovetime_policies 3.83 3.30 3.84

Willingness_work_extra hour 2.61 3.32 3.55

Travel_accomodation_policies 3.26 3.42 3.98

Receiving_policy updates 2.91 3.18 4.16

Discussed_salary_components 4.00 3.29 3.65

Company_host_social_outings 4.48 3.19 4.06

Welcoming_new_ideas 3.30 3.14 3.50

Organisatin_success_retention_motivator 4.61 3.32 4.27

Leaders_act_ethcally 3.48 3.47 4.15

Written_ethical_policies 4.17 3.23 4.13

Support_Professional_carrier_growth 3.74 3.09 3.74

Conflicts_resolved_ontime 3.48 3.35 4.47


Figure 3: Graphical Representations of Final ClusterCenters

After performing the Cluster Analysis on the data, itwas observed that the entire items in the questionnairewere classified into the three clusters. The attractionof employees in the entrepreneurial firms can be madeprecise and more appropriate by concentrating on thesefactors.

Cluster 1. Other Factors

In the process of Talent attraction, there are manyfactors that plays important roles. A candidate whilejoining any entrepreneurial firm have manypreconceptions in the mind. The factors such asexperience of the candidate, the geographical locationof the entrepreneurial firm, and the preferences of thecandidate while showing the job interest.

Cluster 2. Learning and Development

The Second cluster is the largest denoting themaximum homogeneity of the items from thequestionnaire. Learning and Development in today’sera makes a whole lot of difference. The mind set fthe talented pool of employee says that continueslearning is important for self-upgradation. Theactivities offered by the entrepreneurial firm in thedirection of the learning and development of theindividual employee helps in the attraction of thehighly talented pool of people from the industry. Theemployee also seeks for Analytical independence andexposure to different area of work. Offering such thingsin the working culture may a lso help theentrepreneurial firms in the attraction of the talentedpool of people from the industry.

Cluster 3. Job Analysis

An important milestone in the journey of talentattraction is a well specified job analysis. In thiscategory comes the factors such as Job description, JobProfile, Challenging Roles and remuneration. To attractthe best of the talent from the industry it is importantto understand what a candidate id coming from thefirm. To stay ahead from the competitions, that otheremployers are providing, it is important to have a wellstructures job Analysis and remuneration policy.

Conclusion and Limitation

Many entrepreneurial firms enter every industry eachyear, but the success ration of these firms remains low.There are many factors that helps an entrepreneurialfirm to grow and make a mark in the respectiveindustry. An appropriate and effective talent attractionprocess is one of the major factors that effects theperformance of any entrepreneurial firm. If anyentrepreneurial firm focuses on the key drivers likeLearning and development, Job analysis and otherfactors, while making the talent attractionprogrammes, the recruitment process will becomemore appropriate. This will help the organisation inavoiding the cultural misfit, and thus result in higheremployee satisfaction and performance.

The limitation to this study is the geographical area,as only Delhi/Ncr is targeted while doing the research.The study is based on service industry type, giving ascope for the further study in different industries.

References

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Deeksha Thakur*, Part-time Research Scholar, TheNorth Cap University, Gurgaon

Introduction

Higher education institutes in India impartingengineering and management education have beenshowing tough situation in terms of market conditions.Some of them (specially non-funded private players)have closed down in the past because of poor qualityand severe market situations. There can be manyreasons which may be held responsible for this shut-down. However, one among them could be ignoredfaculty-student relationship. Any relationship thriveson good rapport and good rapport can only be

achieved and maintained through right usage of wordsand continuity in communication. While we continuecommunication in a professional set-up, it has to beformal always despite the length or longevity of therelationship. Saying that faculty must be vigilant ofhis/her language would not suffice. Faculty shouldalways keep de-stressing himself/herself so that he/sheis fresh for the next day and all the words that he/shespeaks maintain professional standard. Moreover,recent research has started focussing on positivelanguage education [1] and they focus on ‘positiveeducation’ and ‘language education’. National CapitalRegion of India invites faculty and students from all

Words Transform World: Impact of FacultyLanguage Patterns and Communicative Style inTertiary Education- A Study Conducted inHigher Education Institute in NationalCapital Region- IndiaDeeksha Thakur*

Abstract

Words hold the power to please, hurt, heal and persuade. And they hold special significance ifthey come from authority figures like parents and teachers. Our subconscious starts believingwhat we are told repeatedly. As teachers, do we offer indictments that crush or motivationalwords that inspire?

A faculty should be mindful while he/she speaks. Positive or negative language used by facultycan make or destroy the self-talk among students. In this research paper, an empirical researchwas conducted in one private university offering engineering and management programs inNCR region, India. Self-structured questionnaire was used to collect data from 249 students.Questionnaire included questions on positive/negative language patterns used by faculty andwhether these impacted their own attitude of learning and academic performance. Data collectedwas analysed using SPSS version 20. Results showed that positive language used by faculty impactsattitude of learning among students positively i.e. it enhances their attitude towards learning.Positive language used by faculty impacts academic performance of the students too; in termsof their grade point average. It is advised that faculty should be mindful of using language withstudents inside or out of the class.

Key words: language patterns, higher education, correlation analysis, positive language, NeuroLinguistic Programming


parts of India who differ in ethnicity and culturalnorms so something which could be positive in oneculture could be negative in the other culture. Hencethere is a need to understand cultural sensitivity aswell while faculty communicates with students [2].This needs communicative competence of highdegree. Faculty should be able to decide when theyneed to be distant or emotive with the students;direct or indirect with the students; imposing ornon-imposing with them and it must be ensuredthat there should be person-orientation (no sign offamily’s status or financial status) while facultycommunicates.

Since it is perceived that with so many ifs and buts,it is very difficult to maintain positive language.However, it is of significant value. Looking at thisissue, objective of this study was to study the impactof perception of students regarding language patternsof faculty on attitude of learning among students andtheir performance in terms of Grade Points/Marks.

Literature Review

Key words “language patterns” on research-relatedportals like research gate, academia.edu didn’t givemany encouraging results however keywords “positivelanguage” produced a lot of results. Among those,ten papers relevant to this study were short-listedwhich had theoretical as well as empirical aspects ofpositive language. Aim of education is for capturingemployment as well as acquiring life-skills [3]. Rightlife-skills can be transferred among students usingpositive language (verbal and non-verbal). Literatureis evident [4, 5] that even implicit negative feedbackimpacts language development of students. Positivelanguage and communication impacts behaviouralmanagement[6]. Words are powerful; they can doharm as well as good and in turn, they impact qualityof interpersonal relationship [7]. Positive languageleads to hedonic happiness [8]. In literature, there’sparadigm shift in just focusing on language educationto focusing on positive language education [9]. It isnow called an element of 21st century skill. This canbe achieved through awareness of self, self-disclosureand tolerance [9]. Traces of impact of positive

language leading to positive well-being can be seenin several fields including medical field too[10].

Research Methodology and Data Collection

In order to meet the objective, data from 248 students(studying in engineering and management programs)from one private university in NCR, India wascollected. It was based on non-probability judgementsampling. For this, self-structured questionnaire(Annexure 1) was administered. Students were askedto report the program they were studying in.Students’ perception on language patterns of theconcerned faculty (positive language/negativelanguage) was asked. Students’ perception on theirown attitude of learning was gathered. Students werealso asked to report their grade points (GP) in theparticular subject. Collected data was analysed usingSPSS version 20. Correlation analysis was applied toestablish correlation between language pattern offaculty and students’ attitude on learning and theiracademic performance.

Correlation analysis is a statistical evaluation thatestablishes the strength of a relationship betweentwo or more variables. Here, three variables underconsideration are language patterns of faculty,attitude of learning(student perception) and gradepoint in that particular subject that this faculty wasteaching. Correlation coefficient demonstrates thestrength of the relationship at a particular level ofsignificance. Here the level of significance is.01 (2-tailed).

Results and Discussion

Out of 248 students, 150 students were from differentprograms of B.Tech. and 148 students were fromdifferent programs in management(BBA/MBA).Regarding students’ perception on language patternsof faculty and their perception about attitude oflearning and Grade Points, data collected was putthrough SPSS for correlation analysis, as mentionedabove.


Table 1: Results of correlation analysis between language patterns of faculty and academic performance (GradePoints) of students; correlation analysis between language patterns of faculty and students’ self-perception on attitude

of learning

Student Perception on

Faculty's Language Pattern

Student's Self-Perception on

Own Attitude of Learning

Grade Points

Student Perception on Faculty's Language Pattern

Pearson Correlation 1 .288** -.415**

Sig. (2-tailed) .000 .000

N 248 248 248

Student's self-perception on own attitude of learning

Pearson Correlation .288** 1 -.657**

Sig. (2-tailed) .000 .000

N 248 248 248

Grade Points

Pearson Correlation -.415** -.657** 1

Sig. (2-tailed) .000 .000

N 248 248 248

**. Correlation is significant at the 0.01 level (2-tailed).In Table 1, N which is 248 shows the number of respondents. Sig.(2-tailed).000 is the P value which is a measure of occurrence of any error if such a research is repeated on this population,which further confirms the robustness of this research. The diagonal values 1 are correlation coefficients of a variable withitself. The values.288, -.415 and -.657 are the correlation coefficients(strength of correlation) between two variables vizfaculty’s language pattern and students’ own attitude of learning, faculty’s language pattern and grade points of students,students’ own attitude of learning and grade points of students respectively. These will be further explained in the followinginterpretation.

3. Students’ self-perception on own attitude oflearning was found to have negative correlationwith Grade Points of students. Correlationcoefficient was found to be.657 which shows astrong correlation [11] between students’attitude of learning and their grade points. Thismeans that with 1-outstanding self- perceptionof students in terms of attitude of learning, GradePoints of students was highest but with thismoving to 2/3(good/average), Grade Points getlower and this moving to 4/5(requiresimprovement/inadequate), Grade Points get lowerfurther.

Conclusion

This primary research concludes that languagepatterns/communicative style of faculty impactsstudents’ own attitude of learning to some extent. Onthe other hand, language patterns of faculty impactgrade points of students(academic performance) to amoderate extent and students’ own attitude of learningimpacts grade points of students(academicperformance) to a very high extent.

1. Table 1 shows that students’ perception on FacultyLanguage Pattern was found to have weakcorrelation [11] with students’ self-perception onown attitude of learning. The value of Pearsoncorrelation coefficient was found to be.288. Thismeans that when faculty’s language patternchanges from Positive(1) to Neutral(2) toNegative(3); students’ self-perception on attitudeto learning changes from Outstanding(1)….to…..Average(3) ….to Inadequate(5). Insimple words, positive language of faculty makesstudents perceive their attitude of learningoutstanding and good.

2. Students’ perception on Faculty Language Patternwas found to have negative correlation with GradePoints of students in the subject that this facultywas teaching. Correlation coefficient for thisrelationship was found to be.415 which is termedas moderate correlation [11]. This means thatpositive language patterns of faculty led to higherGrade Points but Grade Points of studentsreduced when language patterns of faculty movedfrom positive to neutral to negative.


From the above discussion, it is further concluded thatlanguage and communicative style of a faculty holdssignificant importance. It is very important that facultyuses positive language in all conditions. Faculty willend up impacting students’ attitude towards learningand actual academic performance of students.Suggestions would include conducting communicationskills workshops for faculty. Faculty may also be putthrough courses on well-being. Neuro LinguisticProgramming (NLP) is a tool that helps in correctingone’s thought process and internal programming.Faculty and students can go through NLP trainings.It must be kept in mind that negative words can beforgiven but never forgotten. So, minds of facultymust be trained to think positively in all conditions.Hence it is very important to focus on positivelanguage since this ultimately leads to well-being andgood mental health; which in turn, leads to highmotivation of students with increased perception ofattitude of learning and actual increase in academicperformance which can be seen through Grade Pointsof students.

References

• Talbot, K. R. (2018). Positive LanguageEducation: Combining Positive Education andLanguage Education. Theory and Practice ofSecond Language Acquisition.

• Tatiana L.(2015), Culture –SpecificCommunicative Styles as a Framework forInterpreting Linguistic and CulturalIdiosyncrasies. International Review ofPragmatics 7(2015) 195-215

• Khan A. I.(2016) Positive Attitude and EnglishLanguage Learning: Psycho-pedagogicConnections. Vol 7 432-444.

• Jeffrey S M(2000), Negative First-LanguageTransfer Effects of Intonation in Japanese

Learners. Language Issues- Journal of the ForeignLanguage Education Centre vol 6 31-38.

• Mashrah,H.(2017). The Role of ImplicitNegative Feedback in Language Development-Some Reflections. International Journal ofEnglish Language & Translation Studies 5(1)01-07.

• Hibblin R.(2019) a psycho-dynamic analysis ofnurture and restorative practice: positivelanguage and communication through relationalapproaches in school, Restorative Practice inSchools.

• Tranca L.M.(2018) the importance of positivelanguage for the quality of interpersonalrelationships, https://www.researchgate.net /p u b l i c a t i o n / 3 2 6 7 4 2 4 0 6 _ t h e _i m p o r t a n c e _ o f _ p o s i t i v e _ l a n g u a g e _for_the_quality_of_ interpersonal_relationships[accessed Sep 03 2019].

• Socha, T.J., Pitts, M.J. (2012). Positiveinterpersonal communication as child’s play.InT.J.Socha and M.J.Pitts (Eds.), The positive sideof interpersonal communication (pp. 523–524).New York, NY: Peter Lang.

• Mercer et a l(2018). Positive LanguageEducation: Combining Positive Education andLanguage Education. Theory and Practice ofSecond Language Acquisition. vol 4(2), 2018.

• Mitchell W.(2016) Positive language leads topositive wellbeing. BMJ online. DOI: 10.1136/bmj.i4426

• Guideline for interpreting CorrelationCoefficient by Ith Phanny, Pearson Australia2009, downloaded from https://www.slideshare.net/phannithrupp/guideline-for-interpreting-correlation-coefficient on Oct 25,2019.


ANNEXURE:

Impact of Language Patterns of Faculty on Attitude of Learning and Academic Performance of Students

(Self-structured Questionnaire)

Subject (to be filled by the Researcher) _______________________________Dear StudentPlease fill in the following information for the subject mentioned above. Please be assured of the confidentialityof the information. This information is being taken only for research purpose.1. Which program are you studying in? Please mention with semester______________________2. In your perception for the subject mentioned above, the language patterns of faculty can be summed up as

Positive(1)/Neutral(2)/Negative(3): _______________________________________3. How do you perceive your own attitude of learning for the subject mentioned above

Outstanding (1)/Good(2)/Average(3)/Requires Improvement(4)/Inadequate(5):__________________________________

4. Please report your Grade Point(1-10) in the above subject________________________


Suneet Soni*, Research Scholar, (Manav RachnaUniversity, Faridabad)

Introduction

As a social unit, an organization has the capacity todraw people from different backgrounds to worktowards achieving a common objective. Differentpeople enter the organization with diverse beliefs,values and notions about how to execute tasks. It hasbeen affirmed by Hofstede et al.(2010) everyindividual is in possession of a manner through whichthey act, feel and think, which they tend to learn overthe course of their life. Therefore, considering thediffering viewpoints, beliefs and values, it becomes

imperative for an organization to outline a commonculture and strive to nurture it amongst all theiremployees. Organizational culture usually exists inthe observed and prevalent practices being followedby an organization and the manner in which peoplerecognize that which occurs within the organization.With the help of organizational guidelines(documents) and by perceiving the way how activitiesare carried out within an organization, theorganization culture of an organization can beinterpreted (Kuscu et al., 2015).

Culture within organizations could be observed toeither be supportive or unsupportive or it could alsobe positive or negative. Those organizations that

Impact of Organizational Culture on EmployeeEngagement and Effectiveness in IndianManufacturing CompanySuneet Soni*

Abstract

Engagement of employees is considered as a robust indicator of outcomes that are highly valuedby any business in any sector of the industry. Therefore, employee engagement and effectivenesscould prove to be an excellent parameter to assess the health of the organization as such withregards to satisfaction, innovation, commitment, retention and productivity. Organizations thatare observed to have a positive organizational culture tend to offer rewards to their employeeswhich in turn leads to the creation of an environment that is enabling, allowing employees togrow, develop and function at their utmost potential. This particular study was carried out tounderstand the impact of organizational culture on employee engagement and effectivenesswithin the Indian manufacturing sector. This study was outlined on the basis of the structuralapproach theory and adopted a secondary research methodology where the data for the studywas gathered through secondary sources derived from researches conducted by researchers inthe past and available from scholarly sites. The study outlines four types of organizational culturewhich included; power culture, role culture, achievement culture and support culture. Each of thesaid cultures had a varying impact on the engagement and effectiveness of the employees. Thefindings of this research indicated that the culture of the organization had a largely positive andsignificant impact on engagement and effectiveness of employees. It was also observed thatemployees who were empowered to utilize their discretion at their organizations tend to projecthigher levels of enthusiasm and this is clearly a trait of an employee who is thoroughly engaged.

Keywords: Employee Engagement, Organizational Culture, Performance, Productivity,Manufacturing


exhibit a positive organizational culture tend toappreciate their employees with rewards and thusfacilitate the creation of an environment which isenabling. Employees in organizations with such anenvironment generally grow, develop and function attheir utmost potential (Robbins & Judge, 2012). Ithas been found by French and Holden(2012) thatan organizational culture which is positive cushionthe adverse effects of bad news during a process oforganizational change. It simply implies that whenemployees believe that they are working in a positiveorganizational culture, they respond in a bettermanner to change and facilitate the changemanagement process . Innovation withinorganizations is driven by employees and it is theywho take the organization ahead where it is perceivedthat the organizational culture is rather supportive(Davies & Buisine, 2018). Negative work-home spill-over effects are lowered by supportive organizationalcultures and they provide employees with a flexiblework from home options that not only retain but alsoattract new high quality talent (Sok et al., 2014). Fourdifferent types of organizational culture have beenproposed through the structural approach theory andthese four types comprise of person, task, role andpower culture (Handy, 1993). The theory oforganization culture as presented by (Schein, 2010)finds frequent mention in research studies.

Culture in organizations is considered as one amongstthe most significant factors that resultsin the creationof a competitive advantage and continues to remainas it impacts the organizational performance andbehavior either negatively or positively (Bogdanowicz,2014). It is therefore significant that managers withinorganizations, academicians and consultants to widelyaccept this fact. An organizational culture impactscommitment and satisfaction of the employees(Messner, 2013), performance (Uddin et al., 2012),as well as employee engagement. The organizationalobjectives and purpose is what influences theorganizational culture and substantially impacts themorale of the employees, their retention andengagement levels (Tsai, 2011). The objective here isnot just to become a good employer, but it is more

about ensuring that the employees are morecommitted towards the organizational vision, missionand strategy. An organizational culture which ishighly effective also leads to create superior levels ofengagement and effectiveness amongst the employeeswhich essentially is translated into high levels ofproductivity (Kotter & Heskett, 2011). Superiorlevels of employee engagement (EE) are critical to theorganization (Ugargol & Patrick, 2018). Employeeswho are engaged remain committed and dedicatedto their work, work with renewed enthusiasm andare thoroughly absorbed within the tasks they execute.Employee engagement is also impacted by resourceavailability and behaviour of the leader. Nonetheless,prevalent literature, mostly from developed nationsstands testimony to the integra l role thatorganizational culture plays towards increasingemployee engagement and effectiveness.

Findings from researches that have been conductedin the past with respect to impact of organizationalculture on employee engagement and effectivenesswithin successful firms have proven a directassociation between robust organizational culturesand high employee engagement (Nongo & Ikyanyon,2012). The notion of organizational culture takes intoits ambit all facets of organizational life and impactseverything that is done by an organization. However,it has not been accorded the required researchimpetus. A look into the prevalent literature revealedthat progress has definitely been made in associateddomains such as organizational change (Kotter &Heskett, 2011), organizational socia lization(Danielson, 2004), organizational leadership (Schein,2004), and organizational climate (Schneider, 1999),however, there is scant research that concentrates onorganizational culture and employee engagementwithin the manufacturing sector in India.

Of late, the manufacturing sector in India has beenaccorded much focus and attention by thegovernment of India. Keeping in mind thesignificance of this sector and the quantum ofopportunities and employment that can be generatedby the sector, several initiatives have been undertakenby the government to nurture growth of the Indian


manufacturing sector. Since, India has the advantagein terms of human resources with a large number ofhighly educated people and availability of skilledlabour, there is ample potential for development inthis sector (Mehta & Rajan, 2017). The recentlyinitiated campaign by the Indian government, aptlynamed as the ‘Make in India’ campaign is by far thelargest initiatives to have been undertaken by anygovernment with a view to draw more foreigninvestors to India and commence manufacturing(Chaudhari, 2015). Appropriate infrastructure suchas; robust network of railways and roads to easetransportation of products within the nation andelectricity is being provisioned by the government ofIndia. Further, there has been a relaxation in termsof laws that are conducive for labour, acquisition ofland are being laid down to facilitate foreign investorsto commence operations in India (Shukla et al.,2017). The primary objective is to facilitatemanufacturing of goods with zero defects so that noneof the goods that are exported are rejected.

Considering that the manufacturing sector in Indiais currently on an upward swing, and that thegovernment of India is attempting to boost this sector,i t becomes imperative to ensure employeeengagement within the manufacturing sector forhigher productivity and superior performance. Fromthis perspective, it is necessary to understand whetherthe culture of the organization in the Indianmanufacturing sector makes any impact on employeeengagement and effectiveness. This review paper willessentially attempt to find whether there is anyassociation between organizational culture andemployee engagement and effectiveness within theIndian manufacturing sector.

Literature Review

Organizational Culture

Different authors have defined organizational culturein diverse manners. However, a large number of suchdefinitions have a common denominator whichprojects that the culture as a concept is somethingwhich is shared within organizational members.

According to Abbas(2017) organizational culture canbe deemed as a value system that is held and actedby organizational members which differentiates oneorganization from another organization. It is said tobe a design of basic assumptions that have beendiscovered, developed or invented by a specificorganization as it learns to handle its challengesrelated to internal incorporation and externaladaptation. Those, that have known to havefunctioned well to be taken as authentic and thus canbe transferred through learning to new memberswithin the organization, as the right manner to view,think and feel in association to those challenges (AlShehri et al., 2017). Diverse cultural models prevailwithin literature. These would comprise of thecultural model presented by Cooper(1982), cognitivelevels of culture presented by Schein(2010) andcultural parameters as depicted by Deal et al.(2000).Out of these, a model which is largely prominent isthe framework of culture as presented byHandy(1987). This framework recognized fourdifferent types of organizational culture whichcomprised of achievement culture, power culture,support culture and role culture.

Owing to organizational culture’s subjective nature,it becomes a challenging prospect to accurately defineorganizational culture’s specifications. Irrespective ofthe fact that not one theory has been accepted in auniform manner, it has been generally agreed thatorganizational culture has been conventionallydefined and structured socially. This comprises ofbehaviours, beliefs, morals as well as values alignedwith diverse organizational levels and integrating eachfacet of organizational life (Uddin et al., 2013).Organizational culture as it has been outlined by(Schein, 2010), as a phenomenon of an organizationon the whole and pertains to the rite and rituals,natural settings, organizational values and climate. Asper (Martins & Terblanche, 2003), culture isintricately linked with beliefs and values that havebeen shared by organizational members.Organizational culture links the norms, beliefs, valuesand principles of the organization to its employeesand such assumptions are incorporated within them


as a set of behavioural standards and activities.Organizational culture was positioned byKlein(1996), as the crux of activities within anorganization that makes an overall impact on theeffectiveness and engagement of employees. This inturn improves the quality of the services and productsoffered by the organization. Schein(2010) also addsthat organizational culture can be summed up as adynamic force in the organization that revolves,engages and is interactive and is moulded bybehaviours and attitudes of the management andemployees. At the same time, there have been otherscholars in the past who have elucidatedorganizational culture as experiences which aremutual and rely on the societal as well as behaviouralactivities.

Types of Organizational Culture

Power culture has been defined as a kind of culturethat is considered on the basis of control and powerthat originated from the key leader and generallyfunctions in an informal manner on the basis of someprocedures and rules. It has been observed byHandy(1993) such kind of power matches thefigurehead and could lead to what has been identifiedby Cooper(1982), as power distance whereindividuals with less power exhibit high levels ofwillingness to embrace the disparity in powerdistribution without any question, and deem it asnormal. On the other hand, role culture can beconsidered as a kind of culture that has the traits ofbureaucracy since, work is being overseen by smallgroup of managers or a single manager at the top.Within this type of culture, roles are perceived to bemore significant as compared to the personnelexecuting the role and people have authorities whohave been clearly delegated within a structure that ishighly defined (Handy, 1993). Achievement cultureon the other hand focusses on the organizationalmission and on finishing the task. This tends toproduce a robust sense of purpose within employeesand generally supersedes every other consideration.Priority is accorded to ends instead of means andexpertise of an individual is greatly valued. Lastly,support culture is a kind of culture that is consensual

with a limited management control. Support cultureis one where people are known to contribute on thebasis of their sense of solidarity and commitment.Individual associations are characterized on the basisof trust and mutuality and the organization essentiallyfunctions to cater to the requirements of its members.In an organization with a culture of support, it isexpected that individual employees influence oneanother through assistance and support (Schein, 2010).

Employee Engagement and Effectiveness

Within a contemporary organization, employeeengagement and effectiveness is a major issue as it isdirectly associated with organizational performance.There have been several researchers Alfes et al.(2013), Anitha(2014) , Randall and Paul(2014) who on thebasis of their research have concluded that employeeengagement makes a positive impact on employeeperformance. This could be attributed to the fact thatemployees who are engaged have more scope to beloyal to the organization Preko and Adjetey(2013)and thus, enhanced performance Amah(2012) can beconsistently realized in the organization. Definitionrelated to employee engagement continues to evolve(Macey & Schneider, 2008). It has been well definedas the subsequent employment and expression of anindividual’s preferred self, within their work- relatedtasks. Thus, encouraging work connections tothemselves and personal presence (emotional, physicaland cognitive) and active, full role performances. Asan outcome, employees who remain engaged havebeen observed to direct more efforts within the workthey are supposed to execute for the simple reasonthat they easily relate to it. It would comprise of a‘fulfilling, positive and affective state of motivationalwork associated well-being that can be perceived asa solution for burnout in jobs’ (Vance, 2006).Therefore, employee engagement can be simply aninvestment of a single facet of the self; it signifies aninvestment involving several dimensions such as;cognitive, physical and emotional.

On the basis of a study that was conducted by Parentand Lovelace (2015), it was found that in situationswhere employees are engaged, there is scope for


everybody to benefit from it as employees believe thatthey can utilize their skills, establish relations thatare fruitful and augment the efficiency through theassociations that have been developed. It has beenfurther emphasized by Allen(2012) that employeeswho are engaged tend to be consistent in theirperformance which fosters invention and drives theorganization ahead. It has also been found throughthe Allen (2012) survey, as reported within theHarvard Business Review that around 30% ofemployees from any organization are engagedactively, while 20% of employees remain disengaged.The findings of a study conducted by Rothmannand Baumann(2017), employees tend to expressthemselves in an emotional, physical, mentalmanner, and execute their tasks effectively when theyare engaged. The author concludes that employeeswho are disengaged tend to be withdrawn fromexecuting their roles and try to protect themselvesphysically, mentally and emotionally. At the sametime, employees who are engaged tend to bepsychologically present at their work. A researchconducted by Blessing White (2013) in India to assessthe level of engagement of Indian employees foundthat 37% of employees were engaged.


A huge amount of data has been created andaccumulated by using information from alreadyprevailing literature, with a view to execute a research.This whole procedure has become very common inthe current day, in the realm of research relatedstudies (Andrews et al., 2012; Schutt, 2012). Keepingthese factors in mind, data for this research wasaccumulated from secondary sources by reviewingresearch papers presented by researchers in the past.The sources of the information will be mostly fromscholarly and academic repositories such as; JSTOR,Sage Journals , Elsevier, Taylor and Francis ,ScienceDirect and other prominent scholarly sources.

Impact of Organizational Culture on EmployeeEngagement

A study was conducted by Ilyasa et al.(2018), on 563employees to assess the impact of organizational

culture on employee engagement and effectives. Thefindings from this study revealed that there is a directpositive impact that organizational culture has onemployee engagement. As an outcome, theorganizational culture influences engagement andfosters innovation, knowledge sharing amongstemployees. Organizational culture also has a directpositive impact on employee effectiveness. Thiseventually leads to innovation amongst employees.A study was conducted by Kalia and Verma(2017),within the hospitality sector in Himachal Pradesh inIndia to evaluate organizational culture and employeeengagement. The findings from their study revealedthat organizational culture plays an integral role inenhancing the overall rate of employee engagement.Out of the several dimensions pertaining toorganizational culture, the authors found thatexperimentation and autonomy were substantiallyassociated with every dimension of employeeengagement. Diverse organizational culturedimensions were observed to be associated more withdedication and vigour as opposed to the parameterpertaining absorption, on employee engagement. Atthe same time, absorption and dedication waspredicted by trust, while collaboration only made animpact on the dimension of absorption related toemployee engagement within the employees in thehospitality sector.

Another study was carried out by PratimaSarangi andNayak(2016), with regards to the impact oforganizational culture and employee engagementwithin the manufacturing sector in India. The studyinvolved around 200 employees and the resultsindicated that the present level of employeeengagement and aspects related to work warranted animprovement to ensure employee engagement in aneffective manner. On the basis of the survey andanalysis that was conducted, it was found thatemployees had diverse opinion and confidence withregards to the organizational culture. It has been statedby Lockwood (2007), that organizational success isdriven by employee engagement. Superior levels ofemployee engagement in an organization results intalent retention, fosters loyalty amongst customers and


improves the performance of the organization. It isa lso a vita l link to customer satis faction,organizational reputation and value of stakeholderson the whole. There were several factors that couldinfluence employee engagement and these compriseof organizational culture, communi-cation, style ofmanagement, respect and trust, organizationalreputation and leadership. According to research, it hasbeen found that a workforce that is fully engaged islargely effective, provides superior levels of customersatisfaction, realizes greater levels of productivity andlowers the rate of attrition. All these factors eventuallytranslate into organizational performance (Buhler,2006).

A research conducted by (Bhavani et al., 2015),revealed that organizational culture is one of thefactors that drives employee engagement within anorganization. This particular study was conducted inthe Automobile manufacturing sector in India. Thefindings also indicated that organizational culture notonly played a vital role in employee engagement butemployee engagement was also instrumental indriving organizational success. The authors foundthat employee engagement within the automobilemanufacturing sector resulted in growth in rate ofproductivity, higher level of retention, trust amongstclients and overall profitability. Employees whoperceived that the organizational culture is one wheremuch emphasis is given to their well-being and healthhad more scope to remain engaged and remain intheir present employment for longer periods. Thiscould lead to large gains for the organization whothen deliver more in an effective manner on the basisof enhancements in productivity and performancewhile lowering attrition, absence and cost ofrecruitment. An organizational culture which isconducive to employees allows the employees to valuespecific aspects related to their job. In such scenarios,their levels of engagement are highly impacted in apositive as well as negative manner, as opposed tothose who do not accord any value to the aspect.

A study that was conducted by Agrawal and Tyagi(2010) revealed that the organizational culture thatexisted within the manufacturing sector in India was

largely of collaboration and experimentation.Collaboration pertains to extending assistance andseeking assistance from internal as well as externalcollaborators. It would imply working in tandem witheach other to resolve any challenges that exist whiledeveloping a team spirit. This kind of culture doescreate employee engagement and results in teamwork, enhanced communication, knowledge transferand resource sharing. All these eventually translateinto organizational enhancement and success. Amultilevel investigation that was executed by Krog(2014) across 35 organizations in Norway revealedthat organizational culture did make an impact onemployee engagement and that there was a moderateassociation between employee engagement and clanculture. In the same vein, hierarchy culture as well asmarket culture did not reveal any large negativeassociation with employee engagement. However, theresearchers were unable to clearly identify that specificorganizational cultures that influenced employeeengagement and factors that determined andmanifested in terms of employee engagement.

Discussion and Conclusion

The findings from this secondary research revealedthat organizational culture had positive andsubstantial impact on employee engagement.Organizational culture tends to develop a robust senseof purpose and commitment amongst employees.According to Al Shehri et al.(2017), organizationswith achievement oriented cultures or those withcollaborative cultures do not allow rules andregulations to impede the manner in which work isexecuted. As an outcome, employees within suchorganizations have the liberty to use their discretionwhile working. Findings from this research indicatethat employees who are empowered to use theirdiscretion within the workplace exhibit superior levelsof enthusiasm which is an attribute of an employeewho is engaged and lower degrees of fatigue (Saavedra& Kwun, 2000). Therefore, it can be inferred thatwhen an organization has a culture of collaborationor achievement, employees are facilitated to utilizetheir discretion that tends to augment their individual


levels of engagement. Therefore, an organizationalculture which is collaborative or achievement orientedcan positively influence engagement within theemployees.

This paper indicated that several diverse attributespertaining to organizational culture can havesubstantial positive influence over employeeengagement which in turn could impactorganizational performance. Organizational cultureis a system of approach which is rather open that hasinteractive as well as inter-dependent links withperformance of the organization. The sophisticatedand broad nature of this research could also extendvalue to studies pertaining to organizational cultureand employee engagement by offering significantviewpoints in the realm of organizational culture,employee engagement and its overall impact whileinitiating extended discussion on the development ofan effective framework between organizationalculture, employee engagement and how it impactsorganizational performance on the whole.Nonetheless, this research also has its own limitationsconsidering that the research was executed byperusing literature from research conducted in thepast. Also, considering that there are not many studiesthat have been executed within manufacturing sectorin India. Therefore, it would be beneficial to conductan empirical research that considers any particularindustry from the manufacturing sector to obtain morepertinent and reliable results.

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Chhavi Singhal Kandoi*, BBA Student- JainUniversity-Center for Management Studies, BangaloreSakshi V Jain**, BBA Student- Jain University-Centerfor Management Studies, BangaloreProf. Abhishek Venkteshwar***, Assistant Professor-Jain University- Center for Management Studies,Bangalore

Introduction

Crowd funding is a new-go-to strategy for buddingstartups. It is a practice of accumulating resources fromnumerous people, does the term ‘crowd’ to fundprospective projects. Crowd funding is an advancedversion of raising funds via the web- based platformbringing together all the investors at a commonground. It is a new internet phenomenon where peoplecome together through a virtual forum to achieve somecommon purposes. Crowd funding is also known as“financial escalators” as its helping new businessventures raise funds. Crowd funding in India is still anew concept and requires attention.

The Models of Crowd funding are as follows:

• Donation Based Crowd funding: Donationbased crowd funding is a way of raising funds forprojects by asking huge number of contributors

to individually donate a small amount to it.Donation based crowd funding is mostly used toraise funds for charities and social service causes.In donation based crowd funding individualsdonate money without expecting anything inreturn. It’s the most preferred way of fundraisingin India. Some examples of donation based crowdfunding are Kick starter, Indiegogo, GoFundMeand First Giving.

• Equity Based Crowd Funding: In equity basedcrowd funding funds are raised by a companythrough issue of equity shares. As equity ownersinvestors receive returns on their investments andalso receive share of profits in the form ofdividends. Usually the amount invested by theinvestors is high. Equity based crowd funding isan illegal concept in India. In India the rulesregarding crowd funding are moderated by themarket regulator SEBI (Securities and ExchangeBoard of India). Equity based crowd funding isquite famous in USA and UK.

• Debt Based Crowd funding: In debt basedcrowd funding funds are raised by companiesfrom investors in return for interest. Debt basedcrowd funding has been one of the most effective

Crowd Funding in IndiaChhavi Singhal Kandoi*, Sakshi V Jain** & Abhishek Venkteshwar***

Abstract

Research in the field of crowd funding has been emerging in India over past few years. This isdue to the release of the consultation paper by SEBI in June 2014.

Crowd funding is a newly introduced concept in India highlighting the use of technology. Thisconcept has helped a lot of emerging startups and SMES raise funds for commencement of theirbusinesses. It is a digital platform for the people willing to invest and for the people who wantsinvestment, whereby the whole process is conducted over the internet having worldwide reach.

Crowd funding though beneficial, investors in India have adapted themselves to the traditionalway of funding making them reluctant to switch to new methods of raising finance.

This article aims at examining the entire concept of crowd funding in India and the factors hinderingits growth.

Keywords: Crowd funding, SEBI and Risks.


ways of raising funds for startups. Startups in therecent years have been successful in raising fundsthrough debt based crowd funding. Though debtbased crowd funding and Bank loans are almostsimilar in nature, startups nowadays prefer raisingfunds through debt based crowd funding becauseof its advantages. Debt based crowd funding andequity based crowd funding are often usedinterchangeably but there is a thin line betweenboth of these.

• Reward Based Crowd funding: In reward basedcrowd funding funds are raised from individualsin return for a product or service. Mostly rewardbased crowd funding campaigns are run byartists, musicians and producers of films.

Literature Review

The literature review considered for this exploratoryresearch covers crowd funding, its risks and itslimitations in the Indian market.

Crowd Funding

SEBI defined crowd funding in the consultation paper(2014) as “Crowd sourced funding is a means ofraising money for the creative project (for instance,music, film, book publications) a benevolent or publicinterest cause (for instance, a community based socialor cooperative initiative) or a business venture, tosmall financial contributions from persons who manynumbers in hundreds or thousands. Thosecontributions are sought through an online crowdfunding platform, while the offer may also bepromoted through social media.”

Prinsha K (2016) in her paper “a study of crowdfunding and its implication in India” states thatCrowd funding is essentially the opposite of themainstream approach to business finance. We canthink of this fundraising approach (crowd funding)as a funnel, with us and our pitch at the wide endand our audience of investors at the closed end. Failto point that funnel at the right investor or firm atthe right time, and that’s your time and moneylost.Crowd funding platforms, on the other hand,turns that funnel on-end. By giving you theentrepreneur, and a single platform to build,

showcase, and share your pitch resources thisapproach dramatically streamlines the traditionalmodel.

Akshay Verma and Shwetaketu Radia Tyagi in theirresearch paper on “An overview of crowd funding inthe Indian setting” (2016) highlights crowd fundingas a process of raising small amounts of capital fromlarge number of people over the internet. Theyobserved that crow funding has emerged as an excitingalternative to the conventional financial market.Entrepreneurs are being drawn by the low cost ofraising capital for their businesses.

Veedantam Leela in his research paper titled “crowdfunding-a study of risk factors” (2016) stated thatcrow funding provides real time financial assistancethrough internet banking services to thoseentrepreneurs who aspire to start their ventures. Hisstudy has highlighted the degree of informed consentwhich people have and the factors they considerseriously prior to lending or pledging funds in crowdfunding events, and to access the impact of riskawareness and risk ignorance among the potentialfund lenders in crowd funding and its effects on thefund lenders willingness to adapt to new situations.

Dr. Hetal Jhaveri and Prof. Anjali Choksi in theirpaper “crowd funding at India: a study of Indianonline crowd funding platforms” (2014) stated crowdfunding as a collective effort by people who networkand contribute collectively for a cause or a businessidea. They observed that this concept was very similarto the traditional concept of charity or socialcooperation but unlike funding here is done with anobjective of earning some return either monetary orintangible. In India, the crowd funding is still in itsnascent stage even though the potential is incrediblyhigh.

Anubhab Sarkar in his research paper titled “Crowdfunding in India: Major Roadblocks and the wayahead” (2014) explained crowd funding as solicitationof funds in small amounts from severalunsophisticated investors via web-based platform orsocial media to fund new business ventures, art, filmetc. He observed that India has seen a surge ofnumerous non-equity crowd funding platforms in therecent years, but there is no equity based crowd


funding platforms yet as it is a grey and murky areaand proper reforms are yet to take place facilitatingequity crowd funding model to work.

Ivo Jenik, Timothy Lyman, and Alessandro Nava intheir working paper named “crowd funding andfinancial inclusion” (2017) stated Crowd funding as afinancial innovation, a FinTech, the fastest growingfinancial industry, and the next big thing in finance.“Crowd funding” typically describes a method offinancing whereby small amounts of funds are raisedfrom large numbers of individuals or legal entities tofund businesses, specific projects, individualconsumption, or other needs. It involves bypassingtraditional financial intermediaries and using onlineweb-based platforms to connect users of funds withretail funders. Definitions of crowd funding vary, butthey often include the following key components: (i)raising funds in small amounts,(ii) from many tomany,(iii) using digital technology

Observation

On completing an extensive secondary research andliterature review, the following conclusions can bemade:

• Crowd funding has still not gained much visibilityand acceptance in India. In the recent years Indiahas seen an increase in non-equity based crowdfunding platforms but equity based crowdfunding still stands illegal in India.

• Crowd funding still is largely a developed worldphenomenon; it has not been accepted fully bydeveloping nations, as people are not ready toinvest considering the risks associated with crowdfunding.

Research Gap

This research is conducted to know the visibility ofcrowd funding in India. After the extensive research,this can be said that crowd funding is an emergingconcept in India and its acceptance is still a questionhere, in contrast to its usage in other countries likeUS. Crowd funding on that other hand is a digitalplatform for raising funds thus, it is considered as ataboo in India.

Conceptual Model

IDEA GENERATION

TURN YOUR IDEA PROJECT

CREATION

INTO REALITY

CROWD PLEDGES INFORMING

THE CASH IN RETURN

FOR CROWD AND REWARDS CAMPAIGNING

The figure above reflects the entire working mechanismi.e. the various steps required in turning your idea intoreality. Also, this is a universal process followed on thesame lines across the globe.

Conclusion

Crowd funding is a phenomenon of raising alternativesources of funds via web based platform (internet).Here, the businesses have access to global marketthereby helping them raise small amount of funds fromlarge number of people from a common platform.There have been many companies coming up whichare providing such services for the emerging startupsso that they can raise funds through this platform.Moreover, this study shows that even after the releaseof consultation paper by SEBI in 2014 it is seen thatit has not gained a lot of popularity in India as a whole.People here are still very reluctant of practicing thismethod. Nevertheless, equity based crowd funding isstill illegal in India.

After conducting the research and understanding theliterature review it can be said that crowd funding isa better alternative of raising funds than the traditionalway of financing but still it does not really suit theIndian market and the mindset with which it isflanked.


References

• Akshay Verma and Shwetaketu Radia Tyagi(2016), “An overview of crowd funding in theIndian Setting”, Imperial Journal ofInterdisciplinary Research(IJIR), ISSN-2454-1362

• Anubhab Sarkar (2016), “Crowd funding inIndia- Major roadblocks and the way ahead”,Manupatra

• Dr. Hetal Jhaveri and Prof. Anjali Choksi(2014), “crowd funding at India: a study of Indianonline crowd funding platforms”,ResearchGate.net

• finance.cioreviewindia.com

• http://milaap.org/CrowdfundingIndia• Ivo Jenik, Timothy Lyman, and Alessandro

Nava (2017)”Crowd funding and financialinclusion”, March 2017, CGAP Working Paper

• Securities Exchange Board of India (2014),Consultation Paper on “crowd funding”, publishedon June 17, 2014

• Prinsha K (2016), “A Study on crowd fundingand its implications in India”, Indian Journal ofResearch, ISSN-2250-1991

• Veedantam Leela (2016), “Crowd funding-a studyof ri sk factors”, South Asian Journal ofManagement, Vol.23,No.3

• www.investindia.gov.in


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