Table of Contents Lakshmaiah Botla Paul Sundar Kirubakaran

Table of Contents

Articles

INFRONICS SYSTEMS LTD: TRIGGERING ENTREPRENEURIAL BUG

Lakshmaiah Botla

AWARENESS OF CONSUMERS ON THE GREEN MARKETING INITIATIVES OF CORPORATES

Chaarlas Lazar Jaganathan, Noorunnisha Syed Abbas, Rajkumar Ramachandran

FREIGHT FORWARDERS HURDLES IN THE OPERATIONS – AN EXPLORATORY STUDY WITH SPECIAL REFERENCE TO TAMIL NADU - INDIA

Paul Sundar Kirubakaran

ASSESSING FARMER PERCEPTION TOWARDS INTERNET BASED INTERVENTION: AN EMPIRICAL STUDY

Sudeepa Banerjee

FINANCAIL INCLUSION FOR SUSTAINABLE DEVELOPMENT:ACRITICAL LITERATURE REVIEW-THE ROLE OF COMMERCIAL BANKS &LOW INCOME PEOPLES

MR.CHITTA RANJAN MISHRA

DETERMINANTS OF JOB SATISFACTION: A STUDY ON BANGLADESH PERSPECTIVE

Ahasanul Haque

ETHICAL ISSUES IN ACCESSING PEOPLE'S KNOWLEDGE AND INNOVATIONS: A STUDY ON SPECIFIC REFERENCE TO LOW COST HEALTH SYSTEM IN INDIA

Suniti Chandiok

INFLUENCE ON BRAND IN FEMALE CONSUMER BEHAVIOR IN APPAREL PURCHASE IN LUCKNOW

Shalini Bariar

TEST OF PRICING EFFICIENCY AND DISTRIBUTIONAL PROPERTIES: INDIAN COMMODITY MARKET

Dr. Namita Rajput

www.theinternationaljournal.org > RJCBS: Volume: 01, Number: 08, June-2012 Page 1

Case Study: Infronics Systems Ltd: Triggering

Entrepreneurial Bug

Lakshmaiah Botla

Faculty at Institute of Advanced Management Education and Entrepreneurship (IAMEE), Hyderabad

Lakshmaiah Botla is a Faculty Member at Institute of

Advanced Management Education and Entrepreneurship

(IAMEE), Hyderabad, prepared this case for an assignment

of ISB, under the supervision of Professor Ramachandran

Kavil, Indian School of Business and Professor

Ramakrishna Velamuri, CEIBS, to serve as the basis for

class discussion rather than to illustrate either effective or

ineffective handling of an organizational situation. Case

writer can be reached at [email protected] &

[email protected]. This case study is presented in the

“International Conference on Management Practices for

Sustainable Growth” during 28-30 July 2010, conducted by

Dept. of Business Management, Annamalai University,

Tamilnadu, India.

Infronics Systems Ltd: Triggering Entrepreneurial Bug

Abstract: The case study discusses the entrepreneurial

journey of a young engineer who left his lucrative software

job abroad when triggered by entrepreneurial bug to realize

his dream of starting his own company in India. The case

study discusses the opinions of an entrepreneur and how

they have influenced his path of success. The case study

says that the appetite for risks open up new opportunities

hence to be exploited to realize the hidden treasury.

A young and medium built, MS Raju is very busy with his

preparation for Netherlands business trip to expand his

business into Europe when case writer reaches his office at

Kondapur in Hyderabad at around 10.30 am on the day of

appointment for the interview. He readily invited case writer

into his chamber and made him to relax by offering water

and that followed by refreshments while attending to his

phone calls and laptop. He has been doing multiple tasks

simultaneously while speaking with the case writer to

optimize his time on various important things.

Stepping into unknown is a game MS Raju plays to explore

the possibilities but he as well knows where and when to

control things and measures each step with calculated risk to

the extent of mathematical precision, may be habituated

because of his engineering background. He says every

problem is a disguised opportunity and one should discover

critical points in each opportunity to exploit the hidden

treasure. He believes strategy is the best tool to face risk and

people management is the highest priority in all of his

endeavors to create and exploit opportunities. His career

path is the testimony of his strategy and his vision is the

telescope of his destiny.

MS Raju is the person who has started his entrepreneurial

journey in the year 2000; and has started a new venture

Infronics Systems limited in the year 2007, headquartered

at Hyderabad, with a turnover of Rs.70 million now, is one

of the few companies in India with capabilities of

developing business critical systems consisting of both

hardware and software components.

Infronics Systems Limited: A Profile

Infronics Systems Ltd., a technology-enabled IT solutions

company has started galloping by foreseeing future needs

and exigencies of the market. It is delivering excellent

products of high quality and reliability with unflinching

commitment to its customers and having emphatic global

market presence with a vision to become a global player. It

specializes in industry-specific software and hardware

solutions, with proven reputation for delivering high quality

solutions to a broad spectrum of industry verticals.

The core technology areas of the company are

RFID

Smart Cards

Biometrics

Enterprise Mobility

Embedded Design & Hardware Production

Some of the products*** are as follows. (See the Appendix

III)

BioMoRF: Centralized Monitoring Tool to

authenticate or identify an individual from a remote

location

AVLS (Automatic Vehicle Location System): It

enables accurate tracking of the vehicles plying any

time, anywhere including fleet management and

container tracking

RFID based Smart Certificate: Solutions for the

award of University degree Certificates to students

eZSMS: It enables to send one or many SMSes to

all the recipients for various business and personal

communications

eZBanking: solution helps banks and Micro

Finance Institutions to reach the unbanked rural

population with branchless banking

Infronics has over 1000 major clients across various

industry verticals like Software Houses, Banks,

Manufacturing facilities, Defence establishments, Textile

industry, Educational institutions, Oil Refineries and System

Integrators. Few of the clients include TCS, Nokia, Nipuna,

mailto:[email protected]



Hyundai, Hero Honda, Pepsi, Ford, University of

Hyderabad, Concorde, Indian Oil, Mahindra, SBI etc.

Infronics designs various indigenous applications and

products for India and Overseas. The company exports its

products to Kingdom of Saudi Arabia, Dubai, UK, Ireland

and United States.

Triggering Entrepreneurial Bug

There is a consensus in India that Software boom has done

one great thing to Indians and that is awakening of the

entrepreneurial bug dormant in them who have visited

foreign lands. MS Raju is another testimony, who has been

triggered by entrepreneurial bug when working for a Korean

company of ENPIA Business Group. Soon after returned

from Korea in 2004 he has started a Dotcom company

“telugupictures.com” under company name Suchi Infotech

Ltd in 2005, where people can watch movies online by

paying a fee through online. A customer can watch any

latest movie at this site with a fee. MS Raju has diversified

his Suchi Infotech Ltd. into technology-enabled IT Solutions

Company with a new name- Infronics Systems Ltd in the

year 2007 and has become a brand by itself now.

Entrepreneur Background

MS Raju has completed his M.S. Post Graduate Degree in

Engineering during 1991-96 from BITS, Pilani, India. Soon

after completion of his Masters Degree he joined WIPRO as

Software Developer and continued for five year but most of

his tenure has been spent in US working for various

assignments with General Electric and other reputed

companies of the US. He has left WIPRO and joined a

Korean company HANWA and stayed there for about 3

years before joining into another Korean company ENPIA

and has spent there till he left for his home country India to

give a shape to his entrepreneurial drive.

MS Raju does not have any family background of

entrepreneurs. His father worked for TISCO and wanted his

son to be an engineer to work for a big company and never

dreamt of becoming his son an entrepreneur.

Entrepreneurship is inside-out

Ms Raju believes that entrepreneurs are born but they can be

refined with training and mentoring. He says that triggering

of entrepreneurial bug is possible only when the

entrepreneurial gene exists dormant in the personality and

context also plays a dominant role initially for triggering.

When the entrepreneurial bug is triggered, it is very difficult

to be non-entrepreneurial hence, creates opportunities for

himself and fires his entrepreneurial drive and nurtures his

entrepreneurial spirit. His inner passions mould the context

to suit his drive and channel his spirit. The inside-out drive

of any entrepreneur is manifested in many forms like start

ups, change in personality, transforming organization,

building new network etc. The inside-out drive of MS Raju

has manifested in the form of Infronics Systems Ltd., a new

startup. MS Raju’s work experiences in US where working

for General Electric, in Korea working for HANWA and

ENPIA have provided the right context for triggering of his

entrepreneurial bug.

Risk is an Opportunity

MS Raju has always prepared himself to take calculated

risks and is also having a presupposition that ‘risks provide

opportunities’ hence, considers risks as “poly metallic

noodles” loaded with treasures. His attitude strengthens the

law ‘risks and rewards are directly proportional’ and his

actions are also proving that ‘the law’ is correct. His

entrepreneurial journey from ‘Dotcom Company’ to Suchi

Infotech to Infronics Systems Ltd. proves that the

opportunities are expanding proportionally with the risks

that he has prepared to take. He is also expanding his

company into overseas and making it a global player

because risks are opening new opportunities. His presence in

Europe, Middle East, US shows that he has ingrained the

law in his personality.

The appetite for risks has taken a quantum leap after

triggering of entrepreneurial bug and the upwelling of

entrepreneurial push is coming out from inside forcibly to

face challenges that are influencing all the situations

towards his way of drive and vision.

Networking with Partners

MS Raju concentrates on two important things while

choosing his partners, the first is wave length of the partner

and the second one is the experience of the partner. He

understands people within few conversations and catches

someone’s wave length with highest precision. He becomes

very careful if wave length doesn’t match. He gives lot of

importance to his partner’s experience also because that

saves lot of time and is very important ingredient for any

business to be successful. The dual dimensions of partners

play a vital role in synerzyzing their efforts towards

organizational vision and mission. His partnership with Assa

Abloy ITG, Germany; IBM, USA; Nedap, Netherlands; etc.

is the result of negotiations out of understanding the wave

length of participants and the reputation of the partners

involved in the deliberations.

Technology and Strategic Partners

He has collaborated with many global players for

technology and expertise. The strategic partnership is crucial

because he doesn’t want to reinvent the wheel. Wherever

new innovations are there he wants to collaborate with them

to serve customers by offering more value and latest

technology. He has a passion for offering the best in the

technology and delighting customers with the best product.

Infronics strategic partners include the following reputed

companies of the world.

Assa Abloy ITG, Germany for RFID Tags

IBM, USA for Enterprise Solutions and

Middleware

Nedap, Netharlands for RFID based Automatic

Vehicle Identification

NXP (Philips), Netharlands for NFC, RFID


Sagem Defence (Safran group), France for Finger

Print Technology

Symbol (Motorola), USA for RFID Hardware

Entrepreneurship and Innovation**

MS Raju says entrepreneurship and innovation are

synonymous and two sides of the same coin. He is an

entrepreneur to invent things and innovator to materialize

his entrepreneurship. He is a two-headed man but with one

vision. His vision is to take Infronics to the top by 2012 and

is possible only through integration of entrepreneurship and

innovation hence, his personality with two dimensions. He

has understood this relationship while working in US where

innovation and entrepreneurship is considered as similar

things. He himself has been a software developer while

working for Wipro, Hanwa, Enpia, GE etc. He has now

developed many products indigenously in India and offering

to the world by expanding his market all over the globe.

He has already filed four patents and applied five trade

marks to date to demonstrate his innovative capacity and

entrepreneurial drive. See the Appendix II for details.

Indian Intelligentsia

MS Raju has worked with many people and has understood

the capacity of various minds of both the west and the East.

His working in abroad has provided a scale to measure

Indian minds with the rest of the best minds hence, his

conviction that ‘Indian intelligence is par excellence’ and

his R & D is loaded with Indian minds to give a shape to his

innovative ideas by their creative talents. He softly warns

Indians that ‘they waste their creative energies in 3-C’s:

chitchat, cricket and cinema’ and that to be channelized for

higher things of the life. He says that Indians waste nearly 3

hours everyday in unproductive pursuits hence, a challenge

to Indian entrepreneurs to channelize their best energies for

productive use.

Mentor Influence

MS Raju is very much influenced by his mentor Krishnam

Raju. K, former Finance Director of Visual Soft. He has

understood the importance of mentorship and its impact on

one’s life. He also has started mentoring his employees too

to derive the extraordinary results of this process. His

mentor Krishnam Raju K not only mentors MS Raju but

also many other entrepreneurs because he has a passion to

build as many entrepreneurs as possible in this country. MS

Raju says he reveals everything to his mentor before taking

any decision that facilitates detachment in his actions hence,

the possibility of psychological balance in his decision

making. He says mentoring plays a strategic role in

nurturing entrepreneurial mind hence, to be given the

highest priority to nurture entrepreneurs. Transformation of

his earlier company ‘Suchi Infotech Ltd.’ into the present

company ‘Infronics Systems Ltd.’ is the result of many

hours of discussion with his mentor, Krishnam Raju and the

mentorship can be seen in the every fiber of the company.

Time Management

MS Raju works nearly sixteen hours a day with rigor and

vigor because he enjoys working hard and long. He says one

has to sacrifice his family in the initial years of a venture

and subsequently as the venture takes-off and reaches the

success plateau, one can relax a bit and spend longer hours

with the family. He also admits that but with the success of

the venture one becomes more busy because more

opportunities flood the door hence, creating time for family

is utmost important. He also works from home while

spending time with the family. He attends many works

simultaneously to leverage time and he believes time is the

most important resource. He again says balance of time

between family and office is crucial for success in the long

run. He starts his office work at around 9.00 am in the

morning and goes up to 6.00 pm in the evening. He does

office work at home during office holidays too.

Managing People

MS Raju follows a very interesting principle while

managing resources and people. Infronics is presently run by

140 employees and many of them are talented engineers. He

gives people enough freedom but controls at critical points.

It appears as if the principle of determinism and free-will

that is seen in many scriptures. He gives the example of

God, how he provides enough freedom to people but

controls at strategic points of life. MS Raju borrows this

philosophy while dealing his employees. He provides

enough freedom to employees but that freedom is cross-

checked at various strategic locations. He gives the example

of 1----10--------20-------30----------40---------------50

mathematical series to understand the concept. He controls

employees at point 10, 20, 30, 40, 50 and so on and provides

enough freedom to people in between 1 and 10, 10 and 20,

20 and 30 and so on. He gives the freedom but also control

with a strategic intent.

The Role of Money

MS Raju shatters the myth of importance of ‘money’ and its

role attached in the success of any entrepreneur. He says the

role of money in entrepreneurship is absolutely zero and he

assumes that money is abundantly available around us if we

have the strategy to exploit an opportunity. He truly fits into

the definition of entrepreneurship that says ‘entrepreneurs

pursue opportunities without regard to the resources they

currently control’. He emphasizes more of partnerships and

strategic partners who play a strong role in the success of

entrepreneurship and simply ignores the parameter of money

in the success of entrepreneurship. He says entrepreneurship

attracts money from all the corners and is never be a

constraint for entrepreneurs. His networking with world

leaders in technology say, IBM, Nedap, NXP, Motorola etc.

has provided him the competitive edge in the market rather

than the money.

Entrepreneurship and Strategy

The success of any entrepreneur he says depends on the

strategy that he adopts to influence the context and driving

the context towards his vision. MS Raju gives the first


priority to strategy for maintaining a leadership position in

the market. He strongly advocates that strategy shapes the

success. Strategy is the true lever that shapes the context

towards your vision and mission. It is the strategy that

optimizes the partners’ linkages to serve customers and to

expand customer base. He goes to the extent of equating

entrepreneurship with strategy. Strategy links partners and

employees with the company to leverage all the

relationships consistently. Entrepreneur delivers

entrepreneurship by strategy hence, a synonymous

relationship.

Stretching Employees and (n+1) strategy

Stretching employees is crucial for higher productivity and

the strategy of Infronics is always demand driven. Many

organizations go for supply-side to stretch employee like

more incentives or other reward oriented strategies. MS

Raju follows demand-driven strategy where he brings more

projects to less number of employees and creates a challenge

among employees to complete the projects. Employees

naturally stretch to meet the demand and raise their

productivity. He follows (n+1) strategy where for ‘n’

number of employees, he brings ‘(n+1)’ projects and keeps

employees always on toes to attack the complacency, a virus

to be killed consistently.

Success mantra is Integrity*

MS Raju knows the secret of success, and he says ‘integrity

is the engine of successes; this cannot be substitutable with

anything else’. Integrity is the glue that binds everyone for

team work to produce quality conscious products for

customers to sustain their trust and commanding respect and

serving community. Infronics believes in six values that

guide each and every employee of the organization and that

are “Team Work, Respect, Trust, Integrity, Quality and

Community”. The values can be seen in Appendix I.

Dream is yet to be seen

MS Raju is exploring his lands because he says ‘I have yet

to realize my dreams’ and is working incessantly to achieve

his ambitions day in and day out. He has ‘Insatiable Desire’

to take his company into higher levels even though his

vision is to take Infronics Systems into one of the top tier-2

IT companies of India by 2012. It is a proven fact that

entrepreneurial dreams are never reached because they

consistently dream higher and higher with the each

achievement, hence MS Raju is certainly not an exception.

*Appendix I: Infronics Systems Ltd (Source-

www.infronics.com)

VISSION

“Be one of the Top Tier-2 IT companies of India by 2012”

MISSION

“Achieve Technological, Operational and Performance

Excellence through Innovation”

VALUES

We believe in

Teamwork – Believe in "Together Everyone Achieves More".

Respect – Value the Individual, Others and Our Diversity.

Trust – Keep Our Promises

Integrity – Conduct Ourselves Honestly, Professionally and

Ethically.

Quality – Employ Quality Conscious Processes.

Community – Believe in Corporate Social Responsibility

**Appendix II: Corporate Highlights (Source-

www.infronics.com)

Established in the year 2000

IT Products and Solutions Company headquartered

at Hyderabad, India

In the year 2006 the company expanded its

footprint to UK and Ireland, and is now planning to

expand to USA

A growing, strong, dedicated, specialized and

highly qualified engineering team from some of the

best universities of India

One of the leading organizations in Biometrics,

RFID and e-mobility

Immense expertise in design, development and

deployment of highly secure and scalable

enterprise products and solutions

In-house Hardware Design and Manufacturing,

catering to Domestic and Overseas Markets

Four patents filed to date

Five Trademarks applied

Infronics has over 1000 major clients spreading

across various

***


Awareness of Consumers on the Green Marketing

Initiatives of Corporates

Dr. LJ. Chaarlas, Associate Professor & Research Advisor in Commerce,

St.Joseph’s College(Autonomous), Tiruchirappalli – 2.

Ms. A. Noorunnisha, Assistant Professor in Commerce,

Holy Cross College (Autonomous), Tiruchirappalli – 2

Mr. R. Rajkumar, Ph.D Research Scholar in commerce(F.T.),

St.Joseph’s College(Autonomous), Tiruchirappalli – 2.

Abstract— The threatening alarm of Global Warming

pushes the coporates towards sharing the responsibility of

making a safe environment for all by involving themselves

as a party to the Social Contract – an invisible agreement

lying between the society and coporates. This growing

importance of an eco-friendly approach, has paved the way

for a new dimension of marketing – the Green Marketing.

Green marketing is still found at its nascent stage due to the

lack of awareness of consumers on eco-friendly activities of

corporates. In order to bring in the awareness of green

marketing, the corporates are bound to educate their

consumers on the importance of environmental protection

rather than adopting the green marketing initiatives. To

make green marketing successful it is essential that the

coporates adopt these functions with the approach of

volunteerism and responsibility over the society and

environment which has given them existence and survival.

Keywords— Green Marketing, Green issues,

Environment-Friendly, FMCGs and services, Consumer

awareness.

I. INTRODUCTION

An intelligent marketer is the one who not only convinces

the consumer, but also involves the consumer in marketing

his product. Today, many corporates have started realizing

that they should be environment-friendly. They believe in

the achievement of both social and environmental objectives

as well as financial objectives. The threatening alarm of

Global Warming pushes the coporates towards sharing the

responsibility of making a safe environment for all by

involving themselves as a party to the Social Contract – an

invisible agreement lying between the society and coporates.

This growing importance of an eco-friendly approach, has

paved the way for a new dimension of marketing – the

Green Marketing.

According to the American Marketing Association,

“green marketing is the marketing of products that are

presumed to be environmentally safe”[1]. Hence, green

marketing involves a broad range of activities, including

product modification, changes to the production process,

changes in packaging, as well as modifying advertising.

Green marketing cannot be perceived to be just one more

approach to marketing, but has to be pursued with much

vitality, as it has an environmental and social dimension

involved into it. It is highly important for the marketers that

they make green marketing as one of the norms of

marketing procedure rather than an exception or just a fad.

Though environmental protection is the trend of the

day, green marketing is still found at its nascent stage due to

the lack of or low awareness of consumers on the eco-

friendly activities performed by the manufacturers and

service providers. Yet the limited awareness of consumers

on green marketing pressurises the marketers and

researchers to do a lot of research on green marketing to

fully explore its potential. Measuring the level of awareness

of consumers has been of great importance to the marketers

as they need to bear the greatest responsibility to make the

consumers understand the need for and benefits of green

products as compared to non-green ones and motivate them

to pay more to maintain a cleaner and greener environment.

II. GREEN MARKETING – A REVIEW

India is growing at 9% annually and expected to

double its energy consumption between 2005 and 2030, is

under pressure to take action for providing clean

environment for all future generations to come. In

India, around 25% of the consumers prefer environmental-

friendly products, and around 28% may be considered

healthy conscious. Therefore, there is a lot of diverse and

fairly sizeable untapped segment in India which green

marketers can serve through offering eco-friendly products

for profitability and survival in the era of globalization[2].

The first wave of Green Marketing occurred in the

1980s. Corporate Social Responsibility (CSR) Reports

started with the ice cream seller Ben & Jerry's where the

financial report was supplemented by a greater view on the

company's environmental impact.

In 1987, a document prepared by the World

Commission on Environment and Development defined

sustainable development as meeting "the needs of the

present without compromising the ability of future

generations to meet their own need". This became known as


the Brundtland Report and was another step towards

widespread thinking on sustainability in everyday activity.

Two tangible milestones for wave of green

marketing came in the form of published books, both of

which were called Green Marketing. They were by Ken

Peattie (1992) in the United Kingdom and by Jacquelyn

Ottman (1993) in the United States of America.

In the years after 2000 a second wave of Green

marketing emerged. By now CSR and the Triple Bottom

Line (TBL) were widespread. Such publications as a 2005

United Nations Report, a book by Al Gore in 2006 and the

UK Stern Report brought scientific-environmental

arguments to the public in an easy-to-understand way[3].

Therefore, surely this is time right to inject

sustainable development into the marketing mix to help

address some of the gritty issues currently facing our planet.

III. STATEMENT OF THE PROBLEM

As resources are limited and human wants are

unlimited, it is important for the marketers to utilize the

resources efficiently without waste as well as to achieve the

organization's objective. There is growing interest among

the consumers all over the world regarding protection of

environment. As a result, green marketing which speaks for

growing market for sustainable and socially responsible

products and services becomes inevitable for corporates.

Various studies by environmentalists indicate that

consumers are concerned with the environment and are

changing their behavioural pattern so as to be less hostile

towards it. The level of green marketing initiatives of

manufacturers and marketers is based on the level of

awareness of consumers on green marketing.

Therefore, the present study “AWARENESS OF

CONSUMERS ON THE GREEN MARKETING

INITIATIVES OF CORPORATES” has been endeavoured

by the researcher to analyse the level of awareness of

consumers on green marketing initiatives of corporates.

IV. OBJECTIVES OF THE STUDY

The following are the objectives of this study,

Primary Objective

To study the level of awareness of consumers on

green marketing initiatives of corporates.

Secondary Objectives

1. To find out the level of awareness of consumers of

FMCGs on green marketing initiatives of corporates.

2. To understand the level of awareness of consumers of

durable goods on green marketing initiatives of

corporates.

3. To identify the level of awareness of consumers of

services sector on green marketing initiatives of

corporates.

4. To provide suitable suggestion to the marketers of

FMCGs, Durables and Services Sector with regard to the

level of awareness of consumers on green marketing

initiatives of corporates.

V. RESEARCH HYPOTHESES OF THE STUDY

To test the level of awareness of consumers on

green marketing initiatives of corporates, the following

research hypotheses have been proposed:

1. There is a significant association between the level

of awareness of consumers of FMCGs on green

marketing initiatives of corporates and their age.


of awareness of consumers of durable goods on

green marketing initiatives of corporates and their

age.


of awareness of consumers of services sector on


age.



marketing initiatives of corporates and their sex.




sex.




sex.



marketing initiatives of corporates and their level

of education.




level of education.




level of education.

VI. SCOPE OF THE STUDY

The study focuses to understand level of awareness

of consumers about green marketing of FMCGs, durables

and services sector. The present study has been conducted

covering consumer-respondents of the district of

Tiruchirappalli. The study may be of help to the marketers

of FMCGs, durables and services sector to work out a good

green marketing campaign for their products, after

understanding level of awareness of consumers on green

marketing initiatives of corporates.

VII. METHODOLOGY

The consumers of the district of Tiruchirappalli were the

sample units of this study. The sample size comprised of 51

consumer-respondents who have been targeted in the retail


stores of the district of Tiruchirappalli. The study is based

on the primary data collected using a structured as well as

illustrative questionnaire which has also been used as an

interview schedule. The hypotheses of the study have been

analysed and proved using Chi-Square Test.

VIII. LIMITATIONS OF THE STUDY

The findings and suggestions derived out of the study may

not be applicable to any period other the period from 15th

November, 2011 to 15th December, 2011 and also may not

be relevant to any area other than the district of

Tiruchirappalli.

IX. ANALYSIS AND FINDINGS

The analysis of the study focuses on measuring the level of

awareness possessed by the consumers of FMCGs, durables,

and services sector on the green marketing initiatives of

corporates.

The Table – 1 explains the relationship between the age of

consumer-respondents and their level of awareness on the

green marketing initiatives of corporates of FMCGs,

durables and services. It may be located from the table that:

There is no significant association between the age

of consumers and their level of awareness on the green

marketing initiatives of corporates of beverages, electronic

products, mobile phones, and services other than financial

services.

There is a significant association between the age


marketing initiatives of corporates of detergent products and

financial services.

The consumers of electrical products possessed

wide knowledge of the green marketing features of their

products irrespective of their level of age.

The consumers who purchase cars did not hold

extensive knowledge of the green marketing aspects of their

products irrespective of their level of age.

Hence, from the Table – 1, it has been inferred that

the independent variable age has no association with the

level of awareness of consumers on green marketing

initiatives of corporates.

The Table – 2 demonstrates the relationship

between the sex of consumer-respondents and their level of

awareness on the green marketing initiatives of corporates

of FMCGs, durables and services. The following findings

have been inferred from the table:

There is no significant association between the sex


marketing initiatives of corporates of beverages, detergent

products and financial services.

There is a significant association between the sex


marketing initiatives of corporates of electronic products,

mobile phones and services other than financial services.

Again the consumers of electrical products have

been found having complete awareness of the green

marketing initiatives of marketers of electrical products

irrespective of their sex.

As found in the previous table the consumers of

cars do not embrace extensive knowledge of the green

marketing aspects of their products irrespective of their sex.

Hence, from Table – 2, it has been recognised that

there is an association between sex of respondents and their

level of awareness on the green marketing initiatives of

corporates.

Table – 3 throws light on the relationship between

the level of education of consumer-respondents and their

level of awareness on the green marketing initiatives of

corporates of FMCGs, durables and services. The table

provides the following inferences:

There is no significant association between the

level of education of consumers and their level of awareness

on the green marketing initiatives of corporates of beverages

and mobile phones.

There is a significant association between the level

of education of consumers and their level of awareness on

the green marketing initiatives of corporates of detergent

products, electronic products, financial services and services

other than financial services.

Again the consumers of electrical products have

been found having complete awareness of the green

marketing initiatives of corporates of electrical products

irrespective of their level of education.

The consumers of cars were found having no

extensive knowledge of the green marketing features of their

products irrespective of their level of education.

Hence, from the Table – 3, it has been identified

that there is an association between level of education of

consumers and their level of awareness on the green

marketing initiatives of corporates.

X. SUGGESTIONS

From the analyses and findings of the study the following

suggestions were proposed:

The corporates should make sure that the consumers are

aware of and concerned about the green issues that the

product attempts to address.

The corporates may take an initiatives to educate the

consumers and letting them know what the corporates are

doing to protect the environment, also by making them


know why it is important and educating them on eco-

certifications.

Consumers must be reassured of the fact that the product

performs the job it's supposed to do and the green issues of

the product are only the additional features. They must be

given the confidence that companies will never forego the

product quality in the name of the environment.

Consumers need to be given an opportunity to participate by

means of personalizing the benefits of environment-friendly

actions of the corporates, through the promotion and

positioning of the consumer desired value into

environmental products and making the green product

attributes as “solutions” for consumer needs.

XI. CONCLUSION

As the whole world is moving towards

environmental protection, this seems to be the right time for

the corporate to select “Green Marketing”, because it is the

vital ingredient to save the world from man-made hazards. It

might bring a radical change in the world of business if all

the nations undertake to perform strict roles of being

environment-friendly. The approach of green marketing

should be practiced with much care, as it has an

environmental as well as social dimension into it. Recycling

activities, treatment of waste material, recovery of used

materials, environment-friendly production etc., in a safe

and harmless style should become a universal practice

among corporates. Educating the consumers on the

importance of environmental protection should be more

important than adopting the green marketing initiatives. To

design the strategy to implement green marketing, it is

imperative for corporates to gauge the level of awareness of

their consumers on their green marketing initiatives. Apart

from all these practices, the prime most consideration of any

sustainable activity of the corporates must be done beyond

legalities and without the compulsion of government and

non-governemental agencies, so that it becomes the part of

one of the objectives and functions of a corporate.

REFERENCES

[1]Available:http://www.indianmba.com/Occasional_Papers

/OP248/op248.html

[2]Available:http://www.indianmba.com/Occasional_Papers

/OP248/op248.html

[3]Available:http://www.indianmba.com/Faculty_Column/F

C1071/fc1071.html

http://www.indianmba.com/Occasional_Papers/OP248/op248.html




http://www.indianmba.com/Faculty_Column/FC1071/fc1071.html

http://www.indianmba.com/Faculty_Column/FC1071/fc1071.html


ANNEXURE

TABLE - 1

ASSOCIATION OF THE LEVEL OF AWARENESS OF CONSUMERS ON GREEN MAERKETING

INITIATIVES OF CORPORATES WITH THEIR AGE

Source : Field Data

Products/

Services

Age Statistical Inference

Below 25yrs

(n=21)

26 to 35yrs

(n=21)

36 to 45yrs

(n=0)

46 to 55 yrs

(n=9)

56 & Above

(n=0)

Beverages X2=2.175

Df =2

P = 0.337

P > 0.05

Not Significant

Yes 01 2 - 02 -

No 20 19 - 07 -

Detergents X2=14.433

Df =2

P = 0.001

P < 0.05

Significant

Yes 03 15 - 03 -

No 18 06 - 06 -

Electronics X2=1.457

Df =2

P = 0.483

P > 0.05

Not Significant

Yes 03 03 - 0 -

No 18 18 - 09 -

Electricals -

Yes 21 21 - 09 -

No 0 0 - 0 -

Mobile Phones X2=1.457

Df =2

P = 0.483

P > 0.05

Not Significant

Yes 03 03 - 0 -

No 18 18 - 09 -

Cars -

Yes 0 0 - 0 -

No 21 21 - 09 -

Finacial Services X2=11.302

Df =2

P = 0.004

P < 0.05

Significant

Yes 18 18 - 03 -

No 03 03 - 06 -

Other Services X2=3.363

Df =2

P = 0.186

P > 0.05

Not Significant

Yes 06 06 - 0 -

No 15 15 - 09 -


TABLE - 2

ASSOCIATION OF THE LEVEL OF AWARENESS OF CONSUMERS ON GREEN MAERKETING

INITIATIVES OF CORPORATES WITH THEIR SEX

Source: Field Data

Products/ Services Sex Statistical Inference

Male

(n=21)

Female

(n=30)

Beverages X2=0.003

Df =1

P = 0.955

P > 0.05

Not Significant

Yes 02

03

No 19

27

Detergents X2=0.042

Df =1

P = 0.838

P > 0.05

Not Significant

Yes 09

12

No 12

18


Df =1

P = 0.029

P < 0.05

Significant

Yes 0

03

No 06

24

Electricals -

Yes 21

30

No 0 0


Df =1

P = 0.029

P < 0.05

Significant

Yes 0

06

No 21

24

Cars -

Yes 0 0

No 21 30

Financial Services X2=0.504

Df =1

P = 0.478

P > 0.05

Not Significant

Yes 15

24

No 06

06


Df =1

P = 0.006

P < 0.05

Significant

Yes 09

12

No 12

27


TABLE - 3

ASSOCIATION OF LEVEL OF AWARENESS OF CONSUMERS ON GREEN MAERKETING INITIATIVES OF

CORPORATES WITH THEIR LEVEL OF EDUCATION

Products/

Services

Level of Education Statistical Inference

< than

SSLC

(n=3)

SSLC

(n=3)

HSC

(n=3)

UG (n=9) PG

(n=30)

Professional

(n=3)

Beverages X2=1.744

Df =5

P = 0.883

P > 0.05

Not Significant

Yes 0 0 0 01 04 0

No 03 03 03 08 26 03

Detergents X2=13.017

Df =5

P = 0.023

P < 0.05

Significant

Yes 0 0 03 03 12 03

No 03 03 0 06 18 0


Df =5

P = 0.000

P < 0.05

Significant

Yes 0 0 0 06 0 0

No 03 03 03 03 30 03

Electricals -

Yes 03 03 03 09 30 03

No 0 0 0 0 0 0


Df =5

P = 0.334

P > 0.05

Not Significant

Yes 0 0 0 03 03 0

No 03 03 03 06 27 03

Cars -

Yes 0 0 0 0 0 0

No 03 03 03 09 30 03

Finacial Services X2=15.987

Df =5

P = 0.007

P < 0.05

Significant

Yes 03 0 03 09 21 03

No 0 03 0 0 09 0


Df =5

P = 0.022

P < 0.05

Significant

Yes 0 0 03 03 06 0

No 03 03 0 06 24 03

Source: Field Data


Freight Forwarders Hurdles In The Operations – An

Exploratory Study With Special Reference To

Tamil Nadu - India

Dr. J. PAUL SUNDAR KIRUBAKARAN

Faculty in Business Studies, Ibra College of Technology, Ibra, Sultanate of Oman

ABSTRACT

The goods are moved from the manufacturers to the

customers/consumers by the freight forwarders with their

effective utilization of the road/sea/air transportations. The

key concept in freight forwarding is the delivery of the

cargo till the destination point or at the doorsteps of the

consignee. Most of the manufacturers are rely on

international freight forwarders to perform the operations to

bring the goods to their end users. The international freight

forwarders act as bridge between the

manufacturers/exporters to the destination of the consumers.

An empirical study was conducted in the study area to

limelight the problems faced by the freight forwarders

whoever is involved towards the sea transportations. To

identify and select the respondents in the study area Simple

Random Sampling method was employed and a well

structured questionnaire was employed to gather the first-

hand information. The questionnaire covers information of

various kinds of their personal, operations and the problems

faced by them towards their operations. The problems faced

by the freight forwarders were chosen for the analysis. The

details of analysis and interpretation s are given in this

article.

I.INTRODUCTION

Freight forwarding agents are licensed by the customs.

The name and address of the freight forwarding agents

operating from different ports can be obtained from customs

house or from their local association. The exporter should

due care in various selecting criteria of fixing freight

forwarder Viz., location, facilities rates, services,

flexibilities and efficiency.

Freight forwarding agents are one who specializes in

arranging of shipping, insurance, and many of them today

arrange land, sea and air transportation for goods. They take

a major portion of the exporters work and their risks. A

forwarding agent receives a large number of consignments

and often group together a number of small ones and, by

putting them into one large consignment, obtain preferential

freight rates from the shipping line or the airline. On behalf

of the shippers, they do all procedural and documentation

formalities involved in the customs and port clearance.

They also look after the warehousing and transshipment of

cargoes before shipment of export consignments and after

discharge of import cargoes, by the sea carriers.

II. NEED FOR THE STUDY

Freight Forwarders play a vital role in transacting

the goods along with doing all the documentation work on

behalf of the Exporters/Importers. Freight Forwarders are

applying different formula for the effective Logistics

business transaction.

The study aims at analyzing the problems faced by

the Freight Forwarders in Tamil Nadu, India and giving

suggestions for improving their services.

III. SCOPE OF THE STUDY

The present study focuses the variety of aspects of

the performance of Freight Forwarders in Indian marine

cargo industry. It highlights the Freight Forwarding

operations, and the problems faced by them. Among all

these aspects of freight forwarding operations,

containerization is essential for speedy and safety reach.

Hence, the study encompasses the role of freight forwarders

in containerization.

IV. OBJECTIVES OF THE STUDY

The present study is aimed to analyze the following

objectives empirically.

1. To limelight the overview of the Freight

Forwarders.

2. To identify the problems faced by the Freight

Forwarders.

3. To analyze the problems faced by the freight

forwarders towards their operations.

4. To suggest ways and means for effective overseas

sea operations.

V. METHODOLOGY OF THE STUDY

In the present study, an extensive use of both

primary and secondary data was made. The study has been

made in a descriptive and analytical way.

SAMPLING DESIGN

Judgment sampling was followed to select the

sample respondent for the study. To obtain primary data, the

researcher approached 300 respondents out of 640 registered

freight forwarders in the area of Chennai, Tuticorin, Tirupur,

Coimbatore and Karur. The data collected from the sample

respondents has been subdued in to suitable tabulated forms.


COLLECTION OF DATA

The study has been used both primary and

secondary data.

PRIMARY DATA

The primary data collected from the selected

respondents, viz., Logistics operators, freight forwarding

agents and multi model transport operators in the study area.

Field survey techniques were used to collect the first hand

information from the respondents. A well structured

interview schedule was prepared to collect data from the

freight forwarders. Pilot study has been conducted with the

help of the few sample schedules and necessary

modification was carried down as and when required.

SECONDARY DATA

The Secondary data was gathered from the records

of freight forwarders association, internet sources, libraries

in Bangalore, Tuticorin, Chennai and Coimbatore.

VI. FRAME WORK OF ANALYSIS

The data collected were analyzed by applying the

tools viz -

Total Score multiplied by the values and Mean

Score and also Garrent Ranking has been used

to analyze the problems faced by the Freight

Forwarders.

VII. MAJOR FINDINGS OF THE STUDY

Major Findings of the study has been given in the following

heads:

The Freight Forwarders in the study area have

encountered innumerable problems with the exporters,

insurance companies, financial companies and port

authorities. The common problems faced by them were

studied with the help of Henry Garrent Ranking methods.

The problem related to the exporters are (i) nature of

product in different types (ii) over expectation regarding

promptness in service (iii) poor co-operation (iv) breach in

contract and lack of export knowledge. Ranking on each

problem was analyzed and rank based on the quantum of

problem faced by them, and the rank thus earmarked by the

respondents are converted into percentage position. For

each percentage Garrent score was calculated from the

standard table developed by Henry Garrent Ranking. The

details of ranking are shown in the following table:

TABLE NO. 1.1

PROBLEMS RELATED WITH EXPORTERS

S.No. Problems Total

Score

Mean

Score Rank

1 Nature of product (in

different) 14160 47.2 IV

2 Over expectation

(Promptness) 18235 60.8 I

3 Lack of co operation 12350 41.2 V

4 Terms of contracts 15748 52.5 II

5 Lack of Export

knowledge 14914 49.7 III

The above table clearly shows that the problem “

Over expectation on prompt service” was ranked in the first

position with the Grarrent score of 18235 points. It is

followed by “Breach of contract” with a Grarrent Ranking

score of 15748 points. The problems faced by the exporters

especially on “Lack of Knowledge on export formalities”

was ranked the third place with the Garrent score of 14914

points. On the other hand, the problem of “Nature of

product of different varieties” was ranked in the fourth place

with the Garrent Score of 14160 points. Lastly, “Lack of

co-operation” was ranked in the fifth place with the Garrent

score of 12350 points. From the analysis it is inferred that

over expectation regarding the prompt services and breach

of contracts are the most burning problems faced by the

Freight Forwarders with their exporters.

PROBLEM RELATED WITH THE INSURANCE

COMPANY

Freight Forwarders encounter many high risk

problems when transporting goods from one place to the

destination. They may incur loss due to a variety of man

made and natural calamities. To avoid these risks, the freight

forwarders insured the goods and the vessels with the

General Insurance and Marine Insurance companies.

Whenever these Freight Forwarders approach the insurance

company for claims and settlements, they have bitter

experiences with them. The problems faced by the Freight

forwarders with the insurance companies are studied under

five categories namely, submission of more documents

before settling the claims, unnecessary delay in settlement,

indifferent attitude of the official of the insurance company,

lack of co-operation and redtapism. Henrry Garrent

Ranking methods were employed to ascertain the most

problems suffered to the least problems suffered with the

insurance company. The details are shown in the

underneath table:

TABLE NO. 1.2

PROBLEMS RELATED WITH INSURANCE

COMPANY


Score

Mean

Score Rank

1 Submission of

Unnecessary

Documents 14581 48.6 IV

2 Delay in settlement 17085 57.0 I

3 Indifferent Attitude 14859 49.5 III

4 Lack of co-operation 13071 43.6 V

5 Redtapism 15877 52.9 II

The above table reveals that the problem “ Delay in

Settlement” was ranked in the first position with the

Garrent score of 17085 points. It is followed by

“Redtapism” with a Grarrent Ranking score of 15877 points.

The problems faced with the insurance company especially

on “In different attitude of official of insurance company”

were ranked the third place with the Garrent score of 14859

points. On the other hand the problem of “Submission of

unnecessary documents” was ranked in the fourth place with

the Garrent Score of 14581 points. Lastly, “Lack of co-

operation” was ranked in the fifth place with the Garrent


score of 13071 points. From the analysis it is identified that

delay in settlement of their claims and Redtapism are the

most burning problems faced by the Freight Forwarders

with the insurance companies.

PROBLEMS RELATED WITH FINANCIAL

ASPECTS


faced innumerable problems related with finance aspects.

The exporters are not properly settling their payment to the

freight forwarders for various reasons. The problem related

with financial aspects are (i) delay in payment (ii) cheque

bouncing (iii) demanding for extention of credit period (iv)

demand for less freight cost and (v) financial loss on the

exporter’s side. Ranking on each problem was analyzed and

rank based on the quantum of problem encountered by them

and the rank thus earmarked by the respondents are

converted into percentage position. The details of ranking

are shown in the following table:

TABLE NO. 1.3

PROBLEMS RELATED WITH FINANCIAL

ASPECTS


Score

Mean

Score Rank

1 Delay in payment 15255 50.9 IV

2 Cheque bouncing 16550 55.2 II

3 Demand for

extended credit

period 18739 62.5 I

4 Demand for less

freight cost 15297 51.0 III

5 Financial loss on the

exporter’s side 9167 30.6 V

It is evident from the above table that the problem “

Demand for more credit period ” was ranked in the first

position with the Garrent score of 18739 points. It is

followed by “Cheque bouncing ” with a Garrent Ranking

score of 16550 points. “Demand for less freight cost” was

ranked in the third place with the Garrent score of 15297

points. On the other hand, the problem of “delay in

payment by the clients” was ranked in the fourth place with

the Garrent Score of 15255 points. Lastly, “financial loss on

the exporter’s side” was ranked in the fifth place with the

Garrent score of 9167 points. From the analysis it is

identified that Demand for more credit period by the clients

and Cheque bouncing are the most burning issues faced by

the Freight Forwarders with regard to the finance in nature.

PROBLEM RELATED WITH THE INSURANCE

COMPANY

Freight Forwarders meet with lots of problems

related with their operations because high risks are there

when transporting goods from one place to the final

destination through ship loss, damages, delay and other

causes. The freight forwarders are solely responsible for the

same towards their clients. To have the best logistics

operations the freight forwarders now rely on the

information technology , proper network and supply chain

management into their operations for the best logistic

operations. The problems faced by the Freight forwarders

towards the operations are studied under five categories

namely More operating and

Freight cost , More government policies through legal

restrictions, More documentary works, Delay in operations

and Natural calamity. Henrry Garrent Ranking methods

were employed to ascertain the most problems suffered to

the least sufferings with the operations. The details are

shown in the following table:

TABLE NO. 1.4

PROBLEMS RELATED WITH THE OPERATIONS


Score

Mean

Score Rank

1 More operating

(fright) cost 13962 46.5 III

2 More government

policies (legal

restriction)

18178 60.6 I

3 More documentary

works 13112 43.7 V

4 Delay in operation 16577 55.3 II

5 Natural calamity 13502 45.0 IV

It could be observed from the above table that the

problem “ more government policies through legal

restriction” was ranked in the first position with the

Grarrent score of 18178 points. It is followed by “delay in

operations” with a Garrent Ranking score of 16577 points.

The problems faced with the operations especially on “More

operating freight cost” were ranked the third place with the

Garrent score of 13962 points. On the other hand, the

problem of “natural calamity” was ranked in the fourth

place with the Garrent Score of 13502 points. Lastly,

“more documentary works” was ranked in the fifth place

with the Garrent score of 13112 points. From the analysis it

is identified that more government polices and delay in

operations are the most burning issues faced by the Freight

Forwarders with the operations.

PROBLEMS RELATED WITH THE PORT

AUTHORITIES


experienced innumerable problems from the port authorities

in the port. The port authorities are partial towards the

logistic operators according their volume of business

handling and the status of their organizations (Like MNC’s,

Large Scale Operators and so on). The problem related

with port authorities are (i) lack of co-operation (ii) more

rules and regulations (iii) delay in getting signal for

operations (iv) seeking more documentary evidence and (v)

lack of advanced equipments. Ranking on each problem was

analyzed and rank based on the quantum of problem

experienced by them, the ranks thus earmarked by the

respondents are converted into percentage position. The

details of ranking is shown in the following table:


TABLE NO. 1.5

PROBLEMS RELATED WITH PORT AUTHORITIES

S.No. Problems Total Score Mean

Score Rank

1 Lack co-operation 15146 50.5 III

2 More rules and regulations 15940 53.1 I

3 Delay in getting signal for operations 14584 48.6 IV

4 Seeking more documentary evidence 14133 47.1 V

5 Lack of advanced equipments 15575 51.9 II

An analysis of the above table shows that t could

be observed from the above “ more rules and regulations

” was ranked in the first position with the Grarrent score of

15940 points. It is followed by “lack of advanced

equipments ” with a Garrent Ranking score of 15575 points.

The problem of “ lack of co-operations” was ranked in the

third place with the Garrent score of 15146 points. On the

other hand, the problem of “delay in getting signal for

operations” was ranked in the forth place with the Garrent

Score of 14584 points. Lastly, “seeking more documentary

evidences” was ranked in the fifth place with the Garrent

score of 14133 points. From the analysis it is identified that

more rules and regulations and lack of advanced equipments

are the most burning problems faced by the Freight

Forwarders with regard to the Port authorities in the study

area.

VIII. SUGGESTIONS

1. Each and every freight forwarders should have an

attitude to have a good and long term relationship with

the manufacturers/exporters/ customers.

2. General Packet Radio Service (GPRS) can be

introduced both by the Customs and also the freight

forwarders to locate the containers as well as the

position.

3. The Customs executives can treat the freight forwarders

in an prestigious way because they are the real source to

enhance the export and import there by our economy

will be improved.

4. The National High way infrastructure, Indian railways

infrastructure should be developed

according to the international standards to enhance the

foreign trade and commerce.

5. There should be proper connectivity between all the

infrastructure in India.

6. To meet the international standards the government

should take effort to install and use the advanced

equipments to improve the turnaround time.

7. Proximity to the Container Freight Station (CFS) and

Inland Container Depot (ICD) to be facilitated.

IX. CONCLUSION

The freight forwarders are proving their efficiency

by doing the best operations to various countries with

limited infrastructural facilities particularly in the study

area. Though various problems are studied and highlighted

in this research, the researcher specially notes that the

freight forwarders in the study area are performing in an

outstanding way. They are also very much enthusiastic and

most dynamic personalities and have the willpower and

courage to dominate the Germans container vessels

operations. To make the effective and efficient way of

operations supply chain management. In order to utilize the

supply chain management concept at the optimal level a

proper initiation should be made to encourage the freight

forwarders this can be very easily achieved by the freight

forwarders association, CII and government of India.

Adequate training can be given to the freight forwarders on

General Packet Radio Service (GPRS) system and its

application and advantages of the same.

X. REFERENCES

TEXT REFERENCES

Anderson, J. and Narus, J. (1998) “Business Market

Management, Understanding, Creating and Delivering

Value”, Prentice Hall, New Jersey.

Ballou, Ronald H. (1999), “Business Logistics

management:Planning, organizing, and controlling the

supply chain”- 4th

Edition, New Jersey: Prentice Hall,ISBN:

0-13-081262-5.

Mercer, James L. and Koester, Edwin H.: Public

Management Systems : American Management Association.

Dr.Paul Sundar Kirubakaran.J., “Supply Chain

Management, Serial Publications, New Delhi, 2008, ISBN:

978-81-8387-221-8.

Seturam Shobha, ‘Corporate Profitability and Supply

Chain’, Supply Chain Management for Global

Competitiveness, Macmillan, New Delhi, 1999, pp. 77-93.

Taff, Charles A.; Management of Physical Distribution and

Transportation: Irwin.

Thomson, A.W.J. and Hunter, L.C,; The Nationalised

Transport Industries: London, Heinemann Educational

Books.

Womack, J.P., Jones, D.T. and Roos, D. (1990) The

machine that changed the world, MacMillan, New York.

Willis, Roger; Physical Distribution Management : An

Analytical Approach to Cutting Costs: Noyes.


JOURNAL – RESEARCH PAPER REFERENCES

Anderson, D.L. and Lee Han, “Synchronized Supply Chains

: The New Frontiers,

Achieving Supply chain Excellence through Technology”,

Montgomery Research Inc., san Francisco, 1999, pp 12-21.

Ansari, A. and Modarress, B., “Just-in-Time Purchasing”,

The Free Press, 1990.

Mason, J. (1999). “Total cycle time compression and the

agile supply chain”.

International Journal of production economics,

1999. P.62.

Sheth, J.N. “A Model of Industrial Buyer Behavior”,

Journal of Marketing, October 1973.

REPORTS REFERENCES

Freight Forwarders Association Reports.

Indian Ports Associations Annual Reports.

Imaritime research report 2003.

The Economic Times - ET Knowledge series2002.

WEBSITES

http://www.imaritime.com

http://www.atlaslogistics.co.in

http://www.tradeport.org

http://www.ais.misstate.edu

http://www.cio.com/summaries/enterprise/scm/

http://www.apldirectlogistics.com

http://www.clml.org/

***

http://www.imaritime.com/

http://www.atlaslogistics.co.in/

http://www.tradeport.org/

http://www.ais.misstate.edu/

http://www.cio.com/summaries/enterprise/scm/

http://www.apldirectlogistics.com/

http://www.clml.org/


Assessing farmer perception towards Internet based

intervention: an empirical study

Dr. Sudeepa Banerjee, Associate professor,

MIS .Teach in MBA, MHRM and MPSM programs of the Calcutta University,

‘A quiet digital revolution is reshaping the lives of farmers

in remote Indian villages. In these villages farmers grow

soyabeans, wheat and coffee in small plots of land as they

have for thousand years. A typical village has no reliable

electricity and has antiquated telephone lines. The farmers

are largely illiterate and have never seen a computer. But

farmers in these villages are conducting e-business through

an initiative called e-Choupal, created by ITC, one of India’s

largest consumer and agribusiness communities.’ (Mohanbir

Sawhney, 2002).

Background

A large part of the Indian population lives in rural areas.

They have mostly low incomes, they are largely dependent

on monsoons for their harvest, they are plagued by illiteracy,

limited media reach and poor infrastructure and their

markets have unviable direct distribution systems.

The vicious circle of low incomes continues due to several

reasons. Some of them are the fragmentation of land that

adversely impacts productivity and quality of produce,

thereby reducing the bargaining power of the farmer. Wide

geographical dispersion results in limited or no real time

access to information and also makes whatever information

delivered, very expensive. The heterogeneity of farmers

imply, single farmer and multiple crops, so it becomes

difficult to customize the land or other requirements like soil

conditions; there is a perpetual need for investment and

hence cash and finally the weak infrastructure- whether it is

roads, telecommunication, power, irrigation or a distribution

system leading the farmers to depend heavily on middlemen

and money lenders.

Rural marketers also suffer a lot for the fragmentation on

account of low effort ratio, high cost of reaching due to the

geographical dispersion, not possible or worth customizing

on account of heterogeneity and a passive distribution

system because of poor infrastructure.

The major problems that are being faced by farmers are lack

of institutional support, lack of information on best farming

practices and weather, quality and information of inputs.

The presence of middle men in the chain lead to incorrect

pricing, quality and weightment, handling losses and waste

of time.

Information and Communication Technology

The revolution in information and communication

technology (ICT) is affecting people in all walks of life

today. Internationally, this revolution has facilitated the

globalization of the economy, business, finance and culture

(Gomez 1997; Heeks 1999). Today ICT constitutes the

fastest growing component of the global economy and the

Indian ICT spending is expected to grow 10.3 percent in

2012 and in that Services and Software will be the fastest

growing segment till the end of 2014(Gartner Press releases

, 2012 and 2011).

However, the rural community in most countries is out of

this growth map and Internet access in these areas is usually

very marginal if at all. India is no exception- while the

spread and use of information technology has been

phenomenal in urban areas the rural communities are still

largely left out (Agarwal, 2009).

There is a growing consensus that knowledge and

information are essential for empowering rural communities.

Communication is central to this process. Convergence of

technologies can help people share knowledge and

information. Information intermediaries like social workers,

educators and mass media can help rural communities

access relevant information. Internet technology can be used

for strengthening research and increasing farmer linkages

through better agricultural marketing, disaster mitigation

through forecasting, monitoring and early warning systems.

Relevance of use of Internet technology in Agriculture lies

in it ability to reduce isolation, facilitate dialogue, provide

information and skills training and encourage orderly

structure in the system.

Social empowerment

Participatory development is necessary in terms of

sustainability, relevance and empowerment and is

considered better than top-down development approaches

(Cooke and Kothari , 2002). The main endeavor in such

processes is to involve economically and socially backward

and neglected population in the decisions that affect their

lives (Guijt, 1999,Khwaja,2004). Participation, especially in

the context of community, is deeply linked to issues of

democracy, power, and asymmetries that historically exist

within communities. International organizations like the

World Bank and UNICEF have been dealing with

community participation through rapid rural appraisal,

participative rural appraisal and participative learning for

action. “Participation is viewed pragmatically and

ideologically—something that helps efficiency, satisfaction

and progress, but which is also morally right” (Mumford

1984) .The role and relevance of modern communication

technology towards social development and its improvement

is being studied by various researchers (Sahay and Avgerou,

2002; Madon and Sahay, 2002).


The extent to which a farmer can understand and adopt a

new technology depends on his experience with it. Strong

and positive experiences will influence better acceptability

amongst individuals and also groups. Certain group

characteristics influence empowerment. When participants

of a new technology interact with each other they make

meaningful changes in their behavior and influences

resulting in individual and collective empowerment.

Research has shown that participation and empowerment are

related to each other (Berger and Neuhaus, 1977; Thomas

and Velthouse, 1990; Rappaport, 1987).

The two underlying theoretical components in

empowerment are information and influence (Khwaja,2005,

pp.273-275). Information is a component of empowerment

where an individual or a community is able to provide

information about their own preference and gain information

from outside that may enhance their capacity to make

optimal choices. Thus access to information can help by

allowing people to make more informed decisions.

Participation can be considered a means of providing and

gaining information. Information exchange as a component

of empowerment implies that the users have to be otherwise

empowered as well as they may else perceive that there is

little chance of their preferences being considered.

While information is necessary it is not sufficient o produce

the desired outcome .There is another component called

influence or ‘bargaining power’(Khwaja, 2005,pp.274) that

is also required. Users may have access to information , but

unless they have the ability to influence the decision and

also know that they have this ability, they will have little

motivation to either provide or gain the requisite

information-this is the influence component of

empowerment which leads to decisions that may be

considered a less tangible asset.

Research question

Internet as a medium has been put to use in some rural areas

of India. It is necessary to investigate how the farmers have

perceived its use. A positive response and experience is

necessary for more farmers to use this medium thus

contributing to the ‘critical mass’ that can convert this

technology to a mass media.

The objective of this research includes an examination of the

perception of empowerment amongst farmers who use

Internet technology through e-Choupals. A modest attempt

has been made to fill up the gap by identifying the following

research question :

What are the effects of different elements of the e-Choupal

on the overall empowerment of farmers?

Study design

To answer this research question the researcher will be using

the case of ITC’s e-choupal. ITC is well known for its

corporate and social responsibility and it is this philosophy

that initiated the e-choupal system, where the business

model increased shareholders value as well as contributed to

social development. ITC envisioned this project by using

Internet as a medium.

ITC and e-Choupal

The ITC group of companies has a yearly turnover of Rs 7.5

billion and is involved in tobacco, cigarettes, paper and

packaging, paperboard manufacturing, hotels and tourism,

information technology and agricultural exports.

Of these its Agri Business Division is one of India’s largest

exporters of agricultural commodities. Initially the

agricultural commodity trading business was small

compared to International players. The opening up of the

Indian market around 1996 brought in international

competition. ITC took the route of information technology

through e-Choupals to create a competitive business that did

not need a large asset base. The e-Choupal has been able to

install computers with Internet access in rural farming

villages, where it serves both as a social gathering place for

exchange of information and an e-commerce hub. The

computer is typically housed in the Sanchalak’s house, who

is also a local farmer and is linked to the Internet via phone

lines or VSAT connectivity and normally serves around 10

villages within a radius of about five kilometers. There is an

initial investment to set it up and an annual maintenance

charge normally shared between ITC and the Sanchalak.

Using the system costs nothing to the farmer. While a pure

trading model does not require much capital investment, the

e-Choupal model, in contrast, has required ITC to make

significant investments to create and maintain its own IT

network in rural India and to identify and train local farmers

(Sanchalaks and Samayojaks ) to set up and manage each e-

Choupal.

Users of e-Choupal can use the computer to access daily

closing prices on local mandis(government –fair price

mandated markets),as well as to track global price trends or

find information about new farming techniques or about

fertilizers, weather , best global practices etc either by

themselves or with assistance from the Sanchalak who is

trained by ITC. Further they can also order quality seeds,

fertilizers and other products such as consumer goods from

ITC or its partners, at prices lower than those from village

traders ; the Sanchalak basically aggregates the village

demand of the various products and sends the order to an

ITC representative. At harvest time, ITC offers to buy the

crop directly from any farmer at prevailing prices, the

testing of quality is done scientifically and the farmer is

informed about the quality of his produce and the altered

price if any in view of poorer quality. If the farmer is willing

to sell , he then transports his produce to the local collecting

centre where it is weighed electronically and reassessed for

quality .The farmer gets paid for the crop as well as a

transportation and bagging fee immediately. The Sanchalak

on the other hand benefits from increased prestige and a

commission paid to him for all e-Choupal transactions. This

is in contrast to the normal trade route where the farmer sells

his produce to a small trader called a kaccha adat, who sells

the produce to a larger trader called pakka adat, who in turn

takes the produce to a local mandi or a market place, where


a larger trader buys the same. The mandi traders then

operate through brokers to negotiate prices with specific

companies like ITC and then sell. This long route results in

high procurement cost for companies, unfair price recovery

for farmers, loss in handling and also deterioration of the

quality of produce due to this time-consuming system.

Additionally, there is a long wait at mandi’s for farmers as

well as harassment in the hands of the various middlemen.

Further, the payment for the crops is also not scientific and

farmers have to wait very long to recover their dues.

Methodology

Model

An additive form of multiple regression model has been

considered for the research question as mentioned earlier

and postulated as:

Y= b0 + bi

n

i 1

Xi + , i=1…..4

where,

Y = mean value of overall empowerment for each

respondent

b0 = constant

bi = regression coefficient of the ith

constraint

Xi = [ (

N

j 1

Xj ) / N ] for each respondent

Xj = score on jth

item of each respondent

N= number of items of ith

construct

= Random error terms is assumed to be normally

distributed.

Hypothesis

The perception of farmers towards ith

construct will have a

positive impact on overall empowerment. Mathematically

H0 : B i= 0 against

H1 : Bi > 0

Questionnaire design

In the early stage of concept development (what is to be

measured and what can be measured), an extensive review

of literature on the subject and an analysis of possible

components to be measured have been done. Some were

established measures,while others were modified or

developed for this study based on intuition, knowledge and

experience.After identifying a set of possible items an

intensive discussion with a group of target respondents

(farmers using e-Choupal for trade and information) has

been conducted to assess the proposed concepts, definition,

terminology and final selection of the relevant items. In the

next stage, face-to-face in-depth interviews with managers

from ITC have been conducted to discuss all the items. After

consultation with two academicians, these items have been

confirmed and questions framed on them on a 5-point Likert

scale (1 = strongly disagree to 5 = strongly agree). The

Likert scale has been used as it is a reliable and commonly

used scale that can be easily interpreted .All the items are

framed in closed-end form.

For the purpose of pre testing the questionnaire a pilot

survey had been performed on 22 respondents.

Therefore, in this study farmer perception was

operationalized as a multidimensional concept and thus the

questionnaire finally consists of 19 items. These are all

refined items, which have been derived from 39 items by

repetitive factor analysis as well as consideration of standard

deviation of each item (rejected when standard deviation

was below 1). The dimensions or constructs that have been

considered are fair price, price information-current as well

as trend, faster recovery of dues, reduced dependence on

money lenders, language barrier, ease of use, soil testing

facility, weather information, information on fertilizers,

pesticides and best practices, increased productivity of land,

reduced wastage, availability of newer and better farming

products that include seeds, tools, fertilizers and pesticides,

reduced harassment and overall sense of empowerment.

To measure the underlying dimensions of these items,

exploratory factor analysis (PCA) has been performed and 4

dimensions have been revealed: (1) increase in income,

(2) inclusion/participation (Khwaja,2005, P.272), (3)

decision-making power (Renuka and Lekshmi, 2003) and

(4) additional benefits .The number of items varies from 3

to 5 between constructs. This ensures the questionnaire

satisfies the construct validity. As far as reliability is

concerned Cronbach alpha for each construct has been

calculated and it varies between 0.6 and 0.8 (Nunnally,

1994).

A single item that measures overall empowerment has been

also framed on a 5-point Likert scale which has been used as

a dependent variable in subsequent analysis.

Sampling technique and sampling size

The sample frame of the farmers was available; hence

simple random sampling technique was used. By this

technique a sample size of 200 had been drawn from a

population of 584.The sample size was more than 5% of the

population and hence this was a finite population and so the

sample size (180) has been given an adjustment by finite

population correction factor (FPCF) of 0.83, calculated as

FPCF= (N-n)/(N-1); N=population size, n=sample

size. Finally data have been collected from 150 , (FPCF x n)

respondents.

Method of interview

The researcher conducted a questionnaire-based survey with

farmers of wheat of the Basai ki Nagla village e-Choupal

near Hathras in western UP in 2009. Interviews were

conducted with Rana Sharma- Sanchalak, samyojaks, Mandi

adatiyas and ITC personnels to gain a better understanding

of the linkages among Internet, participatory development,

social development and empowerment.


Results and discussion

Table 1 shows the result of the multiple regression analysis.

It also shows the beta values, which indicate the variables’

explanatory power.

The model cannot be interpreted before checking the

multicollinearity of the independent variables. When high

level of correlation exists between two or more independent

variables used in the regression, then it is difficult to

determine the contribution of each independent variable,

because their effects are confounded (Hair and Anderson ,

2005, pp.188-89) .For this the variance inflation factor (VIF)

has been assessed. The values are within the common cutoff

threshold of 10(Hair and Anderson , 2005, pp.220-21) .

Table 1: Results of the regression analysis between

overall sense of empowerment, increase in income,

decision-making power, inclusion/participation and

additional benefits.

Notes: *P < 0.01,

** P< 0.05, VIF: Variance inflation

factor

From the results presented in Table 1, it can be observed

that the regression coefficient is positive in all the cases.

This indicates that these variables have a positive

relationship with the dependent variable – overall perception

of empowerment. The coefficients of the four constructs ((1)

increase in income, (2) inclusion/participation, (3)

decision-making power and (4) additional benefits) are

0.55,0.54,0.49,0.44 respectively. That is the change in

perception of farmers with respect to increase in income by

1 unit, will change the overall empowerment by 0.55 and so

on.

From the Table 1, it can be seen that the t values are

significant at desired level, and hence all the hypotheses

related to the four constructs ((1) increase in income, (2)

inclusion/participation, (3) decision-making power and (4)

additional benefits)) as mentioned earlier have been

confirmed in this work.

From the results presented in Table 1, the standardized beta

coefficients indicate the impact that each independent

variable has on the dependent variable. Decision-making

power has the highest impact on empowerment followed by

inclusion/participation, increase in income and finally

additional benefits.

The R2 value or variance explained is significant at 52.1%

(F=25.86, P=0.000) as expected (Anderson et.al ,2009) as is

shown in Table 2 below.

Table 2: Validation statistics

R2 F P

52.1%

25.86 0.000

Conclusion

The objective of this study was to measure the acceptability

of Internet amongst the rural people in general and farmers

in particular. Data have been gathered and analysed

empirically. Subsequently results have been interpreted.

Findings suggest that overall sense of empowerment has

been enhanced since farmer perception towards different

dimensions is positively inclined. Hence the objective of this

study has been fulfilled. Managers of e-Choupal on the other

hand should consider farmer’s perception to formulate better

strategy for the acceptance of Internet in rural India which in

turn will uplift the rural community by increasing their

income, inclusion and participation, their decision making

powers and provide other benefits.

Reference

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The regression equation is: y=0.64+0.55x1+0.54x2+0.49x3+0.44x4

Predictor Coefficient SE T Std Beta VIF Rank

Constant 0.64 0.45 1.42

Increase in income(x1) 0.55 0.27 2.05**

0.93 7.9 3

Decision-making power (x2) 0.54 0.14 3.76*

1.34 4.6 1

Inclusion/ participation(x3) 0.49 0.22 2.19* 1.21 5.3 2

Additional benefits (x4) 0.44 0.22 1.99* 0.74 9.8 4


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***

http://www.itcportal.com/newsroom/press_oct15.htm


Financial inclusion for sustainable development: a

critical literature review-the role of commercial

banks & low-income peoples.

Prof. CHITTA RANJAN MISHRA.

ABSTRACT

This report examines evidence from the academic and

policy literature review about the financial capability &

saving of low-income people. The purposes of the study are

to provide a critical review of evidence about the low-

income people’s financial savings & the role of commercial

banks measurement, the programs used to promote their

saving capability & aware their knowledge about financial

product, services and the information uncovered about the

programs by evaluations. Financial knowledge & saving is

the most important for financial inclusion. Financial product

knowledge has been proposed widely as an effective

approach to preparing people to manage their finances.

Financial capability includes both the ability to act

(knowledge, skills, confidence, and motivation) and the

opportunity to act (through access to quality financial

products and services). The data required for the study have

collected from the secondary sources. Banks are essential

for each country’s economy, since no growth can be

achieved unless savings are efficiently channeled into

investment. In this respect, the lack of a full-fledged banking

system has often been identified as a major weakness of the

centrally planned economies. Therefore, reforming the

banking sector in the former communist countries and

creating a new culture of trust and confidence has been a

crucial task in the process of transition to a market economy.

The banks should encourage the people to access banking

services by ways of no frills account, financial inclusion

campaign and business correspondent etc. As a financial

inclusion strategy, developing inclusive financial systems

should give priority, which is financially and socially

sustainable.

Keywords: Financial Inclusion , role of commercial bank,

poverty Alleviation , Economic development, knowledge

about Financial product & services.

INTRODUCTION

Financial inclusion is an idea whose time has finally come

in India. It will enable hundreds of millions of low-income

people to improve their economic and social status by

participating in the financial system. Not only have the

government and the Reserve Bank of India become very

keen to promote inclusion, successful business models have

at last emerged to serve the poor in a profitable manner.

Capital, both debt and equity, is now available for this sector

at reasonable cost even as better technology and Internet

connectivity are making it easier and less expensive to reach

the poor. Financial inclusion is the delivery of financial

services at an affordable cost to low-income households. It

is estimated that nearly 500 millions Indians are not served

well (or even at all) by the current financial system. There is

a close connection between poverty and financial exclusion,

which can lead to estrangement, disaffection and reduced

participation in society by low-income families. The

government of India and the Reserve Bank of India have

been very concerned about financial exclusion and the great

harm it causes to the society. The RBI has taken many

initiatives to spread banking services such as expanding the

number of rural bank branches as well as allowing the

banking correspondent model. The scale of the problem of

financial exclusion can be daunting. Nearly half of the

population and a majority in rural Indians do not have bank

accounts. Less than 10% of India’s 600,000 villages have a

bank branch. Nearly 80% of the Indian population is without

life or health insurance. Penetration of mortgages, mutual

funds and pension products is also very low. The world is

full of poverty reducing strategies. Human imagination and

creativity know no boundaries in how to overcome poverty.

If they were all successful, the abolition of poverty might be

in sight. However, only few of the many imaginable poverty

reducing strategies are actually put to use, and most of those

are incomplete in the sense that they are put only to partial

use. There are many reasons for this situation. Lack of

resources is the reason most often mentioned. Lack of

knowledge on how to obtain efficient poverty reduction is

one. Inaccurate use, or misuse of knowledge is another.

Administrative inadequacy in organizing and implementing

a poverty reducing strategy can be considered another

reason for failure. Such arguments can be classified as

technical reasons. The underlying assumption is that if

knowledge, resources and administrative expertise increase,

then poverty reduction would also increase. The explicit aim

for donors and others is to work towards improving such

technical defaults. It is important that they continue to do so.

At the same time, we know that other and much stronger

forces intervene to prevent poverty reduction. On the one

hand we have forces that have a direct interest in neglecting

poverty reduction or even trying to stop it from being

implemented and carried out in an efficient manner. There

are many reasons for such an attitude. It may be the dislike

of poor people, the dislike of sharing resources or the fear of

changing a social structure in favor of the poor. Some of

those poverty producing forces are intended because vested

interests are linked to continued poverty. Other poverty

producing forces are unintentional, but still powerful. As a

matter of fact, it can be argued that unintentional poverty

production has a larger impact on poverty formation than


direct poverty production. The relevance of the argument is

here that poverty reducing strategies cannot be understood

unless one takes into account also the forces that work

against poverty reduction. The negative forces built into a

counter-strategy can be political, cultural, economic or

symbolic. The latter might be as important in terms of

resistance to a poverty reducing strategy as the other three.

If this argument is correct poverty reducing strategies need

to be analyzed and understood not only in terms of intended

positive effects. It is just as necessary to analyze and

understand the likely counter forces that come into play

when a new poverty reducing strategy is introduced.

Otherwise the poverty reducing strategy is doomed to fail.

The measures that need to be taken to bring the counter-

strategies under control, or neutralize their effect on the

intended poverty reduction, are not part of the ordinary

curriculum of poverty reduction. It is taken for granted that

“everybody” wants poverty reduction. The reality is

different. There are severe conflicts surrounding most

poverty reducing efforts, in particular those that call for

more comprehensive redistribution or changes in the social

structure. A model of conflict is more adequate. However, to

work within a model of conflict calls for a reorientation of

those responsible for poverty reduction. It means among

other things to identify the counteractive forces and to

develop ways of dealing with actors who are often among

the powerful people. So far poverty reducing measures have

not been developed within such a context. In the following I

shall outline a set of current poverty reducing strategies as

they are played out on different levels. The readers will be

invited to identify counteracting strategies and the actors

and interests behind such strategies. The time ate goal is to

learn how to protect poverty reducing strategies from

counterstrategies and carry them through to greater

efficiency. This may be asking too much since this is a

infield hat politicians and administrators have so far been

reluctant to enter, and perhaps with good reason. Financial

literacy levels are extremely low. Even though microfinance

institutions have expanded very fast in the last five years,

they still only cover about one fifth of low-income

households and they to meet only one tenth of the credit

needs of the poor. While it is a daunting challenge in size

and scope, financial inclusion is also a great social and

business opportunity. Among the potential businesses that

will benefit from more inclusion are business

correspondents who can bring simple banking services as

wells insurance and even pension schemes to the poor.

LITERATURE REVIEW

Banks play an important role in meeting credit need of

people. More studies have attempted to analyze the role of

commercial banks in financial inclusion for sustainable

development. The RRBs and commercial banks in the

economic development and relation with other

developmental programmes. An attempt in this section has

been made to review some important research studies.

Finance Minister Pranab Mukherjee (2010) said financial

inclusion was a key determinant of sustainable and inclusive

growth which could unlock the vast hidden potential of

savings consumption and investment propensities of the

poorer sections of society.

Transact the national forum for financial inclusion, (2007 )

Financial inclusion is a state in which all people have access

to appropriate, defined financial products and services in

order to manage their money effetely. It is achieved by

financial literacy and financial capability on the part of the

consumer and financial access on the part of product,

services and advice suppliers.

Farhat Husain (1986) has made a detailed analysis of the

development of Commercial banks in India in the light of

reorientation of banking policy, credit planning and resource

mobilization for the regional development.

Choubey, B.N. (1983) has evaluated that Commercial Banks

have failed to fill the serious gap and deficiencies in farm

credit, which the RRBs could manage to do. Choubey

emphasized that the NABARD would be required to pay

special attention to the depoliticisation of the agricultural

credit and government credit agencies. He suggested that

NABARD might help the agricultural and rural sector in

raising their productivity at reasonable faster rate.

Shetty (1997) in his studies that the ‘social banking’ policies

being followed by the country resulted in widening the

‘geographical spread and functional reach’ of commercial

banks in rural area in the period that followed the

nationalization of banks.

NABARD (1999) remarked that the despite having a wide

network of rural bank branches in India which implemented

specific poverty alleviation programmes that sought creation

of self employment opportunities through bank credit, a very

large number of the poorest of the poor continued to remain

outside the fold of the formal banking systems.

Gundannavar, V.R. (1992) has highlighted the role of banks

in implementing social banking schemes to keep pace with

changing social needs. He has strongly opposed any move to

reduce resources allocation to priority sectors, which will

have an adverse impact on the agricultural credit. He has

suggested to increase higher interest rate on commercial

lending and to continue concessional rate of lending to

priority sectors.

Barman, K.K. (1994) has made an analytical study on the

implications of financial sector reforms on rural credit

delivery system. He has found that implications are of wide

spread; on interest rate of agricultural loans, lending rates,

priority sector lending, reserve requirements and

institutional restructuring.

Rangarajan, C. (1996) has identified three to four major

factors which would have impact over the future banking

operation including progressive de-regulation of interest

rates, a diversified competitive market place, market

determined exchange rate mechanism and technological

progress. He suggested the banks to provide credit to

agriculture and allied sector as provision of credit to high-


tech agriculture which is almost equal to providing credit to

industry.

Vaidya, B.V. (2002) has made a comprehensive effort to

highlight some of the aspects of rural development of the

country under the policy of liberalisation and globalisation,

including economic aspect, agricultural aspect, industrial

aspect, infrastructural aspect and management aspect. From

his analysis, he has drawn the conclusion that a

comprehensive methodology will be necessary for rural

development which is the bed-rock of development for the

whole country.

Ansari (2007) in her study reveals that reaching the poorest

and whose credit requirements were very small, frequent

and unpredictable, was found to be difficult. Further, the

emphasis was on providing credit rather than financial

products and services including savings, insurance, etc. to

the poor to meet their simple requirements. Therefore, need

was felt for alternative policies, systems and procedures,

savings and loans products, other complementary services

and new delivery mechanisms, which would fulfill the

requirements of the poorest.

Shylendra, (1998) spoke of SHGs as meaning small

informal associations created for the purpose of enabling

members to reap economic benefit out of mutual help,

solidarity, and joint responsibility. The benefits include

mobilization of savings and credit facilities and pursuit of

group enterprise activities. The group-based approach not

only enables the poor to accumulate capital by way of small

savings but also helps them to get access to formal credit

facilities.

To Beck & De la Torre, (2006) financial inclusion should

signify access to a range of different financial services, the

percentage of people in a given area with access to a bank

account is the typical measuring stick for breadth of

financial services.

Karmarkar, K.G.(1997) has highlighted the role of Micro

financing (SHGs) on the rural credit delivery system in the

state of Orissa with example of successful projects in the

different parts of the state. He has suggested for active

participation of banks and other development agencies to

promote micro financing in large scale to accelerate the pace

of rural development.

Biswal, D. and Dash, H. (1997) have attempted to study the

recovery phenomenon of rural bank credit in Orissa. The

banks in financing rural development are of the view that

poor recovery and mounting overdue are the major huddles

faced by them. They have suggested for adequate

development of rural infrastructure in the state to improve

the income and financial condition of rural poor which in

turn will improve the recovery performance of banks in the

state.

Verrashekharappa (1997) in his work on “Institutional

Finance for Rural Development” has highlighted the

importance of institutional finance on farm sector in a

changing perceptive. Taking into account the transaction

cost, utilization of loan, repayments and over dues, he has

advocated for policy implications to be implemented more

cautiously to reduce the gap between bank credit and farm

sector and to remove the size of landholding as collateral

security against farm credit..

World Bank (2008) financial inclusion is also influenced by

specific credit needs of various segment people arises for a

number activities such as housing, microenterprises,

agriculture difficulties in accessing formal sources of credit,

the poor individuals and small savings or internal resources

to invest in housing, health and education, and opportunities.

NEED FOR THE STUDY

The economy is presently in a phase of rapidly rising

income, rural and urban, arising from an expansion of extant

economic activities as well as the creation of new activities

including corporate profitability which has exhibited

sustainable trends and increasing consumer incomes thereby

riding on the growth momentum. All of these developments

suggest that the demand for financial services, both for

savings as well as production purposes, will be greater than

has been the case in the past, and there will be many new

entrants in need of financial services who have not hitherto

been served. Financial inclusion as a topic has attracted

global attention in the recent past. For our own country

where almost 70 percent of population lives in the rural

areas and engages in agriculture and allied activities,

financial inclusion assumes paramount importance indeed,

and is an utmost necessity for a country where a large

number of the world’s highest poverty stricken population

resides. The bank provides a no frills Savings Bank Account

to all members of the lower income groups. As a next step,

small overdraft facilities are allowed in the Savings Bank

Accounts in order to cater to the account holder’s general

purpose or consumption needs. Those who are engaged in

income generation activities were provided with general

credit card facility with a flexibility of roll over facility.

Opening no frills account with a small overdraft or GCC is

only the first step in building the relationship which would

require sustained efforts to ensure that the banking

relationship with the customer is fashioned to meet his

needs. The technology should have a clear focus on

relatively unbanked and under reserved areas rather than

competing aggressively in already well served areas. There

is a clear need to vastly increase the numbers served by

existing branches for saving, loan and remittances. It is

hoped that the new KYC norms for male value accounts will

go a long way in ensuring this. The financial services for

rural areas will need to be supplemented by organizing

support for ancillary activities and knowledge

dissemination. Farmers training centers, village knowledge

centers, RUDSET as set up by a few banks will need

multiplication for ensuring sustainable development. With

the gradual mushrooming of SHG programmers in the rural

areas, there is a need for scaling up to cover productive

loans while ensuring that the process of group formation and

capacity building is given sufficient time to allow social

capital and democratic processes to take root.


OBJECTIVES OF THE STUDY

This study has the main objectives:

To determine the level of awareness of people in

various financial products and services and more

importantly quality as a factor of financial

inclusion.

To study the impact of SHG bank linkage program

& low income people on promotion of financial

inclusion in rural and urban areas in term of access

to banks, saving and loan by the SHG members.

To make suggestions for improvement of the

present situation which will lead to sustainable

development?

STATEMENT OF THE PROBLEM

Financial exclusion is excluding people without of

affordable credit, savings, insurance assets and money and

bank advices. The financial excluded section largely

comprises marginal framers, landless laborers, self

employed and unorganized sector enterprises, urban slum

dwellers, migrants, ethnic minorities and socially excluded

groups, senior sector and women. To achieve greater

financial inclusion, financial services should reach the poor

of socially excluded group’s particularly poor people micro

finance banks and other financial institution has played a

vital role in filling up this gap. This study helps us to know

the financial inclusion position, awareness level, towards no

frills account and saving and credit behavior of the low

income groups.

RESEARCH DESIGN AND METHODOLOGY

The research shall focus on the problems they face with

regard to basic banking needs and identify a range of

particular difficulties likely to be faced relating to the use of

bank accounts, products and services. The study is analytical

and exploratory in nature and makes use of Secondary data.

The data of the study has been collected mostly from the

secondary sources. The secondary data have been collected

from various publications and different government and

non-governmental sources. The data collected from

secondary sources have been suitably edited, analyzed and

interpreted according to requirement of the study. The

purposes of the study are to provide a critical review of

evidence about low-income and at-risk people on how their

financial capability is measured, what programs are used to

promote their financial literacy, and what evaluations of the

programs uncover about them.

THE ROLE OF COMMERCIAL BANKS

‘Banking’’ activity involves acceptance of deposits and

lending for investment of money. It facilitates business

activities by providing money and certain services that help

in exchange of goods and services. Banks are such places

where people can deposit their savings with the assurance

that they will be able to withdraw money from the deposits

whenever required. Banks have an important role in helping

people to deal with financial distress. People earn money to

meet their day-to-day expenses on food, clothing, education

of children, housing etc. They also need money to meet

future expenses on marriage, higher education of children, a

building of their own and other social functions. These are

heavy expenses in the long run which can be met if some

money is saved out of the present income. Savings is also

necessary to meet the exigencies of old age and ill health

when it may not be possible for people to work and earn

their living. People who wish to borrow money for

business and other purposes can also get loans from the

banks at reasonable rates of interest. On the basis of their

deposit, the banks also grant loans and advances to farmers,

traders and business men for productive purposes. The rate

of interest is generally higher than the rate of interest

allowed on deposits. Fees are also levied for the various

other services rendered to the business community and

public in general. Therefore banks contribute to the

economic development of the country. In order to

understand the relationship of banks and the environment,

the basic role of a bank is to receive funds from customers

by way of deposits and allocate these funds where there is a

need or shortage of capital, which is called financial

intermediation. However through the evolution of financial

services, the role has a broader means so as to include

among others, consumer credit, mortgage leasing, treasury,

securities trading and insurance. Finance is universally

acknowledged as the most important contributor to growth

and empowerment in modern day context; financial

inclusion has emerged as a concept uppermost before

government, planners, financial sector players, socio-

economic organizations etc. All across the globe, a

definition of financial inclusion, embracing all its essential

aspects could be like this. ‘‘It is the delivery of financial

services at an affordable cost to the vast sections of

disadvantaged and low income groups.’’ In the Indian

context, a specialty will be the coverage of rural areas as the

main target in view of the concentration of these vulnerable

groups in such areas. It is true that financial inclusion and

poverty alleviation cannot be separated but components like

saving, investment, credit, insurance and remittance should

be included in financial inclusion.

Moreover, financial inclusion emphasizes the need to

include maximum number of people under formal financial

systems. The most important part of financial services in a

region is typically measured by the number of people who

have access to bank accounts. The financial inclusion in the

forms of the growth in bank accounts of scheduled

commercial banks and the changes below poverty line

population. As a poverty education strategy, developing

inclusive financial systems should be given priority, which

is financially and socially sustainable.

The role of commercial banks for sustainable development

is linked to increased savings mobilization and credit

provision in rural areas which allows rural households to

better accumulate capital and to obtain loans for longer term

productive investments. Interest rates on loans and deposits

are attractive relative to those available in informal markets.


THE ROLE OF BANKS IN FINANCIAL INCLUSION

The economy is presently in a phase of rapidly rising

income, rural and urban, arising from an expansion of extant

economic activities as well as the creation of new activities

including corporate profitability which has exhibited

sustainable trends and increasing consumer incomes thereby

riding on the growth momentum. All of these developments

suggest that the demand for financial services, both for

savings as well as production purposes, will be greater than

has been the case in the past, and there will be many new

entrants in need of financial services who have not hitherto

been served. Financial inclusion as a topic has attracted

global attention in the recent past. For our own country

where almost 70 percent of population lives in the rural

areas and engages in agriculture and allied activities,

financial inclusion assumes paramount importance indeed,

and is an utmost necessity for a country where a large

number of the world’s highest poverty stricken population

resides.

The bank provides a no frills Savings Bank Account to all

members of the lower income groups. As a next step, small

overdraft facilities are allowed in the Savings Bank

Accounts in order to cater to the account holder’s general

purpose or consumption needs. Those who are engaged in

income generation activities were provided with general

credit card facility with a flexibility of roll over facility.

Opening no frills account with a small overdraft or GCC is

only the first step in building the relationship which would

require sustained efforts to ensure that the banking

relationship with the customer is fashioned to meet his

needs. The technology should have a clear focus on

relatively unbanked and under reserved areas rather than

competing aggressively in already well served areas. There

is a clear need to vastly increase the numbers served by

existing branches for saving, loan and remittances. It is

hoped that the new KYC norms for male value accounts will

go a long way in ensuring this. The financial services for

rural areas will need to be supplemented by organizing

support for ancillary activities and knowledge

dissemination. Farmers training centers, village knowledge

centers, RUDSET as set up by a few banks will need

multiplication for ensuring sustainable development. With

the gradual mushrooming of SHG programmes in the rural

areas, there is a need for scaling up to cover productive

loans while ensuring that the process of group formation and

capacity building is given sufficient time to allow social

capital and democratic processes to take root.

CONCLUSION

Financial inclusion becomes a major pre-requisite to poverty

alleviation. Reserve Bank of Indias vision for 2020 is to

open nearly 600 million new customers' accounts and

service them through a variety of channels by leveraging on

information technology. However, improper repayment need

for additional workforce, time consumption, high cost and

illiteracy are continued to be a road block to financial

inclusion in many areas. Consequently, many banks are not

adopting full fledged financial inclusion plan. The banks

should step up to overwhelm all these problems and to

disseminate its service to remote area. The banks should

encourage the people to access banking services by ways of

no frills account, financial inclusion campaign and business

correspondent. The government should encourage the banks

to adopt financial inclusion by means of financial assistance,

advertisement and awareness programme etc. to achieve the

Inclusive Growth.

SUGGESTION

India needs to develop a low-cost bank branch

model, possibly attached to village post office.

Bank should open small extension counters at

organization providing public utility services such

as local schools, primary health care centre, village

mandies, farmers association and bus stops etc.

Reserve Bank and Government should give the

suggestion to commercial banks to promote the

financial product and services of banking through

all the educational institution (primary, secondary

& higher secondary)

The RBI should mandate that commercial banks

have a certain percent of their portfolio in small

loans. In addition, important social considerations

should be factored into loan decisions. The children

have to be attending a school before they are

eligible for a loan. Similar conditions should be

imposed for eligibility of loans in India. The

government could also add extra incentives to lend

in Rural areas

India needs to expand the current business

correspondents model to allow microfinance

institutions, NBFCs and other profit-powered

companies to use correspondents.

The government of India should help develop

financial literacy among the population,

particularly in low-income families. That can be

done by teaching it in primary schools, high

schools and colleges.

Telecom companies should be allowed to provide

payments and money transfer services.

The community-based financial systems like the

chit funds need to be revived and strengthened.

They serve as a very useful savings and credit

function and result in local growth and

employment.

Post office employees should be trained and given

incentives to market savings, investment and

pension products. Some of these products have

already been developed by the post office but have

not been marketed effectively.

The banks should step up to over whelm all these

problems and to disseminate its service to remote

area. The banks should encourage the people to

access banking services by ways of no frills

account, financial inclusion campaign and business

correspondent. The government should encourage

the banks to adopt financial inclusion by means of

financial assistance, advertisement and awareness


programme etc. to achieve the Inclusive Growth.

We must promote the financial

inclusion aggressively to serve our own low-

income families but also to show ways to improve

the life of poor people around the world.

REFERENCES

1- Ghorude, K.N. (2009). “Micro Finance for Financial

Inclusion and Sustainable Rural Development”, Southern

Economist, Vol. 48, No.1, PP.47 – 50. �

2- Manoharan, B. “A study on commercial banks in India –

An overview”, Indian Journal of Marketing, Vol. 45, No.1

3- Muthiah Manoharan, P., and Krishnaveni Muthiah.

(2010). “Financial Inclusion in the Indian Rural Area

Context – A Micro level Study” Research Highlights,

Vol. 20, No.2, PP.71 – 74.

4- Narendra. M (2011). “Financial Inclusion Gains

Urgency”, The Hindu Survey of Indian Industry.

5- Beck, T., Demirguc - Kunt, A. & Levine, R. (2007)

‘‘Finance, Inequality and the Poor’’, Journal of Banking and

Finance, 28, 423-442.

6- Raj Kapila, and Uma Kapila, (Eds.) (2008). “Inclusive

Growth: The Role of Banksin Emerging Economies”,

Economic Developments in India, Academia Foundation.

7- Sendhilvelan, M., and Karthikeyan, K., (2006) „No Frills

Account: A Basic Drive for Financial Inclusion”, Southern

Economist, Vol. 45, PP.13 – 14.

8- Subhash Narayan, (2011). “Fund to Boost Financial

Inclusion in the Works”,

http://news.in.msn.com/business/article.aspx?cp-

documentid=4833211

9- Usha Thorat (2007). Financial Inclusion - the Indian

Experience. Financial Inclusion Conference. London. BIS

Review.

10- Vighneswara Swamy and Vijayalakshmi, “Role of

Financial Inclusion for Inclusive Growth in India – Issues

and challenges”,http://skoch.in/fir/Role%20of%20Financial

%20Inclusion%20for %20Inclusive%20Growth%20in%20I

ndia.pdf

11- Chandan Kumar Goyal, (2008), “Financial inclusion in

the North Eastern Region of India with Special Reference to

Assam”, The ICFAI Journal of Applied

Finance, Vol. 14, No. 12.

12- Dr.Rakesh Mohan, (2006), “Economic Growth,

Financial Deepening and Financial Inclusion”, Deputy

Governor of the RBI at the Annual Bankers’ Conference,

Hyderabad, November, 3.

13- Dweep, I., Rakesh Mohan Annual Bankers’ Conference,

(2006), “Economic Growth, Financial Deepening and

Financial Inclusion”, Hyderabad, November.

14- Mitra Rona, (2006), “Financial Inclusion: Meeting the

Challenge”, People’s Democracy, April 22 and 29, available

at 222.pd.cpim.org.18.

***

http://news.in.msn.com/business/article.aspx?cp-documentid=4833211

http://news.in.msn.com/business/article.aspx?cp-documentid=4833211


Determinants of Job Satisfaction: A Study on

Bangladesh Perspective

Fazlul Kabir Rabbanee, Graduate School of Business Curtin University, Perth Australia

Sanoara Yasmin, University of Information Technology and Science

Chittagong Campus, Bangladesh

Abdullah Al Mamun, Faculty of Economics and Management Sciences

International Islamic University, Malaysia, Kuala Lumpur

Abstract:

Job satisfaction as an attitude resulting from a balancing and

summation of many specific likes and dislikes experienced

in connection with the job. Extant literature mostly focused

on job satisfaction in developed world context.

Determinants of job satisfaction in developing world context

are largely ignored whereas there are significant difference

among the nature, personality and culture of the employees

of developed and developing countries. This paper attempts

to explore the determinants of job satisfaction in Bangladesh

perspective. It focused on six factors – Job, Pay, Promotion,

Supervision, Colleagues and Environment as the key

determinants of job satisfaction based on the extant

literature. The study conducted a survey based on structured

questionnaire, which revealed that job, pay, promotion,

supervision have significant impact on job satisfaction while

other two factors – colleagues and environment are not

found to have significant impact on job satisfaction of

Bangladeshi employees. At the end, this paper suggest that,

in order to attain the job satisfaction of the employees, the

human resource managers of Bangladesh should concentrate

more on the nature of the job, promotion, payment and

supervision more than colleagues and the environment of

the office / job.

Prologue

Specific employee attitude relating to job satisfaction is of

major interest in the field of organizational behavior and the

practice of human resources management now (Tett and

Meyer 1993). The interest steamed from the belief that the

satisfied employees are more productive than dissatisfied

employees are. This interest induces the management

academics to conduct many researches regarding different

issues in the field of job satisfaction. However, most of

these researches had been conducted in the organizations

operating in developed countries. A very little number of

researches were conducted in the organizations owned by

third world countries and operating there. It is undeniable

that the characteristics of the environment where the

organizations operate vary from country to country;

especially they vary significantly from developed to

underdeveloped countries. In addition, the characteristics of

members of those organizations in developed countries vary

significantly from those of developing countries due to

difference in cultures, norms, values, ethos and other issues.

The bundle of variables that gains plaudit from employees’

point of view for igniting job satisfaction in a country may

not work out in similar way and to the same extent in

another country. A bundle with different combination of

variables may be required. In this article, the authors have

selected 6 variables that play significant role in determining

job satisfaction and tried to figure out the latent

relationships, if any exist and which are unnoticeable in

ordinary view, among them in context of Bangladesh. The

authors believe that the disclosure of such latent

relationships will make practicing manager more

knowledgeable to determine effective package of motivating

variables to make the employees more satisfied in their job.

Literature Review

Job Satisfaction

Job satisfaction has been widely studied over the last four

decades of organizational research (Currivan, 1999).

However, defining job satisfaction with a single definition is

impossible (Abdulla, Djebarni and Mellahi, 2011). In

general, job satisfaction has been defined as “a function of

the perceived relationship between what one wants from

one’s job and what one perceives it as offering” (Locke,

1969 as cited in Daulatram, 2003). According to Spector,

job satisfaction refers to “the degree to which people like

their jobs” (Spector, 1997, p. 7).

Job satisfaction is defined as “a pleasurable or

positive emotional state resulting from the appraisal of one’s

job or job experience” (Locke 1976, p.1300). It refers to an

individual’s general attitude towards his/her job (Robins

2003, p.78). According to Bullock (1952), job satisfaction is

an attitude that results from a balancing and summation of

many specific likes and dislikes experienced in connection

with the job. Smith (1955, p.322) has defined job

satisfaction as an employee’s judgment of how well his job

has satisfied his various needs. Blum & Naylor (1968) have

defined job satisfaction as a general attitude formed because

of specific job factors, individual characteristics, and

relationships outside the job.

A person with high level of job satisfaction holds

positive attitude towards the job, while a person who is

dissatisfied with his or her job holds negative attitude about


the job (Robins 2003, p.72). It is also defined as an affective

or emotional response toward various facets of one’s job.

This definition means job satisfaction is not a unitary

concept. Rather a person can be relatively satisfied with one

aspect of his or her job and dissatisfied with one or more

other aspects (Kinicki and Kreitner 2003, p.125). As it is an

attitude not exerted behavior i.e. emotional response,

thereby only can be inferred (Luthans 1998, p.144). As it

can be inferred only, it is always difficult to measure exactly

to what extent employees are satisfied or dissatisfied.

Determinants of Job Satisfaction

Job satisfaction may come from a wide variety of sources

(Quarstein and Glassman, 1993, Smith et al. 1969). One

study even found that if college students’ major coincide

with their job, they were satisfied with that job (Fricko and

Beehr 1992, p.99). McGregor (1960), Argyris (1964), and

Bass (1965) argued that job satisfaction lies in the need-

satisfying potential of the job environment. However, we

will consider the following factors discussed below as

causes of job satisfaction.

The Job

The characteristics of job that allow individuals to fulfill

their needs are determinants of job satisfaction (Kinicki and

Kreitnen 2003, p.127). Job satisfaction is enhanced by the

task that is mentally challenging but allows individual to

experience success, and is personally interesting. (Locke

1976). Ciabattari (1986, p.48) also argued identically saying

task that is interesting and challenging can be a source of job

satisfaction. Challenging job along with performance

feedback was identified as variable, which makes employees

intrinsically motivated (Csikszentmihalyi 1990,

Csikszentmihalyi 1997, Mainemelis 2001). Katzell et al

(1992, p.195) also argued the same that under the condition

of moderate challenge, most employees experience pleasure

and satisfaction. People with high growth need look for job

that is meaningful and be satisfied when they get it

(Hackman and Oldham, 1976). Thomas (2000) also argued

that job that is meaningful provides intrinsic stimulus for job

satisfaction. Hackman and Oldham (1976) maintained that

‘autonomy over the job’ and ‘performance feedback’ are

another two major sources of job satisfaction. However,

Kanungo (1979, p.199) maintains that job satisfaction does

not necessarily depend on job characteristics like autonomy

over the job. Thomas (2000) also argued that when

employees be able to accomplish something skillfully

performing task activities, they be internally motivated. For

performing task successfully employees need to develop

competence. Purohit and Belal (1998, p.49) conducted a

survey on professional accountants in Bangladesh and found

‘opportunity for competence development’ as a source of

job satisfaction. So it is assumed that the job that provides

opportunity for competence development will contribute to

job satisfaction. Besides, because of job scarcity in

Bangladesh being employed at the right post is difficult. To

get to the right job with right position, most people start

their career in some job which provides them the

opportunity for competence development. It is assumed that

people expect at least such a job and when they get such,

that job provides them satisfaction. Therefore, it is

hypothesized that

H1: The nature of job has positive impact on job

satisfaction

Pay

Job satisfaction is a function of how fairly an individual is

treated at work. Employees want pay system and promotion

policies that they perceive just, unambiguous, and in line

with their expectations. Their perceived fairness of pay and

promotion were found significantly correlated with job

satisfaction (Witt and Nye 1992). Lambert, Hogan and

Barton (2001) have identified salary as an important factors

that influence job satisfaction. According to Benjamin

(2010), worker’s compensation package is an important part

of the employee job satisfaction and it cannot be ignored.

Wages and salaries are recognized to be significant

but cognitively complex (Carraher and Buckley, 1996,

p.102) and also multidimensional factor in job satisfaction

(Judge 1993, p.331). Purohit and Belal (1998) found ‘pay

and other facilities’ as a source of job satisfaction in

Bangladesh while conducting a survey on professional

accountants. Islam and Swierczerk (2003, p.47) also

identified fair pay and other financial benefits influence job

satisfaction of garments women workers in Bangladesh.

Money not only helps people attain their basic needs but

also is instrumental in providing upper-level needs

satisfaction. Employees often see pay as a reflection of how

management views their contribution to the organization

(Luthans 1998,p.145). When pay is seen as fair based on job

demands, individual skill level, community pay standards,

satisfaction is likely to result (Locke 1976). However,

Luthans (1998) argued that fringe benefits are also

important but they are not as influential. Therefore, it is

hypothesized that

H2: Pay has positive impact on job satisfaction

Promotion

Promotional opportunities seem to have a varying effect on

job satisfaction. This is because promotions take a number

of different forms and have a variety of accompanying

rewards (Luthans 1998, p.145). Promotions provide

opportunities for personal growth, more responsibilities and

increased social status. Individual who perceived that

promotion decisions are made in a fair and just manner, are

likely to experience satisfaction (Witt and Nye 1992).

Promotion plays a significant role that is also a key indicator

of employee job satisfaction (Lambert et al., 2001). Islam

and Swierczerk (2003) identified promotional opportunities

influence job satisfaction of garments women workers in

Bangladesh. Therefore, it has been hypothesized that

H3: Promotion has positive impact on job satisfaction

Supervision

Supervision is another major determinant of job satisfaction.

Studies generally found that employee satisfaction is


increased when the immediate supervisor is understanding

and friendly, listen to employees’ opinions and shows

personal interest in them, and offers praise and recognition

for good performance (Locke 1976). Many researchers have

examined the link between job satisfaction and management

practices (Burke, 1995, 1996). According to Lambert et al.

(2001), the existence of fair appraisal system can boost the

employee satisfaction. Manager should create an

environment where subordinates get opportunity to play an

active role in decision-making process. A participative

climate created by the supervisor has a more substantial

effect on workers’ satisfaction than does participation in a

specific decision (Miller and Monge 1986).

In a survey on professional accountants in

Bangladesh revealed that ‘participation in decision making’

acts as a source of job satisfaction in Bangladesh (Purohit

and Belal 1998) Islam and Swierczerk (2003) found ‘better

supervision’ as a variable influencing job satisfaction while

conducting a survey over garments women workers in

Bangladesh. Another dimension of good supervision is

employee centeredness, which means managers interest in

employees’ welfare. It is commonly manifested in ways,

such as checking to see how well the subordinate is doing,

providing advice and assistance to the individual, and

communicating with the worker at personal as well as

official level (Luthans 1998). Therefore, it is hypothesized

that

H4: The nature of supervision has positive impact on job

satisfaction

Colleagues

People get more out of work than merely money or tangible

achievements. For most employees, work also fills the need

social interaction. Not surprisingly, therefore, having

friendly and supportive co-workers lead to increased job

satisfaction (Locke 1976). A ‘good work group’ serves as a

source of support, comfort, advice, and assistance to the

individual work and of course, makes the job more

enjoyable. The absence of this in the workplace has negative

effect on job satisfaction (Luthans 1998). A better relation

with coworkers was found affecting the level of job

satisfaction in garment women workers in Bangladesh

(Islam and Swierczerk 2003). Therefore, we hypothesize

that

H5: Colleagues influence employees’ job satisfaction

Working Environment

Working condition also has a modest effect on job

satisfaction like workgroup. There is a significant

relationship exists between the work environment and the

level of employee satisfaction in the work place (Herzberg,

1968; Spector, 2008). Several researchers have examined

the relationship between job satisfaction and organizational

commitment (Currivan, 1999; Daulatram, 2003; Lok and

Crawford, 1999; Vandenberg and Lance, 1992). Employees

are concerned with their work environment for both

personal comfort and facilitating doing a good job. If the

working condition is good, the personnel will find it easier

to carry out their job. If not, it will be more difficult to get

things done. In other words, if things are good, there may

not any job satisfaction problem. Nevertheless, things are

otherwise, the likeliness of job dissatisfaction increases

(Luthans 1998). Studies demonstrate that employees prefer

physical surroundings that are not dangerous or

uncomfortable. In addition, most employees prefer working

relatively close to home, in clean and relatively modern

facilities, and with adequate tools and equipment (Locke

1976). Therefore, it is hypothesized that

H6: Work environment has positive impact on job

satisfaction

The hypothesized relationship can be shown in the

following Figure1

Figure 1: Determinants of Job Satisfaction


Research Methodology

Questionnaire and its Construct Validity

Based on the above literature review, an eleven-

item questionnaire is prepared following 5–point Likart

scale (1 = Strongly Disagree, 5 = Strongly Agree and 3 =

Neutral). Conceptually ‘3’ represents neither satisfied nor

dissatisfied with the variable. Thus, recording ‘4’ and ‘5’

represent satisfaction, the higher the number, the greater the

satisfaction level. Similarly, recording ‘1’ and ‘2’ represent

dissatisfaction, the lower the number, the greater the level of

dissatisfaction.

For this study, 600 questionnaires were distributed

among the employees of 18 different private companies in

Dhaka, Bangladesh out of which 467 questionnaires were

received. Each of the response received systematically

screened for errors, incomplete and missing responses.

However, those responses that still contained questions in

the survey questionnaire that had been remained unanswered

or left incorrectly answered finally discarded from data

analysis in order to establish a rationality of analysis through

proper representation. After having the screening process

completed, 437 responses found valid for data analysis. This

represents a rate of 72.8%, which is considered extremely

well in view of time, cost, certainty and geographical

constraints (Sandelowski, 1995).

The results obtained from 437 respondents have been

thoroughly analyzed and the outputs of the results have been

clearly explained in this section. Applying SPSS, the

principal component analysis (PCA) was carried out to

explore the underlying factors associated with 11 items. The

constructs validity was tested applying Bartlett’s Test of

Sphericity and The KMO measure of sampling adequacy

analyzing the strength of association among variables. The

KMO measure of sampling adequacy (KMO) was first

computed to determine the suitability of using factor

analysis. It helps to predict whether data are suitable to

perform factor analysis. KMO is used to assess which

variables to drop from the model due to multicollinearity

problem. The value of KMO varies from 0 to 1, and KMO

overall should be 0.60 or higher to perform factor analysis.

If this does not have achieved, then it is necessary to drop

the variables with lowest anti image value until KMO

overall rises above .60.

The analysis began with an examination of the

measurement in terms of its reliability and its construct

validity. The composite reliability coefficients of the

measurements scale satisfied Nunally’s (1978) guidelines

(Cornbatch Alpha = 0.87). The scale items of job, pay,

promotion, supervision, colleague and working environment

are shown in the following Table 1 along with the

corresponding descriptive statistics and reliability. Result for

the Bartlett’s Test of Sphericity and the KMO reveal that

both were highly significant and eventually concluded that

this variable was suitable for the factor analysis. According

to the Sekeran (2000) Cronbach alpha is reliability

coefficient that indicates how well the items are positively

correlated to one another. Reliability coefficient tested by

using Cronbach’s alpha (α) analysis. In order to measure the

reliability for a set of two or more constructs, Cronbach

alpha is a commonly used method where alpha coefficient

values range between 0 and 1 with higher values indicating

higher reliability among the indicators (Hair, et al., 2010).

After the re-allocation of the eleven items, the Reliability

test was conducted to ensure that, the extracted three factors

are appropriate for this grouping. In accordance with the

Cronbach alpha test, the total scale of reliability for this

study varies from 0.72 to 0.81, indicating an overall higher

reliability factors. The reliability of this study is substantial

in every perspective, as the highest reliability value that can

be achieved is 1.0.

Results and Discussion

Results from the primary data focused on the descriptive

analysis based on the frequency Table 1. Regarding the

length of employment as shown in (Table 1), with three

categories: firstly, those below 10 years are 32.7 %.

Secondly, between 10 to 20 years is 42.3 % where as those

above 20 years, which is 25 %. It showed that, 75 % of the

respondents have the opportunity to serve for the next 10 to

20 years.

Respondent’s demographic profile is shown in

Table 3, out of the total participation of 437, 80.6 % were

males and 19.4 % were females. As for the education level,

22.6 % were degree holders while 77.4 % were those with

diploma, secondary and primary schools qualifications.

Types of employee indicated that, 27.7 % were executives

and 72.3 % were nonexecutive. Out of this 27.7 %

executives, 5.8 % are managers and above.

Further, regression analysis was conducted in order

to find out respective strength of the determinants of job

satisfaction. The dependent variable Job satisfaction has

been regressed by job, pay, promotion, supervision,

colleagues, and environment. The regression results are

shown in Table 4.

Table 4 shows that H1, H2, H3, H4 are accepted (p

< 0.05) while H5 and H6 are rejected. The factors of interest

of this study (i.e. the independent variables) claim 70% of

the variance explained by the dependent variable Job

Satisfaction. Out of the six determinants, four factors (Job,

Pay, Promotion, and Supervision) are found to have

significant positive impact on job satisfaction. The rest two

factors – colleagues and environment are not found to have

significant impact on job satisfaction. Out of the four

significant factors, job has the strongest impact on job

satisfaction with beta value 0.462 followed by promotion,

pay and supervision.

Therefore, employees of Bangladesh consider their

job, pay promotion and supervision as the key factors of

perceiving their job as satisfied. Among these factors, they

consider the job itself as the most important factor followed

by the scope for promotion, pay and supervision. On the

other hand, they do not consider colleagues and environment

as influencing factors to be satisfied with their jobs.


Conclusion and Future Implications

Satisfied employees are more committed to their job than

that of dissatisfied. This is because a person with high level

of job satisfaction holds a positive attitude towards the job,

while a person who is dissatisfied with his or her job holds

negative attitude about the job (Robins, 2003). This paper

focuses on determinants of job satisfaction in Bangladesh

perspective. It offers key contributions in the human

resource management literature of Bangladesh by

suggesting the key considering factors to attain job

satisfaction of the Bangladeshi employees. It has significant

managerial implications. In order to attain the job

satisfaction of the employees, the human resource managers

of Bangladesh should concentrate more on the nature of the

job, promotion, payment and supervision more than

colleagues and the environment of the office / job. To be

more specific, this paper emphasize the most on the Job

itself as the key determining factor for attaining job

satisfaction. By performing the job in real life situation an

employee experience day-to-day pressures and meet variety

of challenges which makes him/her capable of developing

insights that enhances his/her aptitude, ability, skill and

knowledge. Therefore, a job itself can be a key source for

human resource development. It is undeniable that a job

becomes a solid source of learning when it delivers

motivation. A task that provides satisfaction can attract and

contain employees with it. Organizations should always try

to attain job satisfaction of their employees in order to

improve their productivity and attain desired profitability by

focusing on these determinants of job satisfactions.

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Annexure

Table 2: Reliability Test

Table 3: Employee Demographic Profile

Table 4: Regression Results for Determinants of Job Satisfaction

** Significant at 5% level of significance


Abstract— There is a widespread concern all over the world

about the emerging tensions in the local, regional and global

dialogues on relationship between formal and informal

knowledge systems. It is realized that the basic social

contract between knowledge producing communities and the

knowledge valorizing corporations and professionals needs

redefinition. Several professional societies have incorporated

discussions on ethical issues in accessing knowledge,

innovations and practices of local communities involving use

of local biodiversity resources. The situation becomes even

more complex when we realize that the healthcare needs of

large majority of poor people still are met by their own

survival strategies dependent upon use of local knowledge

and resources. It is obvious that this knowledge is precious

and can generate viable and productive alternatives valued by

modern markets. At the same time, it is also true that if this

knowledge was sufficiently robust as it stands, the local

health conditions would not have been as precarious as these

often are in many regions because of nutritional and other

economic hardships. The linkage with formal science and

technology is therefore vital. The paper deals with four issues

like what can we learn from the analysis of a country wide

campaign in India on documenting more than 300 local

health traditions maintained by communities and individuals,

whether the health priorities and the options for addressing

them require new technological and institutional paradigms,

how can new partnership between people, professionals,

public policy makers and profit-oriented corporations be

conceptualized so that not only benefits are shared fairly but

also the knowledge systems grow and thrive and what should

be the ethical code of conduct guiding the knowledge

exchange, value addition and benefit sharing for generating

viable health options for knowledge rich, economically poor

people. The paper would thus provide an overview of the

global debate on this subject and also suggest how an

ethnobotanist can become the watchdog of, as well as the

advocates for, the interests of healers, herbalists and other

traditional knowledge rich communities.

Key Words: Ethical issues, local communities, local

biodiversity resources

I. INTRODUCTION

Knowledge happens when our expectations are belied,

modified and sometimes confirmed. Because the asymmetry

in our expectations is influenced by our access to resources,

institutions, technology and cultural platforms, we get

different kinds of knowledge, even when we confront similar

situations. In any community living close to nature,

asymmetry in knowledge generation and its utilization is

inevitable. The experts exist not just in our profession, but in

every profession.

This raises the issue about conceptualizing the functional

asymmetry without which knowledge systems cannot grow

or provide incentives for experimentation, innovation and

dissemination of either the knowledge itself or its

applications for community well being. Why would a

community encourage asymmetry becomes apparent when

we look at the problems of survival with particular reference

to health. Whether a child is to be born, a bone has to be

repaired or a chronic ailment has to be relieved, one needs

advice. In one of the Shodh Yatras in a village in Karnataka,

a young person felt very disturbed when we paid respect and

appreciated the expertise of a particular healer who seemed

to be very effective in curing the cases of snake bite. This

village was located in the western ghat region with very rich

biodiversity.

This young person felt that everybody in the village knew

about the herbs to be used in such cases, what was so special

about the old person whom we seemed to revere so much.

We asked a question to all the people sitting there, as to how

many people had had a case snake bite in their family in the

last three months. Three people raised hands. We asked them

who they went to, for consulting. All three pointed towards

the old healer whom we were honouring. Everybody laughed

and the answer became obvious. While many people in the

village know, not everybody knows, how to use the specific

knowledge in a specific case such that it works. The specific

part of a generalized knowledge is available with only a few

experts. Society respects such experts but does not adequately

incentivise them. The result is, they often remain poor.

Therefore, despite having walked for more than 2600 kms.,

during every summer and winter Shodh Yatra in last eight

years, we have not come across many young healers. This is

the crisis. If younger generation no more feels inspired and

emboldened to learn, acquire, specialize and improvise the

knowledge that has been generated by the older generation,

the knowledge systems come under threat of erosion. I have

argued that when knowledge erodes, a plant becomes a weed.

How does one ensure that this knowledge system grows,

becomes vibrant, encourages innovations and welcomes

fusion of external, institutional and formal knowledge at its

own terms? The ethical dilemma arise when we have to

decide the terms, mediate the exchange and generate the

portfolio of incentives for the community, local experts and

those who add value to local knowledge. Ethical dilemma

also arises when we the intellectuals, document people’s

knowledge in good faith, publish it and become the author

Ethical issues in accessing people's knowledge and

innovations: A study on specific reference to low

cost health system in India Suniti Chandiok, Asst-Professor,

Banrasidas Chandiwala Institute of Professional Studies, Dwarka, New Delhi


without even acknowledging the knowledge providers or

protecting their intellectual property rights. The question of

sharing benefits seldom arises.

When resources are allocated for adding value to local

diversity and associated knowledge, decision about which

problems/whose problems get how much priority also

involves ethical dilemma. The irony is that healers who help

us cannot provide even the primary health care to the

children, when need arises because public infrastructure and

market forces are invariably very weak in the regions which

are rich in biodiversity. Sixteen years ago, in a paper entitled,

“Why regions of high biodiversity have high poverty”, I

asked this question as to why such regions have poorest

public infrastructure, highest rate of drop out in the primary

education and lowest level of literacy, particularly of women,

highest level of male emigration and consequently high

proportion of households managed or headed by women, low

level of employment and high degree of poverty. Ironically,

the public representatives from these regions are also not very

articulate and are unable to put pressure on the policy making

process. It is not surprising, particularly in Indian context,

almost all the insurgent groups are active in precisely these

regions where social, economic and institutional disparities

have widened over time. The last straw on the camel’s back

would be, if we the ethnobotanists or socio ecologists or

natural resource experts/scholars add to the disparity and

asymmetry. This conference has to resolve some basic

principles which should guide the exchange between local

communities and outsiders.

II. LITERATURE REVIEW

Yamin (1995) suggests that new theories of distributed

justice are required so that the distribution of resources not

only among humans but also humans and the non-humans, present and the future generation may be pursued fairly in

future. The moral and ethical issues underlying these theories

will require decision about how we relate to ourselves and the

nature around us. The perception of nature and its social

context raises tremendous ethical difficulties. Not all of us

use similar language to describe the same human nature

interaction. The very term, ‘ethnobotany’ itself is a

problematic in its orientation. Why should knowledge of

local communities be ethnic in orientation whereas the music

of the similar kind in western context becomes classical. The

contradiction between what is ‘classical’ and what is ‘ethno’

is not going to be easily resolved. But it is useful, as Mary

Douglas (1995:264) suggests (cited in Cooper, 2000:10125)

the word, ‘construal’ vis-à-vis ‘construction’ as less

problematic, perhaps more consensual. Whether one should

use the term, Cooper asks, ‘forests’ or ‘wood’ depends upon

the ethical and moral position one takes in relating to specific

part of nature. Both are socially construed/constructed terms.

Amartya Sen (1980) in his famous paper entitled,

“Description as Choice” asked a similar question. When does

description inherently suggest prescription or prediction, he

said, was a function of the underlying values. Thus, the poor

people after sixth five year plan in India were named, in the

planning documents, as ‘weaker section’. He draws attention

to the fact that language in this case turned the responsibility

from the external forces and actors to the poor people

themselves who were supposed to be weak. He asks as to

how could weaker section carry the heaviest burden. When

we use the term, ‘disadvantaged’ vis-à-vis just the ‘poor’, we

highlight the dialectics in one case and mask it in another.

Culture specific to a region provides different ways of

construing nature.

Just as I mentioned in the beginning, the moment the

knowledge about a plant is lost, it becomes weed, i.e., a plant

out of its place. Come to think of it, can a plant ever be out of

its place? How do we determine what its place is and who

determines it? Imagine a library without a catalogue. Will we

be able to locate the books? Perhaps those of us who have

walked through the carrels may through recollection reach

the point where probability of finding a particular book is

high. But then, librarians are creative people. The

cataloguing assistants can interpret the titles and the subjects

ingeniously. Book may not be where we suspect it to be.

Catalogues, therefore, have a place. They need to be

developed, preserved, updated and shared. Local

communities have been trying to do it, but with more and

more difficulty. The outsiders use Latin names (difficult to

argue why only Latin), but a common classification scheme

is necessary to pool the knowledge and make it accessible to

the entire profession.

The cultural project is just the opposite. As Margret Mead

had stressed that the emphasis on etic meanings vis-à-vis the

emic meanings was a reflection of dominating global over

local. The communities create meanings which are accessed

more easily by the members and are often inaccessible to

outsiders. Conservation, perhaps requires respect for

particular. The scholars, used to dealing with generalized

meanings construct newer and newer projects which deny the

locality of the meanings. This tension is understandable and

to some extent desirable. The problem arises when assertion

of locality and within locality, expertise is construed as

contrary to the communitarian spirit. Attempt to reinforce the

respect for individual experts is interpreted as an assault on

assumed communitarian process of production of knowledge.

The spirit is confused with the structure. The communitarian

spirit does not in any case violate the need for individual

expertise and location specific knowledge, language, terms

and above all ethical norms. Should our profession consider

its duty to understand, and then expand the space, both in

policies and institutions for knowledge, institutions and

technologies that originate in a specific socially construed

spaces and cultural contexts. If we have to do that, we will

have to use modern science and technology to validate and

value add in this knowledge according to the local parameters

so that social benefits in the form of drugs for masses raise

the status of the little science. I will come back to the issue

of building bridges between the ‘little’ and the ‘big’ science

without comprising much with the rules of each system of

knowledge. First let us understand, ‘who gets to tell the

story’, (Lease, 1995 in Cooper, 20006) implies the power of

those who describe, as Sen says often to prescribe. Toulmin

(1982 in Cooper, 20007) teased out the ethical dimension of

ecological concepts and terms. Those who narrate, also select

what to narrate and how. Therefore, the evaluation of the

local knowledge only on the basis of narration by third

parties may not always do justice to the dynamics and


complexity of the knowledge system. Since most researchers

seldom share their findings with the knowledge providers

before publishing or presenting at the conferences, the ethical

dimension of the discourse also deserves attention.

Bodeker (20038) reviews various examples where the

knowledge rights of the local communities have not been

respected adequately. The South African example where the

San people objected to the patent by CSIR on their

knowledge from which a drug was developed for anti obesity,

illustrates the conflict between CBD and TRIPS. Bodeker

strongly endorses SRISTI’s proposal for a global registry of

traditional knowledge and grassroots innovations. He also

supports the SRISTI’s arguments in support of a disclosure

requirement from every patent applicant. Our proposal has

been that every applicant should declare that source material

and/or knowledge associated with it has been ‘rightfully’ and

‘lawfully’ acquired. The ‘rightful’ refers to moral as well as

ethical issues in accessing biodiversity (also see Pew Ethical

Guidelines and background papers prepared for the purpose,

Gupta 1994a & b). However, the task of making databases is

fraught with risks. He refers to the Ethiopian example in 80s

when government required traditional healers to register

themselves as practitioner.

Many healers, ‘submitted inaccurate information’ with the

result that this database was not taken seriously (Bishaw,

1991 in Bodeker 2003). He describes an initiative on Global

Information Hub on Integrated Medicine as a part of

Commonwealth Working Group on Traditional and

Complimentary Health Systems which will build a database

of various stakeholders as well as information resource

regarding the intellectual property rights in traditional

medicine and associated biodiversity. The concept of Prior

Informed Consent (PIC) articulated in CBD but never

incorporated in TRIPS has created considerable tensions with

regard to the ethical aspect of information exchange. Ragavan

(200110) feels that the concept of ‘free’ and ‘informed’

consents have not been defined. CBD does not provide

framework of consequences when the consent is not informed

or adequate. She asks several other questions about the right

of knowledge holders to withhold or not to disclose or keep

information trade secrets. The legal respect for traditional

knowledge has been debated in different courts. She provides

an interesting example of a case, Hodosh v. Block Drug

Company (786F 2d 1136 Fed.Cir., 1986) in which a Chinese

traditional medicine example was considered unacceptable as

a prior art because the court observed that a “skilled person

exercising reasonable diligence, would not be able to locate

the prior art, given the esoteric nature of references. The

constant dilemma of applying statutory law or common law is

referred as one of the persistent problems. She questions

whether codification of knowledge is a necessary condition

for a traditional knowledge system to be recognized as legally

valid system. Toffel (200211) reviews the possibility of using

code of conduct in the absence of legal provisions for guiding

the knowledge exchange between providers and receivers. He

refers to the code of conduct developed by various

indigenous communities as well as Association of Social

Anthropologists, Society for Economic Botany, International

Society for Ethnobiology, NIH, NCI, etc. In 1994, we had

reviewed many of these guidelines and found that most did

not posit any consequences for violation. Gupta and Sinha

(2001) felt that the Honey Bee philosophy has not yet

permeated the discourse on ethical ways of knowledge

exchange, although it was enunciated way back in 1988-89.

Toffel’s advice that ad hoc contract between indigenous

groups and pharmaceutical companies seemed to be the

best answer for getting compensation may be a pragmatic

response but is not a long term institutional solution. Many

others such as Posey, Dutfield and Brush have made

familiar arguments questioning the concept of graduated

and gradient rights in the community. I define ‘graduated’

rights as those which are modified subject to the value

which is added in different stages of the value chain

(sometime referred as milestone based payments or rights)

and the ‘gradient’ rights as the asymmetrical knowledge

distribution within a community and thus knowledge

experts not being treated at par with those who are either

only aware or sometimes not even aware of the details.

The knowledge and ability to practice it in specific

contexts is a skill developed over a period of time with

enormous effort and perseverance. Knowledge systems

would not grow or survive without such gradients being

recognized as an inalienable feature of knowledge systems.

In professional and institutional contexts, we recognize this

concept very well but hesitate in according it the same

respect in informal context and community context.

Ogumanam believes that the alternative world view of

traditional healers is not fully captured in the western bio

medical approaches. He considers two systems as basically

incompatible. However, he hopes that a global framework

for protection of indigenous knowledge would emerge

consistent with cultural and philosophical diversity of local

health traditions. Norchi (200014) refers to the traditional

Onge people of Indian Nicobar and Andaman Islands and

suggests that customary laws evolved by Onges need to be

recognized by forming Onge Corporation. The corporate

firm could respect the trust of the community who could be

share holders. The corporation would then enter into

contract for their knowledge to be accessed by outsiders.

He refers to the work of Ashish Kothari and many others

who have raised the issue of Onges. The health leads from

one had suggested a new eco-ethno ethics, essentially

enforced by not the law but the professional societies. He

warned that anthropologists and ethnobiologists would lose

the respect of native people if they did not follow proper

ethics. Brush (1993) also feels that ethnobiological

information collected so far did not touch upon several

issues that were arising due to commercialization

prospects. Former are non-negotiable and latter are subject

to debate and can be improved. Knowledge rights are at

the root of cultural and other rights. Gadgil, et al (2000)

explains the concept of People’s Biodiversity Register

(PBR) and suggests that these registers could be a tool for

conserving and respecting folk knowledge. They also

suggest that compensation could follow according to the

quality of documentation. They propose that in due course

this knowledge could be fed back to the people from whom

it is collected. Recently, National Innovation Foundation

(NIF) and a community in Karnataka having developed

PBR signed an MOU to honour the knowledge rights of

the communities, already articulated in the PIC framework


used by NIF (see of the oldest tribes of the world would

obviously be of interest to the Indian society. Whether

utilitarian logic will suffice in this context, is the issue that

we need to address. Posey

(1990151617www.nifindia.org/pic.htm). Simpson, Sedjo

and Reid (199618) had earlier cautioned that despite much

hype about the biodiversity use in pharmaceutical research,

not much benefit may flow to the people either for

conservation or for consumption because the companies

had several options and the biodiversity based options

were necessarily the most attractive ones. Lewis and

Ramani (2003) feel that ICBG proposal in Peru was fair on

account of communication, confidentiality and

compensation. Cochran (200519) describes the ethical

guidelines of the Yukon First Nation people from Alaska

region. The Alaska Federation of Natives (AFN) requires

that native people be advised about the purpose, goal,

timeframe, data gathering technique, impact – positive and

negative of the research; the informed consent of

appropriate governing body. Fund the monitoring

committee of the native people to track the research project

and ensure the compliance, protect the sacred knowledge

and cultural and intellectual property, hire and train native

people in the study, use native language whenever English

is the second language, ensure confidentiality, incorporate

native people’s view points, acknowledge local

contribution, inform the community about the major

findings and provide the copies for the local library. This,

to me, is a neat summary of what the local communities

aspire. We could benchmark our practices against this

expectation and judge for ourselves as to how far have we

reached. However, as we know, no ethnobiology or

ethnobotany has follows the concepts of PIC, sharing of

knowledge with the knowledge providers in the manner

and language they understand before sharing it with third

party, not treating knowledge providers anonymously,

ensuring that any benefits generated by the knowledge are

shared with the knowledge providers in fair and just

manner and the rights of individual experts vis-à-vis

community are differentiated as per the local norms.

III. OBJECTIVE AND RESEARCH METHODOLOGY

There is a widespread concern all over the world about the

emerging tensions in the local, regional and global dialogues

on relationship between formal and informal knowledge

systems. It is realized that the basic social contract between

knowledge producing communities and the knowledge

valorizing corporations and professionals needs redefinition.

Several professional societies have incorporated discussions

on ethical issues in accessing knowledge, innovations and

practices of local communities involving use of local

biodiversity resources. The situation becomes even more

complex when we realize that the healthcare needs of large

majority of poor people still are met by their own survival

strategies dependent upon use of local knowledge and

resources. It is obvious that this knowledge is precious and

can generate viable and productive alternatives valued by

modern markets. The linkage with formal science and

technology is therefore vital. The research deals with four

objectives of study:

(a) What can we learn from the analysis of a country wide

campaign in India on documenting more than 300 local

health traditions maintained by communities and individuals?

(b) Whether the health priorities and the options for

addressing them require new technological and institutional

paradigms

(c) How can new partnership between people, professionals,

public policy makers and profit-oriented corporations be

conceptualized so that not only benefits are shared fairly but

also the knowledge systems grow and thrive?

(d) What should be the ethical code of conduct guiding the

knowledge exchange, value addition and benefit sharing for

generating viable health options for knowledge rich,

economically poor people.

The field of study are rural villages of India and this study is

based on field study and explorative research design. Data

was collected from 300 local health centers which rural

people use for their treatments.

IV. ANALYSIS OF STUDY:

Healing strategies and ethical engagement with people’s

knowledge systems:The way ahead Herbal formulations

developed by local communities involve not just the plants,

or their derivatives but also a process, a perception, and

sometimes a deep philosophy. It is true that in most of the

cases when we do documentation, we often get information

about plants, their uses and in some cases the methodology.

There are also cases when the formulations are accompanied

with some hymns or chants, essentially combining the

material world with spiritual consciousness. The scientific

evidence on the effect of prayers is not robust. Recent study

led by Krucoff in July 16, 2005 issue of Lancet does not

provide much support for the therapeutic effect of the

prayers. Surely, it will not change our tendency to pray when

either we or our dear ones are in pain. We cannot say the

same thing about a herbal medicine. Prayer relaxes us and to

that extent its effect is instantaneous. Herbal medicine needs

to interact with our metabolic or physiological pathways and

demonstrate results compatible with expectations. More than

60 per cent people in India rely on herbal and alternative

medicine for meeting their regular or occasional health

needs. Even among the 40 per cent, the popularity of herbal

medicine from different traditions (ayurveda, siddha, unani,

homeopathic, etc.) is increasing.

The story of Chinese medicine is well known. One in five

persons in US is supposed to have used Chinese herbal

medicine or food additives. The knowledge about the herbal

medicine abounds in most developing countries. In last five

years, NIF scouted about 51000 grassroots green innovations

and traditional knowledge practices. More than 70 per cent

deal with herbal knowledge for curing human, animal or

plant diseases/pests or disorders. Formulations developed by

people are often multi ingredient based. Scientists find it very

difficult to deal with formulations having more than 3 or 4

ingredients. The limits of modern science therefore define

the range of opportunities one can create for local knowledge

holders. Most ethnobotanists have documented the

knowledge governed by private, community or public

domain. Often the scientists will document proprietary

knowledge from individuals and/or communities and bring it


in public domain without any possibility of reciprocity. In

Conferences like this have to raise fundamental question

about ethics of such appropriation. If we follow ethical

practice and people voluntarily share their knowledge with

mutual faith and respect, how can this knowledge become the

basis of improving societal health.

There are five ways in which we can achieve the health

objectives using herbal knowledge:

a. Large number of diseases in rural areas are water borne

and therefore herbal substances that can purify water of

various impurities and eliminate the chances of even

viral diseases should be the top priority. We must

recognize the social gain of such substances for safe,

affordable, accessible and widely available solution to

this persistent global problem.

b. In a study of about 8000 entries from our database, we

found about 1000 remedies for pain and aches. Pick up

any public health document and look for any reference

to pains and aches. I doubt if we will find any. I myself

did not realize it till my colleagues in analysed the

frequency distribution of disease wise herbal leads.

When we look at the fact that large majority of poor

people and their livelihood by essentially using labour

and are not able to obtain sufficient nutrition for

meeting their needs, it is understandable that they

would suffer from certain deficiencies. In addition to

these deficiencies, the inability to compensate the loss

of energy may also add to the burden. Further, the

physical drudgery involved in various activities takes

toll of one’s stamina. Pains and aches are also caused

by the hazardous occupations. For working class,

solutions to this problem which may be caused by a

variety of reasons (ranging from excess fluorides to

other deficiencies or sprains and other injuries. Various

analgesics may have to be discovered to supplement the

effect of aspirin which itself originated from plants.

c. Nutraceuticals seem to be the next major category of

solutions that can lead to healthy communities at low

costs and perhaps by strengthening preventive health

care. One of the problems of the working class is that it

ages faster. Nutraceuticals could help in extending the

working life and therefore the wellbeing of the families

of poor people.

d. The diarrohea, diabetes, jaundice, wound, malaria and many

other tropical diseases are well known candidates for

discovering herbal solution. The important concern should

be to distinguish four kinds of ingredients in any herbal

formulation: curative, carrier, bio enhancer, suppresser of

side effects or stimulator of supporting/suppressing

hormonal secretions. Unless we do careful analysis, we may

bark the wrong tree. While National Cancer Institute of US

screened 35000 plants and could isolate only seven leads,

taxol being one of them, it does not mean that hit rate

should be so low. One reason why scientists often fail in

confirming the claims of local communities or individual

healers is because of the basic difference in the protocol of

extraction, delivery and dosage. There are many examples

where healers find something effective and scientists fail to

find appropriate results. The heuristics of validation also

will have to be taken into account while developing

solutions for various diseases.

e. The problems of women whose access to basic

sanitation and hygiene facilities is severely restricted.

Many problems occur because they don’t take enough

water lest they have to keep their bladder under control

in situations where public toilets are often absent or

available infrequently. There are large number of other

institutional conditions which create stress and other

problems for women. Millions of women have to carry

water and other loads on their head and back, perform

farm operations by using inappropriately designed

tools, have to transplant paddy by keeping their feet

under water attracting fungal infections. Why should

not such problems be the priority for scholars and

scientists? Having identified five major areas which

affect working class and their children and women,

how would changing the ethical discourse provide a

solution?

Towards solutions: Learning from Gandhi :Gandhiji was

once asked by a group of young students as to what should

they do for rural development. Gandhiji replied that he had

never worked rural areas and therefore how could he answer

this question. The students insisted, assuming that Gandhiji

was being unnecessarily modest. After a while, Gandhiji

relented. He said that while he lacks experience, he has a

proposal to make. Assume that we have to work in a

particular problem area, say livestock development, in a

given group of villages. He described what he would do in

such a situation. He will go to the villages and look for the

most efficient livestock producer whose animals produce

maximum milk or other products. He will study from

morning till evening all the practices of feeding, managing,

watering, sanitation, hygiene and even psychological care of

the animals. He will write them down. Then he will study

the similar practices of the average livestock producer. The

gap between the two will be his plan of work. Can we

follow Gandhiji’s advice in using ethnobotanical knowledge

for solving widespread global health problems of common

people? Can we focus on identifying those members of the

working class whose health is far superior to the rest, and

study the entire set of strategies including herbal medicine

that they use? Likewise, we could identify local experts who

specialize in solving specific problems. After assuring them

that the solutions will be used exactly as per their advice

and with all the conditions they would impose in the PIC

form, we pool the best practices and develop new products.

There is no reason why our hit rate will not be higher and

gains to all the partners in building herbal value chain not

be commensurate with their expectation.

V. RESULT DISCUSSION AND CONCLUSION:

We have minimum protocol to be followed by all the

ethnobotanists and health researchers. We should aim the the

next discussion, the ethical barometer will show a much


higher reading than is the case today. The key elements of

this protocol discussed many times in past are:

a. Complete disclosure of the purpose of research,

documentation or any other research interaction with the

local communities/researchers.

b. Disclosure of the advantages and disadvantages of

saying ‘yes’ or ‘no’ to different choices in local

language.

c. Clarification about two stage PIC process so that benefit

sharing in general may be discussed in stage one but

specific elements of agreement may be discussed in

stage two when something useful has been found out.

d. Clarification about the risks and chances in developing

products through various stages and therefore

moderating expectations, linking them with the

milestone based performance indicators and assuring

sharing of findings in the manner that can understand at

each stage.

e. Respecting the identity of knowledge providers and

publishing only those results which are authorized by

the knowledge providers with their name and identity.

Unless requested otherwise, knowledge providers will

always be named either as knowledge provider or as

knowledge holder or innovator.

f. The responsibility of taking permission of the

community or informing it as the case that may be,

fulfilled without compromising. It should be understood

that this process can take lot of time and trouble.

g. The benefits can be in monetary or non-monetary terms

and can be targeted at individual or communities. A

portfolio of incentives will have to be evolved for

different situations. It cannot be same everywhere.

h. The ethical basis of knowledge exchange will need to be

recalibrated from time to time so that the learning at the

level of community or scholars is factored in the

evolving ethical framework.

i. If the drug has to be patented, the patentee must take

prior permission from the knowledge providers and

disclose that moral and legal provisions of ethical

knowledge exchange have been followed scrupulously.

There can be many more suggestions. Protocol can be

modified, tested and improved. The plants which are

endangered have to be conserved. It has to be recognized that

medicines based on such plants can pose threat to the

environment, particularly when such plants may also be

endemic. The use of biotechnology or other such means to

propagate such plants must be encouraged. Health solutions

are often developed by understanding the problem of disease,

disability or disorder. I am proposing that the study health,

wisdom and wellbeing. Very seldom, do we ask the question

why are some people are more healthy than others. Let us

learn from those knowledge rich, economically poor people

who have solved problems through their own genius and

have managed to survive sometimes sustainably and

sometime precariously. It is the balance between holistic and

reductionist vision which will help blend informal and formal

science. We need both. Without reductionism, we cannot

specialize. If a bone setter does not focus only on bone

setting, he or she will never become an expert. We need

general physicians but we also need experts. Holism is the

context, the reductionism is the content. Without one, the

other cannot sustain. Let me conclude by suggesting that

good ethics also makes good science. Only when people have

trust in our intentions, they will share the cases where they

fail in treating a problem or cases where they had remarkable

results. Unless we get to learn the extreme values in the

repertoire, we will not be able to dissect the problem in parts

that make it comprehensible and also assimilable with

modern science. Let us remember that health is not absence

of sickness. It is a moral state in which we feel responsible

and because we feel responsible, we have joy, and because

we have joy, we are able to build relationships full of trust

and respect with people who have as much right to enjoy the

same state of happiness despite all the deprivations they

suffer form.

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***

http://www.ed.psu.edu/icik/

http://faculty.haas.berkeley.edu/


Influence on Brand in Female Consumer behavior

in Apparel Purchase in Lucknow

Shalini Bariar

Sr. Lecturer, Babu Banarsi Das University, Lucknow, UP

Dr. Gaurav pande

Associate Professor, Babu Banarsi Das University, Lucknow, UP

Abstract

In the Indian scenario, the branded female apparels are

facing tough competition with in-house brands especially in

the Indian casual wear. The female costumers prefer to

purchase garments according to regional requirements and

culture from the local outlets. The trend of national brands

is growing importance due to the recent development in

retail industry. It is very important for the marketers to

understand the various factors influencing the apparel

purchase to formulate appropriate marketing strategies to

attract consumers towards branded apparels. The purpose

of this research is to examine the female consumer behavior

and to understand the influence branded apparels on

consumer behavior in purchase of apparels.

A survey was conducted from female consumers aged from

25-35, to obtain evidences. Approximately, 100 respondents

were interviewed during the survey which results into

indicating the Brand loyalty, Brand awareness, Brand

Association, Quality Perceptions, and self-concepts were

found to have positive impact on female consumers on

purchase behavior in apparel.

Key words: Brands, Apparels, Consumer Behavior, Female

consumers, Influencing factors.

INTRODUCTION

The Apparel industry is one of the leading Industries in

Indian economy and claims to be the biggest revenue

earners in industrial sectors in India. In the recent years the

Apparel industry especially in Female Garments section, is

witnessing robust growth and grabbing attention of various

marketers in India. Due to the introduction of in-house

brands in apparel industry the national brands are facing

tough challenge in maintaining leading position in the

industry. The female apparel sector in India has been

dominated by in-house clothing brands

The total value for women’s branded apparel as compared to

unbranded apparel for women accounts for one fourth of

total apparel market.

The changing economical condition, lifestyle and increase in

working woman segment resulted in the growth in demand

of branded apparel for females. Also, the rising trend of

family shopping in malls has prompted apparel brands to get

attracted towards branded apparels due to a wide range of

products to customers. And now, brand expansion is the

next step in the Indian branded apparel sector to cater to the

varied tastes and preferences of the Indian customer.

Considering the recent development in the retail trends and

apparel sector, clothing sector firms are competing to

increase their profit share in the market and among these

firms; branded clothing has shifted the conventional clothing

interest of people.

Objective of the study

During the recent years, India has witnessed increasing

attention of females towards branded and unbranded

fashionable apparels for casual as well as formal clothing, it

has also grabbed attention of foreign brands and in-house

branded apparels in the female segment. The purpose of this

study is to analyze the influence of brands in Lucknow and

its impact on consumer purchasing behavior in apparels.

Five dynamic factors of branded clothing adoption are

defined and their relationship is explored with consumer

behavior namely: Brand loyalty, Brand awareness, Brand

Association, Quality Perceptions, and self-concepts. A

survey of general female consumers is conducted in this

study, with help of personal interview.

Branding

Brand is a new business warrior in times of tough

competition as it etches consumer’s mind that signifies what

they stand for and what can be expected from them. In the

times on tough competition with various in house labels, the

brands can create clutter through its brand image. The

product can be copied but the brand can not be. In the

increasingly complex world, a strong brand’s ability to

simplify consumer’s decision making, reduce risk and sets

expectations is invaluable. Brands can be symbolic devices

allowing consumers to project their self-image. A brand can

generate consumer interest, patronage, and loyalty. The

retailers have come up with their respective brand in for of

in-house brands to create its own brand image and

establishing positioning. Creating strong brands that deliver

a promise, maintains and enhances the strength of brands

overtime is a management imperative. As we know that

branded products have always attracted consumers attraction

and marketers preference it has become utmost important

for the marketers to understand the various factors


influencing the purchase of branded products. Various

research has been conducted in past regarding the

importance of brand. Brands are increasingly viewed as

offering a vital point of differentiation and a sustainable

form of competitive advantage in the market place for firms

(Beverland et.al., 2007; Low & Blois, 2002). Brand serves a

pivotal role for distinguishing goods and services from those

of the competitors (Aaker, 1991; Murphy, 1998). The

emergence of brand equity underlies the importance of

brand in marketing tactics and hence provides useful

insights for managers and further research (Keller, 2003).

Consumers like to buy and use brand-name products with a

view to highlight their personality in different situational

contexts (Aaker, 1999; Fennis and Pruyn,2006). A brand can

be an everlasting and lucrative asset as long as it is

maintained in a good manner that can continue satisfying

consumers’ needs (Batchelor,1998; Murphy, 1998).

Apparels

As stated above apparel sector is witnessing robust growth

in the retail sector, it has become a leading industry

contributing to the growth of Indian economy. As India is

one of the emerging markets , it has also attracted global

attention in the various retail industries like food and

grocery and apparels etc. As stated by Bearden and Etzel (as

cited in Hogg et al., 1998), clothing is a kind of public

necessity with weak reference group influence on the

product category but strong reference group influence on the

brand choice. Owing to the proliferation of brands in the

clothing sector, consumers need to take serious

consideration during the buying processes. As mentioned by

Rayport and Jaworski (2003), the purchasing processes can

be divided into three stages, namely pre-purchase, purchase

and post-purchase. Each stage is of equal importance that

can alter the consumer buying decision. Once consumers

make a purchasing decision, consumers may need to

recognize their personal needs, read product information,

decide which and where to buy, determine whether to buy

again from the same retailer, choose the buying modes,

show satisfaction to the services or product quality and

finally be loyal to the brand.

These highlight the complication of buying processes and

the potential impact a brand could impose in between them.

Several brands, under the influence of globalization and

concerted efforts from media advertising, have become

popular not only in their country of origin, but also in other

markets with high potential. Having a strong and remarkable

brand image could help establish an identity in marketplace

(Aaker, 1996), widen the profit margins, encourage greater

intermediary co-operation as well as increase the chance for

further brand extension (Delgado-Ballester and Munuera-

Aleman, 2005). In accordance with Delong et al. (2004),

consumers appear to rely on the brand image as long as they

have little knowledge about the brand. In this way,

managing brand image is of utmost importance. In order to

differentiate one brand from another, marketers would

develop retail brands with unique image so as to continue to

gain popularity and market share (Abend, 2000; Ailawadi,

2001; Corstjens and Lal, 2000).

Consumer behavior

Consumer behavior refers to the activities in which people

acquire, consume and dispose products and services

(Blackwell et al., 2001).Consumer behavior focuses on how

individual consumers and families or households make

decisions to spend their available resources in form of time

money and effort on consumption related items. This

includes what they buy, why they buy, when they buy,

where they buy, how often they buy and use, how they

evaluate it after purchasing, impact of such evaluations on

future purchases and how they dispose it off. It is interesting

to note that the importance of understanding consumer

behavior was realized much before the establishment of

marketing concepts. To identify consumer’s satisfied and

unsatisfied needs it is important for companies to

continuously monitor consumer buying behavior. Owing to

the proliferation of brands in the recent decades, there is a

growing number of researches conducted in the field of

consumer buying behavior. Changing life styles,

technological development in textiles and international trade

have brought about changes in the clothing preferences of

the present day consumers. Consumers with the same needs

may want different clothes depending upon their cultural

background, age, socio-economic status and personality

(Sumathi, 2005) consumer tend to prefer clothes that are

attractive, socially acceptable, economical and suits the

climatic conditions and personality well. It is found that

consumers’ emotions are one of the major determinants

which affect their buying behaviour (Berry, 2000).

According to a research conducted by Freeride Media LLC

(1998) on shopping habits, nearly one-fourth of the

respondents are likely to impulse-buy clothes and

accessories. When deciding which products to purchase,

consumers would have their preferences, which are

developed in accordance with their perceptions towards the

brand. Successful branding could make consumers aware of

the presence of the brand and hence could increase the

chance of buying the company’s products and services

(Doyle, 1999).

In India the purchasing pattern of consumers especially in

case of woman apparels is highly influenced by the

demographic, socio cultural, economical and household

structure. Others influencers may be family, friends,

reference groups, needs, emotions, personality and

information processing etc.

Research methodology

According to the various researches conducted in past on

apparel branding suggest that branded clothes are of high

preference in consumers but in case of females in Lucknow

branded apparels are not much popular especially in case of

Indian wear. There are only limited branded apparel outlets

in comparison to the retailer’s own labels. But still, female

Branded apparels are gaining high acceptance since last

decade, therefore it’s important for the marketers to study

the influence of brands in apparel purchase. This study was

conducted to analyze the various factors like Brand loyalty,

Brand awareness, Brand Association, Quality Perceptions,


and self-concepts, particularly in case of Indian Woman,

influencing the purchase of branded apparels. Around 100

females of 25-35 years were interviewed and further study

was done on the basis of these five factors which influence

brand equity.

Brand loyalty

Brand loyalty has always been a key concern for the

marketers. It provides a dramatic insulation against the

competition and provides an opportunity to command the

premium. Brand loyalty is one of the core components of

brand equity and also positively and directly affected brand

equity (Atilgan et al., 2005). Under the influence of brand

loyalty, consumers continue to buy the brand, regardless of

the superior features, prices and convenience owned by its

competitors (Aaker, 1991). Brand loyalty leads to repeat

purchase, brand recommendation, word of mouth and

customer satisfaction. In case of apparels, it was found that

almost 80% female consumers of lucknow are loyal to retail

outlets rather than being loyal to a particular brand specially

in case of Indian casual wear. The factors which influence

the customer loyalty are accessibility, current fashion trends,

quality of dress material, aesthetics of the apparel available

at specific outlet.

Brand awareness

It refers to the ability of a potential consumer to recall and

recognize the brand, linking the brand with its

corresponding product class (Aaker, 1991). Brand

awareness includes brand recognition and recall i.e., the

ability to confirm prior exposure and remember the brand.

This sort of awareness is essential for a brand to be able to

take part in the decision process. It is very important for a

marketer to create brand awareness so that a consumer

knows and makes it one of the purchasing choice.

It has been noted that brands with higher level of awareness

would be more likely to be purchased (Yasin et al., 2007)

and consumers tend to buy a recognizable brand rather than

an unfamiliar one (Hoyer, 1990; Macdonaldand Sharp,

2000). As mentioned by Keller (1998), brand awareness can

be enhanced through repeat exposure to the brand. The top-

of-the-mind awareness indicates the relative superiority a

brand enjoys over others and develops a stronger positioning

in the mind. During the research it was also found that

female consumers at Lucknow prefers to purchase the

apparel brands which are known to them as it easily access

the association of the brand with attributes and benefits. It

also generates familiarity in the mind of consumers in

apparel purchase and supports during the decision making

process. According the female consumers at lucknow , they

consider brand awareness as a very important factor in

purchasing of Indian casual apparel .

Brand Association

Brand association is defined as the specific linkage between

the memory and the brand (Aaker, 1991). Keller (1998) and

Yasin et al. (2007) further note that equity of a brand is

largely supported by consumers’ associations towards the

brand, which contribute to a specific brand image. A brand

may have connected associations of feelings , characters,

symbols, lifestyle users etc. and can influence recall of

information and is especially important during decision

making. Keller (1993, 1998) further divides brand

associations into three categories, namely attributes, benefits

and attitudes. As in case of luckow consumers mentioned

above that the females purchasing Indian casual apparel

brands are not much loyal to branded clothes but shows

brand loyalty towards retail outlets, brand association

provides bases to them to purchase the branded clothes and

even make them brand loyal. According to consumers at

lucknow, the apparel brands are preferred due to its

association with the endorser or the local culture. The brand

association triggers to the customers to recall the past

experiences, and its unique sets of associations to

differentiate one brand from another.

Perceived Quality

Perceived quality can be defined as the customer's

perception of the overall quality or superiority of a product

or service with respect to its intended purpose, relative to

alternatives (Aaker 1991). According to various research

work conducted in past , it is know that a brand name

enhances the perceived quality of a product. Perceived

quality of a product gives a powerful reason to the customer

to consider and buy a specific brand. Only brands that are

perceived to be of a good quality are considered for a

purchase decision and rest are all eliminated. it also allows

the brand to acquire a position and differentiate and gives

branded products an option for charging premium. In case of

females purchasing apparel in lucknow feels that the

branded apparel are considered to be of high quality only

where the customer involvement is low. The branded

apparels are considered to be of good quality but this is not

the only reason to end up purchasing the branded apparels.

Taking the quality considerations in a brand, the gap

between the actual and perceived quality and its pricing

plays a big role in apparel purchase.

Self-Concepts

According to Pervin and John (2001), selfconcept is often

viewed as a component of personality. A number of

researchers have suggested that there is a positive

association between self-concept and brand image (Levy,

1959; Sirgy 1982; Sirgy and Su, 2000; Sirgy, Grewal and

Mangleburg, 2000; Johar and Sirgy, 1991). Self-concept is

hypothesised to consist of four components, actual self-

concept, ideal self-concept, social self-concept and ideal

social self-concept (Schiffman et al., 2001). To understand

consumer’s self-perception, self-concept and self-image has

a greater importance for marketers to be familiar with their

consumption behavior and the reason is mostly when

consumer’s take any buying decision when they are

influenced by their self-image. People purchase products to

help them show a certain image of themselves to other

people. Individuals use fashion related products to reflect

their self-image and fashion related clothes to reflect their

self-concept. It is seen that in apparel purchase self-concept

plays the most important role during the decision making.


During purchase of apparel, female consumers consider

their age, personality, occupation, culture, style statement

etc. The consumers believe that due to presence of brand

name in their clothing their social image is presented in a

better way. Thus the self-concept is one of the most

important factors to influence the purchase of branded

apparel.

Conclusion

It is seen that the most important factor which influence the

purchase of female branded apparel in the city of Lucknow

is self-concept. The females also believe that the quality of

the branded apparel is better than non-branded ones but the

gap between that actual and perceived quality influences the

repeat purchase. The factor like brand awareness and brand

association plays a key role during the decision making as it

helps in recognizing and recalling the connection of brand

with the previous exposure or emotional attachment. Brand

loyalty is not a very important factor for influencing the

purchase as females of Lucknow are more into convenience

shopping and also give more importance to fashion trends,

quality of dress material and aesthetics of the apparel which

makes them loyal towards a specific outlet.

References

1. Apaydın, F. (2009). Dimensions of global brand

buying behavior: An empirical investigation . 5Th

International Conference on Business,

Management, and Economics, İzmir, Turkey

2. Farquhar, P. H. (1989). Managing Brand Equity.

Marketing Research , 1(Sep.), 24-33

3. Jacoby, J., & Chestnut, R.W. (1978). Brand loyalty

measurement and management . New York, NY:

Wiley

4. Wood, L.M. (2004). Dimensions of Brand

Purchasing Behavior: Consumers in the 18-24 Age

Group. Journal of Consumer Behavior, 4 (1), 9-24.

http://dx.doi.org/10.1002/cb.154

5. A note on branded apparel industry in India,

http://www.icmrindia.org/

6. Consumer Awareness towards Ready Made

Garments , Dr.N.Vasugi Raaja & Dr.Kanikicherla

Rani, www.fashion2fiber.com

7. Sumathi, G.J., Elements of Fashion and Apparel

Design, New Age International Publishers, New

Delhi, P.46 (2005).

8. Murugaiah, V., and Vishvas, R., Women and

Shopping-An Empirical Study of Banglore City,

Indian Journal Marketing, XXXVIII, (7), July, P.47

(2008).

9. Frings, G.S., Fashion from Concept to Consumers,

Pearson Education, New Delhi, Pp.366-368,

(2005).

10. Jasuja, G.D.,), Consumer Choices; Understanding

Apparel and Furnishing Textiles, The New Cloth

Market.20, (3), March, P.37 (2006).

11. Hareem Zeb, Kashif Rashid, and M.Bilal Javeed,

Influence of Brands on Female Consumer’s Buying

Behavior in Pakistan, International Journal of

Trade, Economics and Finance, Vol. 2, No. 3, June

2011

12. Vieira, A.A. (2009), An extended theoretical model

of fashion clothing involvement, Journal of Fashion

Marketing and Management, 13(2), 179-200.

13. Ben Webb and John Gountas, La Trobe University,

Australia, An Integrative Model of Brand

Personality, Self–Concept and Consumer

Personality Orientations

14. Aaker, J., 1997. Dimensions of Brand Personality.

Journal of Marketing Research, 34, (August), 347-

356.

15. Aaker, J., Fournier, S. and Brasel, S., 2004. When

Good Brands Do Bad. Journal of Consumer

Research. 31(1), 1-16.

16. Blackwell, R. D., Miniard, P. W. & Engel, J. F.

(2006). Consumer behavior. Mason: Thomson.

17. Aaker, D. A (1991). Managing brand equity. New

York: Macmillan.

18. Aaker, D. A (1996). Building strong brands. New

York: The Free Press.

19. Dholakia, R. R. (1999). Going shopping: Key

determinants of shopping behaviors and

motivations. International Journal of Retail &

Distribution Management, 27 (4), 154-165.

20. Keller(2008), Strategic Brand management ,

Pearson education

21. Harsh V Verma , (2006) 2nd edition, Brand

management, Excel books

22. www.fashion2fiber.com

http://dx.doi.org/10.1002/cb.154

http://www.icmrindia.org/

http://www.fashion2fiber.com/

http://www.fashion2/


ANNEXURE

1.1 Consumer preference of apparel types:

Apparel Types Preference of Apparel Types

Branded 47

In-house Apparels 11

Both 26

1.2 Influence of Factors

Influence of factors on branded

apparels

1

Least

Important

2

Not

important

3

Important

4

very

Important

5

Most

important

Brand Loyalty 2 36 42 16 4

Brand awareness 0 15 25 45 15

Brand association 0 12 21 44 25

Perceived quality 1 8 18 41 32

self concepts 1 2 16 27 54


Abstract— In this paper we perform the test of random walk

for Indian Commodity Market. Spot price data is used for

thirteen commodities from 2006-2011.We find that daily

commodity returns are not normally distributed and exhibit

short term serial dependence which can be exploited by

technical traders. Commodity return parameters such as mean

returns and volatility do not vary significantly across

commodity classes i.e. agriculture, metal and energy. Further

commodity return characteristics are sensitive to observation

frequency and tend to follow a random walk on monthly

observation hence commodity traders, investors and

researchers shall find more appropriate to work on low

frequency data. The study contributes to both market

efficiency and alternate Asset literature of emerging markets.

Index Terms— Weak-form market efficiency, emerging

market, Indian commodity Markets, trading strategies,

observation frequency.

Jel Codes: G14, G15, C12, C14, C46.

I. INTRODUCTION

luctuations in commodity prices are of interest

because they affect the decisions taken by producers and

consumers; they play a crucial role in commodity-related

investments, project appraisals, and strategic planning; and

they reflect and influence general economic activity. The

ability to accurately forecast the price of these various

natural resource products is therefore an important concern

in both policy and business circles. The Efficient Markets

Hypothesis (EMH) states that an efficient capital market is

one in which security prices adjust rapidly to the arrival of

new information, and therefore, the current prices of

securities reflect all information about them (FAMA 1970).

Three sets of assumptions imply an efficient capital market:

(a) new information regarding securities come to the market

in a random fashion, and the timing of one announcement is

generally independent of others, (b) an efficient market

requires that a large number of competing profit-maximizing

participants analyze and value securities, each independently

of others, (c) the competing investors attempt to adjust

.

Dr. Namita Rajput is an Associate Professor in Department of Commerce

at Sri Aurobindo College (M), University of Delhi, India (phone: +91-

9312180054; +91-8285888860; e-mail: [email protected]). Prof. Sanjay Sehgal is a Professor of finance in Department Of

Financial Studies, south campus at University of Delhi, India, ESC-PAU,

France, (e-mail: [email protected]).

security prices rapidly to reflect the effect of new

information. Although the price adjustment may be

imperfect, it is unbiased. This means that sometimes the

market will under-adjust or over-adjust, but an investor

cannot predict which will occur at any given time. The main

corollary of the idea that markets are efficient is that price

movements do not follow any patterns or trends; hence past

price movements cannot be used to predict future prices.

Rather, prices follow what is known as a ‘random walk’, an

intrinsically unpredictable patterni. If we believe that

efficient market hypothesis is a valid proposition, then the

current asset prices should reflect all generally available

information. The efficient market hypothesis implies that

since market prices reflect all available information,

including the information about the future, the only

difference between the prices at Pt and Pt+1 are events that

we cannot possibly predict, i.e. a random event. Hence, in an

efficient market, stock prices can be statistically tested for

random walk hypothesis.

Recently the efficient markets hypothesis and the notions

connected with it have provided the basis for a great deal of

research in financial economics. Voluminous literature has

developed supporting this hypothesis. Briefly stated, the

EMH claims that asset prices are rationally related to

economic realities and always incorporate all the

information available to the market. This implies the

absence of exploitable excess profit opportunities. The EMH

has received a lot of empirical support in the academic

literature during seventies and eighties. This line of thought

has always been viewed with a lot of skepticism in the

professional community, which led to the use of charts and

technical analysis rules for trading strategies in markets.

Numerous researchers conducted empirical studies in

testing weak-form efficiency for several stock markets and

employed various techniques but the empirical evidence is

controversial. There is a substantial body of literature on

market efficiency and stock return behavior, but similar

research for commodity market is limited. Mainly the

studies are concentrated in the developed stock markets

particularly US market. However, the needs of more

research in the emerging and less developed markets are

well recognized, especially in commodity market.

EMH can be tested in various forms; most common are

“Weak Form” tests in which the set of available information

is simply the history of market prices. Rejection of

hypothesis requires the researchers to demonstrate

dependencies in the history of prices which can be profitably

Test of Pricing Efficiency and Distributional

Properties: Indian Commodity Market

Prof. Sanjay Sehgal Associate Professor in Department of Commerce at Sri Aurobindo College (M), University of Delhi,

Dr. Namita Rajput Professor of finance in Department Of Financial Studies, south campus at University of Delhi

F




be exploited .A trading strategy based only on past prices

must be shown consistently to outperform a naïve strategy

based only on past prices must be shown inconsistently to

outperform a naïve strategy such as buying at the start of the

trading period and selling at its end (buy-and-hold).

Examples of weak form tests of efficiency in commodity

markets are Houthakker (1961), Smidt (1968), Srevenson

and bear (1970), Leuthold (1972), and Peterson and

Leuthold (1982).This paper reports the results of weak form

efficiency tests which samuelson (1965), Cootner (1964)

and Danthine (1978) have all argued that weak form

efficiency is valid only for futures market. Alchian (1974)

claims, however, that cash markets should exhibit efficiency

properties.

The empirical evidence is controversial in the field of

weak form of commodity markets. In this section we

provide a brief review of literature. Financial and economic

time series have often been modelled as random-walk

processes (e.g., Mercer and Smith, 1959; Cheng and Deets,

1971; Cogley, 1990). However, the random walk has been

proven to fit real market data poorly in many cases. For

examples, see Mandelbrot (1963a); Fama (1965); Greene

and Fielitz (1977); Helms and Martell (1985); Hsieh (1989);

Baillie and Bollerslev (1994); Barkoulas et al. (1997). Other

models with trends and cycles have been suggested, and one

category of such models is characterized by long memory or

long-term memory. Memory means that observations are not

independent; each observation is affected by the events that

preceded it. Even a simple autoregressive series exhibits

memory, but autoregressive behaviour is considered short

memory. Early studies on testing weak form efficiency

generally agree with the preposition considering a low

degree of serial correlation and transaction cost (Cootner,

1962; Fama, 1965; Kendall 1953). All these studies support

the proposition that price changes are random and past price

changes are not useful in forecasting future price changes

particularly after transaction costs are taken into account.

Granger and Morgenstern (1970) tested random walk theory

covering more than fifty stock market price series with

differing sampling intervals. Various cues of randomness of

short-term stock prices were found and some deviations

from random walk were also noted in both high and low

frequency regions of the spectrum. However, there are some

studies, which found the predictability of share price

changes (e.g., Fama and French 1988 a and b) in developed

markets but they did not reach a conclusion about profitable

trading rules. Nicolaas, (1997) conceded that past returns

have predictive power but the degree of predictability of

returns was not high. Though it is generally believed that

emerging markets are less efficient, the empirical evidence

does not always support this thought.

A World Bank study by Claessens, Dasgupta and Glen

(1995) noted significant serial dependence in equity returns

from 19 emerging markets that violates weak form EMH. It

explained that the inefficiency might be due to delay in

operations and high transaction cost, thinness of trading and

illiquidity in a market. In India, weak form market

efficiency has been widely researched and studies have

generated a large amount of evidence in favor of weak form

efficiency, e.g. Barua (1981), Barua and Raghunathan

(1987), Rao and Mukherjee (1971), Sharma and Kennedy

(1977), Sharma (1983), Gupta (1985), Ramachandran

(1985), Dhankar (1991), Saxena (1992), Belgaumi (1995),

Mittal (1995), Yalawar (1988), Mishra (2000), and Gupta

(2001).There have been only a few studies (e.g. Chaudhury,

1991; Kulkarni, 1978) which did to support the weak

efficiency hypothesis. Subramanian (1993) studied weak

form of market efficiency and noted prominent spikes at

lower frequency range through spectral analysis. It noted the

presence of periodic cycles in the movement of share prices,

which are against the assertion of the weak form of EMH.

Gupta and Gupta (1997) opined that phenomenon of large

departures from random price behaviour might have been

due to structural transformation taking place in the Indian

Capital Market. Deb (2003) tested weak form efficiency

using both parametric and nonparametric tests across five

major market indices of the Indian stock market. It depicted

that prices in the Indian stock market do not follow the

random walk model except for BSE 100 indices, which

endorses efficiency for the variance ratio test.

Among the studies on commodity futures prices, Larson

[13], using autocorrelograms, found evidence to support

Working's [17] theory of anticipatory prices which implies

that prices move randomly. Stevenson and Bear [16], who

used an assortment of statistical tools and mechanical

trading rules, concluded that corn and soybean futures prices

move in a systematic rather than a random fashion. This

tends to agree with earlier work done by Houthakker [11]

who applied a stop-loss scheme to corn trading. On the other

hand, Cargill and Rausser [3], utilizing spectral analysis on

various futures contracts for 1967, including corn,

concluded that "a simple stochastic process appears

consistent with commodity markets price behavior."

Singh (2001) found that Indian commodity market is

efficient especially when the time of maturity comes closer.

He found Gur and Potato futures market, confirmed to

efficient market hypothesis throughout. Whereas, he found

efficiency in Castroseed, Hapur and Turmeric futures

market was sensitive to period for maturity. On the whole,

since strong co integration in spot market and the futures

market was identified thus, Singh concluded that Indian

commodity futures market was efficient.

A major shortcoming of the entire analysis and a possible

reason for the lack of wide acceptance for any single result.

The consequence has been varying results, depending upon

data and tests used. Only Stevenson and Bear have

attempted to apply alternative statistical tools and

mechanical trading rules to similar data.

Thus, a large majority of studies favor prevalence of weak

form stock market efficiency in Indian commodity market.

Some studies deny its existence to keep the academic debate

alive on the subject. Under this backdrop, the present study

was conceptualized to explore plausibility of profitable

trading strategies based on past prices. In this regard, it may

be constructed as yet another attempt to re-examine the

weak form efficiency proposition in commodity market in

India.

This paper is organized into following sections, first


section gives the introduction of commodity market and

about the EMH i.e. the present section, second section

explains about the research objectives, hypothesis, data and

the period of study. Third section deals with time series

Behaviour of commodity prices and returns in India:

distributional, descriptive, autoregressive analysis is done.

Section four describes about observation frequency and its

impact on aggregate commodity price behaviour and section

five gives Summary and conclusions.

II. RESEARCH OBJECTIVES, HYPOTHESIS AND

DATA

A. RESEARCH OBJECTIVES

As outlined earlier, the basic objective of this paper is to

assess whether spot/cash prices in the Indian commodity

markets move as the random walks theory suggests. In other

words, is the Indian commodity market mechanism efficient

in the manner stipulated in its weak form preposition? To be

more precise, the following objectives are conceptualized in

the paper under consideration: Whether commodity cash

prices tend to follow a normal distribution, to empirically

test whether the weak form of efficient market hypothesis

holds well in Indian commodity markets encompassing

observable interdependence and non randomness, do

commodity parameters vary across risk return parameters

across different commodity classes.

B. HYPOTHESIS

The paper attempts to test on the commodity market

efficiency in its weak form variant for India an emerging

market. In this regard, it tends to examine validity of the

following hypotheses:

H 1: Commodity prices in India are normally distributed.

H 2: Successive price movements are random and are not

interdependent.

H 3: Whether commodity parameters tend to vary across

alternative commodity class i.e. agriculture, metal and

energy.

H 4: The characteristics of commodity return series are

sensitive to observation frequency i.e. use of daily, weekly,

monthly data.

H 5: There is no significant co-incident lead/lag/ between

prices of different commodities.

C. DATA

Daily closing price data of thirteen commodities have

been taken from MCX from may 2006 to January 2010.

There are 1092 observations for each commodity. The

commodity prices were converted into percentage returns by

the following formula Rt = (Pt – Pt-1), where Rt = Returns

of commodities, in period t, Pt = Price of commodities at

day t, Pt-1 = Price of commodities at day t-1. Commodities

include basket of commodities which include agricultural

(pepper, channa, jeera, wheat, refined soya oil, soya bean),

energy (natural gas, crude oil), and metal (gold, silver,

copper, zinc, aluminum). Daily prices were converted into

weekly and monthly by taking closing prices for each week

and month respectively and converted into percentage

returns using the above said formula.

III. TIME SERIES BEHAVIOUR OF COMMODITY RETURNS

We start by testing the stationarity of sample price series.

Augmented Dickey–Fuller Test (ADF) test was performed

on the sample price data using 5% level of significance. The

sample time series exhibit non stationarity as shown in table

1.Next we repeat stationarity test for sample return series.

The daily return series seem to be stable over time as

indicated in table 11 implying that commodity price are

integrated to order 1. After that Descriptive Analysis is done

which exhibits, very low Mean returns .While standard

deviations are quiet high for most of the commodities. High

standard deviation signify very high volatility in asset

returns which is common across all commodity classes, i.e

in agricultural, energy and metal .The result of natural gas

is exceptionally different with large mean and standard

deviations. It provides an annualized return of 1250%

(Assuming 250 trading days in a year), followed by jeera

and pepper. Zinc and wheat provide 25% annualized returns,

while other commodities show low negative returns. There

seems to be no distinct pattern in the mean and volatility

characteristics across commodity classes. it is evidenced that

there is negative skewness in eight out of thirteen

commodities and five are positively skewed. Aluminium,

jeera and natural gas have high positive skweness. Further

the commodity returns distributions series exhibit

leptokurtic. So negative skewness and leptokurtic series of

commodity return series indicates that the distribution is not

normal. Normality violations patterns are also confirmed by

Jarque-bera (parametric test) at 5% level of significance p

value is less than 0.05. In other words, the non-normal series

of commodity return series deviate from the prior condition

of random walk model as shown in table 11.

To confirm the pattern of non –normality Jarque-bera test

was performed. The j b statistics is computed as follows

Where n=no of observations

S=measure of skewness

K=measure of kurtosis

Under large samples the J&B statistic tends to follow chi-

square distribution with two degree of freedom and can be

used to test the null hypothesis that the data are from a

normal distribution. The null hypothesis is a joint hypothesis

of the skewness being zero and the excess kurtosis being 0,

since samples from a normal distribution have an expected

skewness of 0 and an expected excess kurtosis of 0 (which is

the same as a kurtosis of 3). As the definition of JB shows,

any deviation from this increases the JB statistic. Our results

show that no value is less than 0.05, which confirms non

normality. To reconfirm the distribution pattern of the

commodity return series, Kolmogrov–Smirnov Goodness of

Fit test is also used, (K-S test) is a non-parametric test and is

used to determine how well a random sample of data fits a

particular distribution (uniform, normal and Poisson).,

which provides further evidence whether the distribution

confirms to a normal distribution or not.


Results of (K-S test) show very low p –values, which

clearly indicates that daily return series of sample

commodities do not follow normal distribution.

Next we test the statistical dependencies of the daily

return series using parametric test i.e. serial correlation

(parametric test) and non parametric test i.e. runs test (non –

parametric) .Test statistic which is used to notice any

perceptible trend in commodity returns is the serial

correlation matrices that measures correlation between price

changes in consecutive time periods, and is a measure of

how much price change in any period depends upon price

change over the previous time period. A serial correlation of

zero would imply that price changes in consecutive time

periods are uncorrelated with each other, and can thus be

viewed as a rejection of the hypothesis that investors can

learn about future price changes from the past ones. A

positive and statistically significant serial correlation could

be viewed as evidence of price momentum in markets, and

would suggest that returns in a period are more likely to be

positive (negative) if the prior period returns were positive

(negative). Similarly, a negative and statistically significant

serial correlation could be evidence of price reversals, and

would be consistent with a market where positive returns

were to follow negative returns and vice versa. In a more

precise way, serial correlation coefficients provide a

measure of relationship between value of a random variable

(Xt) in time t and its value k-periods earlier. It indicates

whether price changes in the time t are influenced by price

changes occurring k-periods earlier, where k = 1, 2, 3….n.

In the present study we have considered time lags of 1, 2,

3… 16 days. The autocorrelation matrix is estimated by:

Wherein,

C0 = Variance of Xt, and

N = number of observation.

Statistical testing of auto correlation matrices requires

standard error of estimated matrices (S.E. (k)), which is

obtained as:

S.E. (k) = 1/ (n-k)1/2, When n is sufficiently large (n>50),

approximate value of the standard error of estimated

(S.E. (k)) matrices is given by:

S.E. (k) = 1/ (n) ½

From the analysis it is evident that at lag one (5 %) level

of significance there are negative autocorrelation factor

(ACF) values of all thirteen commodities i.e. mean reversion

nature is exhibited for all sample commodities. The results

reported in Table 11 do not support randomness in the

commodity prices as none of p values was greater than 0.05

hence found to be significant .hypothesis is rejected and

series are negatively auto correlated. Market is not

efficient and market information is not symmetric. In

trading behaviour there is no maturity because the

information is not complete. Auto correlation exists in the

series except in case of wheat and soya bean where p

value is >0.05.

The run test, is used to detect statistical dependencies

(non randomness), which may not be diagnosed by the

parametric auto-correlation test. The test is well known

and widely used to prove the random walk model because

it ignores the properties of distribution. Null hypothesis

of the test is that the observed series is a random series.

The numbers of runs are computed as a sequence of the

price changes of the same sign (such as: ++, −−, 0

0).When the expected number of run is significantly

different from the observed first number of runs implies

that the null hypothesis of randomness of the daily return

series is rejected. The run test converts the total number of

runs into a Z statistic. For large samples the Z statistics

gives the probability of difference between the actual and

expected number of runs. The Z value is greater than or

equal to ± 1.96; reject the null hypothesis at 5% level of

significance. The question of whether a sequence of

observed numbers (i.e., the individual daily commodity

price series or daily commodity returns series) is a random

sequence can be studied by the number of runs observed in,

Wherein,

M = Expected number of runs

n1 = Number of positive price changes

n2 = Number of negative changes.

n3 = Number of zero price changes.

N = Total number of price changes (n1+n2+n3)

A process is said to be random if observed number of

runs is given by:

R = M ± 1.96 S. E.

Wherein, standard error (S. E.) is given as:

The difference between the actual and expected number

of runs is expressed by a Standard normal z variate as:

Z = [(R-M)/S.E.]

Adjusted z variate (taking into consideration continuity

adjustment factor, i.e., 0.5) is as follows:

Z = [(R + 0.5 -M)/S.E.]

The independence hypothesis is again rejected at 5% level

of significance for majority of commodities with exception

of three agricultural commodities like wheat, pepper and

THE KOLMOGOROV-SMIRNOV TEST IS DEFINED BY:

H0: The data follow a specified distribution

Ha: The data do not follow the specified distribution

Test

Statistic:

The Kolmogorov-Smirnov test statistic is defined as

where F is the theoretical cumulative distribution of the

distribution being tested which must be a continuous distribution (i.e., no discrete distributions such as the binomial or Poisson or

normal), and it must be fully specified (i.e., the location, scale,

and shape parameters cannot be estimated from the data).

Sig. Level: .

Critical

values:

The hypothesis regarding the distributional form is rejected if the

test statistic, D, is greater than the critical value obtained from a table. There are several variations of these tables in the literature

that use somewhat different scaling for the K-S test statistic and critical regions.

http://www.itl.nist.gov/div898/handbook/eda/section3/eda364.htm

http://www.itl.nist.gov/div898/handbook/eda/section3/eda363.htm


refined soya, as shown in table 11. Thus the daily

commodity returns in India do not seem to follow a random

walk as they are not independently and identically

distribution. Typically, they exhibit thick tails and high

peakdness, which are the properties of stable paretian

distributionii. Such distribution follows a biased random

Walk and behaves as nonlinear dynamical or chaotic

systems. They combine long term trends with noise and

confirm a presence of noise trader risk in such markets.

IV. OBSERVATION FREQUENCY AND ITS IMPACT ON

AGGREGATE COMMODITY PRICE BEHAVIOUR

In this section, we focus on weekly and monthly time

series of commodity returns. The objective is to ascertain

how time series properties of sample distribution change.

When one shifts from high observation frequency (daily

returns) to low observation frequency (weekly and monthly

returns).We replicate the statistical analysis executed in the

previous sections.

Weekly analysis: Weekly returns series exhibit

stationarity when we performed unit root test as shown in

table-111.Further seven out of thirteen commodity return

series show negative skewness, while many of them are

leptokurtic. J&b statistics confirms that seven out of thirteen

commodity returns are non normal in nature. The K.S

statistics provides even stronger results against non

normality as the null hypothesis does hold for any of the

sample distribution. We next evaluate the time series

dependence of weekly commodity returns using ACF (one

lag) it is observed that nine out of thirteen return series

commodities exhibit negative autocorrelation thus

confirming their mean reversion tendency. The sample

return series however seem to exhibit no short term memory

process as per runs test. It is interesting to note that that the

results for both distributional properties and as well as time

series dependence are somewhat conflicting when one uses

parametric and non parametric version of statistical tests.

This is not surprising in case of sample time series which

show i.i.d violations. On overall basis, major of return series

do not seem to be random on weekly basis.

Monthly analysis: The monthly commodity return series

are stable over time. The mean returns and volatility seem to

have sobered down with an exception of Natural Gas with

extremely high mean return and volatility parameters.

Soyabean tend to provide an annualized return of 36% while

Jeera, Pepper wheat and zinc give 24% returns on

annualized basis. Skewness and kurtosis have also become

small over sample distribution. Both JB and KS statistics

confirm that the distribution is normal .The serial correlation

and runs test suggest that the sample distributions are also

independent over time. Thus monthly commodity returns

seem to be randomly distributed, as shown in Table 1V.

This implies that monthly returns are weak form efficient.

This precludes any possibility of employing technical

analysis of employing any profitable strategies further the

sample series are normally distributed and hence

commodities can be suitable analyzed using mean and

volatility statistics.

V. SUMMERY AND CONCLUSION

Indian commodity market, in organized form is relatively

nascent in nature. In India there are 25 recognized future

exchanges, of which there are three national levels. It has

operationalized from November 26, 2002 and got its

recognition in October 2002. In this paper we attempt to

analyze the time series behaviour of selected commodities

.Such a study is essential before any meaningful investment

strategies could be developed for the asset class. The daily

commodity returns behaviour exhibit low mean returns and

high volatility. Further theses commodity return series are

not normally distributed owing to leptokurtosis and high

skewness (which is negative in majority of cases).The

commodity returns also exhibit serial dependence and hence

can be exploited by technical traders.

Commodity return characteristics seem to be sensitive to

observation frequency for instance mean and standard

deviation of return sobered down as we move from daily to

weekly then from weekly to monthly returns. The monthly

commodity returns also follow a random walk as they are

normally distributed and have no short term memory.

Commodity characteristics do not seem to vary significantly

across various asset classes like metal, agriculture and

energy products. Natural Gas is an exception with extremely

high mean returns and volatility parameters; in addition

Jeera, Pepper wheat and zinc tend to provide high annual

returns.

Our findings are extremely pertinent for commodity

traders who are on a look out for profit trading strategies.

They must concentrate on high observation frequency for

trading purpose but must bear in mind that profit from

transaction intensive strategy may get eroded by high costs

of trading. From researchers point of view it is advisable

that empirical work is conducted mainly on monthly return

series at this observation frequency no i.i.d violations are

exhibited. Our empirical work shall provide a foundation for

analyzing relevant research issue in commodity market

including the interrelationship between spot and future

market characteristics.

ACKNOWLEDGMENT

I would like to thank the editor and an anonymous referee

for useful inputs. I gratefully acknowledge the help received

from reviewers. The remaining errors, if any, are my

responsibility.

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i The term random does not imply that price movements are

erratic or chaotic, just that prices respond only to new

information. This information may be randomly good or bad

and prices will therefore move in an unpredictable manner.

The movements themselves are a perfectly rational response

to the available information (Keane, 1983). The market

efficiency theory is inconsistent with the possibility for

analysts and investors to spot over- and undervalued stocks

with different investment strategies in order to earn excess

return. An efficient market is one where market price is an

unbiased estimate of the true value of investment. Contrary

to the popular view, it does not require that the market price

be equal to true value at every point in time. All it requires

is that errors in the market price be unbiased, i.e., that price

can be greater than or less than true value, as long as these

deviations are random.

ii Non-normal stable distributions have "fat tails" that

generally satisfy a convergence property defined by Wilfred

Pareto. For this reason, non-normal stable distributions are

often called stable Paretian distributions.


APPENDIX

TABLE-1: ADF TEST OF PRICES

Commodities t-Statistic Prob.* ADF Statistics

1)GOLD -0.276069 0.9258 -2.863972

2)SILVER -2.863977 0.6058 -1.354392

3)COPPER -1.917971 0.3241 -2.863974

4)ZINC -1.332403 0.6162 -2.863974

5)ALUM -2.863974 0.4715 -1.620845

6)NATGAS -17.92243 0 -2.864649

7)CRUDEOIL -2.863972 0.5642 -1.43908

8)REFSOYA -2.864031 0.4165 -1.728647

9)SOYABEAN -1.301508 0.6302 -2.867496

10)PEPPER -2.863974 0.0321 -3.034252

11)CHANA -2.864013 0.0594 -2.79384

12)ZEERA -2.863977 0.2143 -2.178846

13)WHEAT -0.647119 0.8569 -2.867949

TABLE-11: DESCRITIVE ANALYSIS OF DAILY RETURNS

DAILY ADF (TVAL) ADF(ST) MEAN SD

ENERGY

NATU GAS -2.8 -16.0 0.0567 1.2175

CRUDEOIL -2.864 -15.755 0.0004 0.0163

AGRI COMM

JEERA -2.863 -16.071 0.0028 0.0738

CHANNA -2.877 -9.0478 0.0004 0.0164

PEPPER -2.863 -11.368 0.0016 0.0142

REFINED SOYA -2.864 -19.734 0.0005 0.0056

SOYABEAN -2.867 -13.155 0.0007 0.0142

WHEAT -2.899 -9.7441 -0.001 0.0487

METAL

ZINC -2.863 -13.774 -0.001 0.0236

ALUMINIUM -2.877 -9.1853 -0.008 0.0209

COPPER -2.877 -5.0726 0 0.0191

SILVER -2.863 -12.96 0 0.0152

GOLD -2.863 -11.767 0.0002 0.0095

DAILY SK KURT J&BERA (P V) KS (P V)

ENERGY

NATU GAS 20.792 434.26 3425897.94 (0) 13.447 (0)

CRUDEOIL -0.042 3.7932 11.6130587 (0) 5.5727 (0)

AGRI COMM

JEERA 14.923 317.14 1817292.73 (5.95E-11)

11.902 (0)

CHANNA -0.645 6.6052 267.643148

(0.003007851)

7.4592 (0)

PEPPER 0.6188 5.6637 157.447936 (0) 8.2581 (0)

REFINED SOYA 0.6177 3.7607 38.4205162 (0) 9.8324 (0)

SOYABEAN -6.425 91.125 144744.33 (0) 6.9686 (0)

WHEAT -19.76 405.19 29805.4

(-4.54E-09)

7.6134 (0)

METAL

ZINC -0.417 4.3915 48.0814395 (0) 4.6484 (0)

ALUMINIUM 3.1649 78.943 105987.188 (0) 6.6341 (0)

COPPER -0.291 4.4968 47.0915449 (0) 5.3402 (0)

SILVER -0.39 5.313 108.812321 (3.62E-11)

7.1522 (0)

GOLD -0.453 498 128.914701 (0) 8.3672 (0)

DAILY ACF(AC) ACF -P VA RUNS (ZA) RUNS(PV

ENERGY

NATU GAS -0.04 0.242 0.946 0.343

CRUDEOIL -0.035 0.241 1.562 0.118

AGRI COMM

JEERA -0.239 0.011 -3.74 0.0001

CHANNA 0.027 0.366 -1.949 0.0512

PEPPER 0.03 0.321 -6.016 1.78E-09

REFINED SOYA 0.027 0.369 -6.022 1.72E-09

SOYABEAN 0.026 0.569 -1.11 0.2667

WHEAT 0.01 0.841 -5.549 0

METAL

ZINC 0.014 0.646 2.143 0.03

ALUMINIUM -0.058 0.052 2.324 0.02

COPPER 0.007 0.811 1.518 1.518

SILVER 0.007 0.811 -1.089 0.275

GOLD 0.008 0.793 -0.755 0.449

TABLE-111: DESCRITIVE ANALYSIS OF WEELY RETURNS

WEEKLY ADF(T-VAL) ADF(STAS) MEAN SD

NATL GAS -2.864 -16.001 0 0.04

CRUDEOIL -2.864 -15.755 0.001 0.02

AGRI COM

JEERA -2.863 -16.071 0.032 0.23

CHANNA -2.877 -9.0478 0.003 0.03

PEPPER -2.863 -11.368 0.037 0.28

REFINED SOYA -2.864 -19.734 -0.01 0.1

SOYABEAN -2.867 -13.15 0.035 0.28

WHEAT -2.899 -9.7441 0.004 0.01

METAL

ZINC -2.863 -13.774 0 0.03

ALUMINIM -2.877 -9.1853 0 0.01

COPPER -2.877 -5.0726 0.004 0.02

SILVER -2.863 -12.96 0.001 0.03

GOLD -2.863 -11.767 0 0.01

WEEKLY SKEWNES

S

KURTOSI

S

JARQUEBER

A (P

VALUE)

KS (p)

value)

NATL GAS -0.713 4.961 18.36134 (0.100923)

13.447 (0)

CRUDEOIL -0.081 2.624 0.523536

(0)

5.5727(0

)

AGRI COM

JEERA 8.398 72.02 15769.1

(0.692813)

11.902(0

)

CHANNA -0.295 4.056 4.574182

(0.000103)

7.4592(0

)

PEPPER 8.341 71.4 15488.74

(0.76969)

8.2583

(0)

REFINEDSOY

A

-8.351 71.51 15539.96

(0)

9.8324

(0)

SOYABEAN 8.337 71.42 15499.38

(0)

6.9686(0

)

WHEAT 1.408 5.889 50.85251

(0)

7.6007(0

)

METAL

ZINC -0.331 3.613 2.545997

(0.101561)

4.6484(0

)

ALUMINIM 0.193 3.292 0.73399 (0)

6.6341(0)

COPPER -0.015 3.95 2.824737

(0)

5.3402(0

)

SILVER 2.296 15.77 575.5493 (0)

7.1522(0)

GOLD -0.23 4.121 4.586791

(0.279991)

8.3672(0

)

WEEKLY ACF

(AC)

ACF(PVAL) RUNS

(ZA)

RUNS(P)

NATL GAS -0.518 0 1.23 0.2173 CRUDEOIL -0.582 0 -1.31 0.188 AGRI COM JEERA -0.115 0 1.23 0.2173 CHANNA -0.148 0 -1.31 0.188 PEPPER -0.078 0.01 0.65 0.5113 REFINEDSOYA -0.078 0.011 -0.07 0.9415 SOYABEAN -0.078 0.092 -2.4 0.0162


WHEAT -0.025 0.599 -1.1 0.2689 METAL ZINC -0.311 0 1.28 0.2003 ALUMINIM 0 1.95 0.05 COPPER -0.505 0 -3.38 0.0007 SILVER -0.191 0 0.73 0.4646 GOLD -0.115 0 -1.46 0.1435

TABLE-1V: DESCRITIVE ANALYSIS OF MONTHLY RETURNS

MONTHLY ADF(T-VAL) ADF(STAS) MEAN SD

ENERGY

NATU GAS -2.9511 -5.8091 1.485 6.32

CRUDEOIL -5.8091 -3.9381 0.007 0.064

AGRI COMM

JEERA -2.9314 -4.5305 0.02 0.072

CHANNA -2.9369 -7.2182 0.003 0.097

PEPPER -2.9297 -6.7863 0.037 0.141

REFINED SOYA -2.9297 -6.2519 0.013 0.04

SOYABEAN -3.0206 -4.039 0.033 0.061

WHEAT -2.6605 -3.1122 0.02 0.058

METAL

ZINC -2.9 -7.29 -0.02 0.113

ALUM -2.9 -7.97 0 0.03

COPPER -2.9 -13.9 -0.01 0

SILVER -2.9 -7.14 0.001 0.068

GOLD -2.9 -7.42 0 0

MONTHLY SKEWNES

S

KURTOSI

S

JARQUEBER

A

(P VALUE)

KS (p

value)

ENERGY NATU GAS 4.0037 17.03 206.806

(0.064325)

3.0300

(2.119) CRUDEOIL -0.109 1.763 1.248718

(0.490115)

0.6942

(0.720) AGRICOM

M

JEERA 0.9609 3.091 2.931099

(0.57193)

0.7170

(0.682) CHANNA 0.6061 2.423 1.426229

(0.2309)

0.842

(0.477) PEPPER 1.0833 4.201 4.859556

(0.0915)

0.684

(0.7365

) REFINED

SOYA 0.3442 2.589 0.508596

(0.6301)

0.518

(0.9511

) SOYABEAN 0.2037 1.999 0.923536

(0.7754)

0.640

(0.805) WHEAT 1.1212 4.005 4.781933

(0.88056)

0.757

(0.615) METAL ZINC 0.93 3.437 2.891298 (0) 0.579

(-0.89) ALUM 1.116 4.396 5.487614

(0.5356)

0.693

(0.79) COPPER 0.073 1.821 1.117461

(0.63307)

2.286

(5.E-

05) SILVER -0.361 2.281 0.8227

(0.535)

0.648

(-0.79) GOLD 0.031 1.927 0.9143

(0.235)

0.825

(-0.05)

MONTHLY ACF(AC) ACF(P

VAL)

RUNS

(ZA)

RUNS(P

VALUE) ENERGY

NATU GAS -0.026 0.871 -0.33 0.734 CRUDEOIL 0.451 0.002 -0.2984 0.76541

AGRI COMM JEERA 0.26 0.072 0 1

CHANNA -0.169 0.236 0.149 0.881 PEPPER -0.048 0.739 0.305 0.76

REFINED SOYA 0.018 0.903 0 1 SOYABEAN 0.02 0.92 0 1

WHEAT 0.218 0.304 -2.35 0.018 METAL ZINC 0 0.52 0.003 0.997 ALUM -0.26 0.069 -0.9 0.367

COPPER 0.08 0.5 -2.8 0 SILVER 0.01 0.9 0 0.99 GOLD -0.1 0.3 -0.29 0.76