Springer Proceedings in Business and Economics

Arti Chandani
Rajiv Divekar
J. K. Nayak Editors

Achieving
$5 Trillion
Economy
of India
Proceedings of 11th Annual International
Research Conference of Symbiosis
Institute of Management Studies
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Arti Chandani · Rajiv Divekar · J. K. Nayak
Editors

Achieving $5 Trillion
Economy of India
Proceedings of 11th Annual International
Research Conference of Symbiosis Institute
of Management Studies
Editors
Arti Chandani Rajiv Divekar
Symbiosis Institute of Management Studies Director, Symbiosis Institute
Symbiosis International (Deemed of Management Studies
University) Symbiosis International (Deemed
Pune, Maharashtra, India University)
Pune, Maharashtra, India
J. K. Nayak
Department of Management Studies
Indian Institute of Technology Roorkee
Roorkee, Uttarakhand, India

ISSN 2198-7246 ISSN 2198-7254 (electronic)

Springer Proceedings in Business and Economics
ISBN 978-981-16-7817-2 ISBN 978-981-16-7818-9 (eBook)
https://doi.org/10.1007/978-981-16-7818-9

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Contents

Factors Affecting the Growing Economic Inequality: An Empirical

Study with Reference to BRICS Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Monika Mathur and Vaishali Jain
Prospects of FDI-Driven R&D—A Comparison Between Indian
and Foreign Pharmaceutical Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
J. C. Sharmiladevi
AI as a Tool in Internal Communication to Reduce Employee
Attrition Rate in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
G. Nikita and Sai Nethra Velicheti
World Income Classification and Emissions: A Study
of the Relationship Using Machine Learning Techniques . . . . . . . . . . . . . . 63
Karthikeyan Chandramohan and Ramasamy Murugesan
Impact of Soft Skills Training on Knowledge and Work
Performance of Employees in Service Organizations . . . . . . . . . . . . . . . . . . 81
Sanjay K. Deshpande and M. M. Munshi
Are Recreational Activities Really Recreational at the Workplace? . . . . . 103
Mahavadi Dhanshyam
Green Employee Scorecard—A Conceptual Model to Align
Individual Green Performance and Organizational Sustainability
Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Arpita Ghosh and Shamima Haque
A Study to Analyze Use of Social Media by Private and Public
Sector Banks in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Arti Chandani, Rajiv Divekar, B. Neeraja, Mita Mehta, and Rizwana Atiq
Return Dynamics and Volatility Spill Over Effects of Stock
Markets in G20 Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Viswanathan Thangaraj and John Ben

v
vi Contents

Can Effective E-Government Implementation Disrupt Corruption?

An Exploratory Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Punit Ahluwalia and Mohammad Merhi
Moderation of Income and Age on Customer Purchase Intention
of Green Cosmetics in Bangalore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
S. V. Krishna Kishore, Prabha Kiran, Jayanta Banerjee,
and M. Vasudevan
Study on Identifying the Opportunities for Defence Exports
Initiative Towards Make in India Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Aditya Kumar and Mita Mehta
Effect of Age on Employees’ Attitudes at Workplace—A Study . . . . . . . . 281
N. Srividya and Rita Basu
An Econometric Approach Towards Exploring the Impact
of Workers Remittances on Inflation: Empirical Evidence
from India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Vaishali Jain and Monika Mathur
A Robot Maker for Health Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Om Prakash
Prevalence of Emotional and Financial Stress Among Management
Students . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
Preksha Dassani and Deepak
A Study on Perception of Students Towards Online Classes in India . . . . 341
L. Lavanya
Indian Knowledge Tradition and Research . . . . . . . . . . . . . . . . . . . . . . . . . . . 359
Sapna Sharma
Vipassana Meditation: An Effective Way to Enhance Employee
Contribution in Fostering Organizational Growth . . . . . . . . . . . . . . . . . . . . 365
Seema Pradhan
About the Editors

Dr Arti Chandani is presently working with Symbiosis institute of Management

Studies, Pune as Associate Professor. Dr. Arti Chandani has more than 23 years
of experience in Teaching and research. She has published more than 50 papers in
journals. She is the guest editor for special issue of journal, “International Journal of
Public Sector Performance Management” and “International Journal of Business and
Globalisation” which are being published by InderScience. She is also the Member of
Editorial Board of International Journal of Digital Accounting Research (SCOPUS
Indexed).
She has been awarded Best teacher by National Foundation for Entrepreneurship
Development (NFED), Chennai in September, 2003. She has also received awarded
for Best Teacher in Financial Management by Dainik Bhaskar National Education
Leadership awards in October, 2013. She has been invited to deliver session by
Department of Economics, Bangalore University, Bangalore. She was also invited to
deliver a talk “Union Budget 2021- Suggestion” by EGROW foundations, Delhi on
25 Dec., 2020. She has also received many best papers award for the papers presented
in various international conferences. In addition to this, she has also received 5 more
best paper awards. She has been part of the organizing committee of International
conference, Organised by NFED, Coimbatore- ICCRESMA for year 2020. She is also
the Reviewer of International Journal of Innovation Science, International Journal of
Emerging markets, Journal of Indian Business Research, Reviewer of “Information
Resource Management Journal” of IGI Global along with other journals. She has
also completed online courses from NPTEL in the area of research and training. She
has also completed FDP from IIM-Kolkatta.
She is also the editor of the SIMS Annual International Research Conference:
Unleashing the research journey. She is the conference convener of SIMSARC,
since 2013, which is annual International research conference of Symbiosis Institute
of Management Studies.

Brig (Dr.) Rajiv Divekar is the Director of Symbiosis Institute of Management

Studies for the last 12 years. SIMS is amongst the top ranked B-schools in India
which is over 27 years old.

vii
viii About the Editors

Prior to this he was Head of Faculty Strategic and Operational Studies at Army War
College and Faculty member in Defence Strategic Studies at Defence Services Staff
College, Wellington. He has done his PhD from Symbiosis International University.
He is a M. Phil from D A V V University and MSc from Madras University. A
Gold medallist in BE (civil), he has done his MBA specializing in Human Resource
Management. He has rich experience of strategy, planning, logistics and human
resource management based on his service with multinational teams as part of United
Nations Force in both Somalia and Lebanon. He has served in Kargil and Leh on the
LoC where he was responsible for the Logistics and Supply Chain Management for
soldiers located on posts at 17,000–22,000 feet in the Siachen Glacier.
He has a large number of research publications in National & International Jour-
nals & also in Scopus listed Journals. He is also a reviewer for a journal which is
indexed in SCOPUS.
Under his leadership and guidance, SIMS has been organising an Annual Interna-
tional Research Conference for last 11 years. He teaches Strategy, Human Resource
and Leadership to MBA students and has been invited to deliver talks at various
organisations and institutes as also to deliver key note address in conferences.
He is a recipient of many awards in the field of education. He has been awarded
“The Rashtriya Vidya Gaurav Gold Medal” by the Indian Solidarity Council, the
“Rajiv Gandhi Education Excellence Award” by International Institute of Education
and Management and the “Education Leadership Award” by Education Leadership
Awards, Dubai.

Dr Jogendra Kumar Nayak is an Associate professor at IIT Roorkee. His area of

research interests includes B2B marketing, Pricing, Tourism marketing. He teaches
Marketing Research, Marketing Management and B2B Marketing to the students
of MBA and B.Tech courses. He is currently deputed as a Professor-In-Charge of
Training & Placement Department in DOMS (Department of Management Studies)-
IIT Roorkee. In the year 2017 he was awarded as an ‘Expert Member of Standing
Committee on Research Methodology’ by Ministry of Home Affairs, Govt. of India,
also as a ‘Reviewer for the Executive Government agency, Poland’ by National
Science Centre and in the year 2018 as a member, Board of studies and advisory
board member of Abdul Kalam Technical University.
He did his PhD from VGSOM, IIT-Kharagpur in the field of marketing in 2012
and MBA from Bharti Vidyapeeth’s IMED, Pune University in 2001 and a Civil
Engineering graduate from Utkal University.
His major Research project includes a study on the handicraft industries: Empow-
ering the artisans funded by ICSSR and Marketing Practices in Handicraft sector in
Uttarakhand, funded by IIT. Some of his consulting assignments entailed working
on projects like “Traidcraft-Study the Potential of Handloom sector in Orissa”, and
“European Union-Capacity building of Small and Medium Industries in Orissa”.
He is also an active member of American Marketing Association, Member of
System Dynamics Society and Eastern Asian society of transportation studies. He
holds lifetime membership of the Indian Economic Association as well as the Indian
Society for Technical Education.
About the Editors ix

In addition to his remarkable contribution and achievements in the field of

Marketing, he has published close to 40 research papers with reputed journals from
the publishing houses of Elsevier, Sage, Springer and Taylor & Francis. More than
50% of his papers are in FT-50, A* and A rated journals. He is also an author of
an informative textbook on “Retail Management” publicized by Cengage Publica-
tions in the year 2016. He has NPTEL online courses on Marketing research and
International business.
Factors Affecting the Growing Economic
Inequality: An Empirical Study
with Reference to BRICS Countries

Monika Mathur and Vaishali Jain

Abstract Economic inequality refers to the uneven distribution of earnings and

opportunity between various groups in society and is a point of major concern in
almost all the nations in the world. This study aims to analyse the effect of various
factors over the increasing inequality in BRICS nations. The study takes into consid-
eration factors like trade openness, credit, net foreign assets and health and tries to
assess their impact as a driving force behind the increasing inequality in these coun-
tries. The augmented Dickey–Fuller test for stationarity has been applied followed
by multiple regression. To explore causality, Granger causality test is applied. All the
models are tested for autocorrelation using the Breusch–Godfrey Lagrange Multi-
plier test. Wald test is applied to examine the significance of independent variables.
The study provides statistical evidence about the positive and negative effects of
trade openness, healthcare finance, net foreign assets and healthcare expenditure
on income inequality in BRICS nations. Findings may help to work intensively on
the relevant causes of inequality for these five countries. This paper will add to the
already present literature on inequality which is one of the important problems of
the countries across the world.

Keywords Inequality · Income distribution · Economic growth · BRICS

economies

1 Introduction

With increasing global growth and per capita income, the issue of increasing
inequality is becoming equally important for the world. As per the World Bank

M. Mathur
Manipal University Jaipur, Jaipur, India
e-mail: [email protected]
V. Jain (B)
Christ (Deemed University), Lavasa, Pune, India
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 1
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_1
2 M. Mathur and V. Jain

Inequality report of 2019, India has 55% of the income share owned by top 10% popu-
lation, while this is 41% for China, 55.6% for Brazil, 45.5% for Russian Federation
and 65.1% in South Africa (World Inequality Database, 2018).
A recent study among others by (Assouad et al., 2018) has argued that there is
extreme level of inequality present in India, Brazil, South Africa and the Middle
East, with top ten per cent income shares above 50% of national income comparable
to their counterparts in rich countries. They also argue that historical segregation
and economic policies have been responsible for such extreme inequality in these
nations. As BRICS nations symbolize economies of the developing world, a study of
factors having an impact on inequality will help in understanding and designing better
policies. The study of inequality in these countries become more important as they
habitat 41% of total world population (United Nations, 2019). Although, as a result
of high rate of economic growth, the population below poverty line has gone down
(however, the exact percentage is debatable in the research community), the standards
of living of the people have improved tremendously. Question of increasing inequality
should be equally important to address as it has been strongly argued by (Weisskopf,
2011). He explains that various types of inequalities, i.e. class inequalities, group
inequalities, post-reform consumption inequalities and like are increasing the gains
to rich. Study of inequality literature unanimously argues that inequality has adverse
impact on poverty reduction, growth and sustainability of economy. Growth scenarios
in these five nations changed from the decade of 1990, and thus, study of driving
forces of inequality and their relative intensity in these nations is important in last
25 years. In last two decades, these countries have acquired a prominent position
in the world economy, and thus, BRICS nations have been selected for this study.
A discussion of major determinants of inequality in these countries may result into
better policy decisions in this direction.
India started liberalizing its economy from late 1980s and made several changes
in its economic policies in 1991 onwards to make Indian economy a more open
one. The focus of economic policies in this period moved from state intervention
and central planning for more justifiable distribution to the LPG policies commonly
known together as economic reforms. Indian economy has witnessed a high rate of
growth in GDP since then. In Brazil too, GDP started registering speedy growth from
late 1980s onwards. With economic reforms in China starting from late 1970s, the
growth rate picked up in the subsequent years. In China, Gini index started rising
from 1980s, and the then moderately unequal country became one of the highly
unequal countries in terms of wealth and income. Russian Federation has seen radical
economic changes in the decade of 1990 after switching to market economy. Thus,
this study tries to estimate factors driving inequality of income in these emerging
countries.
Factors Affecting the Growing Economic Inequality: An Empirical … 3

2 Review of Literature

A vast amount of literature is available on the topic of income inequality. This paper
tries to study multiple factors responsible for increasing income and wealth inequal-
ities in five fastest growing economies of the world. The review undertaken in this
study is based on factors which have been studied with respect to causation of
inequality. A detailed review of factors that have been responsible for increasing
inequality in various countries, especially the BRICS nations have been consid-
ered for the study. This paper takes into consideration within country inequality
in BRICS nations and does not present a comparative study of them. It analyses
the relative intensity of various components which have been responsible for rising
income inequalities in these countries. A study of BRICS nations and the challenges
faced by them on inequality by (Ivnis, 2013) highlights the socio-economic factors
as one of the prominent for widening inequality. A study on BRICS by (Younsi &
Bechtini, 2018) evaluates the relationship between economic growth, financial devel-
opment and income inequality and concludes that financial growth is one reason for
increasing inequality; however, inflation and income inequality has a bidirectional
relationship. (Barlow et al., 2009) also study the impact of globalization, internal
reforms and private effects on inequality. (Goesling, 2005) studies that over a period
significance between nations inequalities has reduced and within nation inequality
has become prominent to study and understand. It has been established by various
researchers including (Papanek & Kyn, 1986) and (Barro, 2000) that echelon of
economic growth does not clarify the variations in inequality or their across different
countries. He strongly argues that the relationship between rates of economic growth
and investment and income inequality is negligible. (Gregorio & Lee, 2007) contend
that other than direct effects, inequality also has indirect effects on the growth as it
has a bearing on other factors of growth as well. (Barro, 2008) further affirms this
by studying relationship between health and income inequality and male upper-level
school attainment.
An in-depth study of inequality across the globe has been done and published by
Thomas Piketty. His analysis of India from 1922 to 2014 concludes that since the
beginning of income tax in India in 1922, the share of top 1% of national income
holders has been the highest at present (Chancel & Piketty, 2019). They argue that
in the period of 1980–2014, the bottom 0.1% of the people held share of national
income and wealth more than the bottom 50% of the people. (Piketty & Qian, 2009)
further study the income tax reforms in China and India and argue that over this period
Chinese income tax revenue has grown as a percentage of GDP due to reforms and
economic growth, but despite growth and reforms in India, the ratio of income tax
revenue to GDP remains constant due to exemption policy adopted.
A study made by (Huagun & Haynes, 2011) studies that the causal factor for
increasing regional disparity in China has been due to non-compensation in terms
of employment opportunities in other sectors resulting from economic growth and
loss of jobs in agricultural sector. Another study by (Jian et al., 1996) analyses
real income inequality in Chinese provinces and concludes that during the period
4 M. Mathur and V. Jain

of 1966–1978, real incomes started converging although after 1990, the divergence
in the real income started at a much faster rate due to rapid growth rate of coastal
provinces in comparison with interior provinces.
While (Kiyoto, 2012) studies the ambiguous effect of international trade on
income inequality through the multiple-cone neoclassical growth model. He argues
that labour surplus countries can see a rise in income inequality based on his results.
(Sun & Heshmati, 2010) study the impact of openness in international trade on
China’s growth and concluded that eastern region of China has witnessed a robust
growth, while Central and Westerns China has lagged in growth. (Edwards, 1997)
in a cross-country analysis suggests that trade openness and increasing inequality
cannot be linked together evidently in developing countries (Alsamawi et al., 2014)
found that inequality-intensive commodities like agricultural and electronic goods
produced in developing countries and their trade with developed countries have also
resulted in inequality. He further argues that consumption of such commodities has
been responsible for increasing within country inequality as well.
(Juo, 2016) studies the effect of informal employment on income distribution in
urban China and concludes that the higher section of the urban economy contributes
more towards income inequality in the country. In fact, findings of a study made for
OECD countries reveal that differences in wages and salaries are one of the primary
causes of increasing inequalities between rich and poor countries and that techno-
logical progress has been more beneficial to skilled workers (Foster et al., 2011).
While studying the poverty reduction in India across the states post-1990 period,
(Datt & Ravallion, 2002) study that the rural–urban gap in reduction of poverty ratio
has been expanding. In fact, findings of (Rey, 2001) based on study made in USA
focus on strong positive association between degree of regional autocorrelation and
measures of inequality.
(Fasianos et al., 2017) studied an asymmetric association between income
inequality and the household debt in USA. They argued that falling trends in
inequality does not affect household debt. (Berisha & Meszaros, 2018) also studied
household debt as one of the components for increasing inequalities and concluded
that rising income inequality may result in economic contraction.
Economic reforms in India and China have included financial sector reforms as
well which aimed to promote economic growth with financial inclusiveness. While a
study by (Claessens & Perotti, 2007) suggests that financial development can bring
down income inequality, liberalization in financial sector, if unguarded for, may
lead to increased inequalities. A study made by (Ang, 2010) explores the case of
India and concludes that lesser grown financial system and mechanisms affect poor
more adversely than rich and therefore developed financial system is necessary for
increasing equality. Another study of OECD countries by (Tridico, 2018) reveals that
financialization, a deepening of labour flexibility, the weakening of trade unions act
as primary factors for inequality in these nations. A study of financial development
in reducing inequality by (Seven & Coskun, 2016) suggests that although finan-
cial development helps in growth, it does not necessarily decrease the poverty ratio
in low income countries. Study of inequality of a sample of advanced and devel-
oping countries with the perspective of knowledge and use of financial markets
Factors Affecting the Growing Economic Inequality: An Empirical … 5

by (Prete, 2018) concludes that more economic literacy and knowledge lead to
lesser growth of inequality. (Sebastian & Sebastian, 2016) used credit to GDP ratio
to measure financial development suggesting that financial development increases
income inequality.
Access to health is one of the major determinants and consequences of inequal-
ities of opportunities. A study of BRICS nations made by (Mújica et al., 2014)
analyses that although there is increasing prosperity and improvement in health stan-
dards in these nations, sharp inequalities in health are present within and between
BRICS countries. A study of impact of privatization on economic growth and income
inequality in 82 countries for a period of 11 years (1991–2002) finds that privatiza-
tion does not have a significant negative impact, while good governance definitely
had positive effects on economy (Adams & Mengistu, 2008).
(Bumann & Lensink, 2016) explored the relationship between income inequality
and liberalization of capital account. They measured financial depth in terms of ratio
of private credit to GDP and found that financial liberalization helps reduce income
inequality if the financial depth is high, i.e. when the ratio of private credit to GDP
is equal to or greater than 25%.
(Haan & Sturm, 2017) examined the relationship between income inequality,
financial liberalization, financial development and banking crisis for 121 countries.
They concluded that though all the three factors have an unfavourable effect on
income inequality, financial development has a moderating impact on the relationship
between financial liberalization and income inequality.
Growth in the world today has been information and technology-based which has
given wings to the idea of globalization as well. Undoubtedly in India and China
too, the growth has been based on technology and Internet. Rise in income and
wealth inequalities is also attributed to growth of information technology as argued
by (Pohjola, 2002). (Jaumotte et al., 2013) examined the effect of technology, trade
and financial globalization on income inequality for fifty-one countries for a period
of 23 years and concluded that in most of the countries they studied, inequality
has increased in the upper part. They also found that while increase in trade leads
to lower income inequality, increased financial globalization results in increased
income inequality. Among other factors, skill premium earned by human capital
has been termed as one critical factor determining increasing inequality by (Zhuang
et al., 2014). The study strongly contends that higher level of wages earned by skilled
human capital is one of the major driving forces of inequality. Technological change
has favoured skilled labour more than unskilled one in terms of incomes. Their study
also holds regional inequality in India and People’s Republic of China as one of
the major inequality determinants. Spatial inequality measured by two components,
i.e. rural–urban inequality and interregional, has been argued as one more reason
for inequality in Asian countries. Study by (Wang et al., 2014) discusses the rural–
urban inequality and inter-household inequality. It further argues that Hukou system
has resulted into labour immobility from less grown rural areas to more developed
urban area, which has led to increasing inequality. While the study talked about other
factors as well, but the areas remain unexplored. So, the factors like trade openness,
financial sector growth, net foreign assets and healthcare expenditure have been
6 M. Mathur and V. Jain

explored in the present study. Various studies related to the inequality in different
sectors like or amounting to the extent have been made in India and China (Borooa
et al., 2015; Cain et al., 2010; Kumar et al., 2016), but after reviewing the literature,
study related to the aforementioned three factors in context of five BRICS countries
was not found explicitly. Therefore, this present study adds to the already existing
literature of inequality and its determinants from the period of 2000–2016 in Brazil,
China, India, Russian Federation and South Africa.
The above review of literature shows that though there are many studies conducted
on the factors affecting the increasing inequality yet there is a paucity of literature
focusing on India and China with respect to the factors affecting the inequality.

3 Research Objectives

Based on the research gap, the study puts forth the following objectives:
(1) To study the impact of trade openness on income inequality.
(2) To study the impact of healthcare expenditure on income inequality.
(3) To study the impact of domestic financial sector development on income
inequality.
(4) To study the impact of net foreign assets on income inequality.
Scope of the study is limited to the economic inequality in BRICS nations, i.e.
Brazil, China, India, Russian Federation and South Africa.

4 Data Description

The present study explores the relationship of trade openness, credit, net foreign
assets, healthcare finance, household expenses on health and capital health expendi-
ture on the economic inequality with reference to Brazil, China, India, Russian Feder-
ation and South Africa. Trade openness is defined as the ratio of sum of exports and
imports to GDP. Credit is defined as the ratio of private credit to GDP. Net foreign
assets are defined as the ratio of net foreign assets to GDP. Healthcare finance is
measured as the ratio of government schemes and compulsory contributory health-
care financing schemes to current health expenditure. Household expenses on health
are defined as household out-of-pocket payment towards health expenditure as a
percentage of current health expenditure. Capital health expenditure is measured as
a percentage of current health expenditure.
For the purpose of study, the data is collected for a period of 16 years from year
2000–2015. Since latest data for all the variables is not available, we have taken data
till 2015 only.
The data for inequality, i.e. the percentage of population having top 10% and
bottom 10% share in income, has been taken from world inequality database. Source
Factors Affecting the Growing Economic Inequality: An Empirical … 7

of data for domestic credit to private sector and GDP ratio, net foreign assets to GDP
ratio, health expenditure (all the variables) and trade openness is taken from World
Bank Database.

5 Research Methodology

For the purpose of analysis, data is first tested through the augmented Dickey–Fuller
test (ADF test) to check for stationarity, and then, a multiple regression is applied
to check the effect of trade openness, private credit, healthcare finance, household
expenses on health and capital health expenditure on the economic inequality. Further,
to explore the nature of causality, Granger causality test (Engle & Granger, 1987)
is also used. All the models are checked for autocorrelation using the LM test of
(Breusch, 1978) and (Godfrey, 1978). Wald test is applied to test the significance of
explanatory variables. Data is analysed using EViews 10.

5.1 Test for Stationarity

A series is considered stationary when it is a stochastic process with a constant mean,

variance and auto-covariance with change in time. A stationary series is reflective of
the previous behaviour of the series to future. This implies that if a shock appears in
a stationary series, its effect will gradually become weak. In other words, the effect
of the shock at time t + 1 will be weaker than that of t and will further decrease from
t + 1 to t + 2 and so on and so forth.
In order to examine whether each time series contains a unit root or it is stationary,
the study uses the most widely used stationarity test namely augmented Dickey–
Fuller test or ADF test (Dickey & Fuller, 1979). The null hypothesis of non-
stationarity is checked against the alternate hypothesis of stationarity in the ADF
test (Dickey & Fuller, 1979).

5.2 Granger Causality

Causative association between a set of two variables can be detected using the
Granger causality test (Engle & Granger, 1987). An independent variable (X) is
said to Granger cause the dependent variable (Y ), if the prediction error of depen-
dent variable (Y ) is condensed by using lagged values of independent and dependent
variable. For the purpose of this study, Granger causality is tested using the below
mentioned equation:
8 M. Mathur and V. Jain


p

p

p

p
Iτ = ϕ 10 + ϕ 11i I t−i + ϕ 12i T t−i + ϕ 13i F t−i + ϕ 14i NFA t−i
i=1 i=1 i=1 i=1

p

p

p
+ ϕ 15i HCF t−i + ϕ 16i HP t−i + ϕ 17i CHE t−i + u1t
i=1 i=1 i=1
(1)

Here, ϕ’s denotes the parameters that are to be estimated, ut ’s denotes the error
terms, and εt−1 is denoting the error correction term (ECT). Significance of short-run
causality is indicated by the F statistics on the lagged explanatory variables of ECM.
Lag length is selected using the Schwarz criterion (SIC) and Akaike info criterion
(AIC). The null hypothesis of no causality in Eq. (1) is H 0 : ϕ12i = ϕ13i = ϕ14i =
ϕ15i = ϕ16i = ϕ17i = 0 against H 1 : ϕ12i = ϕ13i = ϕ14i = ϕ15i = ϕ16i = ϕ17i = 0.
While Breusch–Godfrey Serial Correlation LM Test is used to check the pres-
ence/absence of autocorrelation in all the models, recursive estimates of CUSUM
test are applied to check the stability of the models. All the models were free from
serial correlation and were found to be stable at 5% level of significance.

6 Empirical Results

In the first step, descriptive statistics are calculated for all variables-dependent and
independent. Results of descriptive statistics are displayed in Tables 1, 2, 3, 4 and 5
for India, China, Brazil, Russian Federation and South Africa, respectively. Subse-
quent to this, after checking the data for stationarity using augmented Dickey–Fuller
(ADF) test, five regression models are run where inequality is the dependent vari-
able, while trade openness, domestic credit, net foreign assets, expense on healthcare
finance, household payments for health care and capital health expenditure are the
independent variables for Brazil, China, India, Russian Federation and South Africa,
respectively. Regression results are tested for autocorrelation using Breusch–Godfrey

Table 1 Descriptive statistics (India)

Statistics Inequality Trade Credit NFA HCF HP CHE
Mean 28.864 43.357 43.372 16.361 22.878 69.273 4.928
Median 28.175 46.375 46.876 16.457 22.341 69.982 4.982
Max 38.199 55.793 52.385 21.821 28.021 74.106 7.576
Min 19.426 26.274 28.339 8.576 19.633 62.224 2.960
SD 6.7301 10.157 9.111 3.551 2.580 3.986 1.499
Skewness 0.1023 −0.4732 −0.5634 −0.649 0.582 −0.436 0.148
Kurtosis 1.5417 1.9038 1.7146 3.255 2.270 1.799 1.933
Source Own calculations by author(s)
Factors Affecting the Growing Economic Inequality: An Empirical … 9

Table 2 Descriptive statistics (China)

Statistics Inequality Trade Credit NFA HCF HP CHE
Mean 61.878 50.083 121.242 41.754 41.676 49.535 7.426
Median 61.601 48.498 120.694 45.413 41.774 49.329 7.545
Max 78.563 64.478 152.551 56.127 60.181 64.191 11.550
Min 41.255 38.527 101.917 20.043 21.975 35.089 1.574
SD 11.244 8.6954 13.419 11.994 13.700 10.463 2.712
Skewness −0.2602 0.3173 0.683 −0.519 −0.071 0.014 −0.561
Kurtosis 2.0841 1.7980 3.004 1.935 1.468 1.386 2.523
Source Own calculations by author(s)

Table 3 Descriptive statistics (Brazil)

Statistics Inequality Trade Credit NFA HCF HP CHE
Mean 147.478 25.890 45.826 7.334 38.263 39.079 6.715
Median 145.290 26.042 45.782 9.686 39.071 38.368 7.836
Max 171.688 29.678 66.829 18.168 44.458 47.807 10.500
Min 123.386 22.106 27.686 −3.703 25.381 30.502 3.107
SD 13.061 2.098 14.982 6.285 5.440 5.718 2.703
Skewness 0.137 −0.231 0.157 −0.303 −0.714 −0.096 −0.134
Kurtosis 2.506 2.409 1.457 2.064 2.958 1.554 1.381

Table 4 Descriptive statistics (Russian Federation)

Statistics Inequality Trade Credit NFA HCF HP CHE
Mean 199.506 52.658 36.588 25.759 60.897 33.463 4.035
Median 197.913 51.706 41.554 25.567 61.730 33.398 3.799
Max 291.353 61.111 55.946 39.765 63.707 38.646 8.039
Min 133.692 46.193 16.838 11.701 58.041 30.792 1.215
SD 48.029 5.034 12.879 8.134 1.940 2.195 2.402
Skewness 0.634 0.319 −0.163 −0.189 −0.426 0.708 0.266
Kurtosis 2.527 1.677 1.788 2.182 1.659 3.006 1.501

Serial Correlation LM Test, stability using the recursive estimates of CUSUM test,
and finally, Wald test is applied to check the significance of independent variables.
Results of LM test and Wald test as reported in Tables 6 and 7, respectively, show
that the model is free from serial correlation and all the independent variables are
significant contributors to the dependent variable.
Regression results as presented in Table 8 show the impact of independent vari-
ables over the dependent variable. The results envisage that in India, a unit increase
in the ratio of private credit to GDP, healthcare finance and household out-of-pocket
10 M. Mathur and V. Jain

Table 5 Descriptive statistics (South Africa)

Statistics Inequality Trade Credit NFA HCF HP CHE
Mean 72.621 59.315 141.109 13.120 47.299 10.526 2.642
Median 48.455 60.113 145.941 14.344 50.530 10.139 2.901
Max 151.062 72.865 160.125 19.393 54.972 14.335 3.364
Min 34.135 51.078 110.718 2.742 33.439 7.699 1.405
SD 46.559 5.842 13.915 4.478 7.836 2.431 0.621
Skewness 0.935 0.507 −0.924 −0.802 −0.728 0.276 −0.590
Kurtosis 2.063 3.031 3.092 3.050 1.966 1.518 2.131

Table 6 Results of autocorrelation (Breusch-Godfrey serial correlation LM test)

Model F-value Obs R square
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) for 1.189558 (0.3592) 4.058577 (0.1314)
India
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) for 1.037567 (0.4030) 3.658583 (0.1605)
China
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) for 5.763861 (0.0601) 9.865277 (0.0672)
Brazil
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) for 1.72817 (0.1104) 11.72207 (0.1028)
Russian Federation
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) for 0.079044 (0.9249) 0.385076 (0.8249)
South Africa
Source Own calculations by author(s) p values in ()

Table 7 Results of wald test

Model F-value Chi square
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) 144.9221 (0.0000) 869.5325 (0.0000)
for India
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) 15.92990 (0.0002) 95.57940 (0.0000)
for China
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) 14.03555 (0.0007) 84.21330 (0.0000)
for Brazil
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) 11.506673 (0.02884) 19.040039 (0.01713)
for Russian Federation
F ineq (Ineq/Trade, Credit, NFA, HCF, HP, CHE) 7.242796 (0.0067) 43.45677 (0.0000)
for South Africa
Source Own calculations by author(s) p values in ()
Factors Affecting the Growing Economic Inequality: An Empirical … 11

Table 8 Regression results

Independent Inequality in Inequality in Inequality in Inequality in Inequality in
variable India China Brazil Russian South Africa
Federation
Intercept 20.47173 −63.57762 512.3010 264.6961 247.9905
[0.645148] [−0.630691] [2.839454] [0.109454] [0.849587]
(0.5394) (0.5439) (0.0218) (0.9155) (0.4203)
Credit −0.045484 0.238074 −0.794330 −4.718153 0.718818
[−0.184783] [0.748876] [−1.937138] [−1.032961] [0.708629]
(0.8586) (0.4730) (0.0887) (0.3318) (0.4987)
Trade 0.008935 0.178964 −1.825350 −0.411907 1.654383
[0.119080] [0.854044] [−2.260357] [−0.032754] [1.120579]
(0.9086) (0.4152) (0.0537) (0.9747) (0.2950)
NFA 0.011643 0.394158 2.012691 2.815060 2.012698
[0.065132] [0.881852] [2.371345] [0.632936] [0.620233]
(0.9499) (0.4008) (0.0452) (0.5444) (0.5524)
HCF −0.309016 1.138212 −2.194610 −2.708968 −1.218591
[−0.723201] [1.116066] [−1.196632] [−0.119822] [−0.199556]
(0.4930) (0.2933) (0.2657) (0.9076) (0.8468)
HP −0.187716 0.689100 −4.707428 6.653836 −19.43865
[−0.603122] [0.612169] [−1.908237] [0.373158] [−1.385705]
(0.5654) (0.5556) (0.0928) (0.7187) (0.2032)
CHE 0.201841 −1.406919 −4.168379 −0.267389 −52.64915
[0.221572] [−0.619987] [−1.904178] [−0.027612] [−2.553827]
(0.8310) (0.5506) (0.0934) (0.9786) (0.0340)
Adjusted R2 0.253661 0.856568 0.848178 0.178406 0.727927
Source Own calculations by author(s), t values in [], p values in ()

expenses helps reduce the income inequality by 0.045484 units, 0.309016 units and
0.187716 units, respectively. On the contrary, a unit increase in the trade, net foreign
assets to GDP ratio and capital health expenditure leads to an increase of 0.008935
units, 0.011643 units and 0.201841 units in income inequality, respectively. This
indicates that an increase in the share of private credit, healthcare financing and
household expenses on health has a favourable impact on income inequality whereas
an increase in trade, net foreign assets and capital health expenditure has an adverse
impact on income inequality in India. This relationship between the variables can be
expressed in the form of following equation:

Ineq_I N= 20.47173 − 0.045484 Credit + 0.008935 Trade

+0.011643 NFA − 0.309016 HCF − 0.187716 HP + 0.201841 CHE
(2)

With respect to China, the results show that while a unit increase in private credit
to GDP ratio, trade, net foreign assets to GDP ratio, healthcare finance and household
out-of-pocket expenses leads to an increase in income inequality by 0.238074 units,
12 M. Mathur and V. Jain

0.178964 units, 0.394158 units, 1.138212 units and 0.689100 units, respectively.
On the contrary, a unit increase in capital health expenditure results in a 1.406919-
unit decrease in income inequality. These findings envisage that while increase in
private credit to GDP ratio, trade, net foreign assets, healthcare financing and house-
hold out-of-pocket expenses has an adverse impact on income inequality, increased
capital expenditure on health has a favourable impact on income inequality in China.
Following expression sums up the above findings:

Ineq_C N= − 63.57762 + 0.238074 Credit + 0.178964 Trade

+0.394158 NFA + 1.138212 HCF + 0.689100 HP − 1.406919 CHE
(3)

Regression results for Brazil show that every one-unit increase in private credit
to GDP, trade, healthcare finance, household out-of-pocket expenditure and capital
expenditure on health leads to lower the income inequality by 0.794330 unit,
1.825350 unit, 2.194610 unit, 4.707428 units and 4.168379 units, respectively.
Whereas, with every one-unit increase in net foreign assets, income inequality
increases by 2.012691 units. In short, while the share of private sector credit,
trade, healthcare finance, household expenditure and capital health expenditure has
a favourable impact on lowering the income inequality, net foreign assets have an
adverse effect on reducing it. Following expression presents the above relationship:

Ineq_B= 512.3010 − 0.794330 Credit − 1.825350 Trade

+2.012691 NFA − 2.194610 HCF − 4.707428 HP − 4.168379 CHE
(4)

Regression results for Russian Federation show that while a unit increase in
private credit to GDP, trade openness, healthcare financing and capital health expen-
diture leads to lowering the income inequality by 4.718153 units, 0.411907 units,
2.708968 units and 0.267389 units, respectively, a unit increase in net foreign assets
and household expenses leads to a rise in income inequality by 2.815060 units and
6.653836 units, respectively. This implies that while private credit, trade openness,
healthcare financing and capital health expenditure have a favourable impact on
lowering the income inequality, net foreign assets and household expenses have an
adverse effect on lowering this inequality. This relationship can be expressed in the
form of following equation:

Ineq_R F= 264.6961 − 4.718153 Credit − 0.411907 Trade

+2.815060 NFA − 2.708968 HCF + 6.653836 HP − 0.267389 CHE
(5)

Regression results for South Africa show an increase of 0.718818 units, 1.654383
units and 2.012698 units in income inequality with a unit change in private credit
to GDP, trade openness and net foreign assets, respectively. On the contrary, a
Factors Affecting the Growing Economic Inequality: An Empirical … 13

Table 9 Results of granger causality test

Dependent variable Trade Credit NFA HCF HP CHE
Ineq . India 1.29979 3.30668 3.03793 0.45321 0.61479 1.99247
(0.3192) (0.0838) (0.0981) (0.6493) (0.5620) (0.1921)
Ineq . China 5.81405 4.43646 5.40184 3.63024 3.16744 7.54863
(0.0239) (0.0456) (0.0288) (0.0698) (0.0909) (0.0119)
Ineq . Brazil 0.84671 2.65370 0.79353 1.33750 1.08158 1.89043
(0.4639) (0.1306) (0.4849) (0.3154) (0.3839) (0.2126)
Ineq . Russian Federation 1.26622 0.74316 1.59808 3.06953 0.48726 0.63805
(0.3328) (0.5058) (0.2607) (0.1025) (0.6314) (0.5532)
Ineq. South Africa 0.06149 0.11288 1.66780 1.10216 66.2016 0.64053
(0.9408) (0.8947) (0.2481) (0.3778) (1.E-05) (0.5520)
Source Own calculations by author(s) p values in ()

unit increase in healthcare financing, household expenditure on health and capital

health expenditure results in lowering the income inequality by 1.218591 units,
19.43865 units and 52.64915 units, respectively. This implies that while private
credit, trade openness and net foreign assets have an unfavourable effect on lowering
the income inequality in South Africa, expenditure on healthcare financing, house-
hold expenses on health and capital health expenditure have a favourable contribution
towards lowering the income inequality. The following equation expresses the above
relationship:

Ineq_S A= 247.9905 + 0.718818 Credit + 1.654383 Trade

+2.012698 NFA − 1.218591 HCF − 19.43865 HP − 52.64915 CHE
(6)

Post the regression analysis, data is tested for causality using the Granger causality
test. Results of Granger causality are presented in Table 9 which envisages that
though there is no statistical evidence of causative association of trade openness,
private credit and healthcare expenses with inequality in Brazil, China, India, Russian
Federation and South Africa, net foreign assets have a significant causal association
with inequality only in Brazil. This is consistent with the available literature as well
which says that it is difficult to establish a causative association between the variables
under study. (Piketty & Zucman, Capital is back: Wealth–Income Ratios in Rich
Countries 1700–2010, 2014; Piketty & Qian, Income Inequality and Progressive
Income Taxation in China and India, 1986–2015, 2009; Sebastian & Sebastian,
2016).
14 M. Mathur and V. Jain

7 Discussion

BRICS economies form the major share of fastest growing economies of the world
and are crucial in development of the world. Inequality in these countries affects
approximately 41% of the global population. The factors that have been studied
across the globe which have contributed in increasing inequality are many, but in
these emerging economies, the openness in terms of globalization increased during
and post-1990s, and thus, it has been one of the factors which needs to be studied
in detail. BRICS nations had focused on the growth of their financial market and
strengthening its structure as the number of financial institutions, instruments and
tools has grown over a period. Asymmetric expenditure on health care requirements
and inaccessibility to health care is also one of the important socio-economic deter-
minants which have been responsible for pushing people below the poverty line. For
example, in India, approximately 70% and in China, approx. 65%, health care needs
are fulfilled through out-of-pocket expenditure. The same holds for countries like
Brazil, Russian Federation, and South Africa.
This study focusses on the extent to which the above five variables have been
responsible for increasing income inequalities in BRICS nations (Brazil, China,
India, Russian Federation and South Africa). It is a pertinent aspect of economy
to check that when financialization in the economy rises, does it lead to deepening
inequality? Studies in OECD and other developed countries have shown a direct
relationship between increasing financial growth and rising inequality. Some of the
researchers have also argued that intensification of labour flexibility has resulted in
labour becoming more vulnerable having an adverse impact on equality. It reflects an
ironical situation as a few studies show that even if financial growth has been taking
place, its skewed in developing countries, and on the other hand, the study of devel-
oped countries shows increased financialization resulting to increasing inequality.
Study of Brazil, China, India, Russian Federation and South Africa, in this paper,
tries to analyse this situation, and based on findings, it can be observed that as there
is increasing financial growth in these countries, there has been a some positive
effect on reducing inequality. As per a recent report of World Health Organization,
out-of-pocket expenditure in South East Asian countries is declining, but share of
public spending is very low in these countries especially the middle income coun-
tries (Xu et al., 2018). This is one of the important social indicators of inequality in
any economy. Thus, this paper analysed the variables like household out-of-pocket
payment towards health expenditure as a ratio of current health expenditure and
capital health expenditure as a percentage of current health expenditure. The findings
suggest that out-of-pocket expenditure on health has been responsible for decreasing
inequality in India, Brazil, Russian Federation and South Africa. Although the results
show that this feature has been statistically insignificant. Various researchers have
studied inequality in access to health care, but it is also one of the major reasons for
increasing inequality. Access to health care requires intensive studies by researchers
not only in terms of physical availability and financial accessibility but also quality
of care.
Factors Affecting the Growing Economic Inequality: An Empirical … 15

Most of BRICS nations have witnessed economic reforms/openness from late

1980s and prominently from 1990s. The reforms have been in terms of opening of
the economies for movement of goods and services, capital and labour across the
borders. The process of globalization has resulted into rising growth rates for them,
but at the same time, the Gini coefficients for all these countries remain high. There
have been several studies related to impact of globalization on India and China,
and the findings have been positive as well negative on sectoral basis. Studies by
(Kanbur, 2014) also reveal that openness has made nations’ economies more volatile
and instable which affects inequality and poverty in its own way. He concludes that in
last 30 years global integration has led to rising inequalities (of various types) both in
developing as well as developed countries. (Alvaredo et al., 2013) argue that share of
top income earners has increased over last 20 years in India and China as compared
to European countries. Thus, present study provides with some analyses of the area
which reveals that trade openness had adverse effect on income equality in emerging
BRICS economies except South Africa. This calls for better governance to provide
the benefits of trade openness to all the sections of the society. Studies by (Lim &
McNelis, 2016) suggest mixed results for effect of trade and financial openness on
improving Gini outcomes and also suggest that these changes depend upon the stages
of economic development. Study of 51 countries for impact of trade and financial
openness reveals that while trade globalization is associated with reduced inequality,
financial globalization is related to increasing inequality (Jaumotte et al., 2013).
This study also shows mixed results for trade openness on inequality amongst five
nations, and it suggests that India, China, and South Africa have had a positive impact
in reducing inequality. However, results show that financial assets have a positive
impact in reducing inequality in all five nations.

8 Conclusion

The present study is an attempt to study the effect of trade openness, credit, net
foreign assets, healthcare finance, household expenses on health and capital health
expenditure on the economic inequality in Brazil, China, India, Russian Federation
and South Africa. The study envisages the favourable impact of increase in the
share of private credit, healthcare financing and household expenses on health over
income inequality and unfavourable impact of increase in trade, net foreign assets
and capital health expenditure over income inequality in India; favourable impact
of capital health expenditure and unfavourable impact of increase in the share of
private credit, increase in trade, increase in net foreign assets, increase in healthcare
financing and household expenses on health over income inequality in China. In
Brazil, increase in net foreign assets has an unfavourable impact on lowering income
inequality, while there is a favourable impact of increase in the share of private credit,
increase in trade, healthcare financing, household expenses on health and capital
health expenditure over income inequality. In Russian Federation, private credit,
trade openness, healthcare financing and capital health expenditure have a favourable
16 M. Mathur and V. Jain

impact on lowering the income inequality, whereas net foreign assets and household
expenses have an adverse effect on lowering this inequality. While private credit, trade
openness and net foreign assets have an unfavourable effect on lowering the income
inequality in South Africa, expenditure on healthcare financing, household expenses
on health and capital health expenditure have a favourable contribution towards
lowering the income inequality. These results implicitly mean that policymaking in
Brazil needs to focus more on increasing private credit, trade openness and health
care. It also needs to focus on introducing new reforms for its foreign assets and
related policies to narrow the gap between different income groups. China’s economy
needs to prioritize on availability of private sector credit to more inclusive population
and benefits of capital expenditure in healthcare sector to be more widespread. China
needs to introduce reforms in the sector of finance, trade and health care as all these
are leading to an increased inequality in China. India needs to focus more on reducing
out-of-pocket household expenditure on health and reforms in globalized policies to
bring inclusive growth in the country. Russian Federation needs to focus on policy
decisions pertaining to easy availability of private credit and increased healthcare
financing and also introduce new measures to reduce the adverse effect of its foreign
assets along with steps to reduce household expenditure on health. Last but not the
least, South Africa needs to focus on increasing the expenditure in the sector of
health and formulate policies to reduce the adverse impact of growing private credit,
trade openness and foreign assets. In nutshell, BRICS nations shall implement policy
decisions which help in reducing the skewness in financial availability, healthcare
accessibility and more inclusively share the fruits of trade openness with all sectors
of the economy.
Although all BRICS nations fall into the category of emerging economies, we
need to look at many aspects of inequality and explore the factors affecting the same.
Although all BRICS nations fall into the category of emerging economies, we need to
look many aspects of inequality and reason out the factors responsible. But it cannot
be denied that the five variables considered above are important to be considered as
determining factors of inequality.
These conclusions can be summarized in following table.

Table 10 Summary of conclusions

Variable Brazil China India Russian Federation South Africa
Credit Favorable Unfavorable Favorable Favorable Unfavorable
Trade Favorable Unfavorable Unfavorable Favorable Unfavorable
NFA Unfavorable Unfavorable Unfavorable Unfavorable Unfavorable
HCF Favorable Unfavorable Favorable Favorable Favorable
HP Favorable Unfavorable Favorable Unfavorable Favorable
CHE Favorable Favorable Unfavorable Favorable Favorable
Factors Affecting the Growing Economic Inequality: An Empirical … 17

9 Scope of Future Research

Macroeconomic factors like share of ICT capital in the capital block, net international
investment position, skill premium, access to education and government spending
can be studied for these five countries to have a comprehensive view of the issue.

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Prospects of FDI-Driven
R&D—A Comparison Between Indian
and Foreign Pharmaceutical Firms

J. C. Sharmiladevi

Abstract It is now an acknowledged and well-researched fact that foreign direct

investment facilitates and enhances development of underdeveloped and developing
economies. Multinational companies have also understood that with FDI, they can
do more business than any other form of internationalization. India has proved to be
as one of the attractive destinations for research and development (R&D). R&D FDI
in India is increasing, but, at the same time, this increase is not matching with core
R&D activities. Non-core R&D activates dominate 50% inflow of R&D, as most of
these activities get tax concession from the government. R&D FDI is mainly made to
take benefits, tax concessions from the government, which dilutes the desired benefits
and spillover effects of FDI. An attempt is made in this chapter to check whether the
foreign companies are going in tune with Indian companies in creating more R&D.
Data is taken from pharmaceuticals companies, where the R&D intensity is very high.
R&D and innovative potentials of foreign and Indian companies are compared from
their balance sheet data. Results indicate that Indian owned companies are investing
more towards R&D, than foreign owned companies, which is a highly encouraging
phenomenon considering the current demand for innovation .

Keywords Research and development · Multinational corporations · Indian

companies and foreign direct investment

1 Introduction

In recent time, researchers who are undertaking studies in international businesses

have given significant place to the role played by foreign direct investment (FDI) in
enhancing the productivity of domestic firms in domestic markets (Zhang et al.,
2010). Research and development (R&D) is the core component for economic
growth, which leads to innovation and innovation in turn leads to economic growth.

J. C. Sharmiladevi (B)
Symbiosis Centre for Management Studies, Symbiosis International (Deemed University), Pune,
Maharashtra, India
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 21
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_2
22 J. C. Sharmiladevi

R&D allows scientists, technologists, researchers to develop new methods, tech-

niques and create knowledge which enhances the quality and quantity of output.
In the current period, firms depend largely on other external sources for enhancing
the technical and innovative advantages, which necessitates the need to collaborate
more with suppliers, contractors, competitors, universities and institutions (Kedia
and Jain, 2013). To remain in the limelight, multination corporations (MNCs) adopt
global strategies for their R&D activities. Technological and R&D alliances have
become strategic needs for MNCs currently (Cassiman & Veugelers, 2006). Many
MNCs locate their production facilities abroad through their subsidiaries and collab-
orations with local companies, mainly to cater to the local demands, taste and locally
sourced materials. R&D facilities need to be created to make modifications and fit to
the needs of the products and technologies (Mrinalini & Sandhya, 2013). Competi-
tiveness or the competitive power is now no longer determined by factor-endowments
and resources but by R&D and innovations (Erdal & Göçer, 2015).
Research and development is a learning process and takes place in different forms
like reverse engineering, learning by doing, using, observing and sharing with others.
For developing countries, promoting indigenous research and development is one of
ways available for bridging the technology gap with developed countries. Adoption
of foreign technology is an important channel for diffusion of technology in a host
country, which has drawn attention of many policy makers in developing countries.
In this context, many countries strive to attract more FDI through MNCs in the hope
that they will act as a significant channel for transfer and spillover of technology.
As the international competition is highly dynamic, it is essential for countries
and firms to develop new technologies and products to sustain. In this juncture, it
has become essential for developing countries to have domestic firms with ability to
design and produce high-tech products and qualified workforce, establishing produc-
tion facilities to host countries by means of foreign direct investment (FDI) inflows
(Erdal & Göçer, 2015). With this backdrop, the motivation for this student is to
examine and analyse the potentials of Indian owned companies with foreign owned
companies in terms of their total income and expenditure, research and development
expenditure. The objective of this study is to identify, whether the Indian owned
companies are doing better with their foreign counters parts in terms of R&D. This
can be analysed in various manners; in this study, the researcher has analysed some
of the vital annual financials like total income, total expenditure, expenditure on
research and development for the top five Indian and foreign companies.

2 Review of Literature

As early in 1970s, R&D activities were undertaken by MNCs in foreign locations

(Mansfield et al., 1979; Ronstadt, 1978). One-half and one-seventh respectively of the
industrial R&D performed in Canada and UK and Germany were undertaken in US-
based firms (Mansfield et al., 1979). Swedish-based MNCs located their R&D activ-
ities in other developed countries, to leverage upon the man power and infrastructure
(Mrinalini et al., 2012).
Prospects of FDI-Driven R&D—A Comparison Between Indian … 23

Table 1 Organization/categorization of R&D activities

Mode R&D organizations in MNCs Activities
1 Central for global Technology development in home country for global
markets which are centralized
2 Local for local Technology development for local markets which are
decentralized
3 Local link Specific technology development at particular locations
for global markets
4 Globally linked Technology development through cooperation in R&D in
different countries for global markets
Source Bartlett and Ghosal (2013)

Most of the MNCs look in for strategic alliances with firms located in developed
countries, despite the fact that developing countries like China and India have become
Asia’s hot spots of MNC R&D activities and facilities (Sun et al., 2006). Four modes
of R&D organizations in MNCs have been identified by Bartlett and Ghosal (Table
1).
Ronstadt’s pioneering studies on technological activities within American MNCs
indicate four different R&D activities: technology transfer, indigenous technology,
global technology and corporate technology. In another effort, Kuemmerle cate-
gorized global R&D activities into two groups: home-base-exploiting R&D that
aims at exploiting firm-specific capabilities in manufacturing and marketing, and
home-base-augmenting R&D undertaken to acquire new knowledge and capabilities.
Recently, Sun classified MNC R&D as strategic and tactical, on the basis of their
importance. Strategic R&D occupies importance for the global markets of MNCs’ in
the long-run. Tactical R&D is significant for local markets in the short term. Both are
different with respect to the nature and extent of activities, requirements for quality
of labour force, communication channels, differences in markets, commitment and
control from hierarchy to their locations in host countries (Sun et al., 2006).
A 1% increase in FDI inflows is leading to 0.38% and 0.13% increase in R&D
investment for domestic and foreign firms, respectively. FDI positively influences
a firms possibility and tendency in R&D besides inducing the host participants to
pursue R&D activities irrespective of whether they are from a local or a foreign firm
(Khachoo & Sharma, 2017). FDI in India has resulted in a reduction in R&D by
manufacturing firms for short time period between 1994 to 1996, but it did not have
any significant effect in the second half of the economic reform period from 1999 to
2001 (Kathuria, 2008).
Innovations and technology development are usually expected to take place in
MNEs from developed countries (Castellani & Zanfei, 2013), which goes in tune
with product life cycle hypothesis of Raymond Vernon (Vernon, 1966), and it is
further explained with economies of scale associated which are the result of R&D,
learning outcomes, economies of agglomeration, access to a rich and growing market
(De Beule & Somers, 2010).
24 J. C. Sharmiladevi

Forces acting on
transferring R&D activities
abroad

Centripetal Force- Tendency Centrifugal Force- Tendency which

to centralize R&D in firm’s pulls corporate R&D to locations
home country outside home country

Fig. 1 Forces acting on transferring R&D activities. Source De Beule and Somers (2010)

There exists a link between foreign ownership, innovative behaviour and perfor-
mances of enterprises. Membership in an MNE group, helps companies to overcome
financial, technological, market and organizational obstacles. In such incidences the
nationality of parent companies have less significance in relation to their innovative
behaviours and performances (Dachs & Ebersberger, 2009).
In terms of transferring R&D activities abroad, two forces act upon namely
centripetal and centrifugal forces. Centripetal forces are the one which supports
centralized R&D in the firm’s home country and centrifugal forces are the one which
pulls corporate R&D activities to different locations outside of home country (De
Beule & Somers, 2010) (Fig. 1).
From starting of 1960s, MNEs conducted R&D activities outside of their home
countries mainly to support the manufacturing activities of their local subsidiaries.
Such R&D activities are sometimes also used to for product adoption and local
technology development for meeting market demands (Doh, 2005). This strategy is
termed as asset exploiting, home-base exploiting or competence exploiting invest-
ment activities. Asset-exploiting strategies are associated keeping with the view
that the MNEs function as a means to exploit firm-specific advantages in foreign
markets (Dunning, 1998). Subsidiaries supports the exploitation of R&D activities
by adapting technologies, products and processes to local needs, end user tastes and
regulations (Dachs & Ebersberger, 2009). Study conducted by Sun (Sun et al., 2006)
indicates that majority of foreign R&D in China is adaptive as well as tactical in
nature and serves the Chinese market effectively; at the same time, strategic foreign
R&D also exists, and they are engaged in projects for Chinese as well as global
markets and they also conduct long-term original research.
Studies conducted on overseas R&D expenditure of US-based manufacturing
MNEs indicate that too much attention given to MNE affiliates as technology creators
is often not benefitting the host country economy. As the intercountry difference in
R&D intensity is fundamentally determined by domestic market size and overall
R&D capability, the impact of domestic market orientation of affiliates on R&D
propensity varies depending on a particular countries’ stage of global economic
integration (Athukorala & Archanun, 2013).
Prospects of FDI-Driven R&D—A Comparison Between Indian … 25

3 Research and Development in India

In India, the R&D contributions come from private and public sources. Private
R&D comes from large companies in specific industry sectors like pharmaceuti-
cals and electronics; public R&D comes from government exploration in defence,
atomic energy, space technology and agriculture. The pie-chart shows how the R&D
spending in India is broken up in terms of the spenders, and non-private R&D takes
the cake at 62% with the private sector and the industry contributing the balance.
According to a survey conducted by the Department of Science and Technology
(DST), India, stands fourth among other countries in terms of the R&D spending
as a percentage of gross domestic product. But the disturbing fact is the percentage
remains same from 1996 to 2015. Table 2 indicates the R&D as percentage of gross
domestic product in 1996 and 2015 for four countries. More than 80% of R&D
spending are met by some of the public sector and government agencies like Defence
Research and Development Organization (DRDO), Indian Space Research Organiza-
tion (ISRO), Indian Council of Agriculture Research (ICAR), Department of Atomic
Energy, Central Scientific and Industrial Research (CSIR), etc.
In Table 3, a comparison is made between per capita R&D among ten countries.

Table 2 R&D as percentage

Country R&D as % of GDP 1996 R&D as % of GDP 2015
of gross domestic product
China 0.56 2.07
Denmark 1.80 3.01
Germany 2.13 2.88
India 0.63 0.63
Source Department of science and technology, Government of
India

Table 3 R&D expenditure

S. no. Countries Per capita R&D
per capita and gross domestic
product for selected countries 1 Denmark 1870.3
2 Sweden 1860.4
3 Israel 1572.1
4 USA 1430.5
5 UK 790.2
6 China 154.7
7 Brazil 131.5
8 Argentina 78.2
9 South Africa 55
10 India 10.8
Source UNESCO
26 J. C. Sharmiladevi

Table 4 National expenditure on R&D in relation to GDP

Year R&D as % of GDP* R&D as % of GDP (year on year
growth) **
2005–2006 (series 2004–2005) 0.81 –
2006–2007 0.80 −0.01
2007–2008 0.79 −0.01
2008–2009 0.84 −0.05
2009–2010 0.82 −0.02
2010–2011 0.77 −0.05
2011–2012 (series 2011–2012) 0.76 −0.01
2012–2013 0.74 −0.02
2013–2014 0.71 −0.03
2014–2015 0.69 −0.02
Source * Department of science and technology, ** author’s own

It is understood well that the R&D per capita is extremely poor for India when
compared with its competing countries like China, Brazil or Argentina.
An analysis of Table 4 indicates that there is no significant increase in the national
expenditure on R&D from 1995–1995 (0.61) to 2014–2015 (0.69), which gives an
indication of the inclinations of the government towards this sector. Governments
hand holding is needed in order to enhance the investment and expenditure on R&D.
The trend line shown in Fig. 2 indicates that the R&D expenditure is not consistently
increasing. It was the highest in 2008 and 2009, after which it is not able to revive
and continues to fall down (Fig. 3).

4 The Indian Pharmaceutical Industry

The Indian pharma industry (IPI) is world’s third largest in terms of volume and
supplies nearly 50% of world demand for vaccines, generic medicines, contributing
to health care by manufacturing high-quality, cost-efficient medicines to Indian as
well as to global market, with dominant local brands and intense competition among
the foreign players. IPI along with government and other stake holders is responsible
for increasing drug penetration rate to more than 50%, making India Polio-free,
bringing down treatment costs of life-threatening diseases like Chronic Myeloid
Leukaemia and Hepatitis C, to less than five per cent of its original cost.
The IPI is ranked third in terms of volume and tenth in value, having many
unique characters 70–80% if retail market is dominated by branded generics, as early
investors domestic firms dominates in formulation development, low price driven by
intense competition, all of which presents their own opportunities and challenges
(McKinsey & Company, 2015). IPI has contributed to India’s economic growth by
providing direct and indirect employment to over 2.7 million people in high-skill
areas like R&D and manufacturing. The industry generates over USD 11 billion of
Prospects of FDI-Driven R&D—A Comparison Between Indian … 27

Annual R&D Spending in India 2014-15 (%)

3.9
5.5
7.4
38.1

45.1

Public Sector Central Government

State Governments Public Sector Units
Institute of Higher Learning

Fig. 2 System of splitting annual R&D in India (%). Source Department of Science and Technology,
Government of India

Fig. 3 National R&D expenditure and its percentage with gross domestic product
28 J. C. Sharmiladevi

trade surplus every year and is among the top five sectors contributing to the reduction
of India’s trade deficit. Their current revenue of USD 38 billion can be attributed
to its world class capabilities in areas like formulation development, entrepreneurial
ability of firms and the vision of the industry to establish India’s footprint in large
international markets.
Some of the key features of the industry include produced different dosage forms
with good manufacturing practices (GMP) certification, the second highest number
of United States Food and Drug Administration (USFDA) approved facilities, 40%
less labour costs. IPI is ranked third in terms of volume and tenth in value, having
many unique characters 70–80% if retail market is dominated by branded generics,
as early investors domestic firms dominates in formulation development, low price
driven by intense competition, all of which presents their own opportunities and
challenges (McKinsey & Company, 2015).
From a market size of USD 12.6 billion in 2009, the Indian pharmaceutical market
will grow to USD 55 billion by 2020, with the potential to reach USD 70 billion in
an aggressive growth scenario. In a pessimistic scenario characterized by regulatory
controls and economic slowdown, the market will be depressed and (Fig. 4).
Growth of IPI is largely governed by global scenarios rather than domestic busi-
ness environment. As it is a highly knowledge-based industry, technology becomes
outdated fast, and the process of innovation is highly expensive and runs for long dura-
tion. So the demand for technology is met by resources rich western world (Lalitha,
2002). IPI faced highest drop in its growth trend from 17.2% in the pre-reform period
to 1% in post-reform period (1990–1991 to 2003–2004), which is mainly attributed
to lack of investment in R&D in the wake of high competition in the 1990’s (Mehta,
2011). Most of the investments made in IPI is undertaken in reverse engineering
rather than developing new products (Lalitha, 2002) which can be a reason for this
drop (Fig. 5).

New market creation

Patented products Enhanced medical

infrastructure
Rising Income

Greater health Rise in prevalence

insurance and treatment of
coverage chronic diseases

Fig. 4 Reasons for rising income in IPI. Source McKinsey and Company (2015)
Prospects of FDI-Driven R&D—A Comparison Between Indian … 29

Fig. 5 Projected size of IPI by 2030. Source Alliance (2019)

The IPI is poised for growth with current rates of 7–8% compounded average
growth rate (CAGR), with annual revenues expected to grow up to 80–90 billion
USD by 2030 (Alliance, 2019).

4.1 Opportunities

Stepping up
exports in
underpenetrat
ed markets
Leveraging the
patent cliff

Leverage India's strengths in

IT and ITES

Capitalizing on demographic divide

Focusing on biosimilars, gene therapy &

speciality drugs

Focus on Healthcare
30 J. C. Sharmiladevi

4.2 Challenges

Achieving Universal healthcare

Pricing & Investment decision

InnovationDependence on
external market

Export risk due to

buyer consolidation

Scrutiny in
quality
compliance

The IPI with all its merits and limitations holds to be a good case to study as
it is highly driven by investment and innovation—both coming from MNCs in the
form of FDI primarily, and this justifies the reason for choosing this industry among
others.

5 Methodology Adopted and Data Analysis

This study is an applied research and adopts an empirical research design, using
longitudinal data from secondary source. The objective of this study is to identify,
whether the Indian owned companies are doing better with their foreign counters
parts in terms of research and development, which is analysed with the help of
total expenditure, expenditure on research and development for the top five Indian
and foreign companies. Foreign companies mean here, those pharmaceutical firms
receiving more than 10% of their investment funds from foreign sources and operating
either as associates, subsidiaries or branches in India. The routes for receiving such
funds are through FDI.
Data is taken from Prowess database from Centre for Monitoring Indian Economy
(CMIE) from 2009 to 2018 non-annualized. The companies are identified in terms
of their ranking on the basis of market capitalization, as well as their opera-
tion in India. Their balance sheet data is taken for ten years, data pertaining to
total income, total expenditure, research and development expenditure are taken
for the ten companies. The ten companies include five Indian owned and five
Prospects of FDI-Driven R&D—A Comparison Between Indian … 31

foreign owned companies. Indian companies are Cipla, Lupin, Sun Pharmaceuti-
cals, Reddy’s laboratories, Aurobhindo pharma. Foreign companies include Pfizer,
Glaxo Smith Kline Becham\Smithkline Beecham, Proctor and Gamble health, Sanofi
and Zydus. Due to non-availability of adequate data, two companies from the list
were dropped—Reddy’s laboratories and Zydus.
Firstly, research and development expenditure as a percentage of total expenditure
is calculated by the researcher in order to understand the importance; individual
companies are giving towards R&D. Table 5 indicates the details pertaining to total
income, total expenditure, research and development expenditure as captured from
their respective company balance sheets. The calculation is shown in Table 5, which
indicates that the Indian owned companies average expenditure on research and
development as a percentage of total expenditure is very high when compared with
any of the foreign counterparts. Lupin laboratories stand first with an R&D spending
of 16.5%, followed by Sun pharmaceuticals at 9.02%. Cipla’s figure is at 7.07% and
Aurobhindo pharma spends 5%. While the figures for Indian owned companies are
encouraging but from the table, it indicates that the foreign owned companies average
expenditure on research and development as a percentage of total expenditure is very
less. Pfizer-1.51%, P&G health-1.07%, Sanofi-0.45%, GSK/SKB-0.23%.
Secondly, one sample t test is used to test whether the sample mean is different
from the population mean. As the researcher is not aware of the population mean,
calculation of one sample t test is more meaningful than undertaking z test. One
sample t test is separately done for Indian owned and foreign owned companies and
their hypothesis are as follows. This t test is conducted for the variable total income
and research and development expenditure.
H 0 : Sample mean is not the same as the population mean.
H 1 : Sample mean is same as the population mean.
If the significance (p-value) is less than 0.05 (95%), we reject the null hypotheses
and accept the alternate hypothesis.
Thirdly, regression coefficient is calculated taking total income as an independent
variable and research and development expenditure as a dependent variable. This
exercise is also calculated separately for Indian and foreign companies. If the regres-
sion square value is high crossing 0.60, then it is an indication that the dependent
variable is significantly influencing independent variable that is total income.
In Fig. 6, it indicates that the expenditure on R&D is ranging high for Indian
companies and the four foreign companies Pfizer, GSK, P&G and Sanofi is having
a lowest range of averages for R&D as a percentage of total expenditure.
One sample t test is undertaken for to know whether or not the sample mean is
different from population mean for the variables average total income and average
research and development expenditure. Results of the one sample t test indicates that
the sample mean is the same as the population mean; as the significance value is 0.002
which is less than 0.5, we reject the null hypothesis that the sample mean is same
as the population mean in terms of the average total income for Indian companies
(Tables 6 and 7).
Table 5 .
32

Name of Details: Mar 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Averages
company 2009–Mar 2018:
Non-annualized:
Rs. million
Aurobhindo Total income 30,248.30 34,404.20 42,870.00 43,977.90 55,960.10 73,443.30 83,120.60 95,116.70 99,171.60 103,838.00 66,215.07
Pharma Ltd Total expenses 29,252.30 30,621.40 38,295.80 43,505.30 52,211.00 62,079.90 69,548.00 80,265.60 81,790.80 89,052.10 57,662.22
R&D expenses 1032.30 1,014.80 1,757.20 1989.00 2333.40 2708.00 3598.80 4425.60 5904.00 6491.40 3125.45
(capital and
current account)
R&D 3.528953 3.314022 4.588493 4.571857 4.469173 4.36212 5.174556 5.513695 7.218416 7.289441 5.00
expenditure as
% of total
expenditure
Cipla Ltd Total income 53,768.60 58,604.00 64,903.70 72,230.30 85,237.10 98,363.00 103,726.30 123,980.20 111,123.90 117,797.40 88,973.45
Total expenses 47,136.00 50,441.00 56,686.90 60,878.30 73,073.50 86,060.80 95,405.90 107,073.70 100,811.80 105,232.70 78,280.06
R&D expenses 2515.00 2,626.80 2,848.50 3238.30 4251.40 5175.10 8441.40 10,353.40 10,305.60 9802.20 5955.77
(capital and
current account)
R&D 5.335625 5.207668 5.02497 5.319301 5.817978 6.013307 8.84788 9.669415 10.22261 9.314785 7.07
expenditure as
% of total
expenditure
Sun Total income 41,140.60 26,813.20 33,752.50 44,467.10 27,892.60 31,736.70 84,865.20 81,800.10 84,829.00 92,257.50 54,955.45
Pharmacheuticals Total expenses 28,725.50 18,135.80 19,894.60 28,293.30 22,832.40 60,167.20 96,425.40 92,819.00 86,736.00 95,610.80 54,964
R&D expenses 1511.00 1436.70 1,592.00 2184.00 3102.20 4223.90 9092.30 8293.90 10,430.70 9,852.00 5171.87
(capital and
current account)
(continued)
J. C. Sharmiladevi
Table 5 (continued)
Name of Details: Mar 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Averages
company 2009–Mar 2018:
Non-annualized:
Rs. million
R&D 5.260135 7.9219 8.002171 7.719142 13.58683 7.02027 9.429362 8.935563 12.0258 10.30428 9.02
expenditure as
% of total
expenditure
Lupin Total income 30,295.60 37,529.40 45,563.40 54,556.40 72,077.20 94,751.80 100,675.60 115,520.90 129,305.40 102,430.60 78,270.63
laboratories Total expenses 26,380.50 31,020.30 37,468.70 47,838.00 61,297.30 71,967.50 78,410.10 88,939.40 99,744.70 88,137.30 63,120.38
R&D expenses 2,669.10 4,251.10 5,475.60 6161.60 7988.40 9929.20 11,961.90 18,145.10 29,245.00 19,865.50 11,569.25
(capital and
current account)
R&D 10.1177 13.70425 14.6138 12.88014 13.03222 13.79678 15.25556 20.40164 29.31985 22.53927 16.56
expenditure as
% of total
expenditure
Pfizer Total income 10,691.90 9456.10 13,913.50 12,262.50 16,186.00 12,743.40 19,980.40 21,906.30 22,735.20 20,944.80 16,082.01
Total expenses 7930.50 7988.20 11,971.60 10,601.20 11,180.70 10,506.40 19,800.60 18,337.60 19,525.00 17,069.00 13,491.08
R&D expenses 283.5 292.7 106.7 64.7 175.8 148.2 174 205.4 275 172.6
Prospects of FDI-Driven R&D—A Comparison Between Indian …

(capital and
current account)
R&D 3.574806 3.664155 0.891276 0.610308 1.572352 1.410569 0.878761 1.120103 1.408451 1.51
expenditure as
% of total
expenditure
GSK/SKB Total income 20,706.10 21,160.80 23,551.00 26,489.40 29,397.60 28,951.40 36,502.40 29,644.70 31,147.00 29,672.00 27,722.24
Total expenses 14,963.50 16,362.10 18,116.00 22,744.30 23,099.20 24,440.00 31,799.80 27,344.30 26,984.20 26,731.50 23,258.49
(continued)
33
Table 5 (continued)
34

Name of Details: Mar 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Averages
company 2009–Mar 2018:
Non-annualized:
Rs. million
R&D expenses 126.8 80.2 54.4 38.7 24.6 27.5 21.9 20 19 22.5 43.56
(capital and
current account)
R&D 0.847395 0.490157 0.300287 0.170153 0.106497 0.11252 0.068868 0.073141 0.070412 0.08417 0.23
expenditure as
% of total
expenditure
P&G health Total income 5255.60 5624.50 6,291.90 7277.00 8475.40 9182.10 9973.00 10,546.90 11,681.70 22,413.60 9672.17
Total expenses 4571.00 4957.80 6,054.60 6458.10 8208.10 8910.20 9453.60 9773.40 10,719.70 14,061.10 8316.76
R&D expenses 20.4 28.5 33.9 64.2 90.3 112.3 125.1 156.2 175.7 171.2 97.78
(capital and
current account)
R&D 0.446292 0.574852 0.559905 0.9941 1.100133 1.260353 1.323305 1.598216 1.639038 1.217543 1.07
expenditure as
% of total
expenditure
Sanofi Total income 11,666.30 14,070.70 14,858.10 17,370.20 20,165.30 22,730.50 25,464.10 26,042.00 25,901.00 28,611.00 20,687.92
Total expenses 10,322.60 11,902.10 13,047.40 15,692.90 17,608.20 21,604.40 21,885.00 23,352.00 21,664.00 25,410.00 18,248.86
R&D expenses 132.3 55.2 67.4 41.7 60.7 40.3 54 98 88.5 117 75.51
(capital and
current account)
R&D 1.281654 0.463784 0.516578 0.265725 0.344726 0.186536 0.246744 0.419664 0.408512 0.460449 0.45
expenditure as
% of total
expenditure
Source Authors own calculations
J. C. Sharmiladevi
Prospects of FDI-Driven R&D—A Comparison Between Indian … 35

AVERAGE OF R&D EXP AS % OF TOTAL EXP

16.57
9.02
7.08
5.00

1.51

1.07

0.46
0.23
Fig. 6 Average of research and development expenditure as percentage of total expenditure. Source
Authors own calculations

Table 6 One-sample statistics

Variables tested No. Mean Std. deviation Std. error mean
Average total income—Indian 4 72,103.6500 14,734.96897 7367.48449
companies
Average R&D expenditure—Indian 4 6455.5850 3611.88354 1805.94177
companies
Average total income—foreign 4 18,541.0850 7607.17229 3803.58615
companies
Average R&D expenditure——foreign 4 97.3625 54.87287 27.43644
companies

Results of the one sample t test conducted for average R&D expenditure indicate
that the sample mean is the same as the population mean; as the significance value
is 0.037 which is less than 0.5, we reject the null hypothesis that the sample mean
is same as the population mean in terms of the average R&D expenditure for Indian
companies. In the case of foreign companies also the results are identical, in terms
of average total income and R&D expenditure, the null hypothesis is rejected as the
significance is 0.016 and 0.038 which is less than 0.05. Here also, the null hypothesis
is rejected, and alternate hypothesis is accepted indicated that the sample means are
same or identical with the population mean.
36 J. C. Sharmiladevi

Table 7 One-sample test

Test value = 0
t df Sig. Mean 95% confidence interval of
(2-tailed) difference the difference
Lower Upper
Average total 9.787 3 0.002 72,103.65000 48,657.0262 95,550.2738
income—Indian
companies
Average R&D 3.575 3 0.037 6455.58500 708.2723 12,202.8977
expenditure—Indian
companies
Average total 4.875 3 0.016 18,541.08500 6436.3763 30,645.7937
income—foreign
companies
Average R&D 3.549 3 0.038 97.36250 10.0475 184.6775
expenditure—foreign
companies

Simple linear regression is run, taking average total income as the independent
variable and average R&D expenditure as the dependent variable. Regression is
separately run for Indian companies and foreign companies (Tables 8 and 9).
Results of the regression analysis indicate that the R square value is very low to
the tune of 0.164 indicating that only 16.4% of the total changes happening in the
independent variable that is total income is explained by R&D expenditure in the
case of Indian companies (Tables 10 and 11)
Results of the regression analysis indicate that the R square value is low to the tune
of 0.339 indicating that only 33.9% of the total changes happening in the independent
variable that is total income is explained by R&D expenditure in the case of foreign
companies. This is an improvisation when compared with the Indian companies.

6 Discussions and Conclusions

The objective of this study is to identify, whether the Indian owned companies are
doing better with their foreign counters parts in terms of research and development.
Although a case-based analysis might give a better result, here the research is under-
taken taking the balance sheet data for ten years for eight companies (four Indian
and four foreign owned companies). Results of the t test strongly support that the
sample companies studied are similar to the population. It is understood from Table
5 that the averages of research and development expenditure as a percentage of total
expenditure are higher in the case of Indian companies when compared to foreign
owned companies. This means Indian pharmaceutical companies are investing more
towards their R&D, than the foreign owned companies, which is a highly encouraging
Table 8 Regression coefficients
Model R R square Adjusted R square Std. error of the Change statistics Durbin-Watson
estimate R square change F change df1 df2 Sig. F change
1 0.405a 0.164 −0.253 4043.82118 0.164 0.393 1 2 0.595 0.725
a. Predictors: (Constant), average total income
b. Dependent variable: Average R&D expenditure
Prospects of FDI-Driven R&D—A Comparison Between Indian …
37
38 J. C. Sharmiladevi

Table 9 ANOVA
ANOVAa
Model Sum of squares df Mean square F Sig.
1 Regression 6,432,128.638 1 6,432,128.638 0.393 0.595b
Residual 32,704,979.448 2 16,352,489.724
Total 39,137,108.086 3
a. Dependent variable: Average R&D expenditure—Indian companies
b. Predictors: (Constant), average total income—Indian companies

phenomenon considering the current demand for innovation-driven development. At

the same time, it is quite peculiar to see the phenomenon as indicated in regression
results; in both Indian and foreign companies, the research and development expen-
diture is less significantly powerful in explaining the total income, as the R square
is less to the tune of 0.164 (16.4%) and 0.339 (33.9%). This is an indication that
the income is determined more by factors apart from research and development. In
other words, the role played by R&D is less significant in determining profits. This
phenomenon is more strongly visible in the case of Indian companies.
In case of foreign companies, this aspect is already identified in literatures by
Dachs and Ebersberger, Sun et al. as MNEs usually locate their research centres
in their respective home countries (Dachs & Ebersberger, 2009) as they want to
protect trade secrets. In some cases, this phenomenon of the MNCs will also help
them in maintaining their quality standards and benchmarking to an extent in the
international arena, taking into considerations their specific requirements towards
patents, intellectual property rights and local content requirements. This factor very
well goes with the literatures (Sun et al., 2006) which support the fact that big
companies and MNEs from countries like China and India are now investing more
in R&D as the future for their expansion and survival, which also results in their own
individual development.
At a time when the international community is looking into factors like innovation,
specialization and sustainability, research must occupy the prime spot and should
act as the direct determinant of incomes. But, the flip side of the IPI is still the
industry is driven more by factors other than research, innovation and development.
Market forces strongly determine the survival and profits, rather than innovation and
research, which means, IPI are still depending upon demand conditions and other
related market forces to make profit rather than aiming to enhance their income
through R&D indigenization.
It is also understood that transition economies like India are struggling in the inter-
national arena to create patents, intellectual property rights, as the amount of invest-
ment undertaken towards research and development is extremely less. Most of the
investments in R&D in India currently is undertaken by various governmental agen-
cies—a trend which needs to change. This phenomenon is also witnessing change,
Table 10 Modal summary
Model R R square Adjusted R square Std. error of the Change statistics Durbin-Watson
estimate R square change F change df1 df2 Sig. F change
1 0.583a 0.339 0.009 54.62090 0.339 1.028 1 2 0.417 1.251
a. Predictors: (constant), average total income—foreign companies
b. Dependent variable: average R&D expenditure—foreign companies
Prospects of FDI-Driven R&D—A Comparison Between Indian …
39
40 J. C. Sharmiladevi

Table 11 ANOVA
ANOVAa
Model Sum of squares df Mean square F Sig.
1 Regression 3066.212 1 3066.212 1.028 0.417b
Residual 5966.885 2 2983.442
Total 9033.096 3
a. Dependent variable: average R&D expenditure—foreign companies
b. Predictors: (constant), average total income—foreign companies

but this change is very slow. With the kind of development plans, the current govern-
ment is planning; it is extremely essential to undertake more investment by indi-
vidual enterprises to support the objectives of the government of achieving more
development, which incidentally will also enhance the development of individual
companies.
This study is one of the first of its kind to check the potentials of pharmaceutical
companies—both Indian and foreign in terms of their research and development
expenditures. An understanding of the significance of R&D and its potentials will
help the IPI to stand firmly in the international arena in the near future. As the
developed west is getting stagnant, it is time for the developing east to take charge
of the situation to go head strong in creating a stable future.

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AI as a Tool in Internal Communication
to Reduce Employee Attrition Rate
in India

G. Nikita and Sai Nethra Velicheti

Abstract As employees are representatives of their business to the outside world,

a structured communication strategy can bridge the knowledge gap and create an
informed workforce. This research takes into account the role of artificial intelligence
in internal communication that delves into the benefits that arise when employees
are fully involved in the organisation’s ethos, values and functioning (Aristotle and
Smith in Prior analytics. Hackett Pub. Co., Indianapolis, 1989). The objective of
this research is to understand the role of AI in increasing employee engagement;
application of AI in tandem with work stress for employees; ease of AI usage with
respect to up-skilling/cross-skilling, switching organisations, etc. The methodology
implemented is a mixed method approach. The primary data collection consisted of
a pilot study through a structured questionnaire among 60 working professionals that
includes 50 employees and ten industry experts as respondents for the quantitative
study. For qualitative study, in-depth interviews with five industry experts included
two corporate communication professionals, two human resources professionals and
one person working for artificial intelligence. The timeline for this research was
across three months, i.e., December 2018–February 2019, and the sample size of 60
people was selected purposively.

Keywords Artificial intelligence · Attrition · Employee engagement · Internal

communication · Corporate communication · India

This paper is a revised and expanded version of a paper entitled “AI as a tool in internal communi-
cation to reduce employee attrition rate in India” presented at Symbiosis Institute of Management
Studies Annual Research Conference, Pune, 16–18 December 2019.

G. Nikita (B) · S. N. Velicheti

Symbiosis School of Media and Communication, Symbiosis International (Deemed University),
Bengaluru, India
e-mail: [email protected]
S. N. Velicheti
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 43
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_3
44 G. Nikita and S. N. Velicheti

1 Introduction

Communication drives relationships and frames the behaviour of people at a work-

place. It plays a significant role in improving the effectiveness of an organisation.
Many organisations use strategic external communication for their customers, clients,
stakeholders, etc., that brings marketing and communication specialists into play.
There are many practices focused towards external communication, whereas it is
also important to strengthen an organisation from within in order to achieve expected
outcomes. An effective internal communication strategy can create a better workforce
and transparency at work. Communication is often underrated as a function; however,
among various functions of an organisation, communication should be given utmost
importance as all the other management functions can be achieved only through effec-
tive communication. The exchange of ideas, information and views in and outside
an organisation is termed as organisational communication. It includes individual
and mass communication too. Organisational communication may also be described
as the flow of communication between the various groups and units in an organisa-
tion. There are three forms of organisational communication—internal operational
communication, external operational communication and personal communication.
Internal operational communication is the umbrella term for the communication
that takes place in order to accomplish the day-to-day operations in an organisa-
tion. The key consumers and contributors of this type of communication are the
employees of the organisation. This form of communication may be oral (face-to-
face conversations, telephonic conversations, meetings, town halls, speech, etc.) and
written (e-mails, reports, newsletters, Websites, memos, instructions, intranet, blogs,
instant chats). Internal communication takes place in various directions depending
on the flow of information such as horizontal and vertical communication. Vertical
communication takes place from superiors to subordinates (downward communi-
cation) and from subordinates to superiors (upward communication). Horizontal
communication, on the other hand, is the information exchange that takes place
between peers and colleagues in the organisation. They may be working at the
same level in the company and may involve people from different organisational
units/departments. External operational communication is the communication with
external groups that are not a part of the organisational framework. These groups
include clients, customers, stakeholders, suppliers, government agencies, regulatory
bodies and authority, local community, special interest groups and the general public.
In an organisational environment, communication takes place across various levels
and different kinds of communication exist. In a corporate setting, communication
takes place across various genres: marketing communication, management commu-
nication and organisational communication. Marketing communication includes the
communication that goes hand in hand with sales of goods and services. Adver-
tising, sales promotional activities, etc., are a part of marketing communication
efforts, whereas management communication is the bridge between the line managers
and staff. It includes the day-to-day communication mostly done by the human
resources department of the organisation. Organisational communication includes the
AI as a Tool in Internal Communication to Reduce Employee … 45

internal and external communication that takes place and also includes areas such
as investor relations, stakeholder relations, and corporate communication. While
marketing communication and management communication are mostly function-
specific, organisational communication is something that is applied across the organi-
sation at various levels and across departments. It is a niche function and is performed
by the corporate communications department of the organisation.
Internal communication was initially identified under the human resource manage-
ment or an extension for staff communication or employee relations or even industrial
relations. The functioning of this department has changed overtime, this has also led
to the advent of change communication as a major aspect of internal communica-
tion. The evolution of internal communication has been divided into three phases of
development. They are:

1. industrial relations during the pre-1960s

2. realistic journalism during the mid-1960s to 1980s
3. marketing from the late 1980s till now.

The present stage of development involved a strategic approach to aid the manage-
ment and form business-oriented attitude. The business case study for internal
communication (Cowan, 2014) discusses the three key features as sources of perfor-
mance improvement with respect to time. The highest preference being focus on
employees, followed by improving products, services and cost cutting, draws the
attention to structure better communication for employees and focus on communica-
tion within the organisation to maximise performance of an organisation. Although
communication is required of all the managers, the reality in terms of what is deliv-
ered on a day-to-day basis is completely different. Internal communication needs to
be planned, coordinated and linked to business strategy, and hence, a specialist in
this field comes into play. Internal stakeholders play a major role in information flow,
and this demand focuses on proper dissemination of message based on style, timing,
targeting and content of communication. The desired outcome is not just employee
relations, but the way employees perform to better organisation performance.
Retaining employees today has become even more important than in the past.
Over the years, the focus of most organisations has moved to its employees in addi-
tion to profits and business. Richard Branson had once said, “Clients do not come
first. Employees come first. If you take care of your employees, they will take care
of the clients”. It is also believed that the cost of retaining an employee is much
less compared to recruiting new hires. Attrition is the switching of employees from
one organisation to another due to several reasons like lack of motivation, lack of
growth opportunities, unfavourable organisational culture, etc. However, an environ-
ment where employees are encouraged to participate in building the organisation and
include them as part of the bigger aspect of the organisation, they feel engaged and
thus instilling a sense of belonging for the company. Therefore, employee engage-
ment and advocacy matter in retaining employees over a period of time and hence
reduce the attrition rates. The technological boom across industries has enabled a
better work culture for employees, in spite of which there has been considerable
46 G. Nikita and S. N. Velicheti

attrition in organisations. According to Mercer’s survey, 54% of Indians are seri-

ously considering leaving their jobs and the figure rises to 66% in the age group
16–24 (Vorhauser-Smith, 2020). However, technology has an important role to play
in engaging employees enough to retain them and make them feel motivated.
Internal communication is the communication that takes place within an organi-
sation, across hierarchies to ensure everyone is on the same page. It is an important
factor as it helps employees stay abreast with the activities of their organisation and
drives employees towards organisational goals. A well-planned internal communica-
tion is an essential part of any organisation, and lack of proper communication with
the employees can lead to lack of understanding of objectives, vision and mission of
the organisation; lack of direction due to decreased understanding of the goal towards
which they are working; inability to perform individual tasks wherein the highest
quality is possible; lack of perception of consumer requirements and the challenges of
competition; strained or deficient relations with immediate superiors; misunderstand-
ings between different departments resulting in criticisms of one another; inability
to pass on information to subordinates and insufficient assessment of quality and
perfection. Lack of proper internal communication would lead to employees feeling
left out and uninformed, leading to a feeling of being less engaged and dissatisfied,
which may result in attrition.
The existence of an internal communication policy can decrease the feeling of
uncertainty among employees in an organisation and help in motivating them to
achieve a common goal, which is the core purpose of any organisation. Internal
communication may be viewed as a two-pronged approach, i.e., as means of commu-
nication that connects people as well as a strategic tool for better teamwork in
the organisation. Studies have concluded that there is a link between information
and profitability and that communication was one of the most effective means for
change in attitudes. Internal communication should be considered in all its factors:
the source of information, the information itself, means and mediums used, recipi-
ents, the purpose of the message and the style of language used; efficiency by learning
level is correlated with the quantity and quality of the information; the circulation of
information is instrumental in the creation of bonds between people and cooperation
among them in the workplace; information skewed is a source of contempt for the
receivers and produces negative effects. One such research aimed at determining
the role of effective communication in retention and motivation of employees estab-
lishes a workforce that understands the importance of effective communication to feel
motivated and considers it as “a vital source of affiliation with the organisation and
retention” (Ashfaq et al., 2012). Hence, communication should not only be viewed
in its strategic dimension, but rather, it should be seen as an essential component that
helps in the creation of synergy among the employees of the organisation, through a
policy in internal communication.
The prospect of rhetoric’ is also known as Becker mosaic model by Sam Becker.
The models state that the classic models of communication are not very useful in this
contemporary communication. There are multiple origins for messages which make
the communication process dynamic. In an organisation, a varied set of channels
are required at every level of the organisation that is suitable for each department.
AI as a Tool in Internal Communication to Reduce Employee … 47

As humans can themselves act as constraints, there must be an authentic source of

communication. This model complements the study of internal communication that
talks about the flow of information in an organisation. The information cascade is
unlike the classical model of communication that is linear; the model supports the
fact that contemporary communication is a dynamic process. The randomness of
the process from origin of message till the receiver is all a nonlinear process. The
communication is three dimensional, and the receiver ignores certain information
and only consumes the message that is relevant to them. One of the drawbacks of
this model is that it cannot define the environment and social aspects in the process of
communication. The fourth dimension of internal corporate communication has been
defined on various parameters such as understanding, awareness, belongingness and
commitment of employees. These aspects can be used to evaluate the effectiveness
of internal communication tools in organisations. Two major aspects to be included
as a part of this framework are “corporate message’ and ‘credibility of source”.
The corporate message can be analysed based on content, context and structure
of the message, whereas the credibility of the source can be studied based on the
Becker’s mosaic model of communication proposed by Sam Becker in The Prospect
of Rhetoric to understand the dynamic process of communication. This model reduces
the limitations of linear model of communication and stressed on four components
of communication:

1. empty cells that are the unavailable message or source

2. vertical layers which as the sets of similar messages
3. cells that are either message or source based on the channel of communication
4. receivers going through the cells in a loop every time.

This research aims to explore the role of artificial intelligence (AI) as a tool in
internal communication within an organisation to help reduce attrition by taking
certain repetitive tasks from the human resources and corporate communications
teams, thereby giving them more time to strategise and work with employees of
their organisation. This extra time on their hands would help them engage with the
employees better, know what they want and hence cater to their needs better. The
study also attempts to understand if AI can totally replace human skill sets by taking
over only the tasks that human resource professionals and corporate communication
professionals find repetitive and not the entire workload of the said teams. In spite
of its versatility in operations, it is to be noted that AI has its limitations.

2 Review of Literature

Effective internal communication of organisations affects the ability of strategic

managers to engage employees and achieve objectives. A proposed theory with the
potential to improve practices can help enhance internal communication. It is impor-
tant to identify gaps in the academic literature and address calls for discussion and
48 G. Nikita and S. N. Velicheti

definition of internal communication, for theory on its mandates, scope and focus and
to counteract the tendency to treat employees as a uni-dimensional “single public”.
To address these gaps, internal communication is defined and positioned within the
corporate communication school of thought. The internal communication matrix
could be used to supplement other forms of internal situational analysis and as an
analytical tool which may be applied to the strategic analysis, planning and evaluation
of internal communication (Jackson, 2014).
Internal communication is also based on intangible resources rather than organ-
isational boundaries. The resource-based theory of the company, the constructivist
theory of communication and the situational theory of publics complement the study
of internal communication. Developing a resource model (RM) of internal communi-
cation based on interactive processes is aimed at creating two catalytic resources for
organising: knowledge and allegiance. This model captures the concept of internal
communication prevailing in business, based on interviews with ten internal commu-
nication managers in Italian companies. Intangible resources, such as knowledge
and employee attitudes, contribute to the company’s success. Promoting an active
communication behaviours among employees improves the overall performance of
an organisation (Mazzei, 2010). Despite the intranet preferred over the Internet, there
is a gamut of grapevine communication which is controlled by organisations through
formal meets and sending hard copies of newsletter to employee’s residential address.
This also helps in creating a positive impact on the employee’s family members as
well as uplifts the morale of the employee. Internal communication must be struc-
tured well catering to all the internal stakeholder’s right from senior managers to
front line staff (Argenti, 2013).
Neves (1998) considers internal communication as one of the most important
components of integrated communication and shall transmit the messages according
to the strategies defined by the human resources area and determine strategies for
how and when to get messages to the internal public knowledge. The following few
steps can ensure that everyone in the organisation is on the same page:
1. Invite teams to collaborate on creating content.
2. Make the content easily accessible to everyone.
3. Bimonthly meetings with team leads.
4. Remind employees that you are sharing this information with them because it
is not just about having the right content; it is about having the right content at
the right time.
Brito (2018) defined real employee engagement as a result of various factors
such as positive employee experience, continuous interactions, success recognition,
clear idea and purpose of task. There are various studies in the field of employee
engagement, whereas one such study by Brito (2018) captures employee experience
as one of the major factors for a good employee experience.
• Purpose • Positive experiences • Celebrating success openly • Ongoing
interaction • Real employee engagement.
Ms. Rachel Miller, Director at All Things IC Limited, is an independent practi-
tioner who helps companies and communications professionals improve their internal
AI as a Tool in Internal Communication to Reduce Employee … 49

communication. In one of her presentations, she suggests four enablers for employee
engagement success. They are:
1. Strong strategic narrative—it is suggested that visible, empowering leader-
ship from the top management provides a strong strategic narrative about the
organisation.
2. Engaging managers—Managers who focus on their people and give them scope
treat their employees as individuals and coach and stretch them are another factor
that the practitioner points towards success of employee engagement.
3. Employee voice—Throughout, the organisation would mean feedback from the
employees is of importance.
4. Organisational integrity—Integrity is when you do what is right even when no
one is looking.

2.1 Attrition

The biggest challenge that organisations face today is not attracting talent but
retaining it. Companies are constantly under pressure to either cater to the ever-
changing needs of the employees or lose them to competitors. According to KPMG
Report 2018–19 in India’s Annual Compensation Trends Survey (KPMG’s Annual
Compensation Trends Survey 2018–19, 2019), the average annual voluntary attrition
across sectors in India is 13.1%, in which the highest voluntary attrition rate has been
reported in the retail sector is 18.5%, while the lowest which has been reported by
the automobile industry has been 6.6%. The survey analysed and brought together
findings from 272 companies across 18 sectors. Analysing annual reports of three
top IT firms in India from 2013 to 2017, one can see that there have been changes in
the levels of attrition in these companies over the said period.
With global players entering the Indian market, the available talent pool has a huge
range of options and some of these multinationals too are facing issues in retaining
talent in their organisations. A recent survey by Glassdoor in 2016 confirms that
benefits and perks play a major role when deciding whether to pursue a job. A
few instances where companies are listening and have implemented the same are as
follows:
• Netflix announced that it added unlimited employee maternity and paternity leave
for the first year after a child’s birth or adoption.
• Airbnb gives employees an annual stipend of US$2000 to travel anywhere in the
world.
• Asana employees have access to executive and life-coaching services outside of
the company.
• Zillow allows employees who are travelling to ship their breast milk home for
free.
While there may be many reasons for attrition, the top three reasons, according
to the KPMG report 2018–19, are as below:
50 G. Nikita and S. N. Velicheti

• better career opportunities (31.0%)

• better pay elsewhere (25.2%)
• personal reasons—marriage, health, children, relocation, etc. (17.4%).
The stakeholder theory of organisation and business ethics addresses morals and
values of organisations that are directly related to corporate social responsibility. The
stakeholder theory seeks to define normative theory of stakeholder identification that
is examined and classified for descriptive theory of stakeholder salience. Freeman’s
strategic management: a stakeholder approach is widely cited in the field as being
the foundation to stakeholder theory that develops an approach for strategic manage-
ment, corporate planning, organisational theory, system theory and corporate social
responsibility.
The employee lifecycle model is a method used to visualise how an employee
engages with their organisation. The relationship with the organisations can be under-
stood with a framework that provides engagement strategy at every level. According
to the employee lifecycle model, an employee goes through five stages while being
associated with an organisation. They are—recruitment, onboarding, development,
retention and exit or separation. An organisation could be excellent with its recruit-
ment strategy but might not necessarily be good with holding on with their employees
for a long time, resulting in an increase in attrition rates. The model is designed to
build a good employee experience at across stages of an employee’s lifecycle with
their firms. The five stages can be described as follows:

1. Recruitment: it is all about finding each position within the organisation that
can be visualised as a classic marketing funnel to attract potential candidates.
2. Onboarding: The second stage of this process involves immersing the new
hired employees into the organisational culture and helps them understand the
company’s expectations consisting of employee’s performance as well as social
aspects at the workplace.
3. Development: This begins from the day an employee is hired. The process helps
in building confidence and trust for the organisation by investing in learning
opportunities for nurturing the skills of the workforce.
4. Retention: It is a crucial stage of employee lifecycle model. It begins with hiring
the right person for the right task and creating transparency to listen and help
employees to reduce retention or employee turnout.
5. Exit or saturation: The final stage of employee lifecycle is when the employee
decides to leave the organisation. The reasons could be personal, retirement,
new job or any other situation, but when other employees experience sadness
and uncertainty, it is important to ensure that the separation is smooth and less
stressful for the existing employees.

Today, the firms are striving to create positive employee experience and believe
that successful businesses are always built on successful staff. Business now looks
at developing their business as well as their staff in parallel. A focus on building
positive employee experience helps in turn to improve customer experiences and
retention of staff. Hence, employee experience has now become a core goal in internal
AI as a Tool in Internal Communication to Reduce Employee … 51

communication. Employee engagement on the other hand gradually deteriorated due

to complex workplaces, virtual presence, technology, dispersed staff, culture and
other challenges. Employee experience thus fills the gap to overcome such drawbacks
by skill development, non-traditional office environment and collaborations for better
employee communication. In the age of digital disruption, the convergence of media,
the usage of the Internet has turned into mobile phones. This innovation has helped
companies to create mobile applications to engage employees and bring together
dispersed staff at different geographical areas to become more global. Corporate
apps have now become a commonplace to strengthen employee communication,
engagement and loyalty.
Communication with key stakeholders is a most involved function in internal
communication, and understanding the views and expectations of how an organisa-
tion should interact with its environment is a very crucial study. The two major focus
areas are, on the one hand, communicating what the organisation does for sustain-
ability and, on the other hand, advising organisations on how to increase creden-
tials and earn the licence to operate. It is commitment of organisations of different
stakeholders as government agencies, non-governmental organisations, employees,
investors, investment firms and the general public who demand and seek information
regarding company policy and governance, environmental issues, social programmes
and involvement with the community. Major focus by corporate communication is
to strategise CSR communication. Stakeholder’s involvement and engagement is
secured when tools are involved and informed. Consumers on the other hand want
companies to behave ethical and responsible. The need is to assist if the company
operations meet consumer standards both creating engagement and reporting help in
toying innovative techniques and tools for stakeholder engagement and confidence.
One of the major aspects to tap in internal communication is the integrated solu-
tions to communicate with employees and use of different media and tools of commu-
nication and penetrate the message into the minds of internal stakeholders. A repeti-
tive approach to message and strategically sending messages to employees can enable
better recall and informed workforce, especially when there is an overload of infor-
mation and clutter for employees to manage and remember information flowing from
the organisation. An integrated approach to communicate with the internal publics
can be done effectively by stitching different media together to give a more focused
perception about the organisation. If a company has proven track record of commu-
nity engagement and partnership, the public is willing to forgive and forget and
provide an opportunity to the company to start afresh.

2.2 Technological Trends in Internal Communication

Innovations and evolutions are a constant in the current age. Organisations are no
exception to change as it seems to be the only thing that is constant. Internal commu-
nication professionals, like others, need to stay on top of these changes to ensure
52 G. Nikita and S. N. Velicheti

they are not left behind and also to ensure that their organisation does not become
obsolete. Some of the trends predicted to be a part of organisations are:
• Digital dexterity: The ability and desire to exploit existing and emerging
technologies for better business outcomes (Zamolo, 2018).
• Harmonious digital workplace: Emphasis on mobility and limiting the noise
between digital workplaces to better support activity-based working (Zamolo,
2018).
• Embrace AI: AI would play a key role in boosting operational communication
and employee experience (Zamolo, 2018).
• Mobile apps/corporate mobile apps: These apps would offer a modern and
convenient window into the organisation. They would help strengthen employee
communication, engagement and loyalty (Zamolo, 2018).
These are just some of the technological trends that would play a role in internal
communication within organisations. However, the adoption of newer technologies
would occur only if there are proper training facilities to help employees catch up with
the trends; otherwise, adoption of these trends would only be a waste of monetary
resources.

2.3 Theoretical Framework

Although there is no overall grand theory for internal communication, the systems
theory can be relevant. A system can be described as “any set of interrelated elements
that form a unified or complex whole” (Barker & Angelopulo, 2006). This can be
associated with the employees in an organisation, and hence, we can consider a
systems view while dealing with organisational relationships. The theory can be
understood in a better way by taking the example of living organisms that need air,
water, food and sunlight for survival. Of all the theories, the technology acceptance
model (TAM) is considered the most commonly used theory for discerning an indi-
vidual’s acceptance of technology and information systems. It was adapted from
the theory of reasoned action (Ajzen & Fishbein, 1980) and assumes that an indi-
vidual’s acceptance of information systems is based on two major factors: perceived
usefulness (PU) and perceived ease of use (PEOU). “Perceived usefulness is defined
as the potential user’s subjective likelihood that the use of a certain system (e.g.,
single platform e-payment system) will improve his/her action. Perceived ease of
use (PEOU) refers to the degree to which the potential user expects the target system
to be effortless” (Lai, 2017). Relationship management theory originates from the
general principles of public relations which highlight management of relationships
as the core task of public relations (Barker & Angelopulo, 2006). The foundation
of this theory focuses on the management of relationships between the public and
organisations in a way that would benefit both the parties.
AI as a Tool in Internal Communication to Reduce Employee … 53

2.4 Research Objective

The objective of this study is to explore whether the use of AI in internal commu-
nication in an organisation would help the corporate communication and human
resources departments to engage employees better by reducing their workload and
help them focus on areas of their interest, thereby reducing attrition. Hence, the study
focuses on:
1. The role of AI in increasing employee engagement within organisations.
2. Understanding application of AI in tandem with work stress for human resource
and corporate communication employees.
3. Ease of AI usage with respect to. up-skilling/cross-skilling, switching organi-
sations, etc.

2.5 Research Questions

Based on the review of literature done to identify theories that impacted the concept,
the study draws an assumption or hypothesis. Data from industry professionals and
employees were collected to add credibility to the research, followed by analysis of
the data and conclusion. The research questions for the study are as follows:
1. Does involving AI for internal communication increases the engagement of the
employee within the organisation?
2. What are the ways in which application of AI eases out the job stress for an
employee of the human resources and internal communication team? Would
he/she feel better off with or without AI in her/his work palette?
3. If AI eases the job of the internal communicator and human resources team
member, would he/she want to switch or stay in the organisation, in addition to
up-skilling or cross-skilling oneself?

3 Methodology

This section details out various steps adopted to conduct the research to identify
key insights. The details include the area of study, research design, methodology
used in conducting the research, sample size, sampling techniques used, participants
in research and data collection method. The broad area chosen for this research
is AI in communication, which has been narrowed down to one of the functions
of corporate communication, i.e. internal communication. To understand how AI
would help internal communication to reduce attrition in organisations, this research
explores disciplines like human resources and employee engagement, as an overlap
between corporate communications and human resources that had been found during
preliminary research on the topic. The research further explores the contribution of
54 G. Nikita and S. N. Velicheti

participation marketing in improving employee advocacy, which leads to improved

employee engagement.

3.1 Research Design

The methodology implemented was a mixed method approach of both qualitative and
quantitative research methodologies. Primary data collection consisted of a basic pilot
study done through questionnaire survey among a target audience of 60 professionals
which included 50 employees and ten industry experts and in-depth interviews with
five industry experts in the field of AI, corporate communication and human resource
department. The industry professionals consisted of two corporate communication
professionals, two human resource professionals and one person who were into AI.
The employees were from diverse sectors including advisory services, analytics, auto-
mobile, banking and finance, communication, construction, e-commerce, education,
engineering, FMCG, IT and technology, oil and natural gas and shipping. Hence,
the sample size was 60 people, selected purposively. The questionnaire consisted of
broad questions related to the topic of research, and the interview questions were
comparatively specific in nature, based on responses in the questionnaire. Secondary
sources of data collection included previous research papers and studies, annual
reports, the Internet, and books on the subject. The timeline of research has been
three months, i.e. December 2018 to February 2019.

4 Data Analysis

The study has incorporated a mixed method research. The quantitative study was
based on a structured questionnaire; each was circulated on Google Forms to
60 professionals (50 employees and ten industry experts) to gather their opin-
ions on the topic. The employees were from diverse sectors including advisory
services, analytics, automobile, banking and finance, communication, construction,
e-commerce, education, engineering, FMCG, IT and technology, oil and natural gas
and shipping. As a part of qualitative study, in-depth interviews were conducted with
five industry experts to gain a better understanding of their perspective on the topic.
The industry professionals consisted of two corporate communication professionals,
two human resources professionals and one person who were into AI. Data obtained
from both the groups have been analysed in this section.
AI as a Tool in Internal Communication to Reduce Employee … 55

4.1 Sampling Framework

Of the 50 participants for the questionnaire survey, 56% (28 respondents) were male
and 42% (21 respondents) were female, while the remaining 2% (1 respondent) did
not want to mention their gender. The majority of the respondents were in the age
group of 27–28 years (22.2% of the respondents which consisted of ten respondents
each in the age bracket). Also, there were five respondents (11.1%) whose age was
30 years and three respondents (6.7%) who were 23 years old. This has helped
garner insights on the opinions of the young working professionals. The experience
spanned from 0.9 to 34 years in the industry. The majority (10%) of the respondents
were in the industry for a period of either 1 or 6 years (five respondents each, and
majority of them were either from the communication or IT/technology industry).
Four respondents (8% each of the sample) were part of the industry for 4, 5, 7 or
10 years, and the majority of these worked in the IT/technology sectors, with banking
and finance and communication sectors. This diversity helps in understanding what
the young workforce thinks of the topic and also provides an insight into the thoughts
of personnel with varied experience levels in the industry.

4.2 Insights and Analysis from Responses to Employees’

Survey

For the question about recollection of any employee surveys conducted in the organ-
isation, 38% (19 respondents) did not have an idea about the surveys, while a close
34% (17 respondents) had come across surveys conducted by the organisation. Out
of the remaining respondents, 16% (eight respondents) seem to be unsure about the
surveys conducted. However, 10% (five respondents) recollect specific surveys that
were conducted by the organisation. Firstly, the facts gathered show that the recall
of surveys conducted is generally low, and the internal communication and human
resource departments should take measures to improve it.
Secondly, 58% of the respondents (29 respondents) affirmed to recollecting inci-
dents where the organisation celebrated the achievements of its employees, while
only 20% (ten respondents) could not recollect the same. Hence, it can be noted
that appreciation of employees for the work done does not go unnoticed by them.
Some of the incidents mentioned were the completion of a decade of business centre
incorporation, which implies that the success was attributed to the employees; cele-
bration of personal and professional accomplishments, including birthdays; getting
coverage for the client, good media relations, handling events, etc.; for maintaining
quality standards, celebration of completion of year anniversary with the organisation
(rewarding and recognising loyalty to the organisation), spotlight awards and cheers
for peers (recognition of work well done); rewards and recognition programmes,
long-term service to the organisation and performance awards. These statistics imply
56 G. Nikita and S. N. Velicheti

that employees appreciate it when organisations recognise their contributions and

reward them accordingly. This helps them engage better with the organisation.
• Twenty-three respondents agree that they are always informed about the organi-
sational goals being met, while 16 strongly agree to the statement, 9 are neutral
in their opinion and 2 disagree.
• Nineteen agree that surveys are conducted to find out how leadership and
employees understand each other, while 14 strongly agree to the statement, 9
are neutral in their opinion, 7 disagree and 1 strongly disagree.
• Eighteen respondents strongly agree that communication between leadership and
employees can be said to be two-way communication; while 17 agree, 8 are neutral
in their opinion, while 6 disagree and 1 strongly disagree.
• Twenty respondents agree that the organisation celebrates its success with the
employees, while 13 strongly agree. Thirteen are neutral in their opinion, while
3 disagree and 1 strongly disagree—16 respondents agree that their job inspires
them, while 11 strongly agree to the same. Fourteen are neutral in their opinion,
while 7 disagree and 2 strongly disagree.
These sets of questions helped gauge the employees’ opinions on a variety of
questions pertaining to the organisation, their work-life, and the kind of engagement
achieved by various levels of communication with the employees. Most respondents
agreed to be well-informed and motivated.
When asked about the usage of AI in their organisation, 42% (21 respondents)
affirmed its usage, while 30% (15 respondents) said their organisation does not use
AI. Twenty-eight percentage (14 respondents) were unsure of the usage of AI in their
organisation.
On being asked about the type of tasks that they would like AI to take up, manual
mundane tasks, repetitive tasks, voice assistant, tasks that reduce manual work and
time, costing related work, analysis, Excel sheet work, communication, recruitment,
skill mapping, employee performance, feedback and reports collection, administra-
tive and facilities management, appraisal and documentation were the most common
areas that employees wanted AI to take over.
The response to employees staying engaged to continue working for the current
organisation, 26 respondents answered in the affirmative, while the remaining 24
answered in the negative. The reasons for continuing in the organisation included
getting challenging work; being recognised for the work done, work-life balance,
scope to learn and explore, good peer support, good treatment by management,
great work culture, adherence to organisational goals, adoption of new technologies,
growth opportunities, and feeling valued by the organisation. On the other hand,
reasons for leaving were mostly about recognition; compensation and salary issues,
office politics, ill-recognition of talent, repetitive work and lack of appreciation.
Some of the recommendations by employees to their current organisation in order
to retain talent were keeping employees well-informed, salary hike, treating humans
and technology at par with each other instead of just relying on technology, encour-
aging the employees, rewarding them properly and proper resource utilisation, better
AI as a Tool in Internal Communication to Reduce Employee … 57

appraisal, ‘listen’ to employees, not just “hear”, using young talent under the guid-
ance of seniors, trainings and seminars, proper work-life balance, appreciation and
better compensation, transparent communication, adopting newer technologies, more
interaction between employees and management, better treatment of employees by
immediate bosses and senior management, more perks, engaging work, profit sharing,
proper delegation of work and reduction in power distance.

4.3 Insights and Analysis from Responses to Industry

Experts’ Questionnaire

Of the ten participants for the industry expert questionnaire, 70% (seven respondents)
were male and 30% (three respondents) were female. The majority of the respondents
were 30 years old (three respondents). Also, there was one respondent each for the
age of 24, 29, 34, 37 and 63 years old (five respondents). Two respondents chose not
to reveal their age, leading to just eight responses for the question. The experience
spanned from 3 to 39 years in the industry. The majority (20%) of the respondents
were in the industry for a period of four years (two respondents each, and they were
from the communication industry). The remaining had 3, 7, 8, 9, 10, 13, 15 and
39 years of experience each, and they are from the IT/technology, communication
and automobile sectors. This diversity helps in understanding what the young work-
force thinks of the topic, and also provides an insight into the thoughts of personnel
with varied experience levels in the industry, across various sectors of operation.
The main channel of internal communication in the organisations is e-mail (used in
all the ten organisations), closely followed by internal social networking channels
(eight organisations) and in-person presentations like town halls, live forums and
meetings (eight organisations). Newsletters are used by seven organisations, while
videos and intranet each are used by six organisations to update their employees.
Five organisations use their Website for communication. Four each out of the ten
organisations use blogs, wall messaging, displays and banners, screens and screen-
savers, while podcasts and microsites are each used by three organisations in the list.
Chabot and podcasts each are used by two organisations for communication. One
of the organisations uses interactive walls in addition to other channels of internal
communication, while another organisation uses an internal magazine that doubles
up as a blog, internal social media and a microsite with the other channels of internal
communication.
• Seventy percentage of the organisations (seven firms) used games/activities like
fun Friday, fun-on-the-floor and rewards and recognition programmes to engage
employees. Sixty percentage of the organisations’ (six firms) employee engage-
ment plans included outings and monetary benefits. None of the organisations have
implemented all the options listed, as the programmes are tailor-made according
to the industry and its need. One of the organisations does not indulge in any of
the employee engagement programmes.
58 G. Nikita and S. N. Velicheti

• Sixty percentage of the organisations (6 firms out of 10) gauge employee engage-
ment/satisfaction through attitude surveys/feedback surveys, while the remaining
40% did not.
• Only 30% (three firms) used AI in their organisational operations, while the
remaining 70% did not use AI.
• Ten percentage of the organisations (one firm) use AI in internal communica-
tion. The majority 90% of organisations (nine firms) do not use AI in internal
communication.
• Sixty percentage of the industry experts (six respondents) feel that AI would help
reduce their work pressure, while 30% (three respondents) feel AI would make
no difference in their work pressure levels. Ten percentage (one respondent) were
not sure whether AI would reduce their work pressure or not.
• Ninety percentage of the industry experts (nine respondents) agreed that they
would prefer a job role where AI would take up mundane tasks, allowing them to
take over other challenging tasks including those that involved emotional dealing.
Ten percentage (one respondent) felt they would not prefer such a role.
• Ninety percentage of the experts (nine respondents) do not feel threatened by AI
taking over their job, while 10% of them (one respondent) feels threatened about
it.
If AI is presumably used in organisations, the preferred tasks for it would be all
the mundane, repetitive manual tasks, e-mailers and other internal communication
activities with all possible pre-fed answers, employee surveys, tracking papers, oper-
ations, research; market analysis, study of market trends, resume screening, collec-
tion of candidate data for recruitment, scheduling meetings, revising pay scales,
handling increments and promotions, etc. On being asked about the usage of extra
time provided by AI taking care of mundane tasks and whether they would continue
in the same organisation or switch, 70% (seven respondents) of the industry experts
said they would up-skill or cross-skill and continue in the current organisation.
Twenty percentage (two respondents) wanted to up-skill or cross-skill and leave the
organisation. Ten percentage (one respondent) expressed interest in strategising and
continuing in the same organisation. It was observed that they feel AI in internal
communication would reduce attrition by improving employee engagement and 7
of the experts agreed with the statement that it would give the professionals time to
strategise and come up with proactive initiatives to engage the employees. One of
the respondents negated the statement, while 2 of them were not sure but said that
AI in internal communication may reduce attrition by engaging employees, but there
has to be an emotional connect with the employees as well, which can be brought by
the human resource/corporate communication professionals.
AI as a Tool in Internal Communication to Reduce Employee … 59

4.4 Insights from Industry Expert Interviews

A seasoned veteran with 39 years of experience in the communications industry says

that AI will help in reducing boring, mundane activities and raise motivational levels
of employees. He/she will be able to raise the bar and contribute more meaningfully
to the organisation. This in turn will reduce attrition. He also recommended that
appropriate software tools have to be brought in to successfully implement AI and
reap the benefits. People should be trained to use these tools and refresher courses
conducted whenever upgrades or technological advances take place. On being asked
whether he feels threatened by AI taking over his job, generally, he replied in the
negative. Further, he opined “artificial intelligence will only help improve efficiency
and accuracy in operations. It will also give insights into the future”. Some of the
thoughts on AI reducing work pressure, he said “may not reduce work pressure.
But it will enhance knowledge and make the worker more efficient and smarter”.
He was affirmative when asked if he would prefer a job role where AI does the
mundane tasks, letting him handle more challenging tasks and other tasks which
require human emotions. He added, “Absolutely. That is the purpose of developing AI
solutions”. “All routine operations tasks like employee grades, pay scales, increments
and promotions, etc.” was his response when asked about the kind of tasks that he
would want AI to take over. “Yes. AI will help in reducing boring, mundane activities
and raise motivational levels of employees. He/she will be able to raise the bar and
contribute more meaningfully to the organisation. This in turn will reduce attrition”.
Another communications professional with seven years of experience says, “Few
industries would need AI in internal communication, whereas a few will still be going
strong with the traditional techniques. But yes, if an organisation has that kind of
money and workforce, AI will play a pivotal role in reducing the attrition rates!”.
One of the communications professionals with ten years of experience quotes,
“The importance of employee engagement can’t be overstated as employee engage-
ment strategies have been proven to reduce staff turnover, improve productivity and
efficiency. However, face-to-face engagement definitely is a better way to keep the
workforce motivated. AI won’t touch the emotional chords. Employee engagement
has to be both rational and emotional”.
An expert with more than four years of experience in AI, machine language,
blockchain, human resource and a tech enthusiast says, “It’s difficult to comprehend
the effect of AI in reducing employee stress and attrition because the role of AI and
machine learning hasn’t reached that point in its lifecycle where it delivers relief”.
He added “My recommendation is that whist AI can be recommended to handle
mundane and cumbersome tasks, its role in processing intent has been lost due to the
inability to fully comprehend the required output. Because some jobs were never A
+ B = C”.
Some of the takeaway from R professional with 15 years of experience highlighted
by the quotes—“Yes, with AI taking over operational burden it gives more time to
connect on employee pulse to work on some proactive initiatives” and “AI is definitely
60 G. Nikita and S. N. Velicheti

a boon and will be the future. It is not about taking over jobs, it will only help elevate
the current jobs through re-skilling and becoming relevant to the times”.
The overall sentiment of the industry experts on the topic is that AI is very nascent
at this point in time in the industry, and its application would help them handle the
mundane and routine tasks. However, 3 out of the 5 experts feel that when it comes
to interaction with humans, AI may not be of much help. Hence, they suggest that
that aspect should be handled by humans, that is, by the corporate communication
or internal communication specialists. Most experts foresee AI playing an important
role in internal communication in the near future (in the next 3–5 years as per one of
the experts), but the tasks would majorly be restricted to mundane day-to-day tasks
mentioned by experts as media tracking, social listening, preparing reports, analysis,
etc. Experts point out that the extra time that gets saved by AI doing all the mundane
tasks could be used to strategise and devise ways to engage the employees better,
which would help make them feel valued and retain them in the organisation.

5 Conclusions and Limitations

The findings of the research on the topic “AI as a tool in internal communication to
reduce employee attrition rate in India” was intended to explore how the inclusion
of AI could affect internal communicators’ work and whether it would help address
the issue of attrition in organisations today. It started with the assumption that AI
would help reduce the workload of internal communicators and human resources
professionals and would help them focus on employees better, thereby helping them
devise strategies to reduce attrition. The research was done using a mixed method
approach in which a questionnaire was circulated to 60 professionals to gather their
opinions on the topic. The sample included employees and industry experts from
diverse sectors as a part of the quantitative study of the research. In-depth interviews
were conducted with five industry experts in corporate communications department,
human resource department and expert working for AI for internal communication
to gain a better understanding of their perspective on the topic, as a qualitative part
of this research.
On reviewing literature available on the topic, and from the insights gathered from
industry professionals through interactions with them, it can be concluded that AI
would help in reducing the workload of the corporate communication and human
resources professionals by helping reduce the mundane and repetitive tasks done
by them, thereby helping them use the extra time available to concentrate better
on their employees which may help make them feel valued and reduce attrition.
Also, industry experts interviewed during the research process preferred to up-skill
or cross-skill themselves in the extra time gained due to AI intervention in their job
and chose to stay in the current organisation. Employees and industry experts have
similar views on the role of AI in internal communication, wherein work stress would
get reduced considerably due to reduction in redundant tasks, thereby improving
motivation levels among the staff. As a result, the employees would feel encouraged
AI as a Tool in Internal Communication to Reduce Employee … 61

to carry out activities that would help them stay engaged with the organisation and
relevant to the industry, by getting extra time on their hands.
However, a major insight gathered from the research states that AI cannot
completely take over the functions of the corporate communications and human
resources team when it comes to emotionally supporting the employees. Humans
would still be needed in those functions to cater to the employees’ emotional needs
and to ensure their emotional well-being. Hence, it can be concluded that, in addition
to the implementation of AI in internal communications within organisations, human
support is required to ensure the reduction in attrition. Thus, when AI and humans
work hand-in-hand, there are better chances at reduction of attrition in organisations.
The limitations to the study were the gatekeepers to information in organisations,
the hesitation of employees to talk about their organisation and its practices and the
lack of subject matter experts on AI and its implementation in the country. The study
has majorly taken into account the private sector in the country. Future research can
be extended to see whether AI in the public sector would help it function effectively
and efficiently, while also studying the attrition rates in the sector (whether or not
there is an issue of attrition in the public sector in India). Since, attrition is a major
concern in many organisations, there could be various factors affecting the mindset of
employees, one such factor is building strategy to create transparency at workforce.
A deeper understanding about adoption of the latest technology in the sector may
also be included in the study.

References

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Neves, R. (1998). Corporate image: How organizations (and people) can protect and take advantage
of your best assets.
Vorhauser-Smith, S. (2020). How to stop employee turnover in India. Forbes [online]. https://www.
forbes.com/sites/sylviavorhausersmith/2012/07/02/how-to-stop-employee-turnover-in-india/?
sh=3b79ad014817. Accessed January 19, 2019.
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nds/. Accessed February 2019.

G. Nikita is an academician and researcher in the area of corporate communication and adver-
tising. She holds a Master’s in Mass Communication and Journalism from The English and
Foreign Language University and specialises with PG Diploma in Public Relations and Adver-
tising from Indian Institute of Mass Communication. She has worked in the academia teaching
students at the graduate level and has also worked as a writer and verbal trainer. She is a UGC-
NET qualified and currently pursuing her Ph.D. in Internal Communication under the Faculty of
Media and Communication of Symbiosis International (Deemed University). She has a passion for
public speaking and has won various awards. Her research interests are in the areas of corporate
communication, advertising and communication studies.

Sai Nethra Velicheti is Engineer and ex-IT professional whose love for writing led her to pursue
her MBA in Public Relations. Being enthusiastic about corporate communications in general, and
internal communication in particular, she keeps updating herself on these areas, in addition to
managing a toddler and pursuing her passion for photography while taking a sabbatical from full
time work.
World Income Classification
and Emissions: A Study
of the Relationship Using Machine
Learning Techniques

Karthikeyan Chandramohan and Ramasamy Murugesan

Abstract Using classification and clustering on cross-sectional data for 185 coun-
tries, this study explores if the level of emissions in a country is a determinant of
the income class of a country. This study also tests the presence of EKC relationship
between emissions and income across the countries. Income classification and emis-
sion data of countries obtained from World Bank has been used. The results, which
can have a variety of policy implications, reveal: (1) clustering based on CO2 emis-
sions alone has a considerable overlap with income classification, (2) CO2 emission
per capita alone predicts the income class of a country and (3) presence of EKC
relationship between CO2 emissions and income.

Keywords Emissions · Income classification · EKC · Logit · Probit · Clustering ·

Regression

JEL Classification O13 · Q56

1 Introduction

Emissions can be described as gases and particles put into the air from various sources.
These emissions can be detrimental to the planet. Those gases that absorb radiation
in the atmosphere, hence leading to global warming, are known as greenhouse gases.
These greenhouse gases are measured in order to conduct climate science and formu-
late climate policy. CO2 , methane and nitrous oxide are the three greenhouse gases
that are of primary concern. Air pollution occurs if these gases are excessively present.
Pollution and economic growth share a more complex relationship which is different
from the traditional view in which the former is the by-product of the latter. This

K. Chandramohan (B) · R. Murugesan

Department of Humanities and Social Sciences, National Institute of Technology, Tiruchirappalli
620015, India
e-mail: [email protected]
R. Murugesan
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 63
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_4
64 K. Chandramohan and R. Murugesan

view is backed by a growing body of empirical evidence (Paudel & Schafer, 2009;
Paudel et al., 2011). The need for a sustainable development model has brought a
greater emphasis to investigate this relationship extensively.
The early stages of development of a country lead to environmental degradation
due to air pollution, deforestation, water contamination and several other factors. The
pace at which environmental degradation happens slows as the level of income of
the economy increases. The environmental quality starts to improve beyond a certain
level of income. Societies adopt newer and newer technologies in order to conserve
scarce resources (Grossman & Krueger, 1995). The relationship between environ-
ment quality and per capita income has been investigated in many studies. Studies
have examined the direction of causality between income level and environmental
quality with mixed results (Coondoo & Dinda, 2002). These studies have often inves-
tigated the relationship between CO2 emissions and income per capita. These studies
have often modelled the emissions based on income per capita (Mardani et al., 2018).
Many studies test for the presence of EKC between CO2 emissions per capita and
income per capita. Studies arrive at a threshold income per capita, based on the
emissions and other macroeconomic variables used to study the relationship, after
which CO2 emissions per capita will start declining. The income class to which the
country belongs can be inferred from this per capita income. CO2 emission per capita
is highest at this income.
There are very few studies that investigate the relationship between income class
and emissions. This study investigates the relationship between the GNI per capita
and emissions. This study uses World Bank’s Atlas method of classification of coun-
tries into high, upper middle, lower middle and low income class based on income
per capita. Cross-sectional analysis of emissions and income class of a country will
reveal if there is any relationship between them. It should also reveal which emis-
sion is strongly related to income. Any discrepancy between the income class and
income class obtained from emissions is analysed further. This study also tests the
EKC hypothesis for the emission that is a good predictor of the income class. These
findings should serve as input for policy decisions where one country can adopt
technology from another in order to reduce emissions.

2 Literature Review

2.1 Income Classification

Income distribution, as compared to income classification, has been analysed in the

literature to a large extent. This has been analysed using different statistical tech-
niques. Literature talks of income distribution at the intranational, international and
global level (Heshmati, 2006). There are many methods to analyse income distri-
bution, one of which is to use mean income per capita along with Gini coefficient.
Income distribution across the world has been studied in the context of human capital,
World Income Classification and Emissions: A Study … 65

production and finance. Basco and Mestieri (2019) find that unbundling of produc-
tion has been found to exacerbate inequality both in terms of welfare and income. De
Haan and Sturm (2017) find that financial liberalization has an impact on inequality
and is conditioned by financial development. Coady and Dizioli (2018) find a very
strong positive and stable relationship between inequality in years of schooling and
income inequality. This relationship is very prominent in emerging and developing
countries.
Income classification has largely been used in literature as a method for describing
the data. It has been used extensively in the health sciences to describe the occurrence
of some ailment in different income classes. This study tries to explore if income
classification can act as an important macroeconomic variable that can be predicted
from emissions. The World Bank classifies the countries into high, upper middle,
lower middle and low income economies based on the Atlas method. This classi-
fication dates back to the 1970s. GNI per capita is used to classify the countries
into these categories. This ensures that all countries, having lesser GNI, get a better
consideration in the classification. The setting of clearly defined categories of per
capita classification is not completely scientific nor is it completely arbitrary (World
Bank, 1999). This calculation of GNI per capita itself has been questioned based on
theoretical grounds (Kenny, 2011; Sumner, 2012). Income classification has been
criticized for its use outside the World Bank context (Fantom & Serajuddin, 2016).
Alonso-Rodríguez (2001) investigates the relationship between world income classi-
fication and human development indicators using logistic regression. They find that
public expenditure on education expressed as percentage of GDP is a good predictor
of the income class. The relationship between income classification and emissions
has not been investigated much in the literature.

2.2 Greenhouse Gas Emissions and EKC Hypothesis

Carbon dioxide is the main greenhouse gas. Combustion of fuels (coal, natural gas
and oil) is the primary human activity that adds to the already existing level of
carbon dioxide in the atmosphere. The literature on CO2 emissions is very exten-
sive (Mardani et al., 2018). The relationship between CO2 emissions and economic
growth has been investigated along with macroeconomic variables like electricity
consumption (Chaabouni et al., 2016), energy consumption (Sharma, 2011), energy
intensity (De Bruyn et al., 1998), tourism economics (Dogan et al., 2015), popu-
lation (Lee et al., 2010), renewable energy (Menyah & Wolde-Rufael, 2010) and
financial investment (Bekhet et al., 2017). This relationship has been investigated
using ARDL, GMM, Granger Causality as well as artificial neural networks. The
relationship between economic growth and CO2 emissions has been investigated in
many studies as an inverted U-shaped curve (Riti et al., 2017). This curve is similar
in shape to the income—inequality curve of Kuznets (1955) and is known as the
Environmental Kuznets Curve (EKC). This curve has been investigated by many
researches using different methods and different types of data. Income has been
66 K. Chandramohan and R. Murugesan

modelled as a predictor of the quality of environment. This relationship has been

modelled with emissions as the dependent variable using time series as well as panel
data with varied power of income for an economy or a group of economies (Shahbaz &
Sinha, 2019). CO2 is the base with which other greenhouse gases are compared to
determine their environmental impact. The emissions of other greenhouse gases are
converted to CO2 equivalent in order to make comparisons possible.
Methane is the second major greenhouse gas that is emitted from human activ-
ities. Methane is emitted from raising natural livestock, natural wetlands as well
as leakages in natural gas systems. The lifetime of methane in the atmosphere is
shorter than that of CO2 . Methane is 30 times more potent as a heat trapping gas than
CO2 (Princeton University, March 27, 2014). Benavides et al. (2017) found an EKC
relationship between methane emissions and GDP per capita in Austria. According
to their calculations, methane emission per capita will go on increasing till the per
capita income reaches $150,037.38 after which they will start decreasing. Roca et al.
(2001) found that economic growth and methane emissions increase together.
Nitrous oxide is the next largest greenhouse gas. It stays for a longer duration
in the atmosphere before it gets recycled. Agriculture, fuel combustion, wastewater
management and industrial processes increase the amount of N2 O in the atmosphere.
Seldon and Song (1994) find a U-shaped relationship between oxides of nitrogen
and per capita GDP. Zambrano and Fernandez (2017) found the presence of EKC
for nitrous oxide in Germany using an ARDL model. They find that beyond per
capita income of $27,880 the nitrous oxide emissions per capita start decreasing.
Magnani (2001) estimated that industrial nitrous oxide emissions start declining
between $9000 and $12,000 for a panel of 152 countries. The study used cross-
sectional data for the year 1975.
The use of time series or panel data for testing the EKC hypothesis is often cited
in the literature. There are very few studies that use cross-sectional data to investigate
the relationship between other emissions and income per capita. Carson et al. (1997)
find the presence of EKC relationship using cross-sectional data for the year 1990
of 50 states in the US for seven types of air emissions. They use a simple sign
test to investigate the relationship. The air emissions that they study are greenhouse
gases, air toxics, carbon monoxide (CO), nitrogen oxides (NOx ), sulphur dioxide
(SO2 ), volatile organic carbon (VOC), and particulate matter less than ten microns
in diameter (PM10).
Hypothesis about why EKC is inverted U shaped can be classified into two
scenarios. (1) Firms adapt to market or regulation changes by employing better tech-
nologies, (2) residents object to the presence of polluting firms. The first scenario
comes about as a result of changes in consumption and production leading to lower
levels of pollution per unit (Pfaff et al., 2004; Selden & Song, 1994). The second
scenario is due to the demand for higher environmental quality in a locality. This
could lead to pollution processes being pushed to low income areas (Arrow et al.,
1995; Suri & Chapman, 1998). Keene and Deller (2015) state that EKC is an induc-
tive theory and obtained from empirical observations. It does not originate from a
stylized theoretical framework.
World Income Classification and Emissions: A Study … 67

The literature that investigates the relationship between each of the top three
greenhouse gases and income per capita usually does not analyse all the three green-
house gases in a single study. This study explores if these variables show any signif-
icant relationship with GNI per capita. This study uses income classification as the
predicted variable and emissions as the predictor variable. There are very few studies
that use cross-sectional data. The use of clustering and classification techniques to
investigate this relationship is also scarce in the literature (Mardani et al., 2018). This
study also analyses countries that have been misclassified. The EKC hypothesis is
also tested for the emission that is a good predictor of the income class in order to
see if the misclassification can be explained. The usage of GNI per capita to test the
EKC hypothesis is also not cited much in the literature.

3 Objectives

This study aims to:

• Find the relationship between income classification and different emissions
• Explore if different emissions can be used to determine the income class of a
country
• Identify differences between the income class as per Atlas method and the income
class based on emissions obtained using machine learning techniques
• Test the presence of EKC hypothesis between income per capita and emissions

4 Methodology

4.1 Data Description

There are a total of 202 countries in the year 2012 for which macroeconomic data
is available in World Bank database. Table 1 gives the income classification as per
GNI per capita calculated using Atlas method.
The World Bank’s classification of economies was used to construct two binary
variables: cls1 = 1 if the economy falls in high income group, cls1 = 0 if economy
falls in non-high income group (this includes upper middle, lower middle and low

Table 1 Atlas method of

Income class GNI per capita range ($)
income classification
Low <1035
Lower middle 1036 to 4085
Upper middle 4086 to 12,615
High >12,615
68 K. Chandramohan and R. Murugesan

income groups), cls2 = 1 if the economy falls in high or upper middle income group,
cls2 = 0 if the economy falls in lower middle or low income group. The indicators
of the emissions in the environment that are used in this study are:
(i) CO2 per capita
(ii) Methane per capita
(iii) Nitrous oxide per capitaa
They are expressed in metric tons per capita. The data for methane emissions
and nitrous oxide emissions is also calculated on per capita basis using population
number derived by dividing total CO2 emissions by CO2 emissions per capita.

4.2 Cluster Analysis

Clustering is an unsupervised learning algorithm which tries to discover hidden

patterns in data (Hair et al., 2013). This study employs the K-means clustering tech-
nique to check if income classification and emissions classification yield similar
results. The clustering of countries based on CO2 , methane and nitrous oxide emis-
sions is performed. The data has not been scaled when using a single emission, but
has been scaled when using multiple emissions. Suppose there are n observations of
the variables y1 , y2 , …, yp then the clusters are formed such that


n
 2
1/n [min yi − m j ] (1)
j
i=1

 2
is minimized. yi − m j represents the squared Euclidean distance. The centroid
of the jth cluster is represented by mj . The number of clusters in this is fixed to 2 in
order to compare income classification and classification obtained using emissions.

4.3 Classification Techniques

This study uses both logit and probit models with cls1 and cls2 as the dependent
variable. These variables are dichotomous that can take the value of 0 or 1. These
models calculate the conditional probability as a nonlinear function of the indepen-
dent variable. Amemiya (1981) asserts that “One of the most important developments
in econometrics in the past ten years has occurred in the area of qualitative response
models, also known as quantal, categorical or discrete models”. These models are
used in many different fields such as biometrics, marketing, finance and statistics.
These models involve estimation of coefficients using maximum likelihood tech-
nique. A logit and probit model is analysed for each combination of income class
and emissions.
World Income Classification and Emissions: A Study … 69

4.3.1 Logit Model

The probability distribution of the income classification is modelled using a logistic

probability distribution. This can be written as:

1
Pr (cls1 = 1|Emissions) = (2)
1 + e−Z
1
Pr (cls2 = 1|Emissions) = (3)
1 + e−Z

Z = β1 + β2 ∗ (Emissions Variables) (4)

Equation 2 is used to classify based on high or non-high income while Eq. 3 is

used to classify into high or upper middle income and lower middle or low income.

4.3.2 Probit Model

The probability distribution of the income classification is modelled using a normal

cumulative distribution function (NCDF). This can be written as:

Pr (cls1 = 1|Emissions) = F(β1 + β2 ∗ (Emissions Variables)) (5)

Pr (cls2 = 1|Emissions) = F(β1 + β2 ∗ (Emissions Variables)) (6)

 β1 +β2 ∗(Emissions Variables)

1
e−z /2
2
F(β1 + β2 ∗ (Emissions Variables)) = √ dz
2π −∞
(7)

Equation 5 is used to classify based on high or non-high income while Eq. 6 is

used to classify into high or upper middle income and lower middle or low income.

4.4 Testing the EKC Hypothesis Using Multiple Regression

The following is a simple model to verify EKC hypothesis

E = β0 + β1 Y + β2 (Y )2 + β3 (Y )3 + e (8)

where E is emissions per capita; Y, the GNI per capita. The type of relationship
between the two variables can be inferred from the coefficients β1 , β2 and β3 (Dinda,
2004).
70 K. Chandramohan and R. Murugesan

(i) β1 = 0, β2 = 0 and β3 = 0 then there is no relationship

(ii) An inverted U-shaped relationship (EKC) if β1 > 0, β2 < 0 and β3 = 0
(iii) A U-shaped relationship if β1 < 0, β2 > 0 and β3 = 0
(iv) A N-shaped relationship if β1 > 0, β2 < 0 and β3 > 0
If EKC relationship holds, then the turning point is calculated as

GNI Per Capita Turning point = −β1 /2β2 (9)

If the relationship is N shaped, then there will be two turnaround points given by
  
−β2 ± β22 − 3β1 β3
GNI Per Capita Turning Points = (10)
3β3

5 Results

The analysis was carried out using R and E views software. These applications
have all the necessary packages for running a qualitative response model. Data was
collected for all the 202 countries, for the year 2012, from World Bank database. 185
countries have all the necessary data.
The summary statistics for GNI per capita and emissions are shown in Table 2.
Table 3 gives the tabulation of the variables cls1 and cls2.
The countries in high income category range from Bermuda with a per capita
income of 106,080 to Hungary with a per capita income of 12,910 while the countries
in non-high income range from Venezuela with a per capita income of 12,480 to
Burundi with a per capita income of 260. Tunisia with a per capita income of 4090 is
the last country in the high or upper middle income class while Marshall Islands with

Table 2 Descriptive statistics of the variables

GNI per capitaa CO2 emissions per Methane emissions Nitrous oxide
capitab per capitab emissions per
capitab
Min 260 0.030 0.011 0.001
1st quartile 1720 0.752 0.552 0.198
Median 5510 2.488 0.855 0.366
Mean 13,893 4.572 1.474 0.632
3rd quartile 14,100 6.066 1.566 0.588
Max 106,080 37.78 19.04 22.368
a Dollars
b Metric tons per capita
World Income Classification and Emissions: A Study … 71

Table 3 Statistics for cls1

Class Frequency Percentage Cumulative percentage
and cls2
cls1 = 1 55 29.73 29.73
cls1 = 0 130 70.27 100
cls2 = 1 105 56.76 56.76
cls2 = 0 80 43.24 100

a per capita income of 3980 is the first country in the lower middle to low income
class.

5.1 Cluster Analysis

K-means clustering using the different emissions per capita is carried out in order to
analyse which clustering is closely related to grouping based on income.
Table 4 shows that clustering using only CO2 emissions per capita yielded results
closer to income classification. Cluster 1 comprises of 165 countries. There are 40
high income countries in this cluster. Cluster 2 comprises of 15 high income and 5
non-high income countries.
Table 5 lists the high income countries that belong to cluster 1. These high income
countries have lesser emissions as compared to the high income countries in cluster
2. The GNI per capita in this table has a range from 12,910 for Hungary to 106,080
for Bahamas. There are 26 high income European countries in this cluster.
Table 6 gives the details of the means of the clusters formed by using methane
emissions per capita. This classification yielded 129 countries of non-high income
and 52 countries of high income falling into cluster 1 while only four countries,
Brunei, Central African Republic, Qatar and Trinidad and Tobago are in cluster 2.
The values of the centroids of each of the clusters are vastly different.
Table 7 gives the details of the means of the clusters formed by using nitrous
oxide emissions per capita. Central African Republic is the only country in cluster 2.
Clustering using this technique has very little resemblance to income classification.
K-means clustering with two clusters considering methane emissions per capita
and CO2 emissions per capita for determining the members resulted in the mean
values for the clusters as shown in Table 8. The emissions have been normalized
before clustering.
Cluster 1 comprises of 165 countries. There are 39 high income countries in this
cluster. Cluster 2 comprises of 16 high income and 4 non-high income countries. The

Table 4 Cluster means based

Cluster no. 1 2
on CO2 emissions per capita
CO2 emissions per capita 2.90706 18.30837
72 K. Chandramohan and R. Murugesan

Table 5 List of high income

Country name GNI per Country name GNI per
countries that have lower CO2
capita capita
emissions
Austria 50,060 Italy 36,000
Bahamas, The 23,580 Japan 49,480
Barbados 15,960 Korea, Rep 24,550
Belgium 47,190 Latvia 13,790
Bermuda 106,080 Lithuania 14,100
Chile 14,410 Macao SAR, 61,410
China
Croatia 13,460 Malta 21,650
Cyprus 28,950 Netherlands 52,500
Czech 19,350 New Zealand 36,720
Republic
Denmark 61,650 Poland 13,300
Equatorial 13,760 Portugal 21,150
Guinea
Finland 48,670 Singapore 51,110
France 43,020 Slovak Republic 17,550
Germany 46,710 Slovenia 23,130
Greece 23,500 Spain 29,760
Hong Kong 36,340 St. Kitts and 13,710
SAR Nevis
Hungary 12,910 Sweden 58,150
Iceland 40,750 Switzerland 84,880
Ireland 41,660 United Kingdom 41,200
Israel 32,180 Uruguay 13,910

Table 6 Cluster means based

Cluster no. 1 2
on methane emissions per
capita Methane emissions per capita 1.178915 14.867887

Table 7 Cluster means based

Cluster no. 1 2
on nitrous oxide emissions
per capita Methane emissions per capita 0.5140818 22.3687291

Table 8 Cluster means based

Cluster no. CO2 emissions per Methane emissions per
on emissions per capita
capita capita
1 3.0 0.97
2 17.49 5.65
World Income Classification and Emissions: A Study … 73

clusters formed with two emissions yield the same results as that when only CO2
emissions is used.

5.2 Logit and Probit Models

Table 9 gives the logit and probit models based on different variables.
Table 10 gives the estimated coefficients, the p-values of these coefficients and
the McFadden R2 . The statistics of interest are the p-values and McFadden R2 .
It is observed from the results that 1ALog, 1Blog, 1AProb and 1BProb models
satisfy all the necessary conditions for a good fit. This leads us to the conclusion
that there is a strong relationship between CO2 emissions per capita and income
classification. The analysis from model 1ALog finds that if the CO2 emission per
capita is more than 6.73, then there is more than 50 per cent probability that the
country is a high income country. The classification of countries based on this is
shown in Table 11. There are 42 countries that have emissions more than this; out

Table 9 Model sets

Model Equation
1ALog Pr (cls1 = 1|CO2 Emissions per capita) =
∅(β1 + β2 ∗(CO2 Emissions per capita))
1Blog Pr (cls2 = 1|CO2 Emissions per capita) =
∅(β1 + β2 ∗(CO2 Emissions per capita))
1AProb Pr (cls1 = 1|CO2 Emissions per capita) =
ϕ(β1 + β2 ∗(CO2 Emissions per capita))
1BProb Pr (cls2 = 1|CO2 Emissions per capita) =
ϕ(β1 + β2 ∗(CO2 Emissions per capita))
2ALog Pr (cls1 = 1|Methane Emissions per capita) =
∅(β1 + β2 ∗(Methane Emissions per capita))
2Blog Pr (cls2 = 1|Methane Emissions per capita) =
∅(β1 + β2 ∗(Methane Emissions per capita))
2AProb Pr (cls1 = 1|Methane Emissions per capita) =
ϕ(β1 + β2 ∗(Methane Emissions per capita))
2BProb Pr (cls2 = 1|Methane Emissions per capita) =
ϕ(β1 + β2 ∗(Methane Emissions per capita))
3ALog Pr (cls1 = 1|Nitrous Oxide Emissions per capita) =
∅(β1 + β2 ∗(Nitrous Oxide Emissions per capita))
3Blog Pr (cls2 = 1|Nitrous Oxide Emissions per capita) =
∅(β1 + β2 ∗(Nitrous Oxide Emissions per capita))
3AProb Pr (cls1 = 1|Nitrous Oxide Emissions per capita) =
ϕ(β1 + β2 ∗(Nitrous Oxide Emissions per capita))
3BProb Pr (cls2 = 1|Nitrous Oxide Emissions per capita) =
ϕ(β1 + β2 ∗(Nitrous Oxide Emissions per capita))
74 K. Chandramohan and R. Murugesan

Table 10 Model results

Model Pr(y = 1|x) McFadden R-squared
1ALog − 2.80 + 0.42 ∗ CO2 Emissions per capita 0.364
P(0.00) (0.00)
1Blog − 1.98 + 0.86 ∗ CO2 Emissions per capita 0.438
P(0.00) (0.00)
1AProb − 1.64 + 0.23 ∗ CO2 Emissions per capita 0.366
P(0.00) (0.00)
1BProb − 0.89 + 0.34 ∗ CO2 Emissions per capita 0.376
P(0.00) (0.00)
2ALog − 1.24 + 0.26 ∗ Methane Emissions per capita 0.04
P(0.00) (0.02)
2Blog 0.05 + 0.16 ∗ Methane Emissions per capita 0.02
P(0.79) (0.12)
2AProb − 0.72 + 0.12 ∗ Methane Emissions per capita 0.04
P(0.00) (0.00)
2BProb 0.06 + 0.07 ∗ Methane Emissions per capita 0.01
P(0.57) (0.08)
3ALog − 0.86 − 0.01 ∗ Nitrous Oxide Emissions per capita 0.00
P(0.00) (0.91)
3Blog 0.33 − 0.10 ∗ Nitrous Oxide Emissions per capita 0.00
P(0.04) (0.40)
3AProb − 0.53 − 0.00 ∗ Nitrous Oxide Emissions per capita 0.00
P(0.00) (0.91)
3BProb 0.21 − 0.06 ∗ Nitrous Oxide Emissions per capita 0.00
P(0.04) (0.38)

Table 11 Logit model

CO2 emissions per capita High income Non-high income
classification into high or
non-high income with More than 6.73 32 10
probability >0.5 Less than 6.73 23 120

of this 32 are high income countries. There are 23 high income countries that have
emissions lesser than this. The model has misclassified some countries but overall
the model seems to be good.
The analysis from 1Blog finds that if the CO2 emission per capita is more than
2.37, then there is more than 50 per cent probability that the country is high or upper
middle income country. The classification of countries based on this is shown in
Table 12. There are 95 countries that have emissions more than this, out of which
88 are high-upper middle income countries with 52 high income countries. There
are 17 high or upper middle income countries with three high income countries that
have emissions lower than this.
World Income Classification and Emissions: A Study … 75

Table 12 Logit model

CO2 emissions per High-upper middle Lower middle-low
classification into high-upper
capita income income
middle income with
probability >0.5 More than 2.37 88 7
Less than 2.37 17 73

Table 13 Probit model

CO2 emissions per capita High income Non-high income
classification into High
income with probability >0.5 More than 7.14 29 9
Less than 7.14 26 121

Table 14 Probit model

CO2 emissions per High-upper middle Lower middle-low
classification into high-upper
capita income income
middle income with
probability >0.5 More than 2.66 84 5
Less than 2.66 21 75

The analysis from model 1AProb find that if the CO2 emissions per capita is more
than 7.14 then there is more than 50% probability that the country is a high income
country. The classification of countries based on this is shown in Table 13. There
are 38 countries that have emissions more than this, out if this 29 are high income
countries. There are 26 high income countries that have emissions less than this. The
model has also misclassified some countries.
The analysis from 1BProb finds that if the CO2 emission per capita is more than
2.66, then there is more than 50% probability that the country is high or upper middle
income country. The classification of countries based on this is shown in Table 14.
There are 89 countries that have emissions more than this value out of which 84 are
high-upper middle income countries with 52 high income countries. There are 21
high or upper middle income countries with three high income countries that have
emissions less than this.
The model based on high or upper middle income seems to have a slightly better
fit for the data. This could be on account of some high income countries having
low emissions. One can see from the results that a number of high income countries
whose probability of belonging to the high income class is less than 50 per cent based
on CO2 emissions.
The models 2Alog and 2Aprob analyse the relationship between methane emis-
sions and income classification into high and non-high. The p-values of the coeffi-
cients obtained in 2Alog and 2AProb are significant but the McFadden R2 is very low
suggesting that there may be some variables that have to be added. 2Blog and 2BProb
models based on high-upper middle and lower middle-low income classification did
not yield significant coefficients.
76 K. Chandramohan and R. Murugesan

Table 15 Composite model

Model Pr(y = 1|x)
Logit −2.78 − 0.02 ∗ Methane Emissions per capita + 0.42 ∗ CO2 Emissions per capita
P (0.00) (0.87) (0.00) McFadden R2 − 0.36
Probit −1.62 − 0.02 ∗ Methane Emissions per capita + 0.23 ∗ CO2 Emissions per capita
P (0.00) (0.81) (0.00) McFadden R2 − 0.36

The p-values of the coefficients in the models (3 Series) that study the relationship
between nitrous oxide emissions and income class are insignificant. Nitrous oxide is
not a predictor of income class.
A composite model having the independent variables as CO2 emissions per capita
and methane emissions per capita that estimate the income class, the dependent
variable, is formulated. Table 15 gives the relevant statistics for the composite model.
The coefficient of methane emissions per capita is statistically insignificant and does
not improve models 1Alog and 1Aprob.
Findings also suggest that logit and probit models can be used interchangeably.
They do not seem to show significantly different results.

5.3 Testing the EKC Hypothesis Using Multiple Regression

Some high income countries have been clustered with countries that have low CO2
emissions. Classification techniques also show that there are some high income coun-
tries with low CO2 emissions. Multiple regression is used to check if clustering based
on emissions and prediction of income class based on emissions can be explained in
any other mathematical form.
The results of a simple EKC specification are shown in Table 16. The cubic term
has been removed as the presence of the term resulted in high multicollinearity.
The coefficient for GNI per capita is positive and GNI per capita squared is
negative. The p-values for the coefficients are statistically significant. The R square
value is 0.41 but one can make inferences about the relationship from the regression.
EKC relationship exists between CO2 emissions per capita and GNI per capita. The

Table 16 EKC output for

Regressor Coefficient p-value
CO2 emissions
Intercept 0.98 0.00
GNI per capita 3.81e−04 0.00
GNI per capita square −2.92e−09 0.00
Adjusted R2 0.40
DW statistic 2.08
F Stat 43.3
World Income Classification and Emissions: A Study … 77

income turning point comes out to be 65,240 Dollars. This income falls in the high
income class.

6 Conclusion and Scope of Future Research

This study starts by first clustering the countries based on their emissions per capita.
Classification techniques are then used to check if income class can be predicted
from emissions. Different models are analysed to determine the classification that
best represents the data. This is different from the typical EKC specification where in
emission per capita is the dependent variable and income per capita is the independent
variable. EKC hypothesis is then checked for the emission that is a good predictor
of the income class.
The findings from the study indicate that CO2 emission per capita is a significant
determinant of the income class of a country. The countries that have higher CO2
emissions per capita are majorly the high or the upper middle income countries.
Cluster analysis has also validated this fact to a large extent. There are some high
income and some non-high income countries that are grouped differently as compared
to the other members of their respective group. There are many high income European
countries that have lower CO2 emissions per capita. Logit and probit models confirm
the fact that CO2 emission per capita is a good predictor of the income class. The
classification based on high-upper middle income and lower middle-low income best
fits the data that is used.
The other greenhouse gases namely methane and nitrous oxide do not seem to be
related strongly to income per capita. These variables do not provide any additional
benefit when used along with CO2 emissions to determine the relationship with
income. There are a few countries that stand out from the rest as far as these emissions
are concerned.
The study finds the presence of EKC relationship between CO2 emissions and
income per capita. This study is consistent with many other studies done for a country
or a group of countries. The use of regression on cross-sectional data for validating
this relationship is limited in literature. An analysis of the reasons for the presence of
EKC in cross-sectional data may lead to a better understanding of this relationship.
The findings suggest that there may be a bidirectional relationship between income
per capita and CO2 emissions per capita.
This study being exploratory in nature serves as a starting point for other studies.
Studies on methane and nitrous oxide emissions are limited in the literature. One
of the classification models resulted in significant coefficients for methane emis-
sions. An investigation into the cause for high methane emissions in some of the
countries can bring to light interesting facts about the relationship of methane with
other macroeconomic variables. The relationship between CO2 emissions, income
and other macroeconomic variables can also be investigated further using machine
learning techniques. The EKC relationship as analysed in this study can be improved
further by the addition of other macroeconomic variables. The high income countries
78 K. Chandramohan and R. Murugesan

that have brought their emissions in control can act as role models for other countries.
The role of policy in bringing down the emissions can be investigated further.

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Impact of Soft Skills Training
on Knowledge and Work Performance
of Employees in Service Organizations

Sanjay K. Deshpande and M. M. Munshi

Abstract Soft skills have become inevitable for employees to effectively perform
their jobs in the services sector. A growing body of research shows that soft skills
can indeed be effectively taught (Bush in Media’s planet eLearn newsletter, 2012).
The effectiveness of soft skills training on the employees is measured using Kirk
Patrick’s model of training evaluation to study whether soft skills training imparted to
the employees of the service sector can enhance employee knowledge and impact the
dimensions of employee work performance. The result of this research study revealed
that soft skill training was successful in enhancing employee knowledge and does the
impact the employee work performance. This research study has provided insights
about the impact of soft skills training on work performance of employees of the
service sector and has contributed to the body of knowledge through the suggested
training model and pedagogical tools for imparting soft skills.

Keywords Soft skills training · Training effectiveness · Training evaluation · Kirk

Patrick model · Employee work performance · Employee knowledge · Services
organizations

1 Introduction

In the current business scenario, role of soft skills in ensuring professional success
and longevity of employees has assumed a higher importance than ever before. A
research study by Watts and Watts in 2008s the above-mentioned point by stating
that hard skills contribute to only 15% of one’s success, while the remaining 85% is
contributed by soft skills. Ever since the term soft skills was used for the first time in
1972, during CONARC conference in the USA, the importance of soft skills at the
workplace has leapfrogged to an unprecedented level owing to changing customer
orientation, preferences and loyalty, new business models. It has become inevitable
for employees to possess high quotient of soft skills besides education qualification,
professional certification and requisite domain knowledge to succeed in the current

S. K. Deshpande (B) · M. M. Munshi

VTU, Belagavi, Karnataka, India

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 81
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_5
82 S. K. Deshpande and M. M. Munshi

competitive era. Without being equipped with soft skills, it has become extremely
difficult for employees to tread the professional path that was once chosen with
relative comfort in the bygone days. With a significant rise in different types of
services offered through online and offline platforms and ever-increasing customer
expectations of better quality of services, the pressure on organization and employees
to cater to customer demands is only mounting.
In today’s competitive environment, soft skills enable employees to discharge
a better performance on the expected lines and thereby reduce the gap between
expected and offered services. Considering the universal fact that every individual
is different, employees vary in their skills, competencies and behavior employee,
and hence, work performance is not equitable, Therefore, soft skills training acts
a key moderator and enabler to augment employee work performance. However, it
is unwise to assume that every soft skills training program is effective and brings
about the desired success. Rising training cost, lack of time, cut-throat competition
have had a profound impact on training practices and resources of organizations.
Hereafter, it is imperious that organizations assess the effectiveness of their training
programs using the yardsticks like return on investment (ROI), return to learning
(ROL) and many others too. Training evaluation enables the organizations to custom
make the content, methods, training calendar, frequency, trainers, training budget as
deemed necessary.

1.1 Objectives of the Research Study

(i) To determine if soft skills training can enhance employee knowledge.

(ii) To determine the impact of soft skill training on employee work performance.

1.2 Conceptual Framework of the Study

Independent Moderating
variable: Variable
(Soft Skills training) (Demographic Factors )

Dependent
Variable:
(Employee
Knowledge & work
Performance)
Impact of Soft Skills Training on Knowledge and Work … 83

1.3 Brief History of Services Sector

It is worthwhile recalling that human beings have been treading on this Earth since
2,50,000 years. Service activities of many types have been essential aspects of the
evolution of human culture and civilization. Long before the twentieth century, many
scholars directed their attention to the service economy. Services are performed for
people and by the people, which means that service activities are embedded in the five
social institutions that sociologists describe as fundamental to the human civilization,
family, education, government, economy, and religion (Poponoe, 1980). The Latin
root of service is “servus,” which means “slave, servant or serf”. Services involve
human relationships, and interactions, from long services, are performed within the
context of human evolution. Clark (1940) a British and Australian economist was
the first to show the impact of services on GNP, and he was also the pioneer to start
studies on analyzing national economies using GNP as a tool.

Fig. 1 First era of services marketing. Source Raymond P Fisk Model

Making Tools Creating Language Building community

1992-2000 2000-20 2020 and Beyond

Fig. 2 Second era of services marketing

Table 1 Describes stages of different stages first era in the evolution of services marketing
Crawling stage This stage was characterized by services marketing emerging as a distinct
field; this was akin to amphibians crawling out of a swamp. Academic
researchers witnessed the emergence of new species called services Marketing
Scurrying stage This stage was characterized by the struggle of services marketing to stand on
its own merit; many academic scholars published articles and research views
on it. The first-ever book titled Services Marketing was published by Prof
Lovelock from Harvard
Walking stage This stage pertained about steps taken by services marketing to walk. During
this stage, perhaps the most notable achievement was the development of
SERVQUAL—A scale for measuring service quality
Source Raymond P Fisk Model (1993)
84 S. K. Deshpande and M. M. Munshi

Table 2 Describes stages of different stages second era in the evolution of services marketing
Making tools stage This stage was characterized by a congregation of research scholars from
different fields and making technological improvements and
sophistication in order to provide better services to customers
Creating language This stage was characterized by developing common platforms like
service centers, theaters and also a common language to sell services in
an efficient way
Building community This stage represents a futuristic appeal of services marketing; it aims to
bring service sellers and buyers in a virtual community beyond physical
market places
Source Raymond P Fisk Model (1993)

1.4 About Indian Services Sector

India’s dominant services sector is known as the growth engine of the economy
evident by the fact that it contributes about 57.3% to Indian gross value added, i.e.,
GVA (IBEF report), besides attracting a significant foreign direct investment (FDI)
of 68.62 US billion dollars which accounts to INR 313,538,000 (at 71 Indian rupees
per dollar) from 2000 to 2018 (IBEF report), the service sector employs 33% of
India’s employed population (Mehrotra-IL0 2019). India’s services sector covers
a vast variety of activities like trade, building and restaurants, transport, storage
and communication, banking and finance, insurance, property, business services,
community, social and personal services and services associated with construction.

1.5 Background to the Research Problem

A microscopic number of researchers have experimented at knowledge level of Kirk

Patrick’s training evaluation model. There is not much credible evidence on the
measurement of results, viz. return on learning (ROL) Hence, a detailed research
needs to be undertaken in this regard, the present literature survey did not provide
ample insight about any significant study which has investigated the impact of soft
skills training on the performance of employees in the service sector. Hence “Impact
of soft skills training on the knowledge and work performance of the employees of the
service sector in general and Belagavi city of Karnataka state, India, in particular,
remains to be known.” As such, this research study is taken up for purpose of the
above-mentioned research problem. This empirically investigates the impact of soft
skills training on the knowledge and work performance of employees in the service
sector. The study focuses on the employees working in the service organizations in
Karnataka state in general and Belagavi city in particular.
Impact of Soft Skills Training on Knowledge and Work … 85

Fig. 3 Kirk Patrick training evaluation model. Source Linked learning blog by Paul Petrone

1.6 Scope of the Study

The study is conducted on the employees working in the service organizations of

Belagavi city of Karnataka. Service organizations considered for the research include.
(a) Star hotels
(b) Telecommunication outlets
(c) Banks
(d) Insurance
(e) Organized large retail
(f) Post office
(g) Health care—hospital.

1.7 Model for Training Evaluation

See Fig. 3.

1.8 Research Methodology

This research study is descriptive in nature, and it is a quantitative study which aims
to find out whether “soft skill training” “can change employee behavior and impact
their performance.” Questionnaires were administered on the employees of banks
working in the city of Belagavi.
86 S. K. Deshpande and M. M. Munshi

• Sampling method: cluster sampling

• Sample size: 600
• Sampling frame: Employees of service organizations such as banks (public
and private), insurance-based organizations (public and private), large orga-
nized retailed stores, post offices, star hotels, hospitals, telecommunication-based
organizations, etc.
• Sampling unit: City of Belagavi
• Statistical tool: SPSS 22 Version.
• Statistical tests used: Cronbach’s alpha validity test, descriptive statistics,
Wilcoxon signed ranked test, regression analysis.

1.8.1 Scaling Techniques Used for Data Collection

A mixture of comparative and non-comparative scaling technique was used in the

questionnaire. Variables which are perception based were measured on 5-point
Likert’s scales with endpoints of “strongly disagree” and “strongly agree”. Primary
data was collected using a survey research method. Employees of the services sector
(respondents) were asked to rate the extent to which they agree or disagree with their
reaction to the training program. Respondents were asked to rate the extent to which
they agree or disagree with statements that reflect the degree of change in knowledge
and results when compared between before and after the training program.

1.8.2 Data Collection Instrument

A data collection instrument (questionnaire) was constructed and employed to

measure the impact of a soft skills training program on the work performance of
employees of service firms. Data collection instrument was constructed on the lines of
Kirkpatrick training evaluation model referring to the contents mentioned in the book
“Kirkpatrick’s levels of Training Evaluation” authored by James Patrick, published
by ATD press, Oct 2016. This data collection instrument (Questionnaire) had two
sections in it, namely Section A and Section B. Section A is meant for extracting
demographic data, and Section B is meant to extract employee opinion based on
the components of Kirkpatrick’s training evaluation model. Section B contained 31
items under 4 heads, namely Reaction, Learning, Behavior and Results. Reaction
as a head contains 6 items on a non-comparative scale, and other 3 heads Learning,
Knowledge, Results contain 25 items on comparative scale, i.e., before and after the
soft skills training program.

1.8.3 Sample Size Calculation

Since the population for this research study was unknown, the minimum sample size
estimated using the formula of Cochran (1977), discussed in his book ‘Sampling
Techniques’ was used.
Impact of Soft Skills Training on Knowledge and Work … 87

Table 3 The stages of

No. of questionnaires distributed 1000
arriving at a sample size
No. of filled questionnaires received back 734 (73.4%)
No. of the erroneous questionnaires 130
No. of questionnaires excluded for rounding 04
off
No of questionnaires (samples used for data 600
analysis)

z 2 × p(1 − p)
n0 =
e2
The following values can be used for estimating the sample size:
n0 The sample size needed for a research study.
z2 95% confidence level (The value of (1 − α) in standard normal distribution
z-table, which is 1.96 for 95%).
p 50% variability of the population (which is maximum).
e 5% margin of error which is 0.05.

(1.96)2 × 0.5(1 − 0.5)

n0 = = 384.16
(0.05)2

As calculated and determined by the above-mentioned formula (Cochran’s

formula), minimum sample size of 384 and more can be used for the study. Though
the minimum sample for the study was determined as 384, the researcher invested
more efforts to make the study more comprehensive; hence, 600 samples were used
for data analysis. About 1000 questionnaires were distributed in all, 734 respondents
participated in the survey in the study, about 130 of questionnaires were erroneous
in nature (half filled, wrongly filled), and eventually, 600 of them were selected for
data analysis, (4 of them were excluded for the purpose of rounding off to 600, and
since a sample of 600 is larger than the minimum sample of 384, discarding 04 was
feasible). The response rate of this survey was 73.4% (734), and error rate from filled
questionnaires was 17% (130) (Table 3).

2 Review of Literature

2.1 Soft Skills and Work Performance

Chaudhry and Abid (2011) conducted a study on employees in privately owned orga-
nizations to find whether their soft skills predicted their performance. Correlation and
88 S. K. Deshpande and M. M. Munshi

regression analysis were the statistical tools used for analysis. The results revealed
that the soft skills scores of employees predicted their performance scores in organiza-
tions. They also recommended considering the component of soft skills of employees
to take decisions pertaining to selection, retention, promotion, and transfer. Learning
soft skills improves employees communication with others, improves relationships,
enhances integrity, condenses stress levels, cultivates learning from mistakes, lessens
power games at work, enhances empathy, administrates change more assertively,
gets value and admiration from others, increases imagination and creativeness, and
improves job and career prospects, thus empowers and motivates the individuals to
perform better at the workplace.
Khokhar and Kush (2009) studied work performance of two different sets of
employees one with high soft skills and others with low soft skills. For this study, 20
male employees were taken from a company who was having a graduation degree in
engineering and a master’s degree in management. This study was done in Uttarak-
hand state, India. The 20 samples comprised of two sets. One set (10 samples) that
scored high soft skills and the other set (10 samples) that scored low soft skills. The
work performances of these two sets of samples were measured. Later, the indepen-
dent sample t tests were done to examine the mean difference between these two sets
of samples. The results revealed that high soft skills people have good quality of work
performance, ability to get along with others, ability to work without supervision,
capacity on work, quantity on work, speed on the job, care in handling the company,
ability to handle different jobs, dependability, initiative on the job, planning ability,
attendance and punctuality, and of course the overall work performance. They have
suggested that strengthening the soft skills s of the employees will foster the service
orientation of employees in the organizations.

2.2 Soft Skills Training and Work Performance

Dr. Rajshekhar (2019) in a research study titled “Teaching Soft skills: A Necessity In
Modern Era” said soft skills are inevitable and should be taught in schools, colleges,
and organizations in view of rising demand for these skills, Furthermore, soft skills
should also be taught to promote happy living besides for career development and
reinforcing moral standards. Young graduates and employees fail to utilize the oppor-
tunities across India, and because of lack of soft skills, soft skills help employees to
progress to higher positions, and when soft skills are imparted through training, the
benefits are enormous; hence, training becomes extremely necessary.
Sahoo et al. (2017) in a research study titled “Outcomes of Training and Devel-
opment Measures in Public Sector Banks of India” mentioned that investment in HR
development initiatives like training, skill up-gradation, and other employee devel-
opment programs will improve individual performance and organizational effec-
tiveness. Investing in an employee is not the same as investing in equipment or
machinery. Learning of soft and technical skills is necessary for building a career.
Impact of Soft Skills Training on Knowledge and Work … 89

Properly designed and well executed of training programs aid in building competence
and confidence among the employees and thereby accomplish an organizational goal.
Kaur (2016) studied the influence of training interventions on employee produc-
tivity and found that productivity in the service sector was significantly and posi-
tively influenced by various aspects of training and development programs including
soft skills training; hence, soft skills training is an important activity of business
organizations to enhance employee productivity.
According to Dr. Wushe et al. (2014) in a research titled “Humanizing Lead-
ership—The Effect of Business Soft Skills on Service Delivery in the Hospitality
Industry,” delivering quality service through professional business soft skills to
customers is a must for success and survival in today’s competitive business envi-
ronment. Hence, companies are now forced to invest more and more on soft skills
training in order to groom their employees to present themselves in a better manner
and improve their performance.
Dr. Elnaga and Imran (2013) in their research study titled “The Effect of Training
on Employee Performance,” mentioned that soft skills training is necessary to
increase productivity, and also to motivate and inspire workers to perform jobs more
effectively, they further said training makes the employees more capable by sharp-
ening their decision making, problem-solving skills, and thinking ability. Training
is provided to employees to help them perform their current and future jobs as per
the standards and expectations of the organizations.
Truitt (2011)in a study titled “The Effect of Training and Development on
Employee Attitude as it relates to Training and Work Proficiency” found that posi-
tive training paved for positive work efficiency; the study said 80% of trainees who
attended training and had a positive experience.
In a research study titled “Overqualified and under experienced—Turning gradu-
ates into hospitality managers” by Raybould and Wilkins (2005), it was ascertained
that many employees who join professional service organizations have insufficient
knowledge about soft skills, since the academic knowledge and grades they took from
their colleges and universities do not correspond to actual business needs, making it
compulsory of almost all the service-based organizations to impart soft skills training
to meet the business needs of service sector.

2.3 Need for Evaluating Training Program

Kamat (2019) in an article titled “Measure the Effectiveness of Corporate Training”

mentions that the investment in training and development in increasing across the
globe and is growing incrementally by 14% every year in the USA as per training
industry magazine. However, results and efficiency of past training act as critical indi-
cators for future training. With the rising focus on continuous learning and develop-
ment of employees, organizations have realized the need to measure the effectiveness
and the ROL of such training initiatives using reliable and appropriate methods.
90 S. K. Deshpande and M. M. Munshi

Huka, Njehia and KariukiMbugua (2015) in a research study titled “Business

Training Evaluation: Application and Effects on Trainee Competencies” mention
that training evaluation basically aims to answer three critical questions: whether the
training was successfully conducted, whether the immediate objectives of training
are met, and whether it has resulted in any changes terms of improved competencies
and subsequent performance of the trainees.
Mohamed and Alias (2012) in a research study titled “Evaluating the Effectiveness
of a Training Program Using the Four Level Kirkpatrick Model in the Banking Sector
in Malaysia” mention that it is necessary to evaluate every training program as
investments on training are not worthwhile without doing evaluation, and effective
evaluation should be well-planned and reliable. Therefore, organizations are required
to collect study and analyze the data obtained from the training evaluation to upgrade
the present training programs, if necessary, rather than just for training evaluation
purposes.
Gordon (1991) in a research study titled “Measuring goodness of training”
mentioned that to know the benefits accrued or will accrue evaluation of training
becomes necessary, the problem of evaluation, however, has got snakier, as the
amount of common ground for framing a discussion about goodness.

2.4 Construct Validity for Dimensions of Work Performance

Koopmans et al. (2012) categorized employee work performance into task perfor-
mance, contextual and adaptive performance. Task performance refers to the profi-
ciency with which an employee performs core duties or central job tasks. Contextual
performance refers to employee behaviors needed to support organizational culture or
environment made up by social and psychological factors and perform job tasks in the
said environment. Adaptive performance refers to an employee’s proficiency in being
flexible to adapt to changes in work roles and responsibilities, work expectations,
and work environment.
For the purpose of this research, based on the review of literature, the authors
have developed the dimensions of work performance as under.

3 Research Questions and Hypothesis

Research Question 1: Whether the soft skills training program is effective in

enhancing knowledge of employees of the service sector.
Research Question 2: Whether softs skills training has an impact on employee’s
work performance.

Hypothesis 1: Soft skill training is effective in enhancing employee knowledge

Hypothesis 2: Soft skill training has an impact on employee work performance
Impact of Soft Skills Training on Knowledge and Work … 91

4 Analysis and Findings

4.1 Plan for Data Analysis

Research question 1 is addressed by hypothesis (H1 ): soft skill training is effective in

enhancing employee knowledge [Knowledge refers to acquiring new information
in general and about pertaining to the job gaining clarity of expectations of the
job and objectives of Soft Skills training to gain future success (Patrick, 2016)].
Here soft skill training is the independent variable and work performance is the
dependent variable. Wilcoxon signed ranked test (also called paired ranked test,
Wilcoxon T-test), a nonparametric test, is used to know the knowledge level before
and after training method; as the data collected is perceptual in nature, the sample
is drawn from sample population; a t test is not used since the sample size is large (n
= 600). The second section titled Learning of Part B of the questionnaire contains
seven items (questions) about knowledge; the data is collected in a comparative way
using Likert scale. Each item is tested in a comparative way (before and after the
training program).
Research question 2 is addressed by (H2): Soft skills training has an impact on
employee work performance (Referring to Table 4 dimensions of work performance
included work compliance and quality, personal motivation, confidence and determi-
nation to work decision making, conflict management, time management, error-free
work, problem-solving, job satisfaction and self-value, independent working, clarity
in communication).
For the purpose of testing this hypothesis, multi-regression analysis test is used
impact. In the present study, multiple regression analysis was used to ascertain the
impact of independent variable, i.e., soft skills training which includes data about
(a) training infrastructure and environment (b) contents of training (c) presentation
style (d) organization and dependent variable (employee work performance). Here,
independent data (soft skills training) is a grouped variable and was correlated with

Table 4 Dimensions for

Work compliance and quality
measuring work performance
Personal motivation
Confidence and determination to work
Decision making
conflict management
Time management
Error-free work
Problem-solving
Job satisfaction and self-value
Independent working (working with little or no supervision)
Clarity in communication
92 S. K. Deshpande and M. M. Munshi

each dependent variable; i.e., dimensions of employee work performance and overall
variance were tested.

4.2 Data Analysis

4.2.1 Showing Sample Distribution Among Different Clusters

See Fig. 4.

Cluster No of respondents
Star Hotel 60

Telecommunication 64
Bank 160
Insurance 110
Retail 79
Post office 60

Health care – Hospital 67

600
Total

Star Hotel Telecommunication Bank Insurance Retail Post office Health care – Hospital

Health care –
Star Hotel 60,
67

Post office, 60, Telecommunication,

64,

Retail, 79,
Bank, 160,

Insurance, 110,

Fig. 4 Distribution of respondents among different clusters

Impact of Soft Skills Training on Knowledge and Work … 93

Table 5 Cronbach’s Alpha

Name of the dimension No. of items Cronbach’s alpha (α)
values for the dimensions of
questionnaire Reaction 6 0.834
Learning 7 0.947
Knowledge 8 0.967
Results 10 0.971
Reaction, Learning, Behavior, and Results are the components of
Kirk Patrick’s training evaluation model and have been used as
dimensions in the questionnaire, since this research study is based
on the lines of Kirk Patrick model.

4.2.2 Reliability Analysis Items in the Questionnaire

Interpretation: Cronbach’s coefficient alpha is a popular test of inter-item consis-

tency and reliability (Cronbach, 1946). As per the guidelines are given by Nunnally
(1978) for analyzing Cronbach’s alpha, the values between 0.5 and 0.6 for exploratory
research can be considered. Cronbach’s alpha for all the dimensions are above 0.6;
hence, the reliability exists among all the dimensions in the measurement scale
(Referring to Table 5).
Hypothesis 1o: Soft skill training is not effective in enhancing employee
knowledge
Hypothesis 1a: Soft skill training is effective in enhancing employee knowledge
Objective: The objective of testing this hypothesis is to determine whether there is
any change in employees’ knowledge before and after the training program, and
this helps in understanding if the soft skills training was effective in enhancing in
employee knowledge. Here, employee knowledge is the dependent variable and soft
skills training is an independent variable. Wilcoxon signed ranked test (also called
paired ranked test, Wilcoxon T-test), a nonparametric test, was used to test the change
in knowledge level before and after training. Each item is tested in a comparative
way (before and after the training program). As the data collected was collected on
a comparative scale and was perceptual in nature.
Interpretation: Table 6 represents p-values of test results of enhancing employee
knowledge (before and after the training program), and Wilcoxon ranked sign test
results are mentioned in Table 7.
Inference: Referring to Table 7, alternate hypothesis (H1a), i.e., soft skill training,
is effective in enhancing employee. Knowledge is accepted, since in all the cases
(P-value <0.005) at 95% confidence level. Hence, it is clear that soft skills training
is effective in enhancing employee knowledge.
H2o: Soft Skills training has no impact on employee work performance
H2a: Soft skills training has an impact on employee work performance
94 S. K. Deshpande and M. M. Munshi

Table 6 Results of Wilcoxon ranked T test to ascertain the change in employee knowledge
BT I have Knowledge/information-acquired I believe that The training
Before acquired met the expectation and is the needed content and
training information applicable to the job soft skills, information
and knowledge will be helpful
knowledge have been for my future
that is new to imparted success
me
AT I have Knowledge/information-acquired I believe that The training
After acquired met the expectation and is the needed content and
training information applicable to the job soft skills, information
and knowledge will be helpful
knowledge have been for my future
that is new to imparted success
me
Z −20.221b −20.018b −19.641b −19.531b
Asymp. 0.000 0.000 0.000 0.000
Sig.
(2-tailed)
BT Attitude has undergone a change in accordance I am clear I understood
Before with job requirements about what is the objectives
training expected of of this training
me on the job program
AT Attitude has undergone a change in accordance I am clear I understood
After with job requirements about what is the objectives
training expected of of this training
me on the job program
Z −19.468b −19.798b −19.604b
Asymp. 0.000 0.000 0.000
Sig.
(2-tailed)

Table 7 P-values of Wilcoxon ranked T test of all items of knowledge

Details P-value
1. I have acquired information and knowledge that is new to me (BT and AT) 000
2. Knowledge/information-acquired met the expectation and is applicable to the job 000
(BT and AT)
3. I believe that the needed soft skills, knowledge have been imparted (BT and AT) 000
4. The training content and information will be helpful for my future success (BT and 000
AT)
5. Attitude has undergone a change in accordance with job requirements (BT and AT) 000
6. I am clear about what is expected of me on the job (BT and AT) 000
7. I understood the objectives of this training program (BT and AT) 000
BT Before training, AT After training
Impact of Soft Skills Training on Knowledge and Work … 95

Objective: The objective of this hypothesis is to know whether soft skills training
causes any variance on employee work performance. Regression analysis was
conducted to determine the impact of the independent variable (soft skills training)
on dependent variable (work performance). Data for the dependent variable and the
independent variable was collected on a continuous and comparative scale.
Interpretation: Multiple regression analysis was conducted to determine how soft
skills training was related and caused variance to employee work performance. This
overall regression model produced an R2 of .232 which means that the soft skills
explained an overall 23.2% of variance on the dependent variable employee work
performance. The overall model was significant, F (1, 599) = 180.9, p < 0.005,
and it accounted for 23.2% of the variance. The results indicated that overall soft
skills training (β = 0.482, p < 0.05) had a statistically significant relationship with
employee work performance. The strength of relationships (beta scores) indicated
that soft skills training (β = 0.482) had a greater positive relationship with employee
work performance.
Inference: Referring to Table 8
• Alternate hypothesis H 6 is accepted, as P (0.000) < 0.005; hence, soft skills
training has an impact on dimensions of employee work performance.
• Soft skills training showed a variance of 23.2% (R2 value) on employee work
performance.

Table 8 Results of multiple regression analysis between soft skills training and employee work
performance
Model summary
Model R R-square Adjusted R-square Std. error of the estimate
1 0.482a 0.232 0.231 3.64766
ANOVAb
Model Sum of squares df Mean square F Sig
1 Regression 2407.880 1 2407.880 180.970 0.000b
Residual 7956.654 598 13.305
Total 10,364.534 599
Coefficients
Model Unstandardized Standardized t Sig
coefficients coefficients
B Std. error Beta
1 (Constant) 20.636 1.005 20.539 0.000
Soft skills training 0.671 0.050 0.482 13.452 0.000
a Predictors: (Constant), soft skills training
b Dependent variable: work performance
96 S. K. Deshpande and M. M. Munshi

5 Conclusion

This research study concludes by mentioning that, soft skills training is effective
in enhancing employee knowledge, the study further claims that soft skills training
caused a variance of 23% to employee work performance (Referring to Table 8),
Which means soft skill training was instrumental in enhancing employee work
performance by 23%, hence the second hypothesis stands accepted and proved.

6 Implications of the Study

There is a strong need to shed the old belief that training is a cost-centric approach,
since the findings of this study claim that soft skills training provides significant
benefits by enhancing employee performance. Hence, soft skills training should
be made an integral part of the training agenda without any ignorance in service
organizations.

7 Scope for Further Research

• Comparing key performance areas (KPA), key result areas (KRA) and feed-
back can better measure employee performance sought by customers to know if
employee performance is on expected lines. Anderson’s value of learning model
can be used for research endeavor since its focus is on the evaluation of congru-
ence between the learning program’s/training goals and the strategic goals of the
organization.
• Since the workforce in any organization is a blend of people coming from diversi-
fied backgrounds, it may be interesting to ascertain if background of the employees
influences the efficiency of the training programs conducted. The study can focus
on finding out if there education and cultural backgrounds unable or enable them
to acquire the information, knowledge imparted during the training program.
Impact of Soft Skills Training on Knowledge and Work … 97

8 Suggested Training Model for Developing Soft Skills

• Conduct an assessment to find out instincts, traits, thinking and behavioral pattern during
the selection process , using personality assessment tools
• Identifying critical areas of behavior and configure with the demands of the role/ job , to
Thinking find the gaps, if any
• Ascertain the reasons of particular way of thinking (Innate nature, social, cultural, personal
(Assessment) and educational history).

• Impart the much needed critical skills based on the gaps found
• Highlight the importance of training.
• Use appropriate training method based.
Training

• Ascertain the behavioral pattern exhibited by the employees through observation by

superiors, self-assessment, and Customer feedback.
• Measure role / performance based using predefined KRA's (Key result areas) andKPA's
Behavior (Key performance areas )
(Observe &
ascertain)

• Reinforce the Soft Skills training if found necessary to impart key skills
• Retrain to overcome transience

Retrain
(Contextual)
98 S. K. Deshpande and M. M. Munshi

Data Collection Instrument Questionnaire

SECTION – A - GENERAL INFORMATION

1.1 Your Name (Optional): 1.2 Designation:

1.3 Have you attended training program on Soft skills

Yes No

1.4 Type of service organization you work with (Tick whichever is applicable).

Hotel Telecommunication Bank Insurance Retail IT Healthcare

1.5 Gender: (Tick whichever is applicable)

Male Female

1.6 Age: (Tick whichever is applicable)

20-25 Years 25-30 Years 30-35 Years 35-40 Years 40-45 Years >45 Years

1.7 Educational qualification: (Tick whichever is applicable).

PUC Diploma Degree PG

1.8 Your position in the organization. (Tick whichever is applicable).

Operational Middle Level Top Level

1.9 Your experience in this organization. (Tick whichever is applicable).

Below 5 Years 5-10 Years 10-15 Years Above 15 Years

1.10 What type of Soft skills was imparted during the training you may tick more than one

Interpersonal skills like self-confidence, motivation, self-improvement

Leadership and teamwork based
Impact of Soft Skills Training on Knowledge and Work … 99

Specific Skills- Time management, Negotiation, Decision making, Problem Solving, and other skills
Attitude, Ethics, Etiquette based
Communication skills- Written, Oral, listening, Reading
Handling Stress and Criticism
Any other

SECTION B - BASED ON KIRK PATRICK MODEL

1. Reaction (Reaction of the trainees towards the trainer, training content and method)
5- Strongly Agree, 4-Agree, 3- Neither Agree nor Disagree, 2-Disagree, 1- Strongly Disagree

Si. SELF-ASSESSMENT OF TRAINEES REACTION TO INSTRUCTOR, Rating

No MATERIAL, CONTENT
(Tick whichever is applicable)

1 Venue and arrangements for the training were good & acceptable 1 2 3 4 5

2 Contents of training were suited to my level of knowledge and skills and to th

job requirements

3 The presentation style of the facilitator contributed to learning and can be

recommended to colleagues
4 Training methods used have influenced me to be more attentive and
engaged throughout the training

5 Trainer/ facilitator encouraged participation

6 Do you really feel the need for soft skill training to mould the employees
and help them fit into job requirements

2. Learning (Information, Knowledge acquired by trainees post-training program)

5- Strongly Agree, 4-Agree, 3- Neither Agree nor Disagree, 2-Disagree, 1- Strongly Disagree

SELF-ASSESSMENT OF KNOWLEDGE AND SKILLS LEARNT RELATED TO

BEFORE TRAINING AFTER TRAINING
JOB/ ROLE

1 2 3 4 5 I have acquired information and knowledge that is new to me 1 2 3 4 5

Knowledge / Information acquired met the expectation and is applicable to the

1 2 3 4 5 job
1 2 3 4 5

I believe that the needed Soft skills , knowledge have been imparted
1 2 3 4 5 1 2 3 4 5
100 S. K. Deshpande and M. M. Munshi

The training content and information will be helpful for my future success.
1 2 3 4 5 1 2 3 4 5

1 2 3 4 5 Attitude has undergone a change in accordance to job requirements 1 2 3 4 5

I am clear about what is expected of me on the job
1 2 3 4 5 1 2 3 4 5

I understood the objectives of this training program

1 2 3 4 5 1 2 3 4 5

3. Behaviour (Behaviour of the trainees on the job, towards peers, post-training program)

5- Strongly Agree, 4-Agree, 3- Neither Agree nor Disagree, 2-Disagree, 1- Strongly Disagree

BEFORE TRAINING SELF-ASSESSMENT OF BEHAVIOURAL ASPECTS AFTER TRAINING

Soft skill training had the potential to bring positive change in my

1 2 3 4 5 1 2 3 4 5
behaviour

Change in behavior sustained over a period of time and helped me

1 2 3 4 5 1 2 3 4 5
work better

I felt there is a noticeable and measurable change in the activity and

1 2 3 4 5 1 2 3 4 5
performance of my role
I I have received support and encouragement for applying my
1 2 3 4 5 learning to my job. 1 2 3 4 5

Soft skill training helped me to gain the required behavioural

1 2 3 4 5 abilities 1 2 3 4 5

A system of accountability helps me to apply what I learnt.

1 2 3 4 5 1 2 3 4 5

Incentives encourage me to apply what I learnt

1 2 3 4 5 1 2 3 4 5

4. Result (End results, benefits accrued to the trainee after the training program)

5- Strongly Agree, 4-Agree, 3- Neither Agree nor Disagree, 2-Disagree, 1- Strongly Disagree

SELF-ASSESSMENT OF KNOWLEDGE AND SKILLS RELATED TO JOB/

BEFORE TRAINING AFTER TRAINING
ROLE
1 2 3 4 5 My compliance and quality of work has increased 1 2 3 4 5
My personal motivation, confidence and determination to work has
1 2 3 4 5 1 2 3 4 5
increased
I am able to take better decisions and thereby improve productivity
1 2 3 4 5 1 2 3 4 5
( Decision Making)
Impact of Soft Skills Training on Knowledge and Work … 101

1 2 3 4 5 My conflicts with co-workers have reduced 1 2 3 4 5

1 2 3 4 5 My time management skills and have been honed 1 2 3 4 5

1 2 3 4 5 I am able to work efficiency as error rates have decreased 1 2 3 4 5

1 2 3 4 5 My problem solving ability has increased 1 2 3 4 5

1 2 3 4 5 I have felt greater job satisfaction and also feel self-valued 1 2 3 4 5

1 2 3 4 5 I am able to work independently with little or no supervision 1 2 3 4 5

I am able to communicate and express ideas, suggestions, and inputs

1 2 3 4 5 1 2 3 4 5
with more clarity to clients. (Clarity in Communication)

Suggestions: if any other types of training can be given to enhance the skill base and capacity of staff, is so mention.

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Are Recreational Activities Really
Recreational at the Workplace?

Mahavadi Dhanshyam

Abstract The RoI of the human capital—the most important asset of organiza-
tions—depends primarily on the life quality of the individuals, represented by their
performance levels, motivation towards work, and work-life balance. The advance-
ment of fast and competitive business world accompanies increased working hours,
which stress the employees further. To remain competitive, companies try to maxi-
mize the productivity of employees through recreational and wellness programs,
which require high initial investment and significant costs to maintain. Thus, it is
essential to assess their adequacy, effectiveness, and their actual role in the life
quality of employees. Extant literature focuses on positive effects of the recreational
programs, but the actual benefits accrued to the final customers (employees) remain
doubtful. Through this study on Indian IT industry, the author assesses the effective-
ness of these programs using four indicators. The results expose the inadequacies,
emphasizing the need for flexible approach in designing such programs.

Keywords Recreational facilities · Employee wellness · Stress · Work-life

balance · Effectiveness · Performance index · Life quality index · Motivation index

1 Introduction

Organizations throughout the world strive hard to develop their human capital—the
most volatile of their assets. The amount and quality of work the employees put in are
important determinants of the organizational success. Maintenance and improvement
of this high-quality work are related to employees’ satisfaction with their work and
their social life within the workspace.
With organizations becoming flat and leaner, and demanding multitaskers, the job
descriptions of employees have become very fluid, their scope wider, and their targets
increasingly more and more challenging in most of the organizations. The pressure

M. Dhanshyam (B)
Indian Institute of Management, Lucknow 226013, India
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 103
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_6
104 M. Dhanshyam

to achieve targets at workplace affects their work-life balance, making many profes-
sionals vulnerable to stress. Many organizations worldwide have tried to address this
issue by making it mandatory in their policies to implement recreational activities at
the workplace many times in a year. The labor laws and guidelines in many nations
also mandate public limited companies to adhere to some minimum provisions related
to employee morale and wellness.
Literature and practice-based evidence at different types of organizations world-
wide stress the importance of recreational activities at workplaces. Recreational
activities help in improving productivity of employees by refreshing their brains,
helping them unlock their creative self to think out-of-the-box, revitalizing their
bodies, and improving focus. Wellness programs aid in creating lighter work envi-
ronment by creating a fun corner, thus helping in keeping the work stress levels
low and employee morale high. A well-crafted and maintained recreational area
is an easy gateway to encourage informal socializing which strengthens teamwork
and collaborative efforts. It facilitates cross-team and inter-departmental knowledge
exchange, a prerequisite for organizational learning. Well-organized recreational
programs imbibe positive work culture in the organizations by lessening power
distance and increasing approachability. This has an overall positive impact on orga-
nization performance through improvement of individual employee performance and
team performance.
The advantages of recreational activities are numerous, and there is little doubt
about their impact on the organization’s performance. But, as most of the policies
that are drafted at the higher management level get diluted when implemented at
lower level of the organization, recreational activities may also face the same fate.
Implementing recreational activities at different organizational levels productively
is one of the most critical challenges that organizations face today. Most of the
organizations, especially in India, organize recreational activities probably just for
the sake of complying with HR policies. Employees seemingly do not participate
very actively in the recreational activities conducted at their office/organization.
Apparently, the perception of employees toward recreational activities is also very
casual in nature.
All the above-mentioned points kindle an important question of ‘Whether these
recreational activities are at all beneficial for organization’s productivity/output?’.
This paper attempts to delve deep into the nature of recreational activities preva-
lent in Indian IT organizations and to seek a plausible answer for this question. The
findings try to uncover the harsh reality that there exists a significant gap between
‘what is’ and ‘what it is aimed at’ at many major organizations. Given the huge invest-
ments incurred in provision of these activities, the research findings leave the practi-
tioners with a food-for-thought on their present policies. For the aspiring researchers,
the gap between aspirations and reality provides huge scope for understanding the
organizational practice and develop innovative research questions for testing. For
policymakers, the findings help fine-tune their guidelines to ensure overall human
index development of their nations.
Are Recreational Activities Really Recreational at the Workplace? 105

2 Literature Review and Background

Yang et al. (2009) demonstrate the relationship between quality of life and occu-
pational stress among teachers in China. They find that teachers in China suffer
with lower health status than the rest of their population, which is mostly due to
the strain posed by their occupation and absence of any means to dilute or divert
it. Tuisku and Houni (2015) assert cultural leisure activities as a source of well-
being and coping with the stress of employees. Their experience of cultural activities
in Finnish workplaces reveals that community participation is more effective than
individual activities, and that they result in relaxation and psychological detachment
from strain. Van den Brande et al. (2016) suggest wishful thinking, emotional coping,
recreation, social support, and suppression as tools to suppress workplace bullying
and the resulting stress. Okechukwu et al. (2019) assessed the effect of work stress
on staff performance in the Nigerian banking sector and suggested that creation of
time for rest and recreational activities as well as vacation packages are essential to
break their monotony and revitalize them.
Gungaphul et al. (2012) have stressed the importance of promotion of leisure
and recreation in the workplace with some focus on the recent trends in workplace
recreation. Modern organizations are increasingly realizing the value of employee
health, well-being personal and professional growth, and their linkage to the wellness
programs. The advantages like increased productivity, enhanced work-life balance,
platform to socialize, improved motivation, and betterment of professional behavior
of the employees provided by the recreational activities are driving the organiza-
tions to invest heavily and encourage the employees to take active part in the same.
Lacanienta et al. (2018) observed that leisure at workplace (LAW) can provide added
value to the workplace by facilitating personal expressiveness, resilience, and organi-
zational identification. Ledikwe et al. (2017) highlighted that ensuring the well-being
of healthcare workers is critical in reaching international health goals, and demon-
strated the method and effect of implementation of a National Workplace Wellness
Program for health workers in Botswana.
Candice et al. (2012), through their case study, have examined a workplace
recreation-based program using a social and ecological approach to wellness. The
study highlights leadership, social support, and bonding as the primary benefits of
the workplace recreation, even while the constraints related to job responsibilities,
returning to work after perspiring, and limitations of physical space act as challenges
in actual implementation of the recreational activities. They have established that
the recreational activities improve the degree of identification of ownership that the
individuals feel. Kukk et al. (2016) suggested leisure and recreation at workplace
as an opportunity to result in positive integration of ethnic groups and refresh the
employees.
In a detailed study conducted on the effects of workplace recreation on employee
performance at Kenya Utalii College, Mokaya and Gitari (2012) discovered that the
major reasons for engaging in workplace recreation were relaxation of mind, stress
reduction, confidence building, and improvement of health of employees. They have
106 M. Dhanshyam

found a positive correlation between the recreational facilities at workplace and the
employee performance variables like job satisfaction, quality of service and customer
satisfaction, and enhanced productivity. Most employees view recreational activities
as intrinsic reward mechanism, wherein staff parties serve as a platform to obtain
informal feedback on the employee performance and for recognizing one’s achieve-
ments and gaining cognizance of their shortcomings, thus helping them meet their
social needs that are otherwise constrained by the hectic schedules. By offering recre-
ational facilities to employees, organizations boost the productivity of employees by
meeting their physical and psychological needs, which in turn reduces their absen-
teeism, sick leaves, and medical costs, and acquire returns in the form of reduced
turnover, improved working hours, and greater productivity. They further recommend
that in order to achieve the desired results and performance, however, the recreational
activities have to be carefully designed considering the different tastes, genders, age,
and other cultural factors of the demographics. Kerner et al. (2017) found a negative
correlation between leisure-time physical activity and absenteeism at work, showing
that it improved availability and profitability of organizations.
Realizing that physical inactivity is the fourth most leading reason for deaths glob-
ally (Kohl et al., 2012) and that inactivity increases the risk on non-communicable
diseases like cardiovascular disorders and diabetes. Amber and Mayer (2016), have
conducted a research on the faculty and staff of a small private university located in the
Pacific Northwest of the USA, with the hypotheses that workplace and environmental
settings have a positive effect on health status, promote increased quality of life,
reduce stress, and improve overall employee satisfaction. To this effect, Kohl et al.
(2012) call for a systematic approach for capacity and infrastructure to design creative
work environments. Harju et al. (2014) identified different causes of job boredom and
found that it increased the likelihood of employees’ turnover, absenteeism and early
retirement intentions, poor health, poor workability, and stress symptoms. Morrison
and MacKinnon (2008) have defined essentials for workplace wellness programs that
include stakeholder engagement, employee participation and involvement, positive
organizational culture, ability to reduce direct medical economic expenses resulting
out of stress, and effects on humanistic outcomes. Amber and Mayer (2016) have
found that workplace recreation has contributed to changing social norms at the
university by developing a culture of health and wellness. They have addressed the
primary problems of identification of indicators of work-related quality of life, iden-
tification of the recreation needs of the faculty and the staff, and identification of
current trends for the usage of available recreational facilities. They found that the
participants of the wellness program felt very healthy and full of energy. However,
while around 75% of the participants had planned to use the recreational facilities
on being opened, only 46.7% reported to have actually been using them at least once
a week, post their installation. Despite the non-active use, the respondents empha-
sized on the need of such facilities at their workplace. But at the same time, on
posttest, 86% of the participants had reported that the new recreational facility had
little influenced their approach to work. Additionally, their findings reported that the
current facilities fail to address many aspects of health. As such, a lot of refinement
has been suggested in the available recreational facilities to enhance participative
Are Recreational Activities Really Recreational at the Workplace? 107

health efforts among the faculty and staff. Their findings had further emphasized the
importance of components recommended by Morrison and MacKinnon (2008) as
essential to the success of workplace wellness programs. Cannady (2020) extended
Williams and Burgess’ (2007) work on finding a right combination of workplace
and recreational noise exposure and stressed the importance of selection of proper
recreational programs. He asserted that their design should emphasize inclusion of
occupational health and safety standards.
In a study conducted on the managerial and non-managerial staff of The World
Shopping Mall at the city of Bhubaneshwar (India), Samantaray (2014) has found
that the work environment, recreational and refreshment facilities at the workplace,
fun at the work initiatives, and health and safety facilities at the work place are
essential to develop interpersonal relationships and overcome fatigue, boredom, and
the associated stress resulting from the job. The characteristics of an effective work
environment include trust, mutual respect, mindfulness, openness to diversity and
cooperation, which are strengthened by recreational activities. Organizations should
aim at generation of a work environment which ensures easing of the effort and stress,
while eliminating the causes of frustration, anxiety, and worry. Creating healthy
workplaces to foster a positive work environment requires detailed planning and
good implementation. This may involve changes in the organizational structure,
culture, systems, and practices, if required.
Morrison and MacKinnon (2008) have done extensive review of the literature and
interviews regarding Workplace Wellness Programs (WWPs) at Canada and other
places. The employers, who employ more than 50% of Canadian population, are
in prime position to take initiatives to impact health of their employees. The new
millennium WWPs focus on organizational stress, including work-life balance and
morale issues by integrating a comprehensive approach to wellness. The success of
Employee Assistance Programs (EAPs) shows that a WWP with personalized health
counseling-based needs would improve the utility and consumption of the initiatives.
The organizations must foster a culture, wherein wellness must be a core business
process and should be integrated with the strategy to achieve optimal results. Findings
support that workplace wellness programs have a substantial effect on the indirect
costs of the organizations, with significant impact on absenteeism and productivity.
Besides, properly structured wellness programs enhance the corporate image of the
organizations and improve employee retention and engagement.
In her study, Caroline (2013) has tried to determine the effect of workplace recre-
ation on the well-being and performance of employees at the Commission for Univer-
sity Education (CUE), Kenya. Trying to separately analyze the impacts of different
aspects of the recreation, viz. the physical fitness programs, mental health programs,
and workplace entertainment programs, the study was conducted on 66 employees
of staff at varied organizational levels of CUE. The results show a strong positive
correlation of employee well-being with physical fitness and mental health, while
the correlation with entertainment programs has been found less significant. Lack of
time, inadequate recreational facilities, and distrust in the employer have been found
as major deterrents in the positive participation of the individuals in the activities.
The researcher emphasizes on the need of organizations to evaluate their recreational
108 M. Dhanshyam

schedules so that the employees may be allowed to participate in the activities on a

part-employee, part-company time basis. Among major challenges faced by the orga-
nizations in implementation of the recreational activities, the problem is being unable
to quantify benefits from the recreational programs and getting employees to partic-
ipate in the same. Gupta (2019) analyzed the need for human resource departments
in Indian IT sector to invest in workplace recreation.

3 Research Gap and Objectives

The discussion so far establishes the importance of recreational activities and well-
ness programs at the workplace. However, there is very little evidence from these
studies about the real effectiveness in the scenario of Indian IT companies. Gupta
(2019) attempted to understand the need for these activities in the Indian IT sector,
but has not assessed their present nature and effectiveness. Hence, a need has been
felt to address the proposed research question.
An attempt has been made to formulate well worked-out questionnaire for
surveying employees working in IT organizations in India to know about the actual
impact of recreational activities held at their respective workplaces. The survey
provided insights into the actual effectiveness of recreational activities and the impact
these activities have on employees’ satisfaction level and whether these recreational
activities are helpful in improving the employee productivity or not. To summarize,
answers and insights have been sought for the following research question:
‘Are the recreational activities really recreational at the workplace?’
After consolidating the data and concrete opinions of employees, the results have
been presented with the help of representative and inferential statistics, followed by
some insightful recommendations.

3.1 Rationale

• As organizations spend a fortune on recreational activities for its employees, it

becomes essential to realize the actual benefits of implementing these recreational
activities.
• As already mentioned, the employees’ satisfaction level largely depends on the
environment in which he/she works. An employee who might be going through
all the recreational activities available in his/her office may claim to have a low
satisfaction level and dull/boring workspace.
• The effectiveness of recreational activities has a great impact on an individual
employee’s stress level and overall health. The measure of the effectiveness of
recreational activities might provide the actual intensity of stress and pressure that
an employee handles in an organization.
Are Recreational Activities Really Recreational at the Workplace? 109

• Most of the books and a plethora of widely available researches in the area claim
positive impacts of recreational activities on organization’s productivity but if
employees do not participate in these activities willingly and intensively, the
benefits of these activities for those employees might not be significant.
• To know the actual trend and how employees actually perceive these recreational
activities.

4 Research Design and Methodology

The research undertaken is a descriptive research based on primary data backed by

secondary data obtained from the literature review. An attempt has been made to
evaluate the impact of recreational activities at the workplace on aspects such as
employees’ individual performance, team performance, motivation, and life quality.
For this purpose, the impact assessing questions were categorized into individual
heads, viz., individual performance index, team performance index, motivation index,
and the life quality index. The mean of responses for the respective questions (as
per the categories mentioned in the Inferential Analysis Section) has been used
to estimate and analyze the respective indices. These indices have been analyzed
with respect to the frequency of usage, which is the determining variable of the
effectiveness of the available facilities.
Figure 1 represents the conceptual model.
Quantitative tools have been used to analyze the relation between the recreational
activities at the workplace and the above-mentioned aspects.

Fig. 1 Conceptual model

110 M. Dhanshyam

4.1 Sample Design and Size

The sample for the research constitutes the employees from different age groups,
gender, and positions held in their organizations. The study has been limited to the
Indian IT sector, which is one of the largest private sector employers. Further, the
dynamic nature of IT sector may lead to increased workplace challenges and thereby
higher stress levels implying the increasing need for the recreational activities at the
workplace.
An approximate sample size between 100 and 150 was considered for the repre-
sentative analysis. The objective was to ensure adequate representation of the target
population. A total of 138 responses have been collected and analyzed.

4.2 Pilot Study

The pilot study done through the designed questionnaire was tested with responses
from 20 employees. Cronbach’s alpha value of 0.85 between the items assured the
reliability of the questionnaire and set further stage for the full-fledged research.

4.3 Data Collection

Data has been collected from primary and secondary sources. The primary source
of data has been the questionnaires, whereas the secondary sources of data include
research papers and online information databases. The questionnaire method was
used to collect data largely due to the simplicity and convenience in circulation and
data management. Responses were sought using Google Forms.
The questionnaire comprised a mix of general demographic data, questions
specific to the field of research, and a detailed impact-evaluating question on the
5-point Likert scale. An open-ended question seeking suggestions for improvement
in the existing practices has also been included.
Apart from demographic factors like age, position in the organization, and duration
of service, various other factors like the type of recreational activities provided by
the organization, adequacy level of recreational activities, time and frequency of
engagement in recreational activities by employees, employee motivational factors to
participate and not to participate in recreational activities, most preferred workforce
recreational activity by employees, company’s priority toward recreational activities,
and consideration of employee engagement in recreational activities for performance
management system (PMS) have been considered as part of research.
The questionnaire has been normalized to clearly identify the impact of recre-
ational activities at the workplace on employee morale, job satisfaction, motiva-
tion on the scale of ‘highly negative impact, slightly negative impact, no significant
impact, slightly positive impact, and highly positive impact.’ A statement assuring
them the confidentiality of the information provided was included.
Are Recreational Activities Really Recreational at the Workplace? 111

4.4 Data Analysis

Quantitative analysis tools like MS Excel and IBM SPSS, and techniques like charting
and correlation analysis have been used to analyze the data collected from the ques-
tionnaire. The analysis largely involved the use of descriptive statistics and inferential
statistics. An attempt has been made to stratify the data in various strata depending on
certain parameters, for instance, level of management. The objective of data analysis
was to extract the information in the most meaningful and self-explanatory manner
and to facilitate inferences and conclusions.

5 Results and Discussion

The primary data has been collected through questionnaire consisting of 17 questions,
from 138 respondents and analyzed using appropriate tools, the salient findings of
which have been summarized.

5.1 Descriptive Analysis

The descriptive analysis is based on the general and specific information collected
from the survey. A total of 138 valid responses have been collected (where
recreational facilities were available).
A significant 35% of the responses were from employees in significant decision-
making positions of the respective organizations, whereas a good 44% of the
responses were from employees who have been working in the organizations for
more than three years. This gave good insights across all the categories and verticals
of the organization (Fig. 2).

Fig. 2 Demographics of respondents

112 M. Dhanshyam

• Few intriguing facts have been unfolded about the perception of adequacy of
recreational facilities as 45.7% responses report just adequate and only 8.6%
responses report highly adequate.
• Indoor recreational activities have the lion’s share in the type of recreational facil-
ities provided by organizations with indoor games accounted to 79.4% responses
followed by staff parties and gymnasium with 58.8% and 55.9%, respectively.
Travel has least share with mere 5.9% responses.
• It is clearly evident from the survey that the motivational factor for employees
to use the recreational activities is to reduce stress which accounted for 48.5%
responses and the reason not to make use of recreational activities is lack of
time which accounted for 60.3% responses. The top two preferred recreational
activities among employees are found to be team building exercises and physical
fitness activities which shared 60% and 55.4% of responses each.
• Around 50% responses stated that the organizations are giving moderate priority to
the recreational activities at workplace, which shows a lack of systematic approach
and significant weight attached to the activities.
• From the employees’ perspective, it could be very well noted that the major reason
for non-utilization of the facilities turned out to be lack of time. It is quite surprising
to note that 72.5% responses reported that organizations are not taking employee
participation in recreational activities into account in their performance evaluation
system. The organizations care little about the use, nor do they let employees create
some time for the same. Resultantly, the frequency of usage is very low among
employees.
• Table 1 summarizes the various indicators used to develop further detailed insights
on the sample data:

Table 1 Means and standard deviations of the responses

Indicators Mean Std. deviation
Frequency of usage 2.59 1.129
Impact on individual performance and productivity 3.28 0.998
Impact on individual work quality 3.33 1.080
Impact on individual job satisfaction 3.06 1.136
Impact on group participation and engagement 3.38 0.987
Impact on commitment and team performance 3.33 0.918
Impact on communication and confidence 3.71 0.842
Impact on absenteeism and motivation to work 3.10 1.214
Impact on morale 3.43 1.022
Impact on stress and anxiety 3.26 1.120
Impact on mental capability and alertness 3.39 0.958
Impact on work-life balance 3.10 1.059
Are Recreational Activities Really Recreational at the Workplace? 113

The mean score of 2.59 for the frequency of usage with a standard deviation of
1.13 indicates that the employees do not use the available refreshment facilities in
a very productive way. The reasons, from the results of other questions, is mainly
because of the lack of time during the work time and lack of interest of the employers.
The mean scores of impacts of usage on different parameters are barely above 3,
with a standard deviation of 1+ , which further indicates that there is no significant
positive impact on the employees by making use of the existing recreational facilities.

5.2 Inferential Analysis

The impact on different indicators has been further analyzed with the help of refresh-
ment performance indices, which have been obtained by clubbing and obtaining the
means and standard deviations of the parameters, above. The indices have been clas-
sified as individual performance index, team performance index, motivation index,
and life quality index. Each of these performance indices is discussed below.

5.2.1 Individual Performance Index (IPI)

This represents the impact of the recreational activities on the performance of the
individual employees. It takes into account the following parameters:
• Impact on individual performance and productivity
• Impact on individual work quality
• Impact on individual job satisfaction

5.2.2 Team Performance Index (TPI)

This represents the impact of the recreational activities on the performance of the indi-
vidual employees in their teams and workgroups. It takes into account the following
parameters:
• Impact on group participation and engagement
• Impact on commitment and team performance
• Impact on interpersonal communication and confidence

5.2.3 Motivation Index (MI)

This represents the impact of the recreational activities on the motivation levels of
the employees. It takes into account the following parameters:
• Impact on absenteeism and motivation to work
• Impact on morale
114 M. Dhanshyam

Fig. 3 Recreation performance indices

5.2.4 Life Quality Index (LQI)

This represents the impact of the recreational activities on the parameters determining
the quality of life of the employees. It takes into account the following parameters:
• Impact on stress and anxiety
• Impact on mental capability and alertness
• Impact on work-life balance
Figure 3 summarizes the impact of refreshment activities as the respective indices.
The above results with means below 3.5 and standard deviation between 0.75
and 1 show that the impact of the recreational activities on improvement of the
performance, motivation, or life quality has not been significant.

5.3 Correlation Analysis

The relation between the impacts of the recreational activities on different parameters
has been analyzed with the help of Pearson’s correlation obtained using statistical
analysis tool—IBM SPSS Statistics 22. The correlation has been found between
the frequency of usage of the recreational facilities and its impact on the individual
performance index, team performance index, motivation index, and the life quality
index. The detailed report of correlation analysis is available in Appendix. The results
are as tabulated (Table 2).
Pearson’s correlation coefficient of less than 0.3 in each of these indicates that
there is little correlation between the usage of existing recreational facilities and
performance of the employees. The correlation is least for the life quality index,
which means that there has been no improvement in the quality of life of individual
employees, which is the very purpose of the introduction of recreational facilities in
the organizations.
Are Recreational Activities Really Recreational at the Workplace? 115

Table 2 Correlations between frequency of usage and indices

Correlations
Frequency Individual Team Motivation Life
of use Perf index Perf index Quality index
index
Frequency Pearson 1 0.207* 0.213* 0.291** 0.194*
of use correlation 0.015 0.012 0.001 0.023
sig.
(2-tailed) N 138 138 138 138 138

*Correlation is significant at the 0.05 level (2-tailed)

**Correlation is significant at the 0.01 level (2-tailed)

6 Conclusions and Recommendations

The findings suggest that that most of the workplaces do provide recreational activ-
ities at work and employees also find them as adequate or more than adequate. The
corporate organizations are providing recreational activities at work in order to reduce
the stress of work in them, help them in socializing with each other, developing skills
like leadership, interaction and communication in them which in turn would boost
the productivity of employees by improving their physical and mental strength, and
thus will lead to improved organizational efficiency and profitability. But even after
all such improvements in the organization, the employees are still not participating in
those activities and the major reason which could be established from our study is the
lack of time. Even though at the management level it is important that the employees
should be motivated to improve their work performance, at the sub-level the culture
which is followed is more toward achieving the targets at work rather than providing
sufficient avenues/opportunities to let the employees participate in the recreational
activities. Thus, it should be understood by the management that even though they
could provide all the tools for recreational activities those will be of little use if they
are not adequately utilized by the employees. Thus, the recreational activities should
be well planned and managed in order to get the real outputs from them.
These recreational activities can be implemented in a more effective method by
following some basic steps. Firstly, since each individual is different, it would be
much better if an organization could know the hobbies of their employees and have
those recreational activities which are more inclined to their hobbies. Secondly, the
organization should encourage participation of employees in those activities. These
can be done by giving them a day off from their work or by putting a hold on all
the work at that time so that the employee will have only one choice and that to
participate in those activities. The supervisors should make sure that the work of
their subordinates is in line with those activities so that the work does not hinder the
participation of employees in their recreation. The organizations should explore the
opportunities for bottom-up approach while designing their recreational frameworks
in order to use them as profit centers rather than the cost centers.
By following these basic steps, an organization can fully acquire all the benefits
which the recreational activities can confer on them; otherwise instead of having a
116 M. Dhanshyam

positive impact, these activities end up being just the cost centers, providing little
benefit to the organization.
To summarize, the organizations in the Indian IT industry have invested in recre-
ational and refreshment activities in order to improve their employees’ productivity,
motivation, and life quality. However, the present framework is not completely
compatible with the design of their jobs, which is leading to underutilization of
the facilities. Among those who use the facilities, there is no significant impact on
their performance or life quality. Thus, the existing recreational framework may not
be sufficient and the organizations need to review and redesign their frameworks to
match to the requirements of the employees, so as to enhance the effectiveness of the
facilities and positively impact the employee performance and work-life balance. As
such, our very research question—‘Are recreational activities really recreational at
the workplace?’ needs further exploration.
7 Scope for Future Research

This study challenges the effectiveness of the recreational framework in the Indian
scenario and provides a framework for further research into this area. The research
has been limited to the Indian IT industry only. Also, the sample size of 138 makes it
difficult to generalize the study to the entire population. However, sufficient care has
been taken to obtain the data and analyze it in the most objective manner possible.
For the aspiring researchers, this study may provide a platform to explore the
scenario in other industries including manufacturing and service sectors. A cross-
sectoral comparison of the approaches of managements toward recreation and
employee well-being could reveal many more interesting facts. The difficulties in
design, customization, and implementation of the recreational activities could be
good area to delve into. If specific organizations could be accessed more formally,
many more insights could be obtained. Further, some models could be designed and
tested on pilot basis to help understand the behavior and aspirations of the Indian
employees across sectors.
For the organizations, this study may serve as a mirror and provide food-for-
thought for their betterment. Organizations may conduct much deeper internal anal-
ysis to find out specific reasons and factors and help resolve them and restructure
their policies for the proper utilization of their resources. By trying to customize their
organization-specific requirements, they might actually turn their human capital into
their competitive advantage.
For the policymakers, regulatory authorities, and analysts, the study may help in
understanding the differences across countries—why is the Indian scenario different
from other countries, where the recreational activities have proven (as per the previous
researches) to have a net significant positive impact. This may help in the making
policy decisions.
Appendix

See Table 3.
Are Recreational Activities Really Recreational at the Workplace? 117

Table 3 Correlations of performance indices

Correlations
Frequency of use Individual perf Team perf index
index
Frequency of use Pearson 1 0.207* 0.213*
correlation
Sig. (2-tailed) 0.015 0.012
N 138 138 138
Individual perf Pearson 0.207* 1 0.715**
index correlation
Sig. (2-tailed) 0.015 0.000
N 138 138 138
Team perf index Pearson 0.213* 0.715** 1
correlation
Sig. (2-tailed) 0.012 0.000
N 138 138 138
Motivation index Pearson 0.291** 0.839** 0.762**
correlation
Sig. (2-tailed) 0.001 0.000 0.000
N 138 138 138
Refreshment Pearson 0.194* 0.598** 0.673**
index correlation
Sig. (2-tailed) 0.023 0.000 0.000
N 138 138 138
Correlations
Motivation index Refreshment index
Frequency of use Pearson correlation 0.291** 0.194*
Sig. (2-tailed) 0.001 0.023
N 138 138
Individual perf index Pearson correlation 0.839** 0.598**
Sig. (2-tailed) 0.000 0.000
N 138 138
Team perf index Pearson correlation 0.762** 0.673**
Sig. (2-tailed) 0.000 0.000
N 138 138
Motivation index Pearson correlation 1 0.609**
Sig. (2-tailed) 0.000
N 138 138
Refreshment index Pearson correlation 0.609** 1
Sig. (2-tailed) 0.000
(continued)
118 M. Dhanshyam

Table 3 (continued)
Correlations
Motivation index Refreshment index
N 138 138
* Correlation is significant at the 0.05 level (2-tailed)
** Correlation is significant at the 0.01 level (2-tailed)

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Green Employee
Scorecard—A Conceptual Model
to Align Individual Green Performance
and Organizational Sustainability Goals

Arpita Ghosh and Shamima Haque

Abstract The globally growing concern for environmental sustainability has created
obligation for every organization to adopt eco-responsive strategies in corporate
sustainable agenda to achieve organizational excellence. An eco-protective organi-
zation culture with ‘green’ underpinning not only in thoughts and beliefs but also in
practices and processes is possible only with transformation of employees into green
employees. The present study attempts to construct a green employee assessment
metric named Green Employee Scorecard to assess green contribution at individual
level against four identified green perspectives, individual valuation indicators and
relevant key result areas of Green HR. A research model was conceptualized which
aimed to provide an understanding to Green HR practitioners, the strategic linkage of
green result dimensions of the scorecard with environmental, financial and sustain-
ability goals of the organization. The purpose was to assist Green HR managers
to track and nurture green employees enabling strategic implementation of Green
HRM.

Keywords Green employee scorecard · Green assessment tool · Green valuation

indicators · Green HRM · Sustainability

1 Introduction

In recent times, the global business world is witnessing a paradigm shift from the
traditional economic structure to a modern capacity-based economy where financial
profit has to be accompanied with social and environmental well-being. The globally
rising concern for environmental sustainability and the development of international

A. Ghosh (B)
Department of Management, Maulana Abul Kalam Azad University of Technology, Kolkata, West
Bengal, India
S. Haque
School of Management Studies, Techno Main Salt Lake, Sector V, Kolkata, West Bengal, India

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 121
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_7
122 A. Ghosh and S. Haque

benchmarks for environmental management have created obligation for every organi-
zation to accept corporate environmental strategies for being ‘green’ in their business
practices with an aim to remain sustainably viable.
Sustainable development is conceptualized as utilization of human potential ‘to
improve their quality of life in ways which protect and enhance the earth’s life support
systems’ (Parkin, 1999). Hence, no organization can implement its eco-focused busi-
ness initiatives without its ‘people’ and their eco-sensitive approach towards perfor-
mance. To reinstate, organizations can attempt a ‘green’ transformation only with its
‘green’ employees.
Green Human Resource Management (Green HRM) is referred to the concern
of ‘people’ management measures and procedures towards the broader corporate
environmental agenda.
Nowadays, Green HRM is significantly persuasive in enhancing employee
consciousness and commitments on the issues of eco-sensitivity and to involve human
resource initiatives to endorse sustainable business practices in the global context.
Through its distinguished policies in recruitment, performance appraisal, training
and development, discipline management, employee relations and reward systems,
Green HRM aims to create, nurture and retain ‘greening’ within each employee of the
organization so that the employee makes maximum individual contribution towards
the achievement of ‘green’ business goals (Opatha, 2013).
A number of organizations across the globe have adopted Green HRM initia-
tives to successfully implement organizational and environmental strategies through
different business functions. However, in India, Green HRM initiatives are still in
a nascent stage. Here most of the initiatives in developing and nurturing ‘green’
employees seem to be confined only to few trainings, development and leadership
efforts (Ghosh & Haque, 2019). From primary investigative discourses and informal
talks with selected Green HR practitioners, the study has explored that the biggest
challenge is to understand the dimensions of transforming a normal employee into
green employee. There is no established tool depicting valuation criteria to eval-
uate individual green employee. Moreover, it is difficult to assess the contribution of
individual green employee towards organizational profitability and sustainability.
Some organizations have established environmental management information
systems and environmental audits (Carpenter et al., 1996) to monitor the level of
pollution, resource usage, level of energy consumption and regulatory environmental
requirements at the organizational level. The ISO 14001 provides the key perfor-
mance indicators (like pollutant parts per million measures, weight to landfill, envi-
ronmental audit scores, etc.) to help organizations in improving their environmental
performance at the corporate level. Importantly, researchers argue that measuring
employee green contribution in the organizational context is crucial to ensure realistic
green performance at the institutional level in the long run (Milliman & Clair, 1996).
Green HRM advocates integrating corporate environmental management objectives
and targets with performance management system of the organization to specifically
focus on ‘green’ valuation indicators at individual level. Firms need a green assess-
ment tool to identify, track and measure each green employee at the operational level
in order to nurture ‘greening’ within them. However, research works in this line
Green Employee Scorecard—A Conceptual Model to Align Individual … 123

are either inconclusive or sporadic. The present study attempts to propose a Green
Employee Scorecard to evaluate the degree of employee eco-sensitivity and seeks to
draw a plausible relevance of it to the strategic eco-protective vision.
HR Scorecard (Becker et al., 2001) aims to appraise employee behaviours
resulting from the HR activities of an organization. Though it is in practice to
estimate HR’s contribution in generating organizational profitability and increasing
shareholder value, HR Scorecard is not inclusive of the ‘green’ dimensions of HR.
Extant literature indicates that successful implementation of corporate green initia-
tives demands strategic execution of Green HR that matches the organization’s
long-term objectives (Sudin, 2011). The present study attempts to construct a green
employee assessment metric to identify the key result areas of Green HRM against
four aspects of green employee purview (Opatha, 2013). This proposed tool is named
as Green Employee Scorecard (Table 1), and it includes green valuation indicators
against each key area to facilitate linkage of Green HRM with organizational prof-
itability and sustainability goals through employee green results. The purpose is to
assist Green HR managers to track and nurture green employees enabling strategic
implementation of Green HRM.

2 Objective of the Study

The objective of the paper is manifold. Primarily, on the basis of the existing litera-
ture, the study aims to explore the concept of green employee and identify different
dimensions and criteria to assess green employee.
Secondly, it proposes a conceptual measurement tool named Green Employee
Scorecard to appraise green employees and assess green contribution at individual
level.
Thirdly, a research model (Fig. 1) is conceptualized which aims to provide an
understanding to Green HR practitioners of how the result dimension of Green
Employee Scorecard can be linked with environmental, financial and sustainability
goals of the organization.
Finally, the study aims to identify the key challenges in adopting and employing
Green Employee Scorecard.

3 Literature Review

In recent years, the sustainable development concept is rapidly drawing attention to

the corporate schedule. Business firms worldwide are adopting various environment
management techniques to keep a balance between financial progress and conserving
the environment for the future generation to flourish (Daily & Huang, 2001). Orga-
nizations need to channelize distinctive efforts of HRM for effective environmental
management (Rothenberg, 2003). Green HRM aims to develop an environmentally
124 A. Ghosh and S. Haque

Table 1 Green employee scorecard: Dimensions of green employee scorecard indicating KRAs
and indicators
Perspectives/dimensions Key result area Valuation indicators
Green competencies Green recruitment/green Additional short-term
selection/green training and courses/refresher
development programs/MDPs attended or
completed regarding basic and
contemporary environmental
issues
Green training hours (e.g.
practical, seminars, conferences
and lecture sessions)
undertaken/attended per
employee annually
Total experience (e.g. green
projects/efforts managed) in
environmental
management/sustainability
Average time taken by the
employee to transfer green
training into operational
efficiency
Total number of ideas generated
by the employee per year to
develop new
product/process/tool/solution
regarding greening
Green attitude Green culture/green job role Belief: The extent to which the
analysis/green reward system employee perceives greening as
the most important virtue
Affection: The extent to which
employee can attach positive
emotions such as happiness and
satisfaction with greening
Intention: The degree of
seriousness and consistency
attached with greening
Motivation: The degree to which
the employee is self-motivated
regarding greening
Green behaviour Green performance Total number of voluntary green
management/green reward actions/activities the employee
system/green mentoring and gets engaged with per year
leadership Total number of green official
duties performed by the
employee per year
(continued)
Green Employee Scorecard—A Conceptual Model to Align Individual … 125

Table 1 (continued)
Perspectives/dimensions Key result area Valuation indicators
Total number of green mentees
per employee/leader/mentor per
year
Green results Green performance Percentage reduction in energy
appraisal/green reward consumption per employee
management Percentage reduction in existing
level of resource wastage
achieved by the employee
Percentage increase in revenue
due to green initiatives per
employee
Number of green ideas
generated/suggested by the
employee that got implemented
Number of green employees
developed by the employee being
assessed

Fig. 1 Conceptual research model indicating linkages between individual performances with
organizational sustainability goals

responsible and socially accountable workplace, and it helps to entwine corporate

green management enthusiasm (Renwick et al., 2008) into all strategies, policies,
processes and practices managing HR.
Green HRM attempts to amalgamate employee commitment and environmental
compassion such that ‘… individual members embrace a concern for the natural
environment in such a way that it becomes an integral component of the corporation’s
core values … it requires that the corporation seek, through attitudes and behaviours
126 A. Ghosh and S. Haque

of its individual members, constantly and progressively to minimize the detrimental

environmental impacts of all its activities …’ (Keogh & Polonsky, 1998).
Environmental management experts argued that strategic eco-responsive efforts
and initiatives of business firms should be incorporated into each individual job
to mitigate the environmental degradation caused by the organizations (Arulrajah
et al., 2015; Jabbour, 2011; Zoogah, 2011). Green management dimensions can be
successfully entwined into individual job tasks and responsibilities and also as social,
ecological and procedural stipulations making it imperative for job role (Jabbour,
2011), stating recruitment and selection criteria (Jackson et al., 2011; Renwick et al.,
2013), developing consciousness, training and induction sessions (Daily et al., 2012;
Renwick et al., 2013; Revill, 2000), assessing employee’s job performance with
regard to green-related criteria (Opatha, 2013; Renwick et al., 2013), framing envi-
ronmental rewards and incentives (Jackson et al., 2011; Zoogah, 2011), organizing
green discipline management (Arulrajah et al., 2015; Opatha, 2013) and employee
relations and joint consultations (Renwick et al, 2008, 2013) for successful imple-
mentation of environmental procedures and policies. Ghosh & Haque (2018b) have
attempted to design a gaming framework for the application of eco-responsive HR
processes serving employees to enthusiastically appreciate and implement green
initiatives adopted, through games that are playful and gainful at the same time.
Green HRM can be strategically used as a proactive tool that focuses on long-term
corporate goals (Sudin, 2011). The concept of Strategic Green HRM can be under-
stood by analysing the associations between human capital, environmental strategy,
organizational performance and Green HRM (Paawe and Boselie, 2005). Researchers
believe that implementing Green HRM could be effective for promoting human
capital and resulting in organizational and environmental performance and competi-
tive advantage (Deshwal, 2015; Opatha, 2013). Green HRM facilitates attracting and
developing ‘eco-sensitive’ employees and provides a system to harness human capital
(knowledge, energy and creativity of individual) in enhancing business opportuni-
ties by preventing environmental degradation (Bangwal & Tiwari, 2015). Strategic
implementation of Green HRM requires recruiting and retaining green employees
or converting normal employees into green employees so that they can make signif-
icant contribution towards organizational sustainability by achieving green goals of
the organization (Opatha, 2013).
A ‘green employee’ is viewed as a nature lover or an eco-activist with green
competencies and green attitude, who voluntarily or formally engages in green
behaviour or stimulates others to become green and finally produces green results
(Opatha, 2013). This view is supported by Daily and Huang (2001) who value
green behaviour as a critical requirement of Green HRM and believe that without
ample knowledge and skills in respect of ‘greening’, an employee cannot become
green employee. Besides knowledge and skill, experience and creativity regarding
‘greening’ also add to green competencies. Green experience helps an individual to
reduce the non-green behaviour (Muster & Schrader, 2011), and creativity drives an
employee with innovative ideas about ‘greening’ (Chen, 2008).
Green Employee Scorecard—A Conceptual Model to Align Individual … 127

Green attitude refers to appropriate ‘cognition’, ‘affection’ and ‘intention’ to

believe and act ‘green’ (Opatha, 2013). A sense of joy, fulfilment and related-
ness regarding ‘greening’ strengthens green attitude (Ashmos & Duchon, 2000).
Green spiritual capital induces proactive inclination towards ‘greening’ through
deeply driven intrinsic values, emotions and beliefs affirming environment-related
capabilities (Ghosh & Haque, 2018a).
Green behaviour is a range of physical activities that contribute some positive
impact on environmental sustainability as a whole. Green behaviour can be purely
voluntary and deliberate or can be ‘organizationally defined’ and constitute a part of
formal job requirements. When a green employee gets engaged in ‘green interper-
sonal citizenship behaviour’, he/she stimulates and persuades others to believe and
behave ‘green’ (Opatha, 2013).
Producing green result is another critical dimension of green employee (Opatha,
2013). Such results essentially include those that are explicit and clearly oriented
towards organizational performance. It might have two aspects, e.g. green innovations
which refer to the implementation of innovative solutions to organization’s environ-
mental management and green outcomes that refer to the degree of accomplishment
of precise environmental performance targets.
Numerous scholars feel that roles of green employee are of paramount significance
in the success of organization’s green initiatives (Arulrajah et al., 2015; Jackson
et al., 2011; Opatha, 2013; Renwick et al., 2013). The correlation among green
human resource initiatives, string of green competencies, competitive advantage and
financial return is obvious in this context (Murad and Asaduzzaman, 2014). Though
green result strategically contributes to organizational performance (both financial
and environmental) and sustainability (Bangwal & Tiwari, 2015; Opatha, 2013),
a majority of firms and managers failed to realize the connection as there is no
assessment tool at practitioner’s hand to trace the link. The research gap with regard
to the valuation dimensions to track and collate green employee contribution and its
discernible linkage to environmental, financial and sustainability objectives of the
organization are proposed to be addressed by this study.
With its roots in Balanced Scorecard concept (Kaplan & Norton, 1992), HR Score-
card provides a comprehensive HR valuation model, which helps managers to pave
the way to incorporate HR contribution to execute organizational all-level strategies
(Murad and Asaduzzaman, 2014). It incorporates three perspectives—HR compe-
tency, HR engagement, and HR performance, for redefining the role of HR as a
strategic partner (Murad and Asaduzzaman, 2014). However, HR Scorecard is rele-
vant only to the practices of general HRM as it does not consider the ‘green’ aspects
of managing human capital. Existing Green HRM literature suggests that assessment
of green employee should be handled separately across different units of the firm
and the indicators must be aligned with organizational strategic objectives (Arulrajah
et al., 2015). In line with the literature survey, the study proposes a conceptual Green
HR assessment tool to facilitate the strategic role of Green HR. Based on Green HR
requirements, this tool includes four dimensions to tap the stock of green competen-
cies, to track the level of employee engagement in green actions and activities and
to explore the alignment between green result and strategic sustainable goals.
128 A. Ghosh and S. Haque

4 Methodology

The present study is qualitative in approach and attempts to define the concept of
green employee and proposes to develop a conceptual assessment tool for Green
HR. An extensive literature survey has been done to draw the logical inferences as
the basis of this research work. Additionally, various investigative meetings with
employees, HR managers and administrative staffs of different organizations have
been conducted to support the research.

5 Findings

5.1 Concept of Green Employee

Based on the analysis of contemporary studies on Green HRM, the paper highlights
the following key findings to define the concept of green employee:
(i) A green employee advocates preservation and conservation of nature and
natural resources and prevents pollution by every possible means.
(ii) A green employee has sufficient amount of knowledge, skills, ability,
experience and creativity regarding greening.
(iii) A green employee uses his green competencies and attitude as input to get
engaged in green behaviour producing green results.
(iv) A green employee perceives ‘greening’ as one of the most important virtues
and can associate positive emotions such as happiness and satisfaction with
‘greening’.
(v) A green employee has the intention to seriously contribute towards
‘greening’.
(vi) A green employee gets engaged in voluntary and assigned official green
actions and activities in personal and professional life.
(vii) A green employee facilitates the organizational process of transforming
a normal employee into green employee by motivating and assisting
co-employees to think and act ‘green’.
(viii) A green employee produces measurable green results which can directly be
linked with organizational and environmental performance.

5.2 Green Employee Scorecard

A conceptual Green HR valuation tool named Green Employee Scorecard was devel-
oped to assess the degree of green component in an employee. The scorecard iden-
tified four perspectives of green employee that can be considered for evaluation—
namely, green competencies, green attitude, green behaviour and green results. The
Green Employee Scorecard—A Conceptual Model to Align Individual … 129

scorecard essentially integrates the behavioural and results approach of individual

performance management system for effective evaluation of both outcomes and
outputs associated with greening. The study links these four dimensions to key
result areas of Green HRM and identifies green valuation indicators against each
perspective of green employee.

5.2.1 Green Competencies

Green competencies refer to sufficient amount of knowledge, skill, experiences

and creativity regarding greening. Basic and contemporary knowledge regarding
environmental sustainability helps employees to weigh various sides of an envi-
ronmental problem and plays an important role in environmental decision-making.
Awareness and experience regarding ‘greening’ enable employees to incorporate
eco-accountability in business activities with an aim to minimize the impact of
economic activity on the environment. Environmental education can be instru-
mental in contributing to behavioural changes within a normal employee and ulti-
mately translating him or her into ‘environmental citizen’. Employee ability to
apply green knowledge in practice and to embrace environmentally friendly mate-
rials and technologies is crucial in generating significant green results. Creativity
enables an employee to generate innovative ideas to create environment-friendly
products, process or tools and apply competitive solutions to environmental prob-
lems. Employee Green Scorecard incorporated the following valuation indicators for
green competencies:
(i) Additional short-term courses/refresher programs/MDPs attended or
completed regarding basic and contemporary environmental issues.
(ii) Green training hours (e.g. practical, seminars, conferences and lecture
sessions) undertaken/attended per employee annually.
(iii) Total experience (e.g. green projects/efforts managed) in environmental
management/sustainability.
(iv) Average time taken by the employee to transfer green training into operational
efficiency.
(v) Total number of ideas generated by the employee per year to develop new
product/process/tool/solution regarding greening.
The key result areas in relation to green competencies may be green recruitment,
green selection and green training and development.

5.2.2 Green Attitude

Green attitude that reflects the value and spirit of an employee towards eco-
responsiveness is significantly shaped by green learning and perceptions. It is a
psychological tendency that promotes positive inclination towards eco-focused activ-
ities. Green attitude combines appropriate belief, feelings and intention towards
130 A. Ghosh and S. Haque

environmental activities. Belief may be conceived as the degree of importance an

employee attaches to environmental protection. An employee’s ability to associate
positive emotions (such as joy, fulfilment and satisfaction). With ‘greening’ consti-
tutes his or her feelings towards it. Intention to seriously contribute towards green
agenda is imperative in producing impressive green results.
Green reward system has positive implication on green attitude as it motivates
employees by linking financial and non-financial rewards with employee green initia-
tives. However, intrinsic motivation towards ‘greening’, which involves higher levels
of personal involvement without an expectation, is vital in achieving incredible levels
of performance and improvement in environmental management. Integrity is one of
the most important ethical virtues employees need to inculcate in their green initia-
tives. Honest efforts in dealing with green issues in a consistent manner can ensure
substantial progress towards environmental sustainability. Sincerity and truthful-
ness in ‘greening’ induce trust and help green employees play ‘role models’ setting
noble examples for others. Green Employee Scorecard should include a composite
green mindset index to assess the extent of employee cognition, affection, motiva-
tion and positive intention towards greening. This mindset index may incorporate
the following indicators that can be measured using validated assessment tools:
(i) Belief: The extent to which the employee perceives greening as the most
important virtue.
(ii) Affection: The extent to which employee can attach positive emotions such
as happiness and satisfaction with greening.
(iii) Intention: The degree of seriousness and consistency attached with greening.
(iv) Motivation: The degree to which the employee is self-motivated regarding
greening.
This dimension is related with green culture, green job role analysis and green
reward system.

5.2.3 Green Behaviour

Green behaviour refers to employee engagement in green actions or activities

that positively contribute to organizational green goals. Employee’s eco-sensitive
commitment depends on his perceptual experiences shaped from both personal life
and professional life. Thus, green behaviour is facilitated in both life domains.
Employees can get involved in discretionary green activity by setting personal
agenda or they can accomplish it as official duties to fulfil formal job requirements.
Employees can also be engaged in green behaviour by making other employees
‘green’. Managers and leaders can act as green role models to stimulate and help
normal employees to develop their green competencies and green attitude to be
engaged in green behaviour. Green Employee Scorecard identified the following
valuation indicators for green behaviour:
(i) Total number of voluntary green actions/activities the employee gets engaged
with per year.
Green Employee Scorecard—A Conceptual Model to Align Individual … 131

(ii) Total number of green official duties performed by the employee per year.
(iii) Total number of green mentees per employee per year (as a leader or mentor).
The key result areas against green behaviour include green performance manage-
ment, green reward system and green mentoring and leadership.

5.2.4 Green Result

Finally, green result facilitates the link between employee green contribution and
organization’s financial, environmental and sustainability goals at strategic level.
Green result refers to the ultimate green achievements accomplished by the employee.
It refers to implementation and execution of green innovative ideas generated by the
employee and specific green performance target achieved by the employee in the
organizational context. The valuation indicators of green result include.
(i) Percentage reduction in energy consumption per employee
(ii) Percentage reduction in existing level of resource wastage achieved by the
employee
(iii) Percentage increase in revenue due to green initiatives per employee
(iv) Number of green ideas generated/suggested by the employee that got
implemented
(v) Number of green employees developed by the employee being assessed.
In Green Employee Scorecard, this perspective is linked with green performance
appraisal and green reward management.

5.3 Linking Green Employee Scorecard and Organizational

Goals and Strategies

The research model presents how Green Employee Scorecard dimensions can be
connected with organization’s financial, environmental and sustainability goals at
the strategic level. Of the four dimensions, green competencies and green attitude
are closely interrelated, and both of them significantly contribute in shaping green
behaviour which in turn generates green results.
Green results such as reduction in input waste, increase in energy conservation,
increase in revenue and decrease in costs, implementing innovative ideas to create
eco-friendly products, processes and tools, directly contribute to strategic environ-
mental objectives. An eco-protective organization culture with ‘green’ underpinning
not only in thoughts and beliefs but also in practices and processes will promote
and ensure sustainability in the long run benefitting the society and the planet and
conserving for the future generations.
132 A. Ghosh and S. Haque

On the other hand, these green results enhance employee productivity by

increasing operational efficiency and lowering cost, thereby contributing to the
strategic financial objective by increasing ROI of Green HRM.
The achievement of the above financial and environmental objectives accentuates
to ensure sustainability of the organization on a holistic perspective by creating
new business opportunities, increasing competitive advantages and driving long-term
shareholder value.

5.4 Challenges in Implementation of Green Employee

Scorecard

Challenges for adopting and implementing Green Employee Scorecard would be

in the establishment of structured green scoring framework with different valuation
indicators across different units or specializations of the organization. Moreover,
the process of collecting, recording, verifying and assessing correct employee data
against each indicator would be cumbersome and time-consuming. Finally, Green
Employee Scorecard may identify areas of an employee to be improved in order to
transform him/her into green employee, but changing the employee behaviour can
be demanding and lengthy.

6 Discussion

The finding of the study provides a comprehensive understanding of the concept of

green employee to its readers. An approach towards environmental sensitivity can
be self-stimulated or can be extrinsically generated through formalized structural
framework of an organization. A conceptual assessment metric to gauge individual
green contribution may not only serve an individual with gainful insights of his
or her eco-responsive outcome vis-à-vis his comparable friends and peers but will
also encourage the organization to implement a green ‘auditable’ framework for
heightened environmental performance. Individual valuation indicators against each
perspective should be further scaled down to quantifiable high, medium or low ratings
and benchmarked against relevant point rating format. Scoring high or low points
should motivate individual employees to ‘act with responsibility’ and participate in
green initiatives and at the same time help organizational efforts channelize towards
establishing a robust green culture to support and nurture ‘every green thought,
feeling, commitment and action’ for sustainable viability.
Green Employee Scorecard—A Conceptual Model to Align Individual … 133

7 Conclusion

Being ‘green’ in every practicable way is what the organizations should have in their
strategic sustainable agenda to achieve organizational excellence. Green Employee
Scorecard can be an effective individual assessment metric alongside an organi-
zational interventional strategy to ensure green results and outcome in a structured
manner. It can help HR practitioners’ map the linkage of green employee contribution
to verifiable green results that ultimately impact the ‘triple bottom’ deliverables.
After being empirically tested for reliability and validity, green individual score-
cards can add substantial value in determining organizational ‘green employee
valuation index’ as a measure of environmental performance.

8 Limitations and Scope of Future Research

The present study is conceptual and needs further empirical investigation for
complete comprehension of its practical applicability. The indicators proposed
against each dimension may undergo alteration, where new indicators may be added
or proposed indicators may be dropped or modified for effective application in the
organizations. Furthermore, the dimensions and indicators may be tailored to fit
the requirements of the different organizations across sectors and job domains. The
scorecard can be further extended, refined and represented as ‘green employee maps’
to appreciate the contribution of green employees in accordance with job roles or
specializations or vertical and hierarchical differentiations.

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A Study to Analyze Use of Social Media
by Private and Public Sector Banks
in India

Arti Chandani, Rajiv Divekar, B. Neeraja, Mita Mehta, and Rizwana Atiq

Abstract The banking system plays an important role in the modern Indian
economy. Banking system had undergone a massive change or rather transforma-
tion post-1991 when banks have started seeing the face of competition from private
and international players all around the world. Social media boon has also impacted
banking sector, and use of social media for banking sector is increasing since past few
years’. Present research focuses on how Indian Banks are using and can use social
media as part of their strategy. This research has four major social media services
as scope of the study for Indian Banks. These social media platforms are Facebook,
Twitter, LinkedIn, and YouTube. Data for this research was collected through the
official Web site of the banks. Kietzmann honeycomb model was used to analyze
the collected data in terms of social media platform used by these private and public
sector banks. This study focuses on Indian Banks which includes private and public
sector banks together. Findings show that private sector banks are comparatively
more active as compared to public sector banks. Researchers have shown interesting
analysis in the paper which will be useful to Indian Banks.

Keywords Indian banks · Communication · Social media · Strategy · Public

sector banks · Private sector banks

A. Chandani (B) · R. Divekar · M. Mehta

Symbiosis Institute of Management Studies, Symbiosis International (Deemed University), Range
Hills Road, Khadki, Pune, India
e-mail: [email protected]
R. Divekar
e-mail: [email protected]
M. Mehta
e-mail: [email protected]
B. Neeraja
Dr. MGR Educational and Research Institute University, Maduravoyal, Chennai, India
e-mail: [email protected]
R. Atiq
Integral University, Kursi Road, Lucknow, India

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 135
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_8
136 A. Chandani et al.

1 Introduction

Print and outdoor media has given boon to advertising and promotion to marketers.
All these media’s had one or the other limitations. For instance, you cannot get instant
feedback of viewers on newspaper or print media which you can get nowadays on
social media platform. Social media is a platform where user and marketer can get
instant feedback and communication about subject matter. User on social media
has benefit of feature of uniformity which means treating equal all irrespective of
background. When we think of bank, we would think of formal and very professional
bankers who would rather believe on more checklists or compliances rather than
pleasing customers. The world is shifting now, and even banks are trying to raise
community rather than appear rigid and imposing. Focusing on customer service and
adopting the personality and create a brand through social media platform is one of
the objective which bank seek to achieve through social media. Indian banking system
has come a long way. From the notion of banks for few users to banks for all, it has
been transforming tremendously over the last decade. Banks are not only improving
in terms of its reach but also in terms of its presence on social media. Main objective
of this research paper is to verify usage of the social media as strategy by Indian
banks including public and private sector banks. This research aims at studying the
social media platform usage by Indian Banks and how it can be differentiated. Social
media is multidirectional and user-generated communication that is the main feature
which differentiates social media from the traditional forms of advertising. Web
sites mostly offer content from an entity or posted information about some products
(Ashley & Tuten, 2015). It sounds difficult to measure the impact of message on
social media. Whereas before implementing social media, organizations need to
clarify the goal, objective, and measurement tools required to achieve the desired
result of the adoption (Castelo Branco & Lima Rodrigues, 2006). Reasons for banks
using or refraining itself for using social media could be lower demand from the
side of customers for such interaction, probability of involvement of risks and hence
more and more young banks are using it for marketing strategies rather than using
social media for other purposes (Chandani et al., 2018). Marketing on social media
is the use of a method which permits markets to engross with each other to pool
resources and interact with the aptitude of those who share in it for the purpose of
marketing products and services (Hanna et al., 2011). There are many ways through
which social media marketing can be done but which are most popular and cost
effective that organization has to decide based on the resources it has and goal it sets.
Facebook and Twitter are the mail tools used by banks (Hanna et al., 2011). Most of
the social media tools are used standalone, but if they are integrated based on strategic
marketing tools and objectives, then it would turn social media into a firm’s marketing
communications strategy (https://about.linkedin.com/). Organizations have to make
an attempt and integrated efforts for successful social media marketing. Incentivizing
the participants, frequent updates, is creative, and experiential strategies should be
used customer engagement which makes it more personal and effective (https://about.
twitter.com/). There are different models through which social media platform usage
A Study to Analyze Use of Social Media by Private and Public … 137

can be analysed and one of those model is social organization model consisting
of five different ways in which the marketer can establish social media message.
These ways are centralized, coordinated, organic, and so on. This learning curve of
social media strategy is intended to assist marketer in designing effective message
which suits budget and content, beliefs, and values of particular organization. Social
Engagement Journey model was coined by Sean O’Driscall from the Ant’s Eye
View firm in the year 2010 (https://en.wikipedia.org/wiki/Facebook). This model
emphasizes some steps which would help organization in developing successful
strategies for social engagement, viz. traditional stage, silo stage, operationalizing
stage, and so on. These various stages and model can help organization to understand
how to connect with audience with greater impact and effectiveness. Another model
developed by authors Charlene Li & Josh Bernoff in the book Groundswell (HBR
Press), known as POST model. Here, in the acronym, P refers to people, O refers to
objectives, S refers to strategy, and T refers to technology. It is a proven framework
for development of social media strategies (https://www.rbi.org.in/commonman/eng
lish/scripts/banksinindia.aspx#NB). Another model on social media strategy which
researchers have followed is ACCESS model where A is for audience, C stands for
concept, C stands for competition, and E for execution. Here, very important part
which has been mentioned is about audience who is in reality going to deal with the
content. Each business organization has some peculiar content especially designed
as value propositions which intended to reach to its target audience. Social media
visibility can be optimized by looking into its value proposition as well as the level
of competition organization is facing (Kaplan & Haenlein, 2010). OASIS model has
also been discussed in the area of social media research which helps a marketer in
getting clarity in designing the campaign. Banks have more reasons to justify its
existence among their clients through the use of social media (Kietzmann et al.,
2011). Banks with higher visibility on social media show better performance and
these banks have concern for better image through systematic disclosure as reported
in the context of Portuguese banks (Kietzmann et al., 2011).

2 Materials and Methods

This research aims at understanding how Indian Banks are utilizing social media as
their marketing tool. For this research, researchers have taken most famous four social
media platforms which are Facebook, Twitter, YouTube, and LinkedIn. Researchers
have used sample banks’ Web sites to arrive at the social media usage of these banks,
and data was collected. Kietzmann honeycomb model has been used to analyze and
categorize how Indian banks are emphasizing on social media to market their prod-
ucts as well as their brands. To what extent social media platform is being capitalized
is the aim of this research. For this study, researchers have taken entire census for the
study including public and private sector banks. Kietzmann mentioned a root as to
how social media tool may be used purposefully. This model is identified as a honey-
comb model (Li & Bernoff, 2008). As a part of this research, researchers have used
138 A. Chandani et al.

honeycomb model of social media to evaluate social media strategy among banks.
This model gives insights about how user/customer engrosses into social media.
This honeycomb model has seven blocks that permit specific aspect of social media
and its consequences for organizations. Organizations can relate to this honeycomb
model by analyzing which facet is more relevant to their social media strategy, and
accordingly, they can comprehend and improve social media utilities and strategy
for the messages.
Above figure shows the seven dimensions of honeycomb model used in this
research for study of social media presence of Indian Banks. Dimension Identity of
the model talks about identity of user and to what extent user reveals the informa-
tion. The identity dimension has its analytical importance in social media marketing,
mainly as it is central to how one targets leads with advertising as well as outreach.
Presence dimension highlights the presence of other users on particular social media
platform. Users do get influence by the existence of other users on the particular stage.
Another dimension in the honeycomb model is relationship which highlights the
level to which users can share to other users. The next part is reputations which
means the range within which users may have faith on involvement in online social
communications. Social platform features a large range of tools for quantification of
repute of others, which includes likes, blue ticks, connections, and follower count.
Another dimension is conversation which is the extent to which users interact and
communicate with others. Groups dimension highlights how social media platforms
enable users to form communities and groups. Some companies have some policy
for being in group or guidelines that member has to follow. Marketers can focus on
particular community and make focal point accordingly. For example, in the case of
banks, those who are credit card users can make form of users’ community to address
their specific requirements. Another dimension is sharing which means how do users
share content on social medial? Sharing of personal information like photos, videos
and other information makes social media social. People will be encouraged to share
on social media based on positive reinforcement they get on the channel or medium.
Based on extensive literature study, researchers have analyzed that there have
been very less studies which have been conducted in the subject of social media
usage by Indian Banks especially considering entire census in center. Based on best
of knowledge, this study is exclusive and can be considered as one of the first such
study of presence of Indian banks on social media by comparing major four social
media Web sites. This study will be great useful to not only marketers but also to
Indian Banks for further building on strategies. This research mainly focuses on
following objectives:
1. To categories selected social media platforms as per honeycomb model
2. To evaluate the usage of social media by Indian Banks (public and private)
3. To classify banks based on their usage of social media tools.
As emphasized earlier, this research emphasizes over four trending social media
tools, namely YouTube, Facebook, LinkedIn, and Twitter. Online social media pres-
ence of these banks was collected from their official Web site, and the time period
for the study was the month of January, 2018. Data was gathered from all four social
A Study to Analyze Use of Social Media by Private and Public … 139

Fig. 1 Honeycomb framework of social media

media and analyzed through Kietzmann’s honeycomb framework (Fig. 1) which is

very important in identifying the presence on social media.
This study has limited scope up to Indian banks. Official information of these
banks has been gathered from Reserve Banks of India (RBI) Web site. Main objective
of this research was to understand the social media as a tool used by these Indian banks
to engage the customers. Wherever official media information was not sufficient for
data, researchers have used social media search engine to get detail information.

3 Results

The components of social media have been categorized in the honeycomb frame-
work’s functionalities, and these components represent dependent variable of the
study (Table 1).

Facebook
Facebook is widely known social networking site nowadays. Not only end users but
companies are nowadays endorsing most of their products and carrying their social
media pages on Facebook. Facebook is to be considered as most evolving marketing
platform (Mitic & Kapoulas, 2012). Facebook-related data of Indian public sector
140 A. Chandani et al.

Table 1 Analysis of social media features as per honeycomb model

Function Facebook Twitter YouTube LinkedIn
Identity Name of account, Name of account, Name of account, Name of
design, color, and design, color, and design, color, and account, design,
logo logo logo color, and logo
Group Page Lists Channel Page
Relationships Fans Followers Subscribers Connections
Presence Yes Yes Yes Yes
Sharing Photos, links, and Tweets, retweets, Upload video and Connections,
posts and media views videos, events,
and News
Conversations Discussion and Tweets Subscriber’s and Comments
comments viewer’s
comments
Reputations Verified Verified tweets Channel design Job posting,
information and and views notification, and
content verified pages

banks has been mentioned in Table 2. For this analysis, gray color scheme has been
used that shows the usage. Dark gray color means more usage and so on and so forth.
Most of the banks have clear identity, and it was visible through their logos and
presence on social media. During research, it was observed that some places logos
were not clear which would impact the presence and recognition of the particular
bank. The number of active users on Facebook has increased more than 30% in the
previous year that shows the importance of having corporate page on this social
media site.
Presence of many Indian banks on social media is good sign. It was also found
during this research that Facebook page was not found of Central Bank of India,
Canara Bank, and Syndicate Bank. In this research, it has been seen that most of
the banks are active on Facebook that shows and reflects the trust factor of banks on
social media. Highest number of followers were of SBI representing the number of
15,139,880 while least followers were from UCO Bank with a number of just 1441.
Presence SBI is showing lead followed by other bank as far as the use of Face-
book is concerned. Allahabad Bank has its Facebook page though not verified but
is supposed to be managed by Allahabad Bank (as per online displayed credentials)
from its headquarter—Kolkata. It did have one more page with about 6200 likes but
is un-operational since December 23, 2012, and from its HQ at Kolkata only. Andhra
Bank, apart from normal festive wishing posts, also wishes on board exam seasons
(e.g., wishes for 10th board exam) catering to extreme insight to empathize with its
customers via social media platform. Dena Bank does not hold any FB page, but
surprisingly, its Facebook page is a fan made page by a person named Vijay Tondon
and is regular in replies having 2962 followers which is way better than some banks
having their FB page. United Bank of India’s FB wall post, dated February 26, 2018,
this bank won “Social Banking Excellence Awards 2017” under ASSOCHAM. This
A Study to Analyze Use of Social Media by Private and Public … 141

Table 2 Indian public sector banks and Facebook usage

Banks IdenƟty Group RelaƟonships Presence Sharing ConversaƟon ReputaƟons

State Bank of
India
Punjab NaƟonal
Bank
Bank of Baroda
Bank of India
Canara Bank
Union Bank of
India
IDBI Bank
Syndicate Bank
Central Bank of
India
Oriental Bank of
commerce
Allahabad Bank
Andhra Bank
Bank of
Maharashtra
CorporaƟon Bank
Dena Bank
Indian Bank
Indian Overseas
Bank
United Bank of
India
Punjab and Sind
Bank
UCO Bank
Vijaya Bank

bank is also the one which makes posts in National Language Hindi. Only six banks
have verified account, viz. SBI; PNB; Bank of India; Bank of Baroda; Union Bank
of India, and IDBI Bank. Syndicate Bank, Corporation Bank, Central Bank of India,
Canara Bank, and Dena Bank do not have Facebook page at all.

Indian Private Sector Banks and Usage of Facebook

On Face book while doing survey about private banks, it was noticed that most of
the banks had their logos and presence on social media, but some of banks such as
Axis Bank, IndusInd Bank, Federal Bank, and City Union Bank were not very good
(Table 3).
Presence of private banks on Facebook is quite more visible as compared to public
sector banks. This shows that banks are taking these social media platforms quite
seriously and actively. On Facebook, it was seen that number of followers can help
these banks to connect with their customers. Yes Bank has the more numbers of the
users or followers as the number was 7,186,889, while the least followers were 80 for
Nainital Bank. It was also found that the City Union Bank page was not confirmed,
by Facebook that is to be perceived as poor strategy. In this situation, users are
142 A. Chandani et al.

Table 3 Indian private sector banks and Facebook usage

Banks IdenƟty Group RelaƟonships Presence Sharing ConversaƟon ReputaƟons

Axis Bank Limited

Bandhan Bank Limited
Catholic Syrian Bank
Limited
City Union Bank
Limited
DCB Bank Limited
Dhanlaxmi Bank
Limited
Federal Bank Limited
HDFC Bank Limited
ICICI Bank Limited
IndusInd Bank Limited
IDFC Bank Limited
Jammu and Kashmir
Bank Limited
Karnataka Bank
Limited
Karur Vyasa Bank
Limited
Kotak Mahindra Bank
Limited
Laxmi Vilas Bank
Limited
Nainital Bank Limited
RBL Bank Limited
South Indian Bank
Limited
Tamilnadu MercanƟle
Bank Limited
Yes Bank Limited

sometimes confused about the authenticity of page. HDFC Bank is using Facebook
by providing news and tips on the union budget 2018. The usage of Facebook is not
perceived much by other banks, including HDFC bank, in covering the important
details of the Indian economy. Many of the above banks do not have verified pages,
e.g., Bandhan, Catholic, City Union, Nainital Bank, etc. There are banks who have
last updated anything on FB around 6 months back, E.g., Dhanlaxmi Bank and J&K
Bank.

Twitter
Twitter is another most commonly used social media platform after Facebook. It
is microblogging and news feeding site in year 2017, and the character limit was
increased to 280. When it comes to banks, most of the times customers and users
believe to go on Twitter page and read about the announcement of quarterly results and
profit news feeds (Murdough, 2009). Twitter is considered as most official channel
as compared to others based on the perception it has built so far among the users.
A Study to Analyze Use of Social Media by Private and Public … 143

Indian Public Sector Banks and Twitter Usage

After collecting data about Twitter used as social media instrument by the public
sector banks, researchers have analyzed the data. SBI has largest followers on the
Twitter count at 3,049,530, shadowed by IDBI Bank which has 160,241 as followers.
UCO Bank has least followers where the number stood as 46. It has also been observed
that conversation is very important for Twitter page. Banks like SBI are dynamic when
it is matter of optimum usage of Twitter, and they enthusiastically engage with their
followers. This is seen by tweets and replied by SBI, tailed by Punjab National Bank
and IDBI Bank those who have about 40 tweets/week. Union Bank and SBI are seen
to be most active on Twitter and immediately respond to their customers. It was seen
that PNB Banks reply in a minute and few banks reply in some hours that show the
efficiency of banks on social media.
SBI tweeted 600 tweets/week or more, whereas Union Bank of India and Canara
Banks are having 8–10 tweets per week. Central Banks of India and Syndicate Bank
are not substantiated pages during the course of research. SBI and Bank of Baroda
banks have been on Twitter for one or more news feeds relating to budgets and
monetary policy as well as reviews. Same strategies can be used by other banks to
be in news and heading the lead (Table 4).
Syndicate Banks and Central Bank of India had fake pages, and during the course
of this research, it was found that SBI, Bank of Baroda, and Canara Banks, etc., did
have verified page on Twitter. Bank of Baroda, Canara bank, and Punjab National
Bank are using it soberly, while there is Bank of India and Oriental Bank of Commerce
were not found on Twitter. Allahabad Bank joined Twitter in January 2018 only
(though previously they had Twitter handles but are currently inactive) and has
tweeted replica of their FB posts. UCO Bank has tried to open Twitter handle many
times before but have been inconsistent to operate it. The recent one was opened in
December 2017, may be to update about their platinum jubilee. Vijaya Bank is being
very active on Twitter replies to customer’s tweets in 2–3 days which should not be
the case. This shows that they may have less number of people for social media, i.e.,
social media managers. This can also be verified by the fact that Twitter posts are
almost similar to FB posts. Only five banks have verified Twitter handles, viz. SBI;
BOB; Canara Bank; Union Bank of India; and IDBI Bank.

Use of Twitter by Indian Private Sector Banks

Yes Bank happens to be the largest bank follower of other Twitter users having a total
of 3,611,649 followers, tailed by ICICI Bank with 394,358 supporters. Nainital Bank
has least followers with 13 shadowed by Dhanlaxmi Bank. Marketing communication
through Twitter is very important nowadays. The first one to have its presence on
Twitter among the selected bank is Yes Bank which joined Twitter in May 2009, while
most of other banks have joined in during 2010–2012. The latest to join Twitter is
IDFC which joined in August 2015 (Table 5).
Banks like Yes Bank and ICICI Bank were found to be very live and active on
Twitter. This was observed with the “Tweets and replies” by Yes Bank and ICICI
Bank. Yes Bank has 9–10 tweets per week roughly, shadowed by ICICI Bank 8–9
tweets per week approximately. ICICI Bank is having on average 4–5 answers per
144 A. Chandani et al.

Table 4 Indian public sector banks and use of Twitter in accordance with honeycomb model
Banks Identy Group Relaonships Presence Sharing Conversaon Reputaons
State Bank of
India
Punjab Naonal
Bank
Bank of Baroda
Bank of India
Canara Bank
Union Bank of
India
IDBI Bank
Syndicate Bank
Central Bank of
India
Oriental Bank of
commerce
Allahabad Bank
Andhra Bank
Bank of
Maharashtra
Corporaon Bank
Dena Bank
Indian Bank
Indian Overseas
Bank
United Bank of
India
Punjab and Sind
Bank
UCO Bank
Vijaya Bank

day and is replying on daily basis. Yes Bank is extremely dynamic on Twitter and
is responsive to the tweets every 45–50 min. Axis Bank has also been active and
replies on daily basis. RBL Bank replies within 25–30 min. As seen, these are a
few instances that show that banks that are fairly active in response. Research also
shows that Twitter can be utilized in much better way than this. City Union Bank is
having 2–3 tweets per month though RBL Bank, Yes Bank, Kotak Mahindra Bank,
among others, have tweets that are frequent like 15–25 tweets/month. Furthermore,
IndusInd Bank has also been quite active on Twitter. City Union Bank is taking total
148 tweets that are lowest among sample, and City Union Bank page is also not
verified. Federal Bank’s Twitter page is also not verified. HDFC Bank, ICICI Bank,
and Yes Bank are using Twitter to notify to the consumers about the highpoints of the
budget. Axis Bank had organized pre-budget meet in Mumbai, and this was tweeted
by them. HDFC bank also shared a news on pre-budget which was given by their
Chief Economist, Mr. Abheek Barua. RBL Bank had stated the tweets associated
to the tax saving opportunities in the stir of forthcoming fiscal year completing as
of March 2018, while ICICI Bank tax filing service offers on their Twitter page.
Yes Bank also made their tweets on the Goods and Services Tax (GST) which was
A Study to Analyze Use of Social Media by Private and Public … 145

Table 5 Use of Twitter by Indian private sector banks by using honeycomb

Banks IdenƟty Group RelaƟonships Presence Sharing ConversaƟon ReputaƟons
Axis Bank Limited
Bandhan Bank Limited
Catholic Syrian Bank
Limited
City Union Bank Limited
DCB Bank Limited
Dhanlaxmi Bank
Limited
Federal Bank Limited
HDFC Bank Limited
ICICI Bank Limited
IndusInd Bank Limited
IDFC Bank Limited
Jammu and Kashmir
Bank Limited
Karnataka Bank Limited
Karur Vyasa Bank
Limited
Kotak Mahindra Bank
Limited
Laxmi Vilas Bank
Limited
Nainital Bank Limited
RBL Bank Limited
South Indian Bank
Limited
Tamilnadu MercanƟle
Bank Limited
Yes Bank Limited

implemented from July 1, 2017, in India. Other banks such as IDFC, Federal Bank,
and Kotak Mahindra Bank did not have any major update of the budget or tax saving
schemes. The liveliness and timeliness of the tweets and response banks had given. If
banks can hire some of their talent pool to manage these social media tweets/pages,
it is predictable to have more active announcement. Kotak Mahindra Bank, IndusInd,
RBL Bank, and Axis Bank found to have fake profile as well, while there were some
banks that did not have fake pages on Twitter such as Federal Bank, ICICI Bank, and
HDFC Bank. Many of the above banks do not have verified pages, e.g., Bandhan,
Catholic, City Union, Nanital Bank, etc. Tamilnadu Mercantile Bank does not have
any presence on Twitter. Only few banks are there who are commenting back to the
queries or complaints of the users on Twitter on regular basis. These are IndusInd,
Karnataka, South Indian, RBL, and Yes Bank. Many of the banks have their pages
which have certain amount of likes and followers but not even a single post is there
on the accounts. For example, Dhanlaxmi Bank and Nainital Bank on Twitter have
no tweets.

YouTube
YouTube social media Web site located at America. YouTube was established in year
2005. From year 2006, YouTube gave freedom to the user to upload content with
146 A. Chandani et al.

condition to meet age criteria. YouTube gets chief source of revenue from various
endorsements YouTube is able to pull over 1.8 billion consumers every month—
and that is just the users who are just logged in. All these makes YouTube most
popular Web site. There are nine banks within the sample that have their respective
YouTube channels, namely Canara Bank, Union Bank of India, SBI, BOB, IDBI,
Corporation Bank, Indian Banks, Andhra Bank, and Vijaya Bank. Banks such as
Bank of India, Syndicate Bank, Central Bank of India, PNB, Indian Overseas Bank,
United Bank, and Oriental Bank of Commerce, etc., do not have YouTube channel.
Having YouTube channel can benefit banks to create content which can reach to the
millions of active and prospective users at the same time. Having YouTube channel
may not give instant benefits, but it will surely give benefits of presence.

Use of YouTube by Indian Public Sector Banks

The subscribers to the YouTube channel may not be the actual users of these banks.
Also, counting channel viewers as customers or prospective users is also not correct
approach. The correct approach is to integrate these YouTube channels to Face-
book and Twitter, thereby getting benefits out of these. Researchers observed during
research that there were 19 comments on IDBI video whereas no comments seen on
SBI and Canara Bank. State Bank had highest upload of videos on YouTube which
is more than 450 which was then seen by IDBI. Vijaya Bank of India has the least
views as 25,431 as on January 27, 2018 (Table 6).
During this research, we found that there were no fake profile that is to be measured
as decent. Few banks like State Bank of India and Bank of Baroda are steady in posi-
tioning the videos although other banks are not so steady in doing so. Andhra Bank
posted almost 48 videos (90%) out of 53 videos all at once in October–November

Table 6 Use of YouTube by Indian public sector banks as per honeycomb model
Banks Identy Group Relaonships Presence Sharing Conversaon Reputaons
State Bank of India
Punjab Naonal Bank
Bank of Baroda
Bank of India
Canara Bank
Union Bank of India
IDBI Bank
Syndicate Bank
Central Bank of India
Oriental Bank of
commerce
Allahabad Bank
Andhra Bank
Bank of Maharashtra
Corporaon Bank
Dena Bank
Indian Bank
Indian Overseas Bank
United Bank of India
Punjab and Sind Bank
UCO Bank
Vijaya Bank
A Study to Analyze Use of Social Media by Private and Public … 147

2017, post which there are no further updates. Also, the videos are very good in terms
of different procedures explained from customer’s perspective. Only five banks have
official (declared) YouTube channel, viz. SBI, Canara Bank, Union Bank of India,
IDBI Bank, and Indian Banks.

Use of YouTube by Indian Private Sector Banks

HDFC and Axis Banks had 27 comments, while IndusInd and RBL had nine
comments. There were no comments for other banks. Axis Bank has highest numbers
of video upload in comparison with any other private bank, wherein this number
stands at 996 followed by HDFC Bank and ICICI Bank at 372 and 359, respec-
tively. City Banks did not have its own channel. Total views are maximum for ICICI
Bank standing at 44,103,866 followed by HDFC Bank where the number of views
was 34,176,199. The smaller banks such as IDFC Bank and RBL Bank had viewers
3,140,572 and 5,130,211, while Yes Bank had very less views as 288,073 as on
January 27, 2018. Laxmi Vilas Bank had only one video, while the views were
28,441 for this. The foremost usage of YouTube channel by banks is with respect to
notifying the customers on various offers, tips and procedures, and initiatives (Table
7).
It was observed that there were no fake profiles. Few banks such as Axis Bank
was been regular in stationing the video, while other banks were inconsistent in
doing the same. Many of the above banks do not have verified pages, e.g., Bandhan,
Catholic, City Union, Nainital Bank, and few others. City Union Bank, Dhanlaxmi
Bank, Karur Vysya Bank, Nainital Bank, and Tamilnadu Mercantile Bank do not
have presence on YouTube. Only three banks are sharing regularly. These are Axis
Bank, Kotak Mahindra Bank, and Yes Bank. There are banks who have been there
for more than 2 years, but the number of videos posted by them is less than 10, e.g.,
Lakshmi Vilas Bank and Catholic Syrian Bank.

LinkedIn
Most professional networking site is LinkedIn network which was started 2003 and
has more than 546 million memberships through 200 countries at present (O’Driscall,
2018). LinkedIn emphasizes professional data, inspiring members to make profes-
sional profiles on LinkedIn. LinkedIn users have made profiles that are very much
specialized, with low data about interests and affiliation and all (Papacharissi, 2009).
The connection on LinkedIn is hired to preserve and can be referred to each other
(Safko & Brake, 2009).

Use of LinkedIn by Indian Public Sector Banks

Identity on LinkedIn ought to be considered as genuine. When it comes to banks, they
are supposed to publish very intellectual information related to business or customer
targets messages on the LinkedIn pages (Table 8).
During the course of research, it was found that SBI and IDBI were very active in
publishing information on LinkedIn. SBI had 599,154 followers shadowed by 34,580
belonging to the IDBI Bank. Number of supporters also highlights status of banks.
Union Bank had 234 followers which is to be considered as less. SBI had more than
148 A. Chandani et al.

Table 7 Use of YouTube through Indian private sector banks as per honeycomb model
Banks IdenƟty Group RelaƟonships Presence Sharing ConversaƟon ReputaƟons
Axis Bank Limited
Bandhan Bank Limited
Catholic Syrian Bank
Limited
City Union Bank
Limited
DCB Bank Limited
Dhanlaxmi Bank
Limited
Federal Bank Limited
HDFC Bank Limited
ICICI Bank Limited
IndusInd Bank Limited
IDFC Bank Limited
Jammu and Kashmir
Bank Limited
Karnataka Bank
Limited
Karur Vyasa Bank
Limited
Kotak Mahindra Bank
Limited
Laxmi Vilas Bank
Limited
Nainital Bank Limited
RBL Bank Limited
South Indian Bank
Limited
Tamilnadu MercanƟle
Bank Limited
Yes Bank Limited

480 updates 139 of IDBI. Researchers also seen the career posting by various banks
and found that SBI had some posting whereas few banks did not have.

Use of LinkedIn by Indian Private Sector Banks

RBL Banks and ICICI Banks were found very active in notifying through this
medium. The total followers from ICICI Bank were 332,863, followed by 306,503
of Axis Bank. The numbers of followers were minimum for Tamilnadu Mercantile
Bank. The numbers of update were 301 for RBL Bank and talk about the presence,
followed by Yes Bank counted at 264. The job posts were made by Kotak Mahindra
Bank, while the HDFC Bank, ICICI Bank, RBL Bank, and City Union Bank did not
make the career posts during course of research (Table 9).
Many of the above banks do not have verified pages, e.g., City Union, Nainital
Bank, Bandhan, Catholic, etc. Karur Vysya Bank, Karnataka Bank, Lakshmi Vilas
Bank, Nainital Bank, and Tamilnadu Mercantile Bank have zero post and job open-
ings on LinkedIn. Many of the banks have their pages which have certain amount of
likes and followers but not even a single post is there on the accounts; for example,
Karnataka Bank, Karur Vysya Bank, Lakshmi Vilas Bank, and Nainital Bank on
LinkedIn have no posts.
A Study to Analyze Use of Social Media by Private and Public … 149

Table 8 Use of LinkedIn by Indian public sector banks as per honeycomb model
Banks IdenƟty Group RelaƟonships Presence Sharing ConversaƟon ReputaƟons

State Bank of India

Punjab NaƟonal Bank
Bank of Baroda
Bank of India
Canara Bank
Union Bank of India
IDBI Bank
Syndicate Bank
Central Bank of India
Oriental Bank of
commerce
Allahabad Bank
Andhra Bank
Bank of Maharashtra
CorporaƟon Bank
Dena Bank
Indian Bank
Indian Overseas Bank
United Bank of India
Punjab and Sind Bank
UCO Bank
Vijaya Bank

Table 9 Use of LinkedIn by Indian private sector banks as per honeycomb model
Banks Identit Group RelaƟonship Presenc Sharing ConversaƟo ReputaƟon
y s e n s
Axis Bank Limited
Bandhan Bank Limited
Catholic Syrian Bank Limited
City Union Bank Limited
DCB Bank Limited
Dhanlaxmi Bank Limited
Federal Bank Limited
HDFC Bank Limited
ICICI Bank Limited
IndusInd Bank Limited
IDFC Bank Limited
Jammu and Kashmir Bank
Limited
Karnataka Bank Limited
Karur Vyasa Bank Limited
Kotak Mahindra Bank Limited
Laxmi Vilas Bank Limited
Nainital Bank Limited
RBL Bank Limited
South Indian Bank Limited
Tamilnadu MercanƟle Bank
Limited
Yes Bank Limited
150 A. Chandani et al.

4 Discussion

Honeycomb framework has been kept in center for this research to comprehend
usage of social media by Indian private and public sector banks. Indian banks are
lacking social media strategy in terms of building its brand. It is appealed through
this research that if this model is used as benchmark for use of social media by banks,
then it will give brilliant results (Skeels & Grudin, 2009). This research has used only
four medium of social media research which are were popular. This research time
period of 2018 January is its limitation. From the basis of this research analytics, the
ten banks may be put in three categories, as represented hereunder.
Table 10 shows banks and their social media usage. Researchers have taken only
three banks for active, partly active and inactive though the total number of banks
is more than that. State Bank of India is very dynamic on all the four social media
tools followed by IDBI which is active on three platforms except Facebook. Punjab
National Bank (PNB) and Bank of Baroda (BOB) are partly active meaning that
they have their presence and keep on updating their content but not so actively as
SBI does. There are banks like Oriental Bank of Commerce (OBC), Syndicate Bank,
and Central Bank of India, etc. which are in active in one or more social media
platforms. ICICI Bank and Yes Bank are considered to be active among private
sector banks, while in some parameters, these are not so active. Federal Bank is
very active on YouTube and does regular update there, and same is the case with
Karnataka Bank which is very active on Twitter. Axis Bank is partly active across all
social media platforms, while Dhanalaxmi Bank, City Union Bank, Nainital Bank,
etc., are inactive on these social media. The honeycomb model has some limitations
in terms of indispensable as well as classifying the asset of each functionality. A
lack of technical method to estimate the effectiveness of strength of social media
lets researchers to use the most appropriate method in evaluating social media usage.
Most of the banks data have been taken from the official Web site to understand
banks and its social media usage (Tsitsi Chikandiwa et al., 2013). It has also been
seen that some banks have resolved customer online issues in offline mode which is
also good but it should be endorsed by banks efficiently on social media.

5 Conclusions

Social media is like a gold mine. How do you use these data/gold mine is based
on your expertise and skills? Indian Banks which is still in the beginning stage in
using social media needs to gear up in terms of more proactive then less information
posting. Merely putting tweet or budgetary review is not enough, efficiency of banks
lies in resolving customer complaints and gaining confidence.
Honeycomb model used in this study has analyzed presence in its way, and this
can be analyzed in other way also. This research has highlighted that major public
Table 10 Classification of banks based on social media presence
Very active Partly active Inactive
FB Twitter YouTube LinkedIn FB Twitter YouTube LinkedIn FB Twitter YouTube LinkedIn
Public SBI SBI SBI SBI PNB PNB BOB BOB Canara BOI PNB Central
sector BOB Union Canara IDBI IDBI Vijaya Union PNB Syndicate OBC BOI OBC
Union IDBI IDBI Vijaya Indian Union Indian Union CBI BOM Syndicate Andhra
Private ICICI Yes HDFC Yes Axis Axis Axis Karnataka Dhanlaxmi Catholic City Union IDFC
sector IndusInd Karnataka ICICI Axis HDFC HDFC Karnataka South J&K Laxmi Vilas Dhanlaxmi RBL
RBL South Indian Federal ICICI Yes ICICI IDFC Kotak Nainital Nainital Karur City
A Study to Analyze Use of Social Media by Private and Public …
151
152 A. Chandani et al.

sector banks are doing quite well on social media like State Banks, Bank of Baroda,
and IDBI Bank whereas other public sector banks are very in active.
These banks have to do a lot more than what they are doing at present to optimize
their social media presence.
In terms of private sector banks, ICICI Bank, Yes Bank, RBL, Federal Bank, etc.,
are considered to be active banks in these social media platform, while banks such as
Axis Bank, HDFC, IDFC, etc., are partly active on social media. Certain banks such
as City Union Bank, Nainital Bank, and Dhanlaxmi Bank are inactive where these
banks either do not have presence or these are present for the sake of being present,
doing no activity in order to engage with their customer base.

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Return Dynamics and Volatility Spill
Over Effects of Stock Markets in G20
Countries

Viswanathan Thangaraj and John Ben

Abstract G20, a group of developed countries and major emerging markets, was
formed in 1990. G20 aims to bring economic cooperation and the promotion of inter-
national financial stability. Economic cooperation of G20 countries has led to the inte-
gration of stock markets. The integrated markets may cause volatility of one market
getting spillover into other markets. As a result, every market receives spillover and
also contributes to the volatility of other markets. Understanding the market interde-
pendencies and estimating the volatility spillover effect is an inherent process in port-
folio management. Our study examines the return dynamics and volatility spillover
effect among the G20 countries. The interdependencies of G20 stock markets are
tested using cointegration test. We apply vector autoregression (VAR) to decompose
the variance and created a methodology to calculate the spillover index for stock
market volatility. The research is based on the major stock indices of G20 countries
for the years between 2002 and 2018. The results indicate the presence of asymmetric
volatility spillover effect among the stock markets of G20 countries. We observe a
significant increase in volatility spillover from 1 to 5 weeks forecast of error variance.
The shocks in the developed market trigger volatility to other emerging markets. The
outcome of the study would facilitate the investors and portfolio managers to make
an informed decision by considering the nature of stock market volatility.

Keywords Return dynamics · Volatility spillover · Cointegration · Vector error

correction · Variance decomposition

V. Thangaraj (B) · J. Ben

Symbiosis Institute of Business Management, A Constituent of Symbiosis International (Deemed)
University, Bengaluru, India
e-mail: [email protected]
J. Ben
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 153
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_9
154 V. Thangaraj and J. Ben

1 Introduction

Economic integration and regional cooperation have become the major driver of
global trade and economic output. The world economy has seen various forms of
economic integration post the Second World War. Starting from GATT in 1948, G6
in 1975, WTO in 1995, G20 in 1999, reformatted G8 to G7 in 2014, etc. Every
financial crisis has led to the creation of new forms of alliances, bilateral and multi-
lateral agreements. The formation of economic integration arrangements has created
business and investment opportunities for member countries.
The G7 group originated in 1975 as a group of 6-member nations—France,
Germany, Italy, Japan, the UK and the USA—also known as the “Group of Six”
or G6. Later Canada and Russia joined the group in the year 1976 and 1998, respec-
tively. In 2014, Russia was suspended from the group following the annexation of
Crimea. G20 is one of the global economic groups with a membership of 19 countries
and the European Union. The G20 countries account for 90% of the world’s product,
80% of world trade and 2/3 of the world population.
The economic interdependence has deepened the financial connection among
major economies. As a result, the integrated markets exhibit the mechanism of price
discovery and the spillover effect. Any innovation or shock happens in one market,
and getting percolated into other markets is described as the spillover effect. A
constructive approach to quantify the spillover effect of many markets would facilitate
the decision-making process of stakeholders in that market. Spillover happens due
to the occurrence of primary, secondary and tertiary trends. The credit crisis of 1772,
Great depression of 1929, OPEC oil shock of 1973, the Asian crisis of 1997 and the
financial crisis of 2007–08 had signalled volatility across the global markets.
We undertake the present study to examine the interdependencies of the stock
market of G20 countries. The nature of the integration of G20 stock markets is exam-
ined by cointegration test. The impulse response signal among the stock markets is
analysed by creating spillover index for market returns and volatility. We construct
the cointegration model and spillover effects based on the previous research contri-
butions. We follow Diebold and Yilmax (2009) methodology to estimate the spillover
index. They use vector autoregression (VAR) model to decompose the error variance
of 19 different countries. Our objective is to examine the short-term transmission of
volatility spillover effect of G20 stock markets.
The study examines the interdependencies of G20 stock markets using the
stochastic process of vector autoregression. We apply restricted VAR to decom-
pose the error variance of 5 weeks ahead volatility forecast of the stock markets
of G20 countries. The vector error correction model reflects the partial adjustment
of one stock market due to the shocks that happened in other markets. The vari-
ance decomposition of each country indicates how much of variance is coming from
others and the variance contributed by the home country to others. For instance, if
the decomposition result is 80% for India, that shows 80% of the stock market vari-
ance is due to happenings in India and 20% is due to shocks from other integrated
stock markets. The overall adjustments are used as parameters to estimate spillover
Return Dynamics and Volatility Spill Over Effects … 155

index at a time (t) for all G20 stock markets. The trends in spillover index over the
forecasting horizon would indicate an increase or decrease in stock market volatility.
The rest of the paper is organised as follows. Section 2 shows the summary of
the literature review. Section 4 deals with data description and return dynamics. In
Sect. 5, we describe the methodology used to calculate the return volatility. Section 6
highlights the test of cointegration. The spillover index and the associated spillover
table are explained in Sect. 7, followed by the conclusion in Sect. 8.

2 Review of Literature

A vast amount of research effort has been made in the past to gauge the volatility in
the equity markets through the application of the family of ARCH models. Various
studies directly or indirectly related to the objective of this study have been reviewed.
There are various studies which appraise various aspects of Co-movement, i.e.
return, risk, volatility, etc. Bollerslev (1986) introduced the GARCH (Generalised
Autoregressive Conditional Hetroskedastic) models to consider the time-varying
volatility.
A GARCH model is more robust and helps widely in modelling financial time
series with varying volatility. Some previous works by Arshanapalli and Doukas
(1993) and Hamao et al. (1990) displayed that international stock markets are sturdily
integrated.
Shahzad et al. (2016) estimated the Co-movement among the stock markets
applying ARDL and revealed the existence of co-movement among the markets.
Majid and Aziz (2009) assessed the Co-movement among ASEAN-5 stock exchanges
using Cointegration and found the existence of co-movement and Cointegration
among the markets.
Jang and Saul (2002) studied the Co-movement and integration among the Asian
markets using the Granger causality test and Johnsen cointegration test. Recently,
many researchers have found the existence of Co-movement and integration of BSE
with other markets, Mitra and Bhattacharjee (2015), Bhattacharjee and Swaminathan
(2016) and Vohra (2016). Chen and Lian found the existence of disproportionateness
in the equity markets of five ASEAN countries, viz. Malaysia, Singapore, Thailand,
Indonesia and Philippines.
TARCH and EGARCH models achieved better results in forecasting the equity
markets post-Asian financial countries. Most of the spillover studies for the emerging
markets have been conducted for Central and Eastern Europe (Gilmore & McManus,
2003; Gündüz & Hatemi, 2005), Latin America and Asian countries. Lee et al. (2004)
examined the linkages between the daily returns and volatility of the NASDAQ and
Asian markets using EGRARCH and VAR-based methodology and found strong
evidence of volatility spillovers from the US to Asia. Bennett and Kelleher (1988),
Hamao et al. (1990) and Susmel and Engle (1994) displayed that US returns appear
to cause the other countries and that lagged spillovers of price volatility are found
between the major markets.
156 V. Thangaraj and J. Ben

The extensive literature review highlights two broad areas. One is the scope of
study concerning volatility spillover effect, and the other is the methodology used.
We found the previous studies on spillover effect focus on stock markets, comparison
of spillover effect between stock, commodities and foreign exchange markets. The
studies have used VAR and GARCH models to forecast volatility. However, except
Diebold and Yilmax (2009), other studies have not attempted to create an index that
provides multiple benefits. An index can be used as an indicator to study the volatility
before and after a major crisis and impulse response behaviour of integrated markets.
Further, the world economy has been going through a major transformation post the
financial crisis in 2008–09. The major transformation includes protectionism versus
globalisation, preventive measures to global economic shocks and news forms of
alliances among member countries. In this aspect, our study aims to examine the
nature and direction of causality among G20 countries.

3 Objectives of the Study

The major objectives of the study are as follows.

1. To examine the nature of the association among G20 stock markets
2. To analyse the return dynamics and volatility of G20 stock markets
3. To forecast volatility and create a spillover index for the markets of G20
countries.

4 Data Description and Return Dynamics

We obtain the major stock market index data for G20 countries from Bloomberg.
The benchmark composite indices for the respective countries are shown in Table 1.
The sample data for the study covers the period between 2010 and 2018. The
frequency of data includes the weekly high, low, open and closing index. The weekly
prices are observed from Monday to Friday for all the benchmark indices. The weekly
returns are the log-returns calculated based upon the closing index value on every
Friday.

Return = ln(COt |COt − 1) (1)

where COt is the closing price for the current period, and COt −1 is the previous
period closing price (Fig. 1).
Table 2 shows the descriptive statistics of weekly stock market returns of the
benchmark stock indices of G20 countries. Among all G20 countries, Brazil has
given a maximum weekly return of 16.56%, followed by Russia with 14.68%. Both
the countries were rated as one of the best performing stock markets during 2016.
Return Dynamics and Volatility Spill Over Effects … 157

Table 1 Countries and

Countries Index
indices
Argentina MERVAL
Australia ASX
Brazil IBOV
Canada SPTSX
China SHCOMP
EU Euronext100
Germany DAX
France CAC
India Nifty 50
Indonesia JCI
Italy FTSEMIB
Japan Nikkei 225
Mexico MEXBOL
Russia RTS
Saudi Arabia SASEIDX
South Africa JALSH
South Korea KOSPI
Turkey XU100
UK FTSE100
USA S&P 500

Brazil has outperformed S&P 500, Russia, India, China, FTSE, Japan and other
emerging markets. The stellar performance of the Russian stock market is due to
the strong recovery of oil price, stabilisation of Rubble and investors optimum after
the financial crisis in 2008. The negative skewness for all indices shows that the
returns are skewed to the left that indicates more negative return during the period of
observation. The standard deviation of weekly return varies between 1.61 and 4.46%
(Fig. 2).

5 Return Volatility of G20 Countries

Volatility represents the variation in price movement. The methods to measure

volatility include historical and implied volatility. While the historical volatility is
based on the past data, implied volatility is a market estimate of future volatility. It
can be inferred based on the option premium of a particular security. In this study,
we attempt to estimate the spillover index for returns and volatility for all G20 coun-
tries. The forecasting horizon spans from short-run (one week) to long-run (5 weeks)
 ARGENTINA_RETURN AUSTRAILA_RETURN BRASIL_RETURN CANADA_RETURN CHINA_RETURN
158

.2 .08 .2 .08 .10

.04 .05
.1 .1 .04
.00 .00
.0 .0 .00
-.04 -.05
-.1 -.1 -.04
-.08 -.10

-.2 -.12 -.2 -.08 -.15

100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400

EURONEXT_RETURN FRANCE_RETURN GERRMANY_RETURN INDIA_RETURN INDONESIA_RETURN

.15 .12 .15 .08 .08

.10 .08 .10 .04
.04
.05 .04 .05
.00
.00 .00 .00 .00
-.04
-.05 -.04 -.05
-.04
-.10 -.08 -.10 -.08

-.15 -.12 -.15 -.08 -.12

100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400

ITALY_RETURN JAPAN_RETURN MEXICO_RETURN RUSSIA_RETURN SAUDI_RETURN

.15 .08 .08 .2 .2

.10
.04 .04 .1 .1
.05
.00 .00 .00 .0 .0
-.05
-.04 -.04 -.1 -.1
-.10
-.15 -.08 -.08 -.2 -.2
100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400

SOUTHAFRICA_RETURN SOUTHKOREA_RETURN TURKEY_RETURN UK_RETURN USA_RETURN

.06 .10 .10 .08 .08

.04 .05 .04
.05 .04
.02
.00 .00
.00 .00 .00
-.05 -.04
-.02
-.05 -.04
-.04 -.10 -.08

-.06 -.10 -.15 -.12 -.08

100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400
V. Thangaraj and J. Ben

Fig. 1 Return summary of G20 Stock Market: 2002–2018. Source Compiled by the authors
Table 2 Descriptive statistics for the weekly return of G20 countries 2010–2018
Countries Mean return Median_return Max_return Min_return Stdv_return Skewness Kurtosis
ARGENTINA 0.00544 0.008308 0.155418 −0.148674 0.044679 −0.272131 3.868642
AUSTRAILA 0.000657 0.002556 0.07081 −0.10398 0.019452 −0.601956 5.747515
BRASIL 0.000487 0.001736 0.165617 −0.105207 0.029697 0.178679 4.873358
CANADA 0.000411 0.001971 0.052298 −0.067531 0.017241 −0.594547 4.284238
CHINA −0.000529 0.000179 0.090735 −0.142909 0.029251 −0.721776 6.200751
EURONEXT 7.81E−05 0.00311 0.103934 −0.11926 0.026736 −0.440723 4.557357
FRANCE 0.000429 0.002878 0.102376 −0.117869 0.02606 −0.480887 4.690036
GERRMANY 0.001562 0.00373 0.101666 −0.137974 0.026268 −0.567098 5.217417
INDIA 0.001592 0.002673 0.069719 −0.070264 0.02147 −0.035161 3.222213
INDONESIA 0.001872 0.00338 0.072763 −0.116139 0.021903 −0.925852 7.18552
Return Dynamics and Volatility Spill Over Effects …

ITALY −0.000473 0.001333 0.10472 −0.140599 0.031521 −0.501951 4.165739

JAPAN 0.000519 0.001683 0.065797 −0.076561 0.020019 −0.200057 3.756244
MEXICO 0.000519 0.001683 0.065797 −0.076561 0.020019 −0.200057 3.756244
RUSSIA −0.000627 −0.000302 0.146887 −0.179658 0.039029 −0.397198 4.969011
SAUDI 0.000473 0.001992 0.137621 −0.162698 0.02527 −0.860235 10.47131
SOUTHAFRICA 0.001485 0.002999 0.050909 −0.048132 0.016136 −0.278031 3.094319
SOUTHKOREA 0.000415 0.00253 0.075672 −0.093009 0.020049 −0.777278 5.492035
TURKEY 0.001103 0.00298 0.083366 −0.143708 0.031258 −0.663048 4.396444
UK 0.000511 0.002663 0.072373 −0.102819 0.020074 −0.515557 5.49398
SA 0.001725 0.002844 0.071284 −0.074603 0.019845 −0.595527 4.909666
159
 160

ARGENTINA AUSTRAILA BRASIL CANADA CHINA

60 60 80 80 100
50 50 80
60 60
40 40
60
30 30 40 40
40

Frequency
Frequency
Frequency
Frequency
Frequency
20 20
20 20
10 10 20

0 0 0 0 0
-.16 -.12 -.08 -.04 .00 .04 .08 .12 .16 -.12 -.10 -.08 -.06 -.04 -.02 .00 .02 .04 .06 .08 -.12 -.08 -.04 .00 .04 .08 .12 .16 .20 -.08 -.06 -.04 -.02 .00 .02 .04 .06 -.150 -.100 -.050 .000 .050 .10 0

EURONEXT FRANCE GERRMANY INDIA INDONESIA

100 100 100 60 60

80 80 80 50 50
40 40
60 60 60
30 30
40 40 40

Frequency
Frequency
Frequency
Frequency
Frequency

20 20
20 20 20 10 10
0 0 0 0 0
-.12 -.08 -.04 .00 .04 .08 .12 -.12 -.08 -.04 .00 .04 .08 .12 -.16 -.12 -.08 -.04 .00 .04 .08 .12 -.08 -.06 -.04 -.02 .00 .02 .04 .06 .08 -.12 -.10 -.08 -.06 -.04 -.02 .00 .02 .04 .06 .08

ITALY JAPAN MEXICO RUSSIA SAUDI

80 60 60 60 120
50 50 50
60
40 40 40 80
40 30 30 30

Frequency
Frequency
Frequency
Frequency
Frequency

20 20 20 40
20
10 10 10
0 0 0 0 0
-.16 -.12 -.08 -.04 .00 .04 .08 .12 -.08 -.06 -.04 -.02 .00 .02 .04 .06 .08 -.08 -.06 -.04 -.02 .00 .02 .04 .06 .08 -.20 -.16 -.12 -.08 -.04 .00 .04 .08 .12 .16 -.20 -.16 -.12 -.08 -.04 .00 .04 .08 .12 .16

SOUTHAFRICA SOUTHKOREA TURKEY UK USA

80 80 80 80 80

60 60 60 60 60

40 40 40 40 40

Frequency
Frequency
Frequency
Frequency
Frequency

20 20 20 20 20

0 0 0 0 0
- .05 - .03 - .01 .00 .01 .02 .03 .04 .05 .06 -.1 0 - .08 - .06 - .04 - .02 .00 .02 .04 .06 .08 .1 0 - .1 50 - .1 00 -.050 .000 .050 .1 00 - .12 -.1 0 -.08 - .06 - .04 - .02 .00 .02 .04 .06 .08 - .08 - .06 -.04 - .02 .00 .02 .04 .06 .08

Fig. 2 Distribution plot of G20 Stock Market: 2002–2018

V. Thangaraj and J. Ben
Return Dynamics and Volatility Spill Over Effects … 161

volatility for the sample period. So, the appropriate measure is to calculate the histor-
ical volatility and estimate the variance decomposition using a vector autoregression
(VAR) model. The estimation of historical volatility will be highly influenced by the
frequency of past data. The data gets smoothened when daily index movement is
converted into a weekly or monthly average and so as the volatility. The choice of
selecting data frequency depends on the intention of the trader/investor. Use of high-
frequency data shows hourly or daily volatility. A day trader or scalper will be more
institutive to know hourly volatility. An investor is concerned about how the volatility
spans in the future. Short-run and long-run volatility are measured taking weekly or
monthly data, respectively. We use the transformed price to calculate returns and
volatility. The returns are calculated as log-returns, and volatility is calculated by
converting the absolute weekly data into log transformation.
We examine various estimators to calculate volatility. The classical estimator
of volatility is one of the simple methods to estimate volatility. The volatility is
measured based on the squared difference between the closing price current period
(C t ) and the previous closing price (C t −1 ). Though the method is easy to use, it
suffers from information bias. It is quite possible that the price of security opens
at a price “X” on Monday and close at the same price “X” on Friday after going
through some ups (high) and downs (Low). The difference between high and low price
contains information that contributes to measuring volatility. Parkinson introduced
an estimator, which calculates volatility based on the squared difference between
high and low price. The main disadvantage is its failure to consider the joint effect
of opening and closing price. Like Yilmaz, Diebold and Hwee Kwan Chow Tan, we
follow Garman and Klass to measure weakly volatility of the benchmark indices.
The estimator is comprehensive, and it addresses the limitations of classical and
Pearson’s volatility estimators. To calculate volatility, we obtain the highest (H t ),
lowest (L t ), open (Ot ) and closing price (C t ) for the week ending Friday.

σ 2 = 0.511(Ht − L t )2 − 0.019[(Ct − Ot )(Ht + L t − 2Ot )


−2(Ht − Ot )(L t − Ot ) − 0.383(Ct − Ot )2 (2)

In the equation, (H t − L t ) measures the range, (C t − Ot ) shows the normalised

close, (H t − Ot ) calculates the normalised high, and (L t − Ot ) scales the normalised
low.
Table 3 and Fig. 3 show the summary statistics of return volatility (variance) of
G20 countries. The skewness and kurtosis show the momentum of distribution. Stock
returns often deviate from the normal distribution and show asymmetric distribution.
The skewness and kurtosis value indicate the variance non-normal distribution of
return volatility. The positive skewness shows that the variance is skewed to the right.
There are more instance of higher market volatility of G20 countries as compared
to low market volatility. The kurtosis value greater than 3 highlights occurrences
of abnormal market volatility. Among the G20 countries, Argentina had seen the
maximum stock volatility. The patterns of volatility clustering are observed in the
series for all countries.
 162

Table 3 Descriptive statistics of return volatility of G20 countries

Mean_var Median_var Max_var Min_var Stdv Skewness Kurtosis
ARGENTINA 0.001416 0.000871 0.017894 4.82E−05 0.001851 4.059647 26.70109
AUSTRALIA 0.000355 0.000194 0.005279 1.18E−05 0.000557 5.023357 35.26567
BRASIL 0.000867 0.000583 0.007227 2.34E−05 0.000948 3.438032 18.31299
CANADA 0.000271 0.000154 0.003688 1.15E−05 0.000382 4.543069 30.95781
CHINA 0.000728 0.00039 0.01439 1.00E−05 0.001302 6.018514 51.82692
EURO 0.000664 0.000387 0.012095 2.85E−05 0.000946 5.65739 53.83193
FRANCE 0.000638 0.00037 0.01017 3.00E−05 0.000884 4.763426 37.90196
GERMANY 0.000613 0.00039 0.0087 1.00E−05 0.000846 4.737605 33.00272
INDIA 0.00043 0.00027 0.0153 2.00E−05 0.000807 13.84014 248.4756
INDONESIA 0.000443 0.00022 0.00798 2.00E−05 0.000741 4.816425 34.7838
ITALY 0.000954 0.0006 0.0142 6.00E−05 0.001205 4.841427 40.69838
JAPAN 0.000391 0.00024 0.00512 3.00E−05 0.000519 4.461684 29.96242
MEXICO 0.000392 0.0002 0.0051 0.00E+00 0.000519 4.430176 29.58909
RUSSIA 0.001364 0.0008 0.054 0.00E+00 0.002885 13.61381 239.9939
SOTHAFRICA 7.60E−05 6.00E−05 0.00046 1.00E−05 6.06E−05 2.229608 9.677821
SAUDI 0.000456 0.0002 0.0114 0.00E+00 0.00101 6.205177 53.4333
SOUTHKOREA 0.000334 0.0002 0.0083 0.00E+00 0.000543 8.183198 105.0258
TURKEY 0.000823 0.0005 0.0088 0.00E+00 0.00098 3.796378 22.03162
UK 0.000392 0.00022 0.0055 1.00E−05 0.000583 4.702511 31.43866
USA 0.000331 0.0002 0.0058 0.00E+00 0.000535 5.082484 38.878
V. Thangaraj and J. Ben
 ARGENTINA_VAR AUSTRALIA_VAR BRASIL_VAR CANADA_VAR CHINA_VAR
.020 .006 .008 .004 .015
.005
.015 .006 .003
.004 .010
.010 .003 .004 .002
.002 .005
.005 .002 .001
.001
.000 .000 .000 .000 .000
100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400

EURO_VAR FRANCE_VAR GERMANY_VAR INDIA_VAR INDONESIA_VAR

.016 .012 .010 .016 .010
.010 .008 .008
.012 .012
.008
.006 .006
.008 .006 .008
.004 .004
.004
.004 .004
.002 .002 .002

.000 .000 .000 .000 .000

100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400

ITALY_VAR JAPAN_VAR MEXICO_VAR RUSSIA_VAR SOTHAFRICA_VAR

.015 .006 .006 .06 .0005
.005 .005 .05 .0004
.010 .004 .004 .04
Return Dynamics and Volatility Spill Over Effects …

.0003
.003 .003 .03
.0002
.005 .002 .002 .02
.001 .001 .01 .0001

.000 .000 .000 .00 .0000

100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400

SAUDI_VAR SOUTHKOREA_VAR TURKEY_VAR UK_VAR US_VAR

.012 .010 .010 .006 .006

.008 .008 .005 .005

.008 .004 .004
.006 .006
.003 .003
.004 .004
.004 .002 .002
.002 .002 .001 .001
.000 .000 .000 .000 .000
100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400

Fig. 3 Stock market volatility of G20 countries

163
164 V. Thangaraj and J. Ben

6 The Test of Cointegration

Economic theory states that two or more variables are said to be cointegrated if
the linear combination of the variables is stationary. A series of cointegrating vari-
ables tend to move together. Any deviation between variables is only a temporary
phenomenon, and it cannot drift away from each other for the long term. Thus, these
variables tend to correct themselves during deviation and bring equilibrium in the
cointegrating equation. The lagged change in one variable has the power to predict the
change in another variable in the series. Economic integration has led to the financial
integration of G20 countries. It is pertinent for the trader/investor to understand the
nature of long-run association among the stock markets of these countries. We apply
the Johansen cointegration test to examine the number of cointegrating equations.
Application of cointegration test requires that all series are stationary at the same
order, either I(O) or I(I).
It is the general nature of stock markets to exhibit fluctuations in the short run and
follow a trend in the long run. The trend could be flat (no slope), upward (positive
slope) or downward (negative slope). We apply the augmented Dickey–Fuller unit
root test to examine whether the historical return series are stationary. The visual
examination of the historical return chart shows significant fluctuation. The unit root
test is applied at three levels, i.e. no intercept and trend, intercept without trend and
intercept and trend. The null hypothesis states that the series are non-stationary or
there is unit root. The results are tested at 5% significance level. ADF test indicates
that the return series of all G20 countries are non-stationary at levels and become
stationary at first difference I(1) (Table 4).

Table 4 Lag selection

Lag LogL LR FPE AIC SC HQ
0 58,077.59 NA 6.1e−137 −256.8920 −256.7100* −256.8203
1 59,031.26 1818.711 5.3e−138* −259.3418* −255.5194 −257.8356*
2 59,392.83 657.5578 6.3e−138 −259.1718 −251.7090 −256.2310
3 59,814.77 729.9801 5.8e−138 −259.2689 −248.1656 −254.8935
4 60,181.90 602.6884 7.1e−138 −259.1235 −244.3797 −253.3135
5 60,512.08 512.8055 1.0e−137 −258.8145 −240.4304 −251.5700
6 60,931.53 614.3156 1.1e−137 −258.9006 −236.8760 −250.2214
7 61,267.79 462.7377 1.7e−137 −258.6186 −232.9535 −248.5049
8 61,647.54 488.9606* 2.3e−137 −258.5289 −229.2235 −246.9807
* Indicateslag order selected by the criterion
LR: sequential modified LR test statistic (each test at 5% level)
FPE: final prediction error
AIC: Akaike information criterion
SC: Schwarz information criterion
HQ: Hannan–Quinn information criterion
Return Dynamics and Volatility Spill Over Effects … 165

The historical weekly return series of G20 countries stock market have 469 weekly
observations. It is the general nature of time series data to exhibit a lead–lag relation-
ship. It is inferred that the current period return will be influenced by the previous
period. An equation, whether it is OLS or GLS, should include the lag of the response
variable. Inclusion of too many lags would lead to a loss in the degrees of freedom.
If the lag length is too short, the equation becomes imprecise, and autocorrelation of
the error term may lead to inefficient estimators. We run unrestricted vector autore-
gression to select the optimal lag length. The optimum lag is selected based on the
minimum Akaike information criterion (AIC). The minimum AIC is observed at Lag
1.

6.1 Johansen Cointegration Test

We apply the Johansen cointegration test (1988, 1995) to examine whether stock
markets of G20 countries are cointegrated. The cointegration test is appropriate to
examine the long-run relationship between the stock market movements. The results
of the unit root test indicate that the series of market returns of all G20 countries
are integrated of the same order I(1). We run unrestricted vector autoregression to
estimate the number of cointegrating equations. The assumption made to run the
model is no intercept and trend in cointegrating equation and vector autoregression.
Table 5 shows the results of cointegration test. The test results are interpreted based
on two likelihood ratio (LR) statistics. First is the trace test, and the second is the
maximum eigenvalue. To determine the number of the cointegrating equation, the null
hypothesis is set as no cointegrating equation against the alternative of k − 1 number
of equations, where k is the number of variables. The theoretical framework of
Johansen test suggests that there may be zero or r number of cointegrating equations,
where 0 > r < k.
The following are the hypothesis of cointegration test.
H 0 : r = r o (None—no cointegration).
H 1 : r o < r < k (There exists r number of cointegrating equations).
The hypothesis has done sequentially starting from none and proceeding to (k) in
steps until the null hypothesis cannot be rejected. The results are interpreted based
on the obtained values of trace and Max-Eigen statistic value. The null hypothesis is
rejected if the trace or eigenvalue is more than the critical value or the probability is
less than 5%. Both trace test and maximum eigenvalues are statistically significant
at 5% level for all null hypotheses. The trace test and maximum eigenvalue indicates
seven cointegrating equations. It is inferred that the stock markets of G20 countries
are cointegrated.
166 V. Thangaraj and J. Ben

Table 5 Cointegration results

Unrestricted cointegration rank test (trace)
Hypothesised no. of Eigenvalue Trace statistic 0.05 critical value Prob.**
CE(s)
None 0.467858 3008.965 NA NA
At most 1 0.428267 2716.253 NA NA
At most 2 0.388980 2456.839 NA NA
At most 3 0.367946 2228.261 NA NA
At most 4 0.361317 2015.387 NA NA
At most 5 0.340372 1807.354 NA NA
At most 6 0.335502 1614.293 NA NA
At most 7 0.318327 1424.646 NA NA
At most 8* 0.306327 1246.839 334.9837 0.0000
At most 9* 0.287963 1077.128 285.1425 0.0000
At most 10* 0.247057 919.5424 239.2354 0.0000
At most 11* 0.239512 787.8751 197.3709 0.0000
At most 12* 0.230205 660.8343 159.5297 0.0000
At most 13* 0.219051 539.4376 125.6154 0.0000
At most 14* 0.198779 424.7155 95.75366 0.0000
At most 15* 0.185164 321.8846 69.81889 0.0000
At most 16 * 0.153879 226.8724 47.85613 0.0000
At most 17 * 0.129218 149.3415 29.79707 0.0000
At most 18* 0.098927 85.14056 15.49471 0.0000
At most 19* 0.076259 36.80637 3.841465 0.0000
Unrestricted cointegration rank test (maximum eigenvalue)
Hypothesised no. of Eigenvalue Max-eigen statistic 0.05 critical value Prob.**
CE(s)
None 0.467858 292.7121 NA NA
At most 1 0.428267 259.4142 NA NA
At most 2 0.388980 228.5779 NA NA
At most 3 0.367946 212.8743 NA NA
At most 4 0.361317 208.0327 NA NA
At most 5 0.340372 193.0608 NA NA
At most 6 0.335502 189.6474 NA NA
At most 7 0.318327 177.8075 NA NA
At most 8* 0.306327 169.7101 76.57843 0.0000
At most 9* 0.287963 157.5861 70.53513 0.0000
At most 10* 0.247057 131.6673 64.50472 0.0000
At most 11* 0.239512 127.0408 58.43354 0.0000
(continued)
Return Dynamics and Volatility Spill Over Effects … 167

Table 5 (continued)
Unrestricted cointegration rank test (trace)
Hypothesised no. of Eigenvalue Trace statistic 0.05 critical value Prob.**
CE(s)
At most 12* 0.230205 121.3967 52.36261 0.0000
At most 13* 0.219051 114.7221 46.23142 0.0000
At most 14* 0.198779 102.8308 40.07757 0.0000
At most 15* 0.185164 95.01226 33.87687 0.0000
At most 16* 0.153879 77.53091 27.58434 0.0000
At most 17* 0.129218 64.20091 21.13162 0.0000
At most 18* 0.098927 48.33418 14.26460 0.0000
At most 19* 0.076259 36.80637 3.841465 0.0000
* Significant @ 5%
** MacKinnon–Haug–Michelis (1999) p-values

7 Spillover Index

Spillover is the transmission of volatility induced by one variable into other variables
that are supposed to be cointegrated. The spillover effect occurs when one or more
markets are interlinked. The spillover index measures the percentage of forecast error
variance caused by own and other variables. We construct a spillover index for the
return and volatility series of the stock indices of G20 countries.
We follow the stepwise conceptual process to model return and volatility spillover
for the G20 countries. The procedural steps involved are as follows.
Step 1: Check whether the historical series of return are stationary using the
augmented Dickey–Fuller test.
Step 2: Run unrestricted vector autoregression to estimate the optimum lag
structure (p).
Step 3: Conduct Johansen cointegration test at (p) lags to check the number of
cointegrating equations (r).
Step 4: Apply the decision rule to choose between vector autoregression (VAR)
and vector error correction model (VECM). VAR model is used where there is no
cointegration among the variables. VECM model is applied when there is at least
one cointegrating equation among the variables.
Step 5: Estimate the parameters of the VAR model taking (p − 1) lag.
Step 6: Forecast 10 weeks ahead variance decomposition for return and volatility.
Step 7: Perform diagnostics test to check for model accuracy.
Step 8: Construct the spillover index separately for the series of return and
volatility of G20 countries.
The sequential application of procedural steps shows that the historical series of
return are stationary at first difference I(1). The most commonly used approach to
168 V. Thangaraj and J. Ben

estimate volatility transmission across markets is to adopt VAR models. We follow

Diebold and Yilmaz (2009) framework to model volatility and calculate spillover
index. However, they used the VAR framework to measure the spillover of 19 coun-
tries. In our study, we attempt to calculate the spillover among G20 countries. Unlike
the 19 countries, G20 countries are bound together with economic and financial
integration. By running VAR model, we forecast the error variance for the next
5 weeks. We use Cholesky factor identification to orthogonalise the shocks among
G20 countries and then estimate the spillover index (Fig. 4).
The spillover index is a simple measure to understand how the return and volatility
spillover transmits across the G20 stock markets. The variance decomposition param-
eters of VAR are used to calculate the spillover index, and the results are shown in
Tables 6 and 7. We have taken the full sample data of weekly returns and forecasted
the error variance for the 5-week horizon to calculate the spillover index (SP). The
spillover tables are to be read as (i × j) matrix. Every ijth value in the matrix shows
the contribution of forecast error variance from country j to i for all j = i. For every
country in a row (i), we estimate the contribution of error variance due to shocks or
innovations from other countries by simply adding values of (j), for all j = i. The
diagonal values in the matrix for every i = j show the contribution from own to the
forecast variance. The sum of values in every row (i) excluding i = j or the diagonal
element in the row shows a contribution from others. We then add all i = 1… n to
get the total contribution from others. The sum of columns (j) for all j = i provides
the contribution of every country to the forecast error variance of other countries. In
simple terms, the sum of rows for all j = i highlights the contribution from others.
Similarly, the sum of columns for all j = i shows the contribution to others.

Contribution from others

The spillover index (SP) =
Contribution including own

For example, for one week ahead variance decomposition in Table 4, the total
contribution from others is 902.28, and the total contribution including own is 1900.
Thus, the spillover index = 902.28/1900 = 47.49%
We interpret the spillover index across the period by referring to the spillover
table. The analogy of interpretation is the same for the return and volatility spillover
index. The spillover table is flexible to decompose the spillover into input and output
variance. For instance, in Table 6, the shocks from the S&P 500 (US) can cause
31.55% variance to FTSEMIB (Italy) for one week ahead forecast of Italy whereas
shock in the US can cause only 20.66% variance to NIKKEI (Japan). Therefore, for
one week forecast of return, the spillover from USA to Italy is larger as compared
to Japan. The overall spillover index for one week ahead forecast in 47.49%. We
forecasted the volatility from one to 5 weeks and calculated the spillover index. The
spillover index for week 2 is shown in Table 7. The trend in spillover from one to
5 weeks is shown in Fig. 5.
The overall return and volatility spillover effect can be summarised by referring
to the spillover index. An insight of spillover index for stock returns of G20 countries
shows for one week forecast, and the spillover index is 47.49%. When the forecasting
 AUSTRALIA_VAR ARGENTINA_VAR BRASIL_VAR CANADA_VAR CHINA_VAR
.003 .008 .004 .0015 .006

.002 .0010 .004

.004 .002
.001 .0005 .002
.000 .000
.000 .0000 .000
-.004 -.002

QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
-.001 -.0005 -.002

-.002 -.008 -.004 -.0010 -.004

.000 .002 .004 .006 .000 .005 .010 .015 .020 .000 .002 .004 .006 .008 .000 .001 .002 .003 .004 .000 .005 .010 .015
QuanƟles of AUSTRALIA_VAR QuanƟles of ARGENTINA_VAR QuanƟles of BRASIL_VAR QuanƟles of CANADA_VAR QuanƟles of CHINA_VAR

EURO_VAR FRANCE_VAR GERMANY_VAR INDIA_VAR INDONESIA_VAR

.004 .004 .004 .003 .003
.003 .002 .002
.002 .002
.002 .001
.001
.000 .001 .000 .000
.000
.000 -.001
-.002 -.002

QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
-.001 -.002 -.001

-.004 -.002 -.004 -.003 -.002

.000 .004 .008 .012 .016 .000 .004 .008 .012 .000 .002 .004 .006 .008 .010 .000 .004 .008 .012 .016 .000 .002 .004 .006 .008 .010
QuanƟles of EURO_VAR QuanƟles of FRANCE_VAR QuanƟles of GERMANY_VAR QuanƟles of INDIA_VAR QuanƟles of INDONESIA_VAR

ITALY_VAR JAPAN_VAR MEXICO_VAR RUSSIA_VAR SAUDI_VAR

.006 .003 .003 .012 .004
Return Dynamics and Volatility Spill Over Effects …

.004 .008 .003

.002 .002
.002 .004 .002
.001 .001
.000 .000 .001
.000 .000

QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal

-.002 -.004 .000

-.004 -.001 -.001 -.008 -.001

.000 .005 .010 .015 .000 .002 .004 .006 .000 .002 .004 .006 .00 .01 .02 .03 .04 .05 .06 .000 .004 .008 .012
QuanƟles of ITALY_VAR QuanƟles of JAPAN_VAR QuanƟles of MEXICO_VAR QuanƟles of RUSSIA_VAR QuanƟles of SAUDI_VAR

SOTHAFRICA_VAR SOUTHKOREA_VAR TURKEY_VAR UK_VAR US_VAR

.0003 .003 .004 .003 .0020
.003 .002 .0016
.0002 .002
.002 .0012
.001
.0001 .001 .001 .0008
.000
.000 .0004
.0000 .000

QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal
QuanƟles of Normal

-.001 -.001 .0000

-.0001 -.001 -.002 -.002 -.0004
.0000 .0002 .0004 .000 .002 .004 .006 .008 .010 .000 .002 .004 .006 .008 .010 .000 .002 .004 .006 .000 .002 .004 .006
QuanƟles of SOTHAFRICA_VAR QuanƟles of SOUTHKOREA_VAR QuanƟles of TURKEY_VAR QuanƟles of UK_VAR QuanƟles of US_VAR
169

Fig. 4 Variance analysis of G20 countries

170 V. Thangaraj and J. Ben

Table 6 One week ahead forecast of volatility spillover index of G20 countries
USA CHI JAP FRA CAN UK GER IND AUS SOK
USA 79.94 0.00 0.52 1.50 0.02 0.03 0.96 0.02 2.15 0.89
CHI 0.15 97.70 0.19 0.04 0.00 0.19 0.19 0.01 0.50 0.02
JAP 20.66 0.11 62.56 0.02 0.24 0.00 1.14 0.00 4.11 0.00
FRA 37.13 0.37 1.29 36.71 0.00 0.73 1.61 0.02 4.04 0.30
CAN 38.31 0.06 1.93 6.10 37.95 0.49 2.37 0.03 1.85 0.06
UK 32.78 0.08 2.34 24.41 1.19 18.43 2.22 0.03 4.65 0.40
GER 28.66 0.30 2.42 33.60 0.39 0.93 15.00 0.02 2.30 0.98
IND 0.86 0.04 0.77 0.21 0.04 0.26 0.15 94.96 0.04 0.39
AUS 31.21 0.06 2.15 24.96 0.56 19.45 2.06 0.04 6.91 0.27
SOK 16.98 0.05 2.90 4.66 0.39 1.55 8.41 0.24 4.83 42.10
SOA 7.99 2.02 0.52 0.75 0.38 0.03 0.72 0.21 0.50 0.26
BRA 18.58 0.23 10.36 0.95 0.77 0.01 0.22 0.29 2.74 0.91
RUS 0.85 0.98 0.13 0.07 0.38 0.10 0.03 0.03 0.48 0.11
ITA 31.55 0.05 0.52 19.50 0.05 0.52 1.33 0.12 5.09 0.27
SAU 0.18 0.71 0.12 0.52 0.81 0.88 0.73 0.01 0.33 0.66
INA 6.55 0.25 1.39 1.00 0.02 1.69 3.25 0.62 2.37 0.18
MEX 20.49 0.11 62.18 0.02 0.23 0.00 1.24 0.00 4.10 0.00
TUR 4.36 0.68 1.22 2.03 1.08 0.43 0.64 0.00 0.74 1.51
EUR 32.05 0.28 1.13 35.07 0.02 1.14 2.40 0.06 4.78 0.38
Contribution 329.35 6.38 92.07 155.41 6.57 28.43 29.66 1.76 45.60 7.58
to other
Contribution 409.29 104.08 154.63 192.12 44.53 46.86 44.66 96.72 52.50 49.68
including own
SOA BRA RUS ITA SAU INA MEX TUR EUR Contribution
from others
USA 2.22 0.62 2.65 0.03 0.01 7.64 0.08 0.39 0.33 20.06
CHI 0.47 0.00 0.16 0.04 0.05 0.13 0.00 0.05 0.08 2.30
JAP 0.57 0.68 2.43 0.22 0.04 7.12 0.05 0.01 0.04 37.44
FRA 2.74 0.03 1.96 2.59 0.05 9.40 0.00 0.67 0.37 63.29
CAN 0.34 0.86 1.61 0.11 0.02 7.58 0.00 0.27 0.05 62.05
UK 2.32 0.25 1.97 0.52 0.09 7.46 0.02 0.70 0.15 81.57
GER 2.38 0.00 2.35 2.01 0.05 7.89 0.03 0.45 0.26 85.00
IND 0.01 0.06 0.04 0.01 0.02 1.93 0.08 0.05 0.09 5.04
AUS 2.13 0.28 2.03 0.55 0.07 6.39 0.05 0.67 0.17 93.09
SOK 1.65 0.03 0.89 2.73 0.02 9.46 0.00 0.35 2.74 57.90
SOA 85.83 0.00 0.00 0.49 0.10 0.04 0.08 0.06 0.01 14.17
BRA 2.34 55.58 2.99 0.64 0.09 2.98 0.00 0.07 0.26 44.42
(continued)
Return Dynamics and Volatility Spill Over Effects … 171

Table 6 (continued)
SOA BRA RUS ITA SAU INA MEX TUR EUR Contribution
from others
RUS 0.38 0.60 94.74 0.37 0.15 0.14 0.01 0.33 0.12 5.26
ITA 1.95 0.27 2.24 26.99 0.01 6.86 0.05 1.10 1.52 73.01
SAU 2.89 2.05 0.09 0.04 89.13 0.31 0.02 0.19 0.35 10.87
INA 2.03 0.63 2.29 0.37 0.34 76.30 0.42 0.26 0.04 23.70
MEX 0.57 0.66 2.46 0.21 0.04 7.25 0.38 0.01 0.04 99.62
TUR 1.29 0.06 0.13 2.92 0.68 8.82 0.05 73.23 0.14 26.77
EUR 2.24 0.10 1.81 4.07 0.03 10.37 0.05 0.74 3.27 96.73
Contribution 28.51 7.19 28.10 17.92 1.83 101.78 0.99 6.38 6.77 902.28
to other
Contribution 114.34 62.77 122.84 44.91 90.96 178.08 1.37 79.61 10.04 1900.00
including
own
Spillover index 47.49%
USA—America, CHI—China, JAP—Japan, FRA—France, CAN—Canada, UK—United Kingdom,
GER—Germany, IND—India, AUS—Australia, SOK—South Korea, SOA – South Africa, BRA—
Brazil, RUS—Russia, ITA—Italy, SAU—Saudi Arabia, INA—Indonesia, MEX—Mexico, TUR—
Turkey, EUR—Euronext

horizon increases gradually from one to 5 weeks, the spillover index has increased
from 47.49% in week 1 to 51.55% in week 5. It indicates in the short run, the spillover
effect is less, and it becomes larger with an increase in time. Therefore, we conclude
that the spillover effect is significant for return and volatility for G20 countries.
Further, the volatility spillover is larger than the return spillover. In the long run, the
shocks or innovations from other G20 countries make significant contributions to
the volatility of the home country. Hence, it is inferred that the stock market of G20
countries is integrated (Table 8).

8 Conclusion

The interdependencies of the stock market in G20 countries have increased due to
growing economic integration, the influence of technology and favourable economic
policies. Like other groups of countries, the members of G20 countries make a signif-
icant contribution to the global trade and trade among the members. The economic
cooperation, cross-broader investments, imports and exports bring financial inte-
gration to the market. Transmission of volatility is a common phenomenon in an
integrated market. We apply the Diebold–Yilmax methodology to calculate spillover
index for return and volatility. The spillover index is constructed through a variance
decomposition process by running vector error correction model. We found out the
presence of volatility transmission in return and volatility within the G20 countries.
172 V. Thangaraj and J. Ben

Table 7 Two weeks ahead forecast of volatility spillover index of G20 countries
USA CHI JAP FRA CAN UK GER IND AUS SOK
USA 74.05 0.09 0.49 1.75 0.06 0.03 1.23 0.09 2.43 1.00
CHI 0.15 96.19 0.30 0.08 0.01 0.26 0.23 0.02 0.99 0.02
JAP 20.41 0.13 59.31 0.16 0.54 0.02 1.17 0.04 4.27 0.02
FRA 35.12 0.47 1.15 32.60 0.00 0.62 1.84 0.07 4.11 0.33
CAN 36.98 0.22 1.81 6.51 34.09 0.62 2.89 0.11 1.81 0.14
UK 31.50 0.20 2.08 22.58 1.05 15.94 2.63 0.08 4.98 0.45
GER 27.86 0.45 2.06 29.34 0.33 0.77 13.70 0.07 2.32 1.15
IND 1.05 0.04 0.77 0.21 0.05 0.27 0.18 93.99 0.05 0.41
AUS 30.22 0.16 1.92 23.16 0.53 16.90 2.40 0.09 7.17 0.31
SOK 16.82 0.05 2.74 5.01 0.37 1.38 8.99 0.28 4.60 37.46
SOA 9.23 2.63 0.48 0.80 0.41 0.16 0.72 0.20 0.46 0.32
BRA 18.47 0.28 9.92 1.36 0.76 0.06 0.22 0.28 2.93 1.00
RUS 1.02 1.37 0.13 0.08 0.41 0.10 0.03 0.04 0.48 0.14
ITA 30.47 0.05 0.47 18.69 0.07 0.50 1.41 0.13 4.98 0.24
SAU 0.18 0.96 0.23 0.50 0.77 0.83 0.71 0.02 0.38 0.79
INA 7.12 0.38 1.33 0.96 0.04 1.70 3.10 0.60 2.49 0.31
MEX 20.24 0.13 58.89 0.16 0.53 0.03 1.26 0.05 4.27 0.02
TUR 5.16 0.64 1.32 1.90 1.28 0.40 0.67 0.05 0.80 1.53
EUR 30.59 0.34 1.02 31.65 0.02 0.99 2.56 0.10 4.70 0.40
Contribution 322.59 8.61 87.07 144.90 7.21 25.67 32.23 2.33 47.07 8.57
to other
Contribution 396.65 104.80 146.38 177.50 41.30 41.61 45.92 96.32 54.24 46.03
including own
SOA BRA RUS ITA SAU INA MEX TUR EUR Contribution
from others
USA 3.71 0.73 3.59 0.40 0.08 9.33 0.09 0.38 0.46 25.95
CHI 0.89 0.07 0.18 0.04 0.10 0.32 0.00 0.07 0.08 3.81
JAP 1.18 0.97 3.33 0.22 0.07 7.99 0.05 0.06 0.06 40.69
FRA 5.16 0.08 3.98 2.92 0.05 10.30 0.01 0.71 0.49 67.40
CAN 0.97 0.90 2.50 0.64 0.05 9.30 0.05 0.29 0.13 65.91
UK 4.24 0.36 3.44 0.88 0.08 8.48 0.02 0.69 0.32 84.06
GER 4.79 0.02 4.13 2.75 0.04 9.18 0.05 0.50 0.49 86.30
IND 0.03 0.08 0.11 0.03 0.04 2.41 0.08 0.05 0.14 6.01
AUS 3.96 0.39 3.48 0.91 0.06 7.28 0.05 0.68 0.32 92.83
SOK 3.31 0.25 2.61 2.77 0.03 10.38 0.00 0.33 2.62 62.54
SOA 82.69 0.05 0.03 1.22 0.21 0.15 0.08 0.07 0.09 17.31
BRA 3.05 53.22 4.03 0.88 0.08 3.11 0.01 0.07 0.27 46.78
(continued)
Return Dynamics and Volatility Spill Over Effects … 173

Table 7 (continued)
SOA BRA RUS ITA SAU INA MEX TUR EUR Contribution
from others
RUS 0.57 0.76 93.36 0.55 0.18 0.16 0.02 0.44 0.15 6.64
ITA 3.67 0.26 4.30 24.89 0.03 7.14 0.05 1.19 1.47 75.11
SAU 4.07 2.28 0.08 0.14 86.60 0.77 0.02 0.27 0.38 13.40
INA 2.83 0.63 2.48 0.50 0.46 74.29 0.45 0.29 0.05 25.71
MEX 1.18 0.94 3.38 0.21 0.07 8.16 0.36 0.06 0.06 99.64
TUR 2.45 0.16 0.79 3.12 0.64 10.77 0.16 68.00 0.18 32.00
EUR 4.49 0.17 4.00 4.16 0.04 10.98 0.05 0.77 2.98 97.02
Contribution 50.56 9.10 46.45 22.31 2.31 116.23 1.24 6.92 7.74 949.10
to other
Contribution 133.26 62.32 139.80 47.20 88.91 190.52 1.60 74.91 10.72 1900.00
including
own
Spillover index 49.95%
USA—America, CHI—China, JAP—Japan, FRA—France, CAN—Canada, UK—United Kingdom,
GER—Germany, IND—India, AUS—Australia, SOK—South Korea, SOA—South Africa, BRA—
Brazil, RUS—Russia, ITA—Italy, SAU—Saudi Arabia, INA—Indonesia, MEX—Mexico, TUR—
Turkey, EUR—Euronext

5 weeks ahead Spillover Index

51.35% 51.55%
52.00% 50.91%
49.95%
50.00%
47.49%
48.00%
46.00%
44.00%
Week 1 Week 2 Week 3 Week 4 Week 5

Fig. 5 Spillover index of return and volatility for 1 to 5 week forecast

The spillover index shows evidence of inward and outward transmission of volatility
among the benchmark stock indices of G20 countries. The transmission of volatility
increases significantly in the long run.
174 V. Thangaraj and J. Ben

Table 8 Two weeks ahead forecast of volatility spillover index of G20 countries
USA CHI JAP FRA CAN UK GER IND AUS SOK
USA 71.95 0.21 0.47 1.92 0.07 0.03 1.24 0.09 2.35 1.04
CHI 0.18 95.51 0.32 0.08 0.02 0.27 0.25 0.03 1.12 0.04
JAP 20.54 0.20 58.17 0.17 0.66 0.02 1.14 0.05 4.22 0.04
FRA 34.66 0.69 1.07 30.96 0.01 0.58 1.80 0.07 3.91 0.34
CAN 36.50 0.37 1.74 6.52 32.50 0.65 2.93 0.12 1.72 0.22
UK 31.28 0.38 1.95 21.69 1.00 14.97 2.61 0.09 4.78 0.49
GER 27.73 0.67 1.90 27.61 0.30 0.72 12.91 0.07 2.18 1.18
IND 1.10 0.04 0.77 0.22 0.05 0.29 0.19 93.69 0.05 0.42
AUS 30.11 0.33 1.81 22.28 0.53 15.91 2.37 0.09 6.91 0.33
SOK 17.41 0.11 2.59 4.98 0.37 1.31 8.81 0.27 4.36 35.53
SOA 9.62 2.84 0.46 0.91 0.40 0.18 0.69 0.20 0.47 0.31
BRA 18.58 0.39 9.77 1.46 0.75 0.07 0.22 0.28 2.91 1.01
RUS 1.05 1.50 0.14 0.12 0.44 0.11 0.03 0.04 0.49 0.15
ITA 30.44 0.18 0.46 18.20 0.07 0.48 1.37 0.12 4.80 0.23
SAU 0.17 1.09 0.27 0.50 0.75 0.82 0.75 0.03 0.40 0.86
INA 7.36 0.46 1.31 0.95 0.04 1.69 3.05 0.59 2.52 0.37
MEX 20.38 0.19 57.73 0.18 0.64 0.03 1.24 0.05 4.22 0.05
TUR 5.43 0.65 1.31 1.86 1.32 0.40 0.65 0.06 0.79 1.53
EUR 30.47 0.53 0.96 30.16 0.02 0.93 2.49 0.10 4.47 0.41
Contribution 323.01 10.84 85.01 139.80 7.43 24.48 31.82 2.33 45.75 9.03
to other
Contribution 394.97 106.35 143.18 170.76 39.93 39.45 44.73 96.02 52.66 44.56
including own
SOA BRA RUS ITA SAU INA MEX TUR EUR Contribution
from others
USA 4.69 0.73 3.95 0.63 0.12 9.57 0.09 0.38 0.48 28.05
CHI 1.15 0.14 0.18 0.06 0.13 0.35 0.00 0.08 0.09 4.49
JAP 1.60 0.97 3.47 0.27 0.10 8.19 0.05 0.06 0.06 41.83
FRA 6.55 0.08 4.51 3.24 0.06 10.24 0.01 0.71 0.52 69.04
CAN 1.65 0.86 2.88 1.03 0.08 9.67 0.07 0.31 0.17 67.50
UK 5.51 0.35 3.93 1.24 0.08 8.58 0.02 0.69 0.36 85.03
GER 6.35 0.02 4.70 3.20 0.05 9.28 0.06 0.52 0.56 87.09
IND 0.06 0.09 0.15 0.04 0.05 2.51 0.09 0.05 0.14 6.31
AUS 5.18 0.38 3.97 1.25 0.07 7.39 0.05 0.69 0.35 93.09
SOK 4.39 0.24 3.06 3.08 0.04 10.58 0.01 0.32 2.55 64.47
SOA 81.52 0.05 0.16 1.45 0.26 0.20 0.09 0.08 0.12 18.48
BRA 3.41 52.37 4.21 1.05 0.08 3.09 0.01 0.08 0.26 47.63
(continued)
Return Dynamics and Volatility Spill Over Effects … 175

Table 8 (continued)
SOA BRA RUS ITA SAU INA MEX TUR EUR Contribution
from others
RUS 0.65 0.80 92.89 0.59 0.18 0.18 0.02 0.47 0.15 7.11
ITA 4.60 0.25 4.69 24.25 0.05 7.09 0.05 1.21 1.45 75.75
SAU 4.51 2.37 0.08 0.22 85.47 1.02 0.02 0.28 0.39 14.53
INA 3.29 0.62 2.54 0.59 0.49 73.35 0.46 0.28 0.06 26.65
MEX 1.61 0.95 3.53 0.26 0.11 8.37 0.36 0.06 0.06 99.64
TUR 3.12 0.18 1.02 3.14 0.64 10.99 0.16 66.57 0.18 33.43
EUR 5.77 0.16 4.49 4.42 0.06 10.87 0.05 0.77 2.87 97.13
Contribution 64.11 9.22 51.53 25.75 2.66 118.17 1.30 7.05 7.97 967.26
to other
Contribution 145.63 61.58 144.42 50.01 88.12 191.52 1.66 73.62 10.84 1900.00
including
own
Spillover index 49.95%
USA—America, CHI—China, JAP—Japan, FRA—France, CAN—Canada, UK—United Kingdom,
GER—Germany, IND—India, AUS—Australia, SOK—South Korea, SOA—South Africa, BRA—
Brazil, RUS—Russia, ITA—Italy, SAU—Saudi Arabia, INA—Indonesia, MEX—Mexico, TUR—
Turkey, EUR—Euronext

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Can Effective E-Government
Implementation Disrupt Corruption?
An Exploratory Study

Punit Ahluwalia and Mohammad Merhi

Abstract The motivation of this study is to explore the relationship between e-

government usage and corruption at a country level. This paper statistically assesses
this relationship using data of 164 countries collected by credible organizations.
Secondary data included in various reports published by international agencies were
used for analyses. The sample of 164 countries makes the results more generalized
than those published in previous studies. The empirical analysis shows that e-govt
index is a significant antecedent of corruption index. The findings reported in this
paper have important implications for policy makers and researchers.

Keywords e-government · Country-level analysis · Corruption · Government

effectiveness · Percentage of individuals using the internet

1 Introduction

Many countries are plagued by high levels of corruption, and there is a widely
held perception that this corruption can be decreased by e-government practices by
limiting the human interaction between the citizens and the people in authority. For
example, recently, the finance minister of India issued directions to the tax authorities
that all notices for tax collection or inquiries must be processed through a central
processing system (India Today, 2019). A 2016 UN Survey shows that governments
of 148 countries provide some service using Internet channels (United Nations,
2016). The goal of e-government is to deliver government services to citizens in
an effective and efficient manner to increase transparency and accountability, lessen
corruption, grow revenue and/or reduce costs, while profiting from greater conve-
nience (Merhi & Koong, 2016; World Bank, 2011). Although various studies report

P. Ahluwalia (B)
The University of Texas, Rio Grande Valley, Edinburg, TX 78541, USA
e-mail: [email protected]
M. Merhi
Department of Decision Sciences, Judd Leighton School of Business, Indiana University South
Bend, South Bend, IN, USA
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 177
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_10
178 P. Ahluwalia and M. Merhi

that e-government is beneficial to both government and citizens, governments’ initia-

tive to simply provide these services to their citizens does not immediately translate
to usage of these services. Adoption of e-government by citizens is hindered by a
lack of trust and transparency in government, lack of awareness of technology, and
low e-maturity levels (AlAwadhi & Morris, 2009; Belanger & Carter, 2008; Shareef
et al., 2011). Many governments cite decreasing corruption as their primary motive
of implementing e-government technology. This paper explores whether this belief
of the negative relationship between e-government and corruption can be validated
through rigorous statistical analysis. In other words, can it be established whether
effective e-government policies, platform development, and implementation disrupt
corrupt practices?
E-government has been defined as the use of information and communica-
tion technologies (ICTs) to improve the activities of public sector organizations
(Ngafeeson & Merhi, 2013). Research shows that effective implementation and use
of e-government-based systems enables many benefits such as increased techno-
logical innovation, greater self-efficacy of citizens, decreased cost of services, etc.
(Hassan, 2017). Clearly, implementation of e-government systems requires a good
IT infrastructure as well as high level of education among the citizens to be able to
use these technologies.
Many governments are focusing on implementing e-government systems but
research shows that a significant number of these systems are not successful because
of low usage by citizens (Merhi, 2018). There may be several factors that determine
citizens’ usage but according to the technology diffusion model, technology factors
are important drivers of technological innovation. Therefore, we use “percentage of
people using internet (PII)” as an antecedent of e-government usage. The global data
on PII are published by the United Nations for 164 countries and is used in this paper.
This study proposes a model that examines the relationship between e-government
and corruption at country level. The model also includes two other factors, percentage
of people using the Internet and government effectiveness index. This paper makes
the following specific contributions:
1. Empirically investigates the relationship between e-government usage and
corruption level at country level using data from one hundred and sixty four
countries.
2. Analyzes and interprets the empirical relationships in the context of research
and government policy opportunities.
This section presented the introduction. Next section (Sect. 2) describes the
research model. The research design is presented in Sect. 3, followed by presen-
tation of results in Sect. 4. The results are discussed in Sect. 5. Finally, conclusions
and implications are presented in Sect. 6.
Can Effective E-Government Implementation … 179

2 Research Model and Hypotheses

In this section, we provide details of each of the related factors included in the model.
We also explain the relationships between these factors and corruption perceptions.
E-Government (EGOV)
The e-government development index measures the ability and willingness of a
country’s administration to adopt ICTs with the intention to provide information
and services to its citizens. In this paper, we use this measure as e-government usage
in a country.
Percentage of Individuals Using the Internet (PII)
According to the diffusion of innovation theory, adoption of technology is integral
to diffusion of innovation in a social system (Rogers, 1962). Accordingly, the avail-
ability and adoption of Internet-based technologies that are fundamental to the use
of e-government platforms reaching a critical mass. The International Telecommu-
nication Union published the World Telecommunication/ICT Development Report
which includes a measure of individuals using the Internet as a percentage of popu-
lation (PII) (World Bank, 2016b). Thus, we hypothesize that percent of individuals
using the Internet (PII) is a driver of e-government use.
Hypothesis 1 (H1): Greater the percent of individuals using the Internet (PII),
greater is e-government usage (egov).

Government Effectiveness (GEI)

According to the World Bank, the government effectiveness index “measures the
quality of public services, the quality and degree of independence from political
pressures of the civil service, the quality of policy formulation and implementation,
and the credibility of the government’s commitment to such policies (World Bank,
2016a).” It can be argued that increased use of e-government improves the quality and
delivery of public services because of increased speed, greater access, standardization
of basic processes and insulating the citizen from government agents. Thus, we state
the second hypothesis:
Hypothesis 2 (H2): Greater e-government (EGOV) use has a positive effect on
government effectiveness (GEI).

Corruption
Corruption is defined as the “abuse of public power or authority for private bene-
fit” (Anokhin & Schulze, 2009). Corruption manifests in forms of bribery, clien-
telism, embezzlement, lobbying, and patronage. Corruption creates distrust in citi-
zens hindering effective delivery of public services (Damania et al., 2004). Many
countries around the world face high levels of perceived corruption, and there is
a widely held belief that corrupt practices are one of the biggest impediments to
180 P. Ahluwalia and M. Merhi

Table 1 Countries with high and low corruption indexes

High CPI Low CPI
Country CPI GEI Country CPI GEI
Denmark 90 1.89 Somalia 10 −2.18
New Zealand 90 1.86 South Sudan 11 −2.26
Finland 89 1.85 Syrian Arab Republic 13 −1.82
Sweden 88 1.79 Sudan 14 −1.41
Switzerland 86 2.03 Libya 14 −1.89

Fig. 1 Research model

the overall public good. Transparency International publishes a yearly Corruption

Perception Index (CPI), which is a widely used indicator of corruption worldwide
(ourworldindata.org). The countries with low CPI are plagued by untrustworthy and
badly functioning public institutions (transparency.org) and negative government
effectiveness index, whereas the countries with high CPI exhibit positive GEI. On
the other hand, less corrupt countries tend to have higher degrees of information
about the public expenditure and stronger standards when it comes to integrity for
public officials (transparency.org). Table 1 shows CPI and GEI values from the data
for select five countries ranked by high and low CPI measures.
Accordingly, we argue that more effective governments are better able to control
corruption. Thus, we state the third hypothesis as:
Hypothesis 3 (H3): Greater the Government Effectiveness Index (GEI), Greater
will be the Corruption Index (CPI).1
The three research hypotheses are shown in Fig. 1.

3 Research Design

Secondary data comprising of 164 countries were used for conducting the empirical
analysis. The data are drawn from credible organizations that have the resources to
collect data at a global level and are known for their integrity. The datasets used for
analysis are drawn from the Transparency International “Corruption Index 2016,”

1 Greater index values are associated with lesser corruption.

Can Effective E-Government Implementation … 181

Table 2 Countries with high

High EGOV Low EGOV
and low e-government
indexes Country EGOV Country EGOV
United Kingdom 0.919 Somalia 0.027
Australia 0.914 Niger 0.059
Singapore 0.883 Central African 0.079
Republic
Finland 0.882 Eritrea 0.090
Sweden 0.870 Guinea 0.123

and the “United Nations E-government Survey 2016.” The variables of interest are
now described.
E-government
The e-government development index presents the state of e-government develop-
ment of a country. It assesses the Website development patterns in a country, as
well as incorporates the access characteristics such as the infrastructure and educa-
tional levels to reflect how a country is using IT to promote access and inclusion
of its country. The data for this factor were obtained from the United Nations data
repository. See Table 2 for sample values in this index.
Government Effectiveness (GEI)
The GEI taps into the quality of public services, government policies, and their
implementation. This measure also reflects insulation of civil service from political
influences and government’s credibility toward its policies. These data were collected
in the United Nations E-Government Survey 2016. See Table 1 for representative
sample values in this index.
Corruption (CPI)
Transparency International publishes index on perceptions about levels of corrup-
tion in a country. The CPI measures range between 0 and 100 which represents no
corruption at all and 0 represents highest corruption. Table 1 shows CPI values from
the data for select five countries ranked by high and low CPI measures.

4 Analysis and Results

Descriptive analysis is the first step in most statistical analyses as it helps in providing
useful information about the data such as its distribution. For example, descriptive
analysis may reveal that the data are not suitable for further analysis. The results of the
descriptive statistics are presented in Table 3. Unlike structural equation modeling,
the PLS method is not based on assumptions of normal distribution of data.
182 P. Ahluwalia and M. Merhi

Table 3 Descriptive analysis

VARS N MEAN SD MIN MAX RANGE SKEW KURTOSIS SE
PII 164 48.72 28.63 0.00 98.24 98.24 −0.02 −1.30 2.24
EGOV 164 0.50 0.22 0.03 0.92 0.89 −0.04 −0.99 0.02
GEI 164 −0.06 1.00 −2.26 2.21 4.47 0.24 −0.52 0.08
CPI 164 43.04 19.39 10.00 90.00 80.00 0.67 −0.34 1.51

Table 4 Inner model squared

PII EGOV GEI CPI
multiple correlations (R2 )
0.000 0.843 0.754 0.851

Table 5 Bootstrap SEs and two-tailed significance tests

Relation Estimate SE t p (regression)
PII EGOV 0.918 0.012 0.70 <0.5
EGOV GEI 0.868 0.019 0.45 <0.5
GEI CPI 0.922 0.012 0.81 <0.5

We used Matrixpls package offered by R statistical repository (Ronkko, 2017)

to conduct multivariate PLS regression analysis. The R2 values reflect the amount
of variance in endogenous latent variables that is caused by their antecedent latents.
Table 4 shows the R2 values which show that significant variance in the dependent
variables is explained by the independent variables included in the research model.
The standardized coefficients, t values and the regression coefficients are shown
in Table 5. These results show data confirmed the three hypotheses as the p-values
for all three relationships which are statistically significant, i.e., < 0.5.

5 Discussion

This paper explored empirical validation of widely reported assertion that effective
e-government implementation and practices can reduce corruption. Although many
factors may directly or indirectly influence corruption at a country level, we exam-
ined the stated hypotheses in the research model by drawing from secondary data
published by the United Nations, World Bank, and Transparency International. The
data confirmed all three hypothesis. This paper hypothesizes and confirms antecedent
roles of PII, EGOV, GEI in influencing corruption. The results are mapped onto the
research model and are shown in Fig. 2.
It is frequently argued that e-government systems help in reducing corruption.
The results produced by the analysis presented in this paper suggest that effective
e-government policies and implementation have a significant impact on corruption.
Can Effective E-Government Implementation … 183

Fig. 2 PLS model: results

The coefficient of the relationship between corruption and government effectiveness

is very high (β = 0.922).
The results also indicate that Internet usage by the citizens is a significant and
strong (β = 0.918) antecedent to effective e-government practices. With the advances
in social media and technologies, citizens are able to share news faster. Individuals
can also access information in a very fast and convenient way. This confirms the
assertions made by the innovation diffusion theory (Rogers, 1962).
In this paper, we also confirmed a positive relationship between e-government
implementation and government effectiveness. Thus, it is important for the govern-
ment to focus on effective implementation of e-government policies and platforms
that would improve the quality of delivery of public services to its citizens.

6 Conclusions and Implications

The motivation of this study was to examine the empirical relationship between
e-government usage and corruption. Using the secondary data published by very
reputable international organizations, we explored these relationships. The data
collected supported all the hypotheses postulated in this paper.
The ever-increasing adoption of e-government among varying governmental agen-
cies has led to many studies that measure the adoption and usage of these systems by
citizens of different nations. This research constructs a model that depicts the rela-
tionships between e-government usage and corruption index, and empirically test it.
This study makes two important contributions to the literature. Even as most studies
in e-government literature examine e-government use as the dependent construct,
no study has yet investigated the research model postulated in this study. Thus, this
research adds to the literature and the body of knowledge. Second, by empirically
investigating the hypothesized relationships using a dataset with a greater sample
size lends greater generalizability to the results. Previous studies that examined
e-government usage and adoption have used smaller sample size.
A multitude of people is expected to find this paper useful and interesting. In addi-
tion to its contribution to the growing empirical base of literature on e-government
and corruption, this study has significant implications for policy makers and people
working with e-government technologies. During the last decade, it is witnessed that
governments from all over the world are trying to develop efficient as well as effec-
tive government services and delivery systems by using technologies and especially
e-government systems. Despite their attempt to achieve success, unfortunately some
184 P. Ahluwalia and M. Merhi

Table 6 Percentage of
Country Percentage of individuals using internet
individuals using internet:
sample values Iceland 98.24
Bahrain 98.00
Luxembourg 97.49
Norway 97.30
Denmark 96.97
India 29.55

governments fail to accomplish their goals. The results obtained in this research
suggests that effective government is a significant antecedent to corruption and that
the effectiveness and quality of governments’ delivery of public services can be
significantly improved by effective e-government implementation and adoption.
The data also suggest that the Internet usage is a significant driver of e-government
usage. This finding is supported by the diffusion of innovation theory. This finding
may be especially important for Indian policy makers. Table 6 shows the top five
rated countries as well as India’s measure as reported in the United Nations ITU
report (World Bank, 2016b). This shows that there is a huge opportunity for the prac-
titioners to make improvement in this area of governance.2 In this context, looking
into the aspect of improving human capital and whether it can improve diffusion of
e-government channels offers a worthwhile research opportunity.
It is important to know that effective implementation and adoption of e-
government platforms can play an important role in disrupting established corrupt
practices by lending themselves to ease of search and reporting. All these factors
facilitate transparency which is considered to be the strongest anti-dote of corruption.
Thus, when governments make greater use of digital technologies in their decision
making, in providing information to its citizens, and to interact with various stake-
holders, they help in strengthening the perceptions that their practices are free of
corruption. Although this study looks at the Internet usage and effective government
factors, other factors such as infrastructure, e-participation, and education may also
be examined in how they impact corruption. Cultural dimensions are yet another set of
factors that may shed more light into how to curb corruption through implementation
of e-government platforms.
While this paper makes important contribution to theory and practice, it is neces-
sary to acknowledge its limitations as well. The findings of the paper are a result
of statistical analysis of secondary data. It is practically impossible to collect global
level data by individuals or even group of researchers. Therefore, most studies that
examine cross-country-level phenomena are dependent on secondary data. This also
means that the studies can only assess the indexes that have been published by large
organizations such as the United Nations and Transparency International. Second,
this study examines the relationships of four macro-level factors and e-government
adoption. Many other determinants have been found to also influence e-government

2 Please note that this data was published in 2016. These measures may have changed over time.
Can Effective E-Government Implementation … 185

adoption and corruption. However, the variables used in this study have been found
to be both stable and useful in describing the phenomenon.

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Moderation of Income and Age
on Customer Purchase Intention
of Green Cosmetics in Bangalore

S. V. Krishna Kishore, Prabha Kiran, Jayanta Banerjee, and M. Vasudevan

Abstract Cracking the code of customer purchase behaviour is a challenge for

market researchers as myriad factors interfere. Marketers are puzzled as competi-
tors position a new product category in the market to create demand. Indian public
perceived cosmetics composition as blend of “healthy” chemical extracts. Television
commercials portrayed the presence of chemicals in cosmetics as a product perfor-
mance booster. People attributed chemical presence to superior product performance.
Saturated markets witnessed competitors aiming at increased sales with similar
commercials. Under pressure to differentiate, the idea of organic cosmetics started.
Companies invested heavily on product development, marketing and branding.
Expected success was not achieved as buyers measured performance of cosmetics
weighing the absence of chemicals. Scepticism on organic level of the products
emerged as various brand commercials claimed their respective compositions a true
organic product. Fewer studies explained purchase intention of green cosmetics
without focus on health consciousness and consumer innovativeness. Product diffu-
sions were strategized on the basis of consumer innovativeness. Health conscious-
ness captured individual’s weightage on health and well-being while purchasing
a product. This paper explores relationship of health consciousness and consumer
innovativeness with purchase intention development conducting exploratory factor
analysis, regression analysis and interaction analysis on selected independent vari-
ables using dependent variables. The study found both consumer innovativeness
and health consciousness leading to development of purchase intention of green
cosmetics. Age and income moderated the relationship of consumer innovativeness
and purchase intention.

Keywords Green · Cosmetics · Purchase · Intention · Age · Income · Health

consciousness · Consumer innovativeness

P. Kiran (B)
Westminster International University, Tashkent, Uzbekistan
S. V. Krishna Kishore · J. Banerjee · M. Vasudevan
School of Business and Management, Christ University, Bangalore 560074, India

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 187
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_11
188 S. V. Krishna Kishore et al.

1 Introduction

Green product category demand in recent times is on positive slope. But it is

also evident that there is a sluggish customer acceptance of green philosophy.
Green cosmetics manufacturer’s attempts of customer’s acquisition have not seen
a convincing success (White et al., 2019a, b). In nineteenth century, cosmetics
marketing techniques evolved. Marketing communications focused on benefits of
beauty and health. Companies funded R&D activities embedding beauty and well-
ness ingredients in their products. Later, companies positioned products as treatable
solution for oily skin-related problems. Cosmetics were associated with medicines.
UK cosmetic industry promoted wellness and organic lifestyle to target their
customers (Dimitrova et al., 2009). Initial responses were impressive. Suppliers
formed a robust distribution chain. Wellness promotion drove market growth at UK
in the year 2010 (Mintel, 2010). Mintel (2010) had also reported spike investment
in wellness ads and misleading information of companies entering into the category
leading to decrease in customer confidence. In 2013, the industry registered 3.8%
growth compared to 2012. In 2015, sales were estimated to cross 14 billion mark.
Mintel (2018) found more than half of consumers in Britain favoured using cosmetics
made from natural ingredients. In the present scenario, global consumers are confused
to select green products due to confusion on definition of a green product.
Mason (2012) discovered health benefit elements driving the sales of organic
cosmetics not features that used to be frequent part of market communications. Mason
recommended organic cosmetic manufacturers to communicate benefits instead of
ingredient details. In Hong Kong, knowledge dissemination about foods and their
benefits amplified organic food product sales (Cheung et al., 2015). In Malaysia,
Thambiah et al. supported the finding of food knowledge. Taiwanese believed cancer
can be treated by adopting organic food habits (Tung et al., 2015).
According to Hill and Lynchehaun (2002), consumers already believed organic
food products taste better as they do not consist of chemical ingredients. Previous
studies found that consumer’s health consciousness as a major driver of organic
product sales (Huber et al., 2011; Patnaik et al., 2021; Sirieix et al., 2011; Van Loo
et al., 2013).
Indian urbanites live in packed routines. They are vulnerable to illness than their
ancestors. Health and wellness products are prioritized by urban dwellers. Products
and services portraying well-being on their packages are being preferred. Market
entrants skimmed pricing to make money. In the past, chemical cosmetics were
sold in the market; cues of chemical cosmetic trend changes can be observed with
managerial and marketing tweaks by companies. Modern urbanites demand green
cosmetics and healthier lifestyle.
Cosmetics market was valued at USD 532 billion in 2017 and is forecasted to
reach approximately USD 863 billion in 2024, growing at a CAGR of more than
7% between 2018 and 2024. India is one of the top ten countries in cultivable land
availability for growing natural ingredients for green cosmetics (Laheri, 2015). The
organic cosmetic industry in the world has gained momentum. Organic cosmetic
Moderation of Income and Age on Customer … 189

sector’s growth in India is at a snail pace. The reason for achieving fast growth
momentum in world markets is not clear. As a first mover company in the market
releases a green product, imitators flood the market causing distortion of customer’s
belief system and preferences. Customer purchase intention development needs
a tranquil environment. This is absent due to aggressive competition –generating
clutter. In 2010, Cosmetic Organic and Natural Standards (COSMOS) was formed
to monitor the adherence of cosmetic brands to green theme.
A product is green when it preserves nature with less pollution backed with a
concrete plan of recycling and disposal of wastes leading to sustained living of
animal and plant species (McEachern & Mcclean, 2002). Shamdasani et al. (1993)
had already made point of nature preservation and recycling in products. Csorba and
Boglea (2011) argued that a cosmetic is considered green if the composition includes
fruit- and botanical-based formulae (Csorba & Boglea, 2011). This argument was
supported by Mintel report.
Super-premium, premium and mass green cosmetic brands have earned small
revenues citing an important need to research and identify effective indicators of green
cosmetics purchase intention (GVR, 2019). Factors influencing and interacting store
visitors to buy the green brands have to be explored. The demographic variables like
age, gender, income status reserve vital insights on customer purchasing behaviour
(Roberts, 2021) – Research Gap.
Authors point at difference in consumer purchase behaviour of general cosmetics
and organic cosmetics. Natural ingredients and organic ingredients are powerful
purchase decision drivers followed by botanical ingredients, free from label claims,
not tested on animals, fragrance- and gluten-free product properties. General products
are weighed on the basis of cost and benefits. With enhanced green literacy rate in the
market and exposure to health articles, consumers are aware of health implication by
usage of chemical-based products (Blasi et al., 2020; Kotler, 2011). Overall review
of all industry trends lead us to form research questions in Indian market scenario
like.
• What influences the development of purchase intention of organic cosmetics?
• Do health consciousness and innovative consumers drive the purchase intention?
• Do age and income moderate the development of purchase intention?
The rising preference of organic elements in cosmetics is a challenge for
(Dimitrova et al., 2009; Johri & Sahasakmontri, 1998; Kim & Seock, 2009). There
are studies at various countries on increased production of green products relating
to changing consumer tastes (Rybowska, 2014).

2 Review of Literature

Initial literatures indicated scholars acknowledging increase in the demand of organic

cosmetics. Media promotions on wellness and fitness lifestyle amplified organic
cosmetics sales. Li et al. (2019) observed modern cosmetic industry’s reliance
190 S. V. Krishna Kishore et al.

on innovation and technology. Companies are informed on customers preferences

for younger appearances linked to organic products. Companies aimed at better
understanding of consumer preferences and market conditions resulting in feeble
rise in number of studies on organic products (Dimitrova et al., 2009; Johri &
Sahasakmontri, 1998; Kim & Seock, 2009; Rybowska, 2014).
Laroche et al. (2002) observed that environmental concern among consumers
solely need not necessarily lead to organic product purchases. On the contrary,
Cervellon and Carey (2011) argued wider awareness of green products contributed
to sales growth of green cosmetics category.
According to Organic Monitor (2012), in addition to efficiency at R&D organi-
zational verticals creating green formulations, the summits organized on creating
awareness about natural ingredients benefits connected with customers. Package
Digest (2010) also reported similar findings. Cervellon and Carey (2011) observed
gap in consumer’s acceptance towards organic cosmetics. The solution for low adop-
tion needs to be explored. Similar studies in past have been conducted in the area of
China and Korea. Insight on Indian consumer cosmetic preferences is negligible in
research world (Matić & Puh, 2016).
Lea and Worsley (2005) linked green products with demographic characteristics.
Harper (2002) and Ahmed (2010) also found very small set of consumers consis-
tently consume green product categories in India. The consumption depended on
mostly demographic attributes. The gaps were identified from studies outside India,
especially in Korea, Japan and Finland. Not many studies have been done in India
with respect to cosmetics’ market. Since most of the researches are based out of
outside market, it is evident that Indian cosmetic market will be definitely different
from others. According to Mintel, the male grooming product market grew almost
12% between 2006 and 2011. Still, more studies focussed only on female cosmetics
and their perceptions. So far, studies conducted are mostly on consumer attitude and
perception (Anjana, 2018; Baghel, 2020). → Research Gap.

2.1 Operational Definition

A definition of green cosmetics has been adopted in the study to clear define the scope
of green cosmetics. According to Chin et al. (2018) Green cosmetics can also be called
as organic cosmetics. They fit in the bracket of green theme if they adhere to envi-
ronmental preservation and promotes ecological stability. Green, organic and natural
cosmetics terms have been used to discuss and measure the consumer behaviour.
According to Gourville (2006) and Rogers (2003), there is complexity in purchase
intention development of organic products compared to general products. They also
argued that the set of general variables used to predict the purchase intention may not
be sufficient. This makes clear that a specific set of variables that have consistently
explained the purchase intention of organic cosmetics (Rybowska, 2014; Tsakiridou
et al., 2008). A review of scholarly articles pointed us at variables like social influ-
ence, price sensitivity, general characteristics of the products, green cosmetics buying
Moderation of Income and Age on Customer … 191

pattern and health consciousness were selected due to their relevance to the Indian
market situation. According to Zelezny et al. (2000) and Tikka et al. (2000), from
the year 2001, more females were worried on chemical effects and started preferring
green cosmetics and products. According to Lea and Worsley (2005) and Ahmed
(2010), psychological attributes acted as major influencers compared to other clas-
sifications in preferring green cosmetics. Mainieri et al. (1997) found that females
would be loyal customers after trusting on green cosmetics. This was supported by
Pillai (2013).
Also, most studies are done combing organic products and cosmetics. Specific
studies on organic cosmetics are less. Besides users are still not familiar with all
the categories and brand of green cosmetics; hence, overall research with respect to
organic cosmetics is not valid for most of the occasion. There is a gap in studies on
cosmetic preference across genders, as most of the studies are on female consumers.
Indian customers are yet to adapt organic cosmetics. Until and unless proper study
is conducted, the information gap will widen.

2.2 Consumer Innovativeness

Consumer innovativeness is a personality trait reflecting willingness to change.

Consumer innovativeness is a tendency of an individual to adopt a new product earlier
compared to others in the society (Rogers & Shoemaker, 1971). The propensity of
consumer to purchase fresh releases in the market points at interesting dimensions
of decision making (Hirschman, 1980).
Consumer innovativeness construct assumes that consumers would like to go for
new experiences. Their mental and physical activities are in synch with motivations.
Cote, Wood and Roehrich (2004) observed that innovativeness forms by change
embracing behaviour of consumers. Researchers consider innovative consumers as
prime segment in getting revenue inflow from the market (Cowart et al., 2008; Gil
et al., 2000; Klink & Athaide, 2010). Bartels and Reinders (2010, 2011) observed
that consumer innovativeness is different in its approach as it studies the behaviour
with new product adoption perspective. Innovativeness could explain the consumer
acceptance of new product based on cultural relativity. This gives key insight on
connecting campaigns and the consumer’s intention to study behaviour (Bartels &
Reinders, 2011; Goldsmith & Flynn, 1992; Wood & Swait, 2002).
Bhate and Lawler (1997), Barrena-Figueroa and Garcia-Lopez-de-Meneses
(2013) found that consumer innovators pay high prices to purchase new products
earlier ignoring the conventional products in the market. This behavioural pattern
of purchasing premium-priced novel products are found rapidly among innovators.
Other classifications in diffusion of innovation model try lately. According to Leavitt
and Walton and Chao et al. (2013), consumer innovativeness construct has consis-
tently explained development of purchase intention on organic products. Hwang et al.
(2020) also found that CI leading to purchase intention. Zhang et al. (2020) supported
that CI explains the willingness to pay. There we hypothesized.
192 S. V. Krishna Kishore et al.

H1N: Consumers innovativeness of an individual does not lead to development

of purchase intention of green cosmetics.
H1A: Consumers innovativeness of an individual leads to development of
purchase intention of green cosmetics.

2.3 Health Consciousness

Health consciousness is the propensity of an individual to centre decisions on

purchase and lifestyle on conscious of health (Gould, 1988; Jayanti & Burns, 1998).
Kraft and Goodell (1993) identified that maintenance of nutritional choices and
physical fitness led to health-based choices of the consumers. Health informa-
tion for health conscious people is attractive as they believe life-threatening situ-
ation can be averted (Dutta-Bergman, 2004, 2006). Aldoory (2001), Iversen and
Kraft (2006) found that health conscious consumers pay higher attention to health-
based market communications (Dutta-Bergman, 2006; Moorman & Matulich, 1993).
Dutta-Bergman, (2004) and Ahadzadeh et al. (2015) observed the same finding in
the Internet. Health conscious consumers give prime importance to well-being and
longevity. This was also later supported by Dutta-Bergman (2004), Kim and Chung
(2011) and Newsom et al. (2005).
Michaelidou and Hassan (2008) observed health consciousness as prime motive
behind the organic products purchases. Kim and Chung (2011) linked health
consciousness to purchase intention of organic cosmetics. According to Kraft and
Goodell (1993), Newsom et al. (2005), health consciousness is related to daily
consumer purchase decisions. Consumers maintain elevated awareness of organic
products that promote healthy lifestyle and wellness.
Johri and Sahasakmontri (1998) observed that health conscious people believe
synthetic-free products give glowing skin and it lead to beautiful appearance.
These individuals are more ingredients driven than the finished product. Tarkiainen
and Sundqvist (2005) commented on keen interest in ingredients or being health
consciousness does not affect the scale of the items purchased. Kim and Seock (2009)
found that heath conscious people engaged themselves more in exercises and health
clubs to promote wellness. This finding was further supported by Michaelidou and
Hassan (2008) as well as Kim and Chung (2011). Female consumers were concerned
on their lifestyles, health, self-image and economic considerations while purchasing
of green cosmetic products (Pudaruth et al., 2015).
We found various studies linking animal well-being, environmental concern,
health and safety as motive for female buyers to buy green cosmetics and healthcare
products. However, it is interesting to observe women did not only buy cosmetics
and beauty care products because of environmental concerns or personal beliefs but
mainly due to health reasons (Vermeir & Verbeke, 2006). Leire and Thidell (2005)
contended requirement for clear comprehension of female inspiration concerning
eco-named beautifiers as female customers are more concerned on corrupt adver-
tisers with “green” claims (Bhaskaran et al., 2006; Thogersen et al., 2010). As most
Moderation of Income and Age on Customer … 193

of the consumers lack knowledge and awareness about green cosmetics, so they
tend to opt for those products promote based on traditional methods. According to
Tran et al. (2020) health consciousness mediated the marketing mix factors towards
purchase intention. Nagaraj (2021) found health consciousness leading to purchase
intention. So, we hypothesized.
H2N: Health consciousness of an individual does not lead to development of
purchase intention of green cosmetics.
H2A: Health consciousness of an individual leads to development of purchase
intention of green cosmetics.
Consistency in product quality leads to consumer loyalty (Chumpitaz &
Paparoidamis, 2004). Thus, green customers see organic ingredients inclusion as
the best quality point and judge green products as more secure because of the evaded
danger of pesticide deposits in the makeup items (Cornelissen et al., 2008; D’Souza
et al., 2006; Martenson, 2007; McWilliams & Siegel, 2001; Rios et al., 2006; Yiridoe
et al., 2005).

2.4 Moderation of Age and Income

Demographic variables deepen the understanding of variables in the model.

Davies (1995) found age as vital determinant of purchase preferences compared to
other variables among demographic variables. Lea concluded that moderately aged
people have strong conviction and preferences towards natural products. Finisterra
do Paco et al. (2009) found no critical relations among age and green attitudes. Mihic
and Kuran focused on purchases rather than attitude and found age, income, marital
status are important determinants of green cosmetic purchase.
As green product preferring segment is small resulting in purchases getting slug-
gish, the prices of these products are high. This brings income factor in demography
as second important variable that explains offering (Davies, 1995; Chinnici, 2002;
Lea, 2005). The literature provided on the product package played a vital role in
forming of customer loyalty (Ahmed, 2010; Lockie et al., 2002).
Green cosmetics purchases were not studied on the basis of age and income
role purchase intention development. Davies (1995) observed purchase decisions
of organic cosmetics depend on age cycle of an individual. Im et al. tested demo-
graphic variables like age, education, income and concluded no moderating effect
on consumer innovativeness. Lea and Worsley (2005) supported Im et al.’s find-
ings but stated middle-aged persons are more likely to purchase organic items and
with age, purchase preferences of organic cosmetics rises. Straughan and Roberts
(1999) had already argued age and income explain eco-conscious buying behaviour
of consumers. D’Souza et al. (2007) supported Straughan and Robert’s findings and
argued demographic factors as a lens for researchers with perspectives to look at
consumer behaviour. No study area is there on income and gender moderation of
194 S. V. Krishna Kishore et al.

organic cosmetics. Ali et al. (2019) supported the view of moderating demographic
variables by testing age and financial costs. Therefore, we hypothesized.
H3 a (n): Age of an individual does not moderate the path of consumer
innovativeness leading to purchase intention.
H3 a: Age moderates of an individual moderate the path of consumer innovative-
ness leading to purchase intention.
H3 b (n): Age of an individual does not moderate the path of health consciousness
leading to purchase intention.
H3 b: Age of an individual moderates the path of health consciousness leading to
purchase intention.
H4 a (n): Income of an individual does not moderate the path of consumer
innovativeness leading to purchase intention.
H4 a: Income of an individual moderates the path of consumer innovativeness
leading to purchase intention.
H4 b (n): Income of an individual does not moderate the path of health
consciousness leading to purchase intention.
H4 b: Income of an individual moderates the path of health consciousness leading
to purchase intention.
Davies (1995), Chinnici (2002), Lea and Worsley (2005) had already concluded
that purchase of organic products can also be explained better with of income data
of a region.

2.5 Purchase Intention (Dependent Variable)

Purchase intention is a will of an individual to purchase a particular product or a

service. Purchase intention has a credible record as dependent variable in explaining
the adoption phenomena in various cases (Chen & Chang, 2012) (Fig. 1).

Age Income

H3 b H4 b
Consumer H1
Innovativeness
Purchase Intention
H3 a H4 a Towards Organic
Cosmetics
H2
Health
Consciousness

Fig. 1 Proposed conceptual framework of green cosmetics adoption. Source Literature review
Moderation of Income and Age on Customer … 195

Goldsmith and Hofacker (1991) observed consumer innovativeness as an imme-

diate predictor of purchase intention. PI was widely used in new product purchase-
based studies. Rashid (2009) concluded that purchase intention can explain new
product adoption behaviour in all product categories. Rybowska (2014) identified
consumers insensitiveness to price and perception of superior value on green prod-
ucts. There were enhancements in biotechnological extraction of natural ingredients.
As consumers lacked knowledge and awareness about green cosmetics, consumers
weighed old brands positioning methods than novel one (Lin et al., 2018).

3 Objectives of the Study

The main objective of the study is to observe factors resulting in development of

purchase intention towards green cosmetics. The sub-objectives include identifying
factors impacting purchase intention and to determine the strength of their relation-
ship. Moderation effect of income and age on the path of independent variables
(consumer innovativeness and health consciousness) leading to customer purchase
intention development is also aimed.

4 Research Methodology

Descriptive approach was made to accomplish stated objectives. Data was collected
through structured questionnaire. Non-probabilistic sampling was used to trace
respondents. Sampling frame was not available. Under non-probabilistic sampling
technique, convenience sampling was used to reach the respondents. Respondents
were engaged outside the stores. It was hit or miss basis based on the consent of the
respondent. Questionnaire was administered to collect data.
The questionnaire was tested prior to full-fledged data collection. Pilot study was
conducted for a sample size of 36 to test reliability and internal consistency of data.
The internal consistency check was done for the instrument. The Cronbach’s alpha
of reliability statistics need to reflect data reliability of more than 0.6. The results of
reliability analysis is as follows (Table 1).
Each variable with their items was tested for reliability analysis. All variables
had a satisfactory Cronbach’s alpha value. Cronbach’s alpha is a measure of internal
consistency, that is, closely related set of items as a group. The value was more
than 0.75 against the role of thumb 0.60. Overall model’s value was at 0.82. The
value was satisfactory for further analysis. Over 517 responses were collected. After
scrutiny, 62 responses were removed for tabulation and coding as they were faulty.
Four hundred nine responses were considered for further analysis. SPSS was used
to analyse data.
196 S. V. Krishna Kishore et al.

Table 1 Summary of
S. No. Variable items Reliability Model’s
reliability analysis
(Cronbach’s Cronbach’s
alpha) alpha)
1 Health 0.79 0.82
consciousness
2 Consumer 0.74
innovativeness
3 Purchase 0.86
intention
Source Data analysis

5 Data Analysis and Interpretation

After tabulating and coding data, raw data was treated for outliers and missing data.
After data cleaning process, the data set was subjected to reliability, factor analysis
and multiple regression with interaction analysis. Factor analysis provides evidence
about a scale in question being one-dimensional for further analysis. Exploratory
factor analysis was conducted to checking dimensionality.

5.1 Demographic Variables

The demographic variables under investigation were gender age and income.

5.1.1 Gender

Out of 459 samples, 71.7% were females that are 329 and 28.3% of the total sample
which was males that are 130. Apparently, in the store’s cosmetic section, more
females were seen than males.

5.1.2 Age

A frequency pie chart was generated on age. Age had four classifications in ques-
tionnaire apparently 20–24 yrs, 25–29 yrs, 30–35 yrs and more than 35 yrs. In the
total sample, more number of samples was from 20 to 24 yrs age group classification
with 44.2% followed by 25–29 yrs groups with 38/1% and 30–35 yrs group as well
as above 35 yrs with 11.5 and 7% presence.
Moderation of Income and Age on Customer … 197

Table 2 Summary of reliability table

S. No. Variable Reliability–Cronbach alpha Model reliability
1 Health consciousness (HC1, HC2, 0.899 0.842
HC3)
2 Consumer innovativeness (Innov 1, 0.856
Innov 2, Innov 3)
3 Purchase intention (PI1, PI2, PI4) 0.861
Source Primary data

5.1.3 Income (Per Month)

A frequency pie chart was generated on income. Income had three classifications
apparently 0–20,000 per month, 20,000–50,000 per month and more than 50,000
per month. More samples were from 0 to 20,000 Rs per month income group clas-
sification with 47.8% followed by 20,000–50,000 Rs per month income group with
26.5% and more than 50,000 Rs per month income group with 25.7% presence.

5.2 Reliability Analysis

Exploratory Factor Analysis (EFA) was conducted to observe convergence of factors.

Before running an EFA, reliability analysis was conducted to test internal consistency
of data after complete data collection (Table 2).
All items of variables were loaded under their respective factors validating subject
matter. This proved convergent and divergent validity of constructs. PI3 was removed
during the pilot test as variance of the construct improved in its absence. Compared
to 50% rule of thumb measure, all factors had reliability value of above 0.60 with
health consciousness, consumer innovativeness and purchase intention recording
Cronbach’s alpha of 0.899, 0.856 and 0.861. The overall model reliability value of
0.842 signalled us to proceed for further analysis.

5.3 Sample Adequacy. Exploratory Factor Analysis

and Multiple Regression

The Kaiser–Meyer–Olkin (KMO) measure of sampling adequacy examines the

appropriateness of factor analysis. High value indicates factor analysis is appropriate,
and low value implies that factor analysis may not be appropriate (Table 3).
Against the rule of thumb reading is 0.50. The KMO value was 0.778 signalling
good sample adequacy and ample opportunity for factor analysis. The output was
statistically significant with chi square value of 1809.940 (Fig. 2).
198 S. V. Krishna Kishore et al.

Table 3 KMO and Bartlett’s

Kaiser–Meyer–Olkin measure of sampling 0.778
test
adequacy
Bartlett’s test of Approximately 1809.940
sphericity Chi-square
Df 36
Sig. 0.000

Fig. 2 Scree plot curve. Source Primary data

4.5

4
Purchase Intention

3.5
Low Age
3
High Age
2.5

1.5

1
Low Consumer High Consumer
Innovativeness Innovativeness

Fig. 3 Health consciousness and purchase intention. Source Primary data

Moderation of Income and Age on Customer … 199

4.5

4
Purchase Intention
3.5
Low Income
3
High Income
2.5

1.5

1
Low Consumer High Consumer
Innovativeness Innovativeness

Fig. 4 Consumer innovativeness and purchase intention. Source Primary data

Scree plot curve deep dived lesser than 1 eigen value. Below the eigen value of 1
4th factor appeared. Factors with minimum eigen value of 1 were considered. Three
factors with more or equal to 1 eigenvalue were selected. The total of three factors
was extracted from EFA (Table 4).
As per the scree plot, table displayed a total variance of 13.734 with cumulative
total percentage of 81.452. As per the rule of thumb, 60% should be cumulative
value, and three factors were able to explain 81.452% of the data that is more than
rule of thumb.
Selected three factors were rotated orthogonally using varimax method with
Kaiser normalization. Table 5 consists of three factors and the item loadings. All
items were loaded under their respective components. There were no cross-loadings
proving convergent and divergent validity (Table 6).
Model summary table retained r value at 0.497 and r square at 0.247. Generally,
these values are not considered excellent. In consumer behaviour the R squared
values are expected low. While predicting consumer behaviour, behaviours linked to
psychology, it is normal to have r squared values lower than 50%. Human behavioural
patterns are difficult to conclude (Frost, 2016). Durbin Watson value with 1.758 was
within the range. The value range of 1.5–2.5 was acceptable (Table 7).
R and r square values do not symbolize complete regression output. ANOVA
output was also crucial output for observation to reach final interpretation of
coefficient table. F value of 51.584 was statistically significant (Table 8).
Health consciousness and consumer innovativeness were related to development
of purchase intention. The relationship was statistically significant with beta value of
0.429 and 0.177. Health consciousness was more strongly related to green cosmetics
purchase intention development.
 200

Table 4 Total variance explained

Component Initial eigenvalues Extraction sums of squared loadings Rotation sums of squared loadings
Total % of variance Cumulative % Total % of variance Cumulative % Total % of variance Cumulative %
1 4.054 45.041 45.041 4.054 45.041 45.041 2.653 29.481 29.481
2 2.041 22.677 67.718 2.041 22.677 67.718 2.344 26.046 55.527
3 1.236 13.734 81.452 1.236 13.734 81.452 2.333 25.925 81.452
4 0.431 4.784 86.236
5 0.396 4.398 90.635
6 0.306 3.399 94.034
7 0.198 2.195 96.228
8 0.172 1.906 98.134
9 0.168 1.866 100.000
Source Primary data
Extraction method: principal component analysis
S. V. Krishna Kishore et al.
Moderation of Income and Age on Customer … 201

Table 5 Rotated component

Component
matrix
1 2 3
HC1 0.903
HC2 0.849
HC3 0.900
PI1 0.868
PI2 0.912
PI4 0.696
INNO1 0.913
INNO2 0.934
INNO3 0.750
Source Primary data
Extraction method: principal component analysis
Rotation method: varimax with Kaiser normalization

Table 6 Model summarya

Model R R square Adjusted R square Std. error of the Durbin–Watson
estimate
1 0.497b 0.247 0.243 1.86744 1.758
a Dependent variable: Purchase_Intention
b Predictors: (constant), Consumer_Innovativeness, Health_Consicious

Table 7 ANOVAa
Model Sum of squares df Mean square F Sig.
1 Regression 359.778 2 179.889 51.584 0.000b
Residual 1095.018 314 3.487
total 1454.796 316
Source Primary data
a Dependent variable: Purchase_Intention
b Predictors: (constant), Consumer_Innovativeness, Health_Consicious

Table 8 Coefficientsa
Model Unstandardized Standardized t Sig.
coefficients coefficients
B Std. error Beta
1 (Constant) 1.785 0.370 4.820 0.000
Health_Consicious 0.429 0.049 0.435 8.766 0.000
Consumer_Innovativeness 0.177 0.049 0.179 3.605 0.000
Source Primary data
a Dependent variable: Purchase_Intention
202 S. V. Krishna Kishore et al.

5.4 Moderation Analysis of Path with Income and Age

Variables

Moderation analysis was conducted using mean centring and Jeremy Dawson
approach. Direct moderation could result in biased results leading to faulty conclu-
sion. Initially, all variables health consciousness, consumer innovativeness and
purchase intention were mean centred as per their respective grand means. Median
split and mean centring are used as data cleaning methods in moderation analysis.
Median split classifies the whole data set in to 1 and 2. This causes loss of data. Mean
centring concentrates the power in variables resulting in accurate outputs.

5.4.1 Age Interaction on HC’s Path to Purchase Intention

Age was subjected to moderation analysis in the path of health consciousness to

purchase intention. Model summary table had r value at 0.524, r square at 0.275 and
adjusted r square 0.268.

Model summary
Model R R square Adjusted R square Std. error of the estimate
1 0.524a 0.275 0.268 2.77579
a Predictors: (constant), age, health consciousness, Age_HC

ANOVA output is also crucial output for observation to reach final interpretation
of coefficient table. F value of 39.543 was statistically significant with mean square
values of 304.679.

ANOVAa
Model Sum of squares df Mean square F Sig.
1 Regression 914.038 3 304.679 39.543 0.000b
Residual 2411.672 313 7.705
Total 3325.710 316
a Dependent variable: purchase intention
b Predictors: (constant), age, health consciousness, Age_HC

The mean centred variables health consciousness, age and hc combined and age
loaded in coefficients table. Age and health consciousness were combined as an
interaction effect.
Moderation of Income and Age on Customer … 203

Coefficientsa
Model Unstandardized Standardized t Sig.
coefficients coefficients
B Std. error Beta
1 (Constant) 4.305 0.661 6.516 0.000
Healthconsciousness 0.495 0.078 0.423 6.309 0.000
Age_HC 0.128 0.073 0.338 1.756 0.080
Age −0.818 0.647 −0.231 −1.264 0.207
Source Primary data
a Dependent variable: purchase intention

Health consciousness was related to development of purchase intention with the

strength of 0.495. Age_HC, and age variables were not related as there was no
statistically significance. This proved that age had no interaction effect in the path
of health consciousness and purchase intention (Fig. 3).

5.4.2 Age Interaction on CI’s Path to Purchase Intention

Age was subjected to moderation analysis in the path of health consciousness to

purchase intention. Model summary table had r value at 0.436, r square at 0.190 and
adjusted r square 0.182.

Model summary
Model R R square Adjusted R square Std. error of the estimate
1 0.436a 0.190 0.182 2.93333
a Predictors: (constant), innovativeness, age, Age_CI

ANOVA output is a crucial output for observation to reach final interpretation of

coefficient table. F value of 24.504 was statistically significant with mean square
values of 210.840.

ANOVAa
Model Sum of squares df Mean square F Sig.
1 Regression 632.519 3 210.840 24.504 0.000b
Residual 2693.191 313 8.604
Total 3325.710 316
a Dependent variable: purchase intention
b Predictors: (constant), innovativeness, age, Age_CI

The mean centred variables consumer innovativeness, age and CI combined and
age loaded in coefficients table. Age and consumer innovativeness were combined
as an interaction effect.
204 S. V. Krishna Kishore et al.

Coefficientsa
Model Unstandardized Standardized t Sig.
coefficients coefficients
B Std. error Beta
1 (Constant) 4.375 0.587 7.450 0.000
Age 0.995 0.477 0.281 2.085 0.038
Age_CI −0.067 0.052 −0.184 −1.286 0.019
Innovativeness 0.440 0.065 0.475 6.787 0.000
a Dependent variable: purchase intention

Consumer innovativeness was related to development of purchase intention with

the strength of 0.995. Age_CI and age variables were related with statistical signifi-
cance. This proved age had an interaction effect in the path of health consciousness
and purchase intention.
Jeremy Dawson’s two-way unstandardized Excel Macro was used to plot the
moderation effect. The moderation analysis portrayed age’s interaction with in
the path of consumer innovativeness and purchase intention. Age increased the
relationship strength of consumer innovativeness and purchase intention increase.

5.4.3 Income Interaction in the Path of Consumer Innovativeness

to Purchase Intention

Income was subjected to moderation analysis in the path of consumer innovativeness

to purchase intention. Model summary table had r value at 0.424, r square at 0.184
and adjusted r square 0.176.

Model summary
Model R R square Adjusted R square Std. error of the estimate
1 0.428a 0.184 0.176 2.94530
a Predictors: (constant), Income_CI, innovativeness, income

ANOVA output is a crucial output for observation to reach final interpretation of

coefficient table. F value of 23.458 was statistically significant with mean square
values of 203.497.

ANOVAa
Model Sum of squares df Mean square F Sig.
1 Regression 610.491 3 203.497 23.458 0.000b
Residual 2715.218 313 8.675
Total 3325.710 316
Moderation of Income and Age on Customer … 205

a Dependent variable: purchase intention

b Predictors: (constant), Income_CI, innovativeness, income

The mean centered variables consumer innovativeness, income and CI combined

and age loaded in coefficients table. Income and consumer innovativeness were
combined as an interaction effect.

Coefficientsa
Model Unstandardized Standardized t Sig.
coefficients coefficients
B Std. error Beta
1 (Constant) 5.775 0.570 10.132 0.000
Innovativeness 0.280 0.070 0.302 3.974 0.000
Income −0.548 0.526 −0.140 −1.042 0.028
Income_CI 0.099 0.058 0.267 1.703 0.010
a Dependent variable: PurchaseIntention

Consumer innovativeness was related to development of purchase intention with

the strength of 0.280. Income_CI and income variables were related with statistical
significance. This proved that income had an interaction effect in the path of consumer
innovativeness and purchase intention (Fig. 4).
Jeremy Dawson’s two-way unstandardized Excel Macro was used to plot the
moderation effect. The moderation analysis portrayed income’s interaction with in
the path of consumer innovativeness and purchase intention. Income increased the
relationship strength of consumer innovativeness and purchase intention increase.

5.4.4 Income Interaction in the Path of Health Consciousness

to Purchase Intention

Income was subjected to moderation analysis in the path of health consciousness to

purchase intention. Model summary table had r value at 0.538, r square at 0.289 and
adjusted r square 0.282.

Model summary
Model R R Square Adjusted R Square Std. error of the estimate
1 0.538a 0.289 0.282 2.74807
a Predictors: (constant), Income_HC, health consciousness, income

ANOVA output is a crucial output for observation to reach final interpretation of

coefficient table. F value of 42.460 was statistically significant with mean square
values of 320.654.
206 S. V. Krishna Kishore et al.

ANOVAa
Model Sum of Squares df Mean square F Sig.
1 Regression 961.963 3 320.654 42.460 0.000b
Residual 2363.746 313 7.552
Total 3325.710 316
a Dependent variable: purchase intention
b Predictors:(constant), Income_HC, health consciousness, income

The mean centered variables health consciousness, income and HC combined and
income loaded in coefficients table. Income and health consciousness were combined
as an interaction effect.

Coefficientsa
Model Unstandardized Standardized t Sig.
coefficients coefficients
B Std. error Beta
1 (Constant) 3.495 0.610 5.729 0.000
Income 0.237 0.556 0.061 0.427 0.670
Healthconsciousness 0.557 0.074 0.476 7.541 0.000
Income_HC 0.051 0.068 0.113 0.758 0.449
a Dependent variable: purchase intention

Health consciousness was related to development of purchase intention with the

strength of 0.557. Income_HC was not related as there was no statistical significance.
This proved that income had no interaction effect in the path of health consciousness
and purchase intention.

6 Findings

The study revealed that consumer Innovativeness and health consciousness leads to
development of purchase intention. Health consciousness had strong influence on
purchase intention compared to consumer innovativeness. Consumer innovativeness
though had a less influential strength was able to explain the age and income moder-
ation. Promotional strategies can be planned from health conscious perspective. The
paths with beta values mentioned are shown in the below diagram.
Moderation of Income and Age on Customer … 207

Age Income

0.995
Consumer 0.177 0.280 R2 0.24
Innovativeness
Purchase Intention
Towards Organic
Cosmetics
0.429

Health
Consciousness

The satisfied hypothesis statements after the analysis as follows.

H1A: Consumers innovativeness of an individual leads to development of
purchase intention of green cosmetics.
H2A: Health consciousness of an individual leads to development of purchase
intention of green cosmetics.
H3 a: Age moderates of an individual moderate the path of consumer innovative-
ness leading to purchase intention.
H4 a: Income of an individual moderates the path of consumer innovativeness
leading to purchase intention.
Age and Income moderated the path of consumer innovativeness and purchase
intention. Age’s moderation was far stronger than incomes moderation on health
consciousness path to development of purchase intention.

7 Conclusion

Study was able to solve the puzzle of green cosmetics adoption with some
insights. Health consciousness and consumer innovativeness and purchase inten-
tion variables were subjected to regression and moderation analysis. It is found
that health consciousness and consumer innovativeness lead to development of
green cosmetics purchase intention. Health consciousness of an individual compared
to consumer innovativeness drives the development of green cosmetics purchase
intention effectively.
It was also an interesting finding on how consumer innovativeness led to purchase
intention development. If a consumer retains the tendency to be innovative in his/her
preferences, then these individuals are likely to develop purchase intention of green
cosmetics.
Interaction analysis revealed age moderation in the path consumer innovativeness
to purchase intention. Study concludes that elder people have tendency of being inno-
vative in their preferences. Income moderated the path of consumer innovativeness to
purchase intention. Study concludes higher income individuals are more innovative
208 S. V. Krishna Kishore et al.

in their purchase preferences. This may be due to purchasing power leading to more
alternatives.

7.1 Future Scope of Research

Organic cosmetics category has registered less growth. Study provided insights on
development of purchase intention. In the year 2013, European agencies created
COSMOS standards. These standards emphasized on cosmetic manufacturer and
country of origin. As these were shallow indicators to decide organic level of a
product, buyers in retail stores were lost in making a purchase decision. Many prod-
ucts in FMCG sector have been widely banking on “organic” mantra to brand and
sell their products. Despite these clutter in the market sector growth so far is positive.
More studies in the line of recognizing the true nature of organize products taking
statutory guidelines into account can shed more light leading clarity on organic nature
of a product.
According to Cervellon et al., an environmentalist and health conscious consumer
would buy organic product and believe that the purchase has contributed to environ-
ment. They spare no doubt in trusting about the performance of the product. The
determinants and mind-set of health conscious consumers can be separately probed.
The variables were narrowed and selected based on the relevance of Bangalore
demography. Moderation analysis also led to some key insights. More studies can
research on relevant variables in a wider geography that would lead researcher’s
community to a theoretical framework explaining purchase intention development
of green cosmetics.

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Study on Identifying the Opportunities
for Defence Exports Initiative Towards
Make in India Initiative

Aditya Kumar and Mita Mehta

Abstract India aims to make the country amongst the top 5 in the world in aerospace
and military sectors, for which it has set a target of a turnover of USD 26 Bn and
exports of USD 5 billion by 2025 which in FY15-16 was at USD 319 million.
India’s current defence import-to-export ratio stands at 194:1, making it one of the
largest arms importers in the world. Larsen & Toubro (L&T) is a leading Indian
private sector company in defence equipment and services, and it should aim to capi-
talise on the markets in Africa, Middle East and South Eastern countries to help the
Indian government’s target for 2025. This research examined the market opportuni-
ties for L&T in the MENA region, and a go-to-market strategy was formulated. For
formulating the go-to-market strategy for L&T’s defence product exports, parame-
ters taken into consideration were GDP, military spending and arms imports. Data
was collected using internal and external secondary resources. Analysis is done using
standard frameworks, namely Political, Economic, Social, Technological, Environ-
mental, Legal (PESTLE) and Segmentation, Targeting, Positioning (STP) analysis,
and this research is restricted to the above-mentioned frameworks. Countries which
were analysed were Oman, Saudi Arabia, UAE and Egypt.

Keywords Defence · Strategies · Export · New India · MENA · L&T

1 Introduction

L&T is a leading private sector company in defence equipment and services. Its
offerings range from home grown air defence, land-based and naval weapon launch
systems and their modernisation to communication, missile systems and avionics.

A. Kumar · M. Mehta (B)

Symbiosis Institute of Management Studies, Symbiosis International (Deemed) University, Range
Hill, Pune 411020, India
e-mail: [email protected]
A. Kumar
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 215
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_12
216 A. Kumar and M. Mehta

Underwater
Submarines
platforms
Steering Gear and
Stabiliser
Sonar Winch &
Naval Engineering Handling Systems
Helo landing grids
` Systems Helo Handling
System Helo traversing and
Shiplift and security system
Naval Solutions

Handling System
ASW Rocket
launcher
Twin tube rocket
Anti-Submarine
launcher
Triple tube
launcher
Naval Weapons
Dhanush
Systems
Missile launcher Vertical
BrahMos
Inclined
Other Weapons Rocket Launcher
System WM-18
Naval Combat
Management ITacS
Systems

Fig. 1 Naval systems’ capabilities (www.larsentoubro.com)

Apart from these, it also offers solutions such as military bases, storage facilities
and modernisation of current facilities.
Its capabilities in the different fields are highlighted below (Figs. 1, 2, 3 and 4).

2 Objectives of the Study

2.1 Problem Statement

The government of India wants to make India among the top 5 countries in world in
aerospace and military sectors.1
In this regard, it has set a target for the year 2025 to achieve a turnover of $26 billion
and exports of $5bn. To achieve this, majority of the opportunities it can target lies in
Africa, Middle East and South Eastern countries. L&T is one of the leading defence
product and service providers in India and should aim to capitalise on this market.

1 https://theprint.in/security/govt-spells-out-defence-industry-vision-5-billion-exports-by-2025-
leader-in-ai-cyberspace/44005/.
Study on Identifying the Opportunities for Defence Exports … 217

Rocket Launcher Pinaka Multi Barrel Rocket

System Launcher

Missile Launcher
Akash Air Force launcher
System

Medium Range Surface to

Air
Land Weapons Medium range
System Mobile Autonomous
and Long range
launcher
launcher

Universal Launcher

155mm/52 cal tracked SP

Artillery Systems
155mm/52 cal Towed Gun
System
Land Solutions

Bridge Layer Tank

Mobile Bridging System

Land Bridging
Systems
Short Span (5-10m)
Land Engineering Air Drop
Systems Platforms
Modular Bridging
Mooring System

Modernisation of
Land System L70 AA Gun
Upgrades Modernisation of
Zu-23

Fig. 2 Land system solutions

However, India’s current defence import-to-export ratio stands at 194:1, making it

one of the largest arms importers in the world. The Middle East is already dependent
on the USA for majority of its arms supplies,2 whereas Africa is dependent on China
for its defence imports. As per published data for FYI 2016-17, the export value
stood at $166.13 mn compared to $309.52 mn in 2015–16.3
Should the same situation continue the target of achieving $5billion exports could
be difficult to achieve. The Middle East is looking to increase its spending on
defence imports. Therefore, L&T as well other private defence goods and services
manufacturing companies should look to export here.

2 http://bigthink.com/strange-maps/mapping-the-worlds-biggest-weapons-exporters-nil-and-their-
best-customers.
3 http://ddpmod.gov.in/sites/default/files/Annual%20Report%202016-17.pdf.
218 A. Kumar and M. Mehta

Air Defence Fire Control Radar

C Band
Precision Monopulse Tracking
Radar
SBand

Ground Penetrating
Radar Systems

Radar
Dual Technology Mine
Dual Band Ship Borne Tracking
System
Trailer Based
Radar Antenna Platform
Vehicle Based
Stabilised Platform for Shipborne
Radar

Radar Power System

Radar Antenna Frames

Fig. 3 Radar systems

This research examines the market opportunities for L&T in these regions and to
formulate a go-to-market strategy.
For selecting the specific countries to target, key parameters taken into consider-
ation are GDP, military spending and arms imports (Figs. 5 and 6).
As the graphic indicates, in comparison to Africa and Americas, the Middle East
holds a significantly larger share of the arms imported.
Military spending as of last year also points to the fact that the Middle East spends
a significant % of its GDP in comparison to most parts of Africa. However, we need
to consider the size of the GDP as well (Table 1).
On comparison of the GDP of both regions, we can see that the Middle East has
a higher GDP in comparison to most African nations (Fig. 7).4
On the basis of the parameters taken into consideration, the focus will be on the
Middle East region, whereas in the North African region, only Egypt would be taken
into consideration.
The countries examined in this research are:
• Saudi Arabia
• UAE
• Oman
• Egypt

4https://www.sipri.org/research/armament-and-disarmament/arms-transfers-and-military-spe
nding/military-expenditure.
Study on Identifying the Opportunities for Defence Exports … 219

Fig. 4 Missiles and

aerospace. Military
Communications and C4I
Systems (www.larsentoubro.

Missiles and Aerospace

Missiles
com)

Space

Military Aviation

UAV's and Targets

Bulk Encryption Unit(BEU)

IP Nano Radio

Radio over IP(RoIP)

Tactical Services Router

Satcom
Militay Communication and

Chemical Agent Monitors

C4I Systems

Software Defined Radio

MANET

UHF Link Network

UHF Communication System

Tactical Military Network

Long Range Secure Communication on VLF

High Data Rate Modems

220 A. Kumar and M. Mehta

Fig. 5 Comparison to Africa and America (https://www.sipri.org/)

Fig. 6 Military spending as a percentage of GDP (https://www.sipri.org/)

Study on Identifying the Opportunities for Defence Exports … 221

Table 1 GDP of Middle East and African countries

Middle East North Africa
Rank Country GDP (in crores USD) Rank Country GDP (in crores USD)
1 Saudi Arabia 64,643.84 1 Egypt 33,279.10
2 Iran 41,897.67 2 Algeria 15,905.00
3 UAE 34,874.43 3 Morocco 10,360.63
4 Israel 31,774.45 4 Tunisia 4,206.25
5 Iraq 17,489.00 5 Jordan 3,865.47
6 Qatar 15,245.19 6 Malta 1,099.04
7 Kuwait 11,087.56
8 Oman 6,629.33
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=ZQ&year_high_desc=true

Fig. 7 Arms imports by states in the Middle East

3 Methodology

• The method of research for preparing the strategy in this report is quantitative
• The type of data used is secondary with data being collected from
– Internal secondary resources
222 A. Kumar and M. Mehta

– External secondary resources

• The data was analysed using standard frameworks, namely PESTLE and STP
(Fig. 8)

Fig. 8 PESTEL and STP process (http://www.covalconsultores.com/herramientas-sencillas-de-

gestion-i-analisis-pestel/, http://stpsamsungmobiles.blogspot.com/)
Study on Identifying the Opportunities for Defence Exports … 223

3.1 Indian Competitors5

• Tata Aerospace and Defence

They design, produce and manufacture in the field of land mobility solutions,
aerospace, weapons systems, sensors and command control and C4I. It has tied up
with Lockheed Martin Corp. and is pitching for providing aircrafts to the Indian Air
Force. It manufactures airframes for Pilatus Aircraft Ltd. It also manufactures fuse-
lages for the Apache attack helicopters. They also manufacture armoured vehicles
and troop-carrying vehicles.
• Mahindra and Mahindra Ltd
Mahindra and Mahindra Ltd has a group of subsidiaries which design and manufac-
ture defence equipment and services. They cater to the fields of armoured vehicles,
radar systems for fixed and rotary wing aircrafts, naval vessels and ground-based
systems, communication systems and border security solutions.
• Reliance Naval and Engineering Ltd
Reliance Naval and Engineering Ltd is a group company of Reliance Ltd. It has
the capability of designing and manufacturing OPVs, LPDs, frigates, destroyers,
corvettes, submarines and aircraft carriers. It has won a contract from the Indian
Govt. for five OPVs. It also manufactures CMS systems for naval vessels and land
systems.
• Adani Defence and Aerospace
It is a subsidiary company of Adani Group. Adani Defence and Aerospace is a
relatively new entrant in the defence sector. It has tied up with Israel’s Elbit systems
for providing UAVs. It has also tied up with Saab Ab to bid for the contract for
providing aircrafts to the Indian Air Force.
• Mazagon Dock Shipbuilders Ltd
It is the prime shipyard of India. It designs and manufactures naval ships and
submarines. Some of its products include Nilgiri class, Godavari class, Khukri
class, Delhi class, Shivalik class, Kolkata class, Shishumar class and Scorpene class
submarine.
• Cochin Shipyard
It is one of the largest shipbuilding and maintenance facilities in India. It has under-
taken the repairs of INS Viraat and has been contracted by the Indian Govt. to locally
build Vikrant class aircraft carriers.6

5 https://www.livemint.com/Industry/FLQDiv0sdMc2Io61PEaCFL/Inside-Indian-industrys-big-
defence-play.html.
6 https://www.indiannavy.nic.in/content/iac-vikrant-undocks-cochin-shipyard-limited.
224 A. Kumar and M. Mehta

• Hindustan Shipyard Limited7

It undertakes the repair and maintenance of warships and submarines. It has been
contracted by the Govt. in partnership with Hyundai to manufacture five support
vehicles for the Indian Navy.8 It also manufactures onshore and offshore patrol
vessels for the Indian Navy and Indian Coast Guard.
• Garden Reach and Shipbuilders Ltd
It manufactures frigates, corvettes, landing crafts, OPVs and landing ship tanks.
Some if its products include Brahmaputra class, Khukri class, Kora class, Seaward
class, Trinkat class, Bangaram class, Car Nicobar class, Aditya class, Magar and
Shardul class vessels. It has been contracted by the Govt. to build four Kamorta class
corvettes and seven Project 17A class frigates. It has exported a patrol vessel MCGS
Barracuda to Mauritius.9
• Bharat Electronics Ltd10
It manufactures defence communication systems, land-based radars, naval systems,
electronic warfare systems, avionics, weapons systems and C4I systems.

4 Analysis and Interpretation of Data

4.1 Middle East

4.1.1 Saudi Arabia

Current Leader: King Abdullah bin Abdul Aziz Al-Saud.

Currency: Saudi riyal.

Political

Government Structure
• Saudi Arabia is an absolute monarchy. The King is the head of state as well as
head of the government. The Quran is said to be the constitution and is governed
based on Islamic Laws

7 https://www.hslvizag.in/content/49_1_ProductsProfile.aspx.
8 http://www.thehindu.com/news/national/andhra-pradesh/hyundai-hsl-to-build-first-of-five-fleet-
support-ships/article19679125.ece.
9 https://economictimes.indiatimes.com/news/economy/foreign-trade/garden-reach-shipbuilders-

and-engineers-to-export-first-warship-to-mauritius/articleshow/45307196.cms.
10 http://bel-india.in/Default.aspx.
Study on Identifying the Opportunities for Defence Exports … 225

• The King is appointed from amongst the sons of the first King. He is subject to
the approval of the religious leaders. He is also the Prime Minister and presides
over the Council of Ministers
• The complete Government budget is not fully disclosed to the public

Tax Policies
• Corporate income tax rates vary between 25 and 45% based on levels of profit
• Petroleum and other hydrocarbon-producing companies are charged a flat rate of
85% of net operating income
• Tax holiday of 5 years can be granted to foreign companies which enter into joint
ventures with local companies. Agricultural product manufacturers can be granted
10 years

Entry and Trade Regulations

• Foreign companies which want to conduct business can enter the Saudi market in
the following ways:
– Limited Liability Company—Joint venture with Saudi partner.
Minimum capital investment to be SAR 500,000
– Partnership—Entering into a limited partnership.
It is a separate business entity which could comprise of several companies
or individuals.
It has to comprise of at least on general partner and limited partner
– Joint Stock Corporation—At least five shareholders holding transferrable
shares.
At least SAR 2 million for private JSC and SAR 10 million for public
– Branch Office—Wholly foreign-owned branch office
Can engage in any government or private sector work within scope of licence
– Sponsorship and Temporary Commercial Registration (TCR) Sponsorship
by a Saudi company for private sector or a temporary commercial registration
for government sector
If a contract is awarded with the Saudi govt., to a company which doesn’t
have a presence in the above-mentioned forms it has to obtain a TCR.
It also has to appoint a Saudi Service Agent

Economics

GDP fell by ~1.2% in 2016, triggered by falling oil prices. As of 2016, 44% of the
GDP was due to its hydrocarbon sector. Future plans with regard to Vison 2030 aim to
226 A. Kumar and M. Mehta

Table 2 GDP growth rates

Last (2016) Previous (2015) Highest Lowest Unit
GDP growth rate 1.00 −0.20 8.50 −2.00 %
GDP annual growth rate −1.20 −0.40 24.20 −20.70 %
GDP 646.44 654.27 756.35 4.19 USD billion
https://tradingeconomics.com/saudi-arabia/gdp

Table 3 Interest rates

Last (2016) Previous (2015) Highest Lowest Unit
Interest rate 2.25 2.25 7.00 1.50 %
Interbank rate 1.99 1.90 5.24 0.60 %
Deposit interest rate 2.65 2.65 9.04 0.50 %
Reverse repo rate 1.75 1.75 6.75 0.25 %

reduce dependence on hydrocarbon sector and diversify the economy by developing

retail, private and renewable energy sector and defence industries (Table 2).

Interest Rates11
Saudi Arabia hiked its Repo and reverse repo rates by 0.25% points. The reason
is to maintain parity with the US federal rates. Repo and reverse rates indicate the
borrowing and lending ability and the tendency to do the same (Table 3).

Inflation Rate
Saudi inflation rate in the year 2018 reached 3% vs 2017 where it was at about -0.5%.
This is attributed to the VAT introduced in 2018 (Fig. 9).12
Saudi arm imports as indicated in the above graph have shown an uptick over a
period of 17 years. In 2017, the value of arms imports stood at $4.11bn compared to
$2.98bn in 2016.

Defence Offsets
• Saudi Arabia implements its military offset policy on an ad hoc basis. The offset
is at least 30% of the value of the contract
• Foreign companies which are awarded Govt. contracts have to subcontract at
least 30% to be wholly owned Saudi subcontractors subject to the subcontractor’s
ability

11 https://tradingeconomics.com/oman/interest-rate.
12 https://tradingeconomics.com/saudi-arabia/inflation-cpi.
Study on Identifying the Opportunities for Defence Exports … 227

Arms imports in USD Billion

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2002 2004 2006 2008 2010 2012 2014 2016

Fig. 9 Military expenditure (https://data.worldbank.org/indicator/MS.MIL.MPRT.KD)

• The primary goals of programme are technology acquisition, economic growth

and diversification towards sectors such as petrochemicals, health care and
education
• It follows an indirect offset approach13,14

Social

Literacy Rate
• As of 2013, Saudi literacy rate stood at ~95%.
• For females aged 15 and above, literacy rate stood at 91.36%
• For males aged 15 and above, literacy rate stood at 96.5%15
• Median age of males was 27.9 and females 26.216
• As per Saudi Arabia General Authority for Statistics, total female population was
49.05% and male population at 50.95%
• Unemployment rate as of 2016 stood at 6% increasing by about 0.2% year on
year (Figs. 10 and 11)

Technological

Saudi Government as a part of its Vision 2030 is investing heavily in indigenous

technology development. To this effect, it has an independent scientific organisation

13 https://idsa.in/jds/3_1_2009_ASurveyofSuccessfulOffsetExperiencesWorldwide_AMitra.
14 http://www.mepc.org/journal/offsets-middle-east.
15 data.worldbank.org.
16 http://worldpopulationreview.com/countries/saudi-arabia-population/.
228 A. Kumar and M. Mehta

Saudi Literacy Rate

100
90
80
70
60
50
40
30
20
10
0
1990 1995 2000 2005 2010 2015

Fig. 10 Literacy rate of Saudi (https://www.indexmundi.com/facts/saudi-arabia/literacy-rate)

(KACST). It has also set up several universities with the curriculum dedicated to
science and technology with curriculum ranging from biotechnology to geophysics.
As of 2016, Internet users stood at 64.7% of the population contributing to about
0.6% of the world’s Internet users.
Online content restriction is regulated by the Saudi government with content such
as pornography, gambling and anti-government opinions completely banned.

Environmental

Energy Consumption
• Saudi has the capacity to produce 318 bn kWh energy where its consumption
accounts for 292.8 bn kWh
• Per capita consumption stands at 9072 kWh which is almost 68% more than per
capita Europe consumption
• It is capable of 604.37 bn kWh using fossil fuels and 604.88 mn kWh using
renewable energy

Environmental Protection Laws

• General Authority of Metrology and Environmental Protection is the body of
Saudi govt. which handles all environmental policies
• Due to the abundance of oil, fossil fuel consumption for energy generation is
high. Also due to the subsidies provided carbon emission has been increasing
substantially17
• KAUST, an institute created by the Govt., is working on a model where energy
usage is supported only by nuclear and renewable sources

17 https://bit.ly/2K5AEw0.
Study on Identifying the Opportunities for Defence Exports … 229

Fig. 11 Population demographics

Legal

Competitive Regulations
• The competition law came into effect in 2005. It is not applicable to Govt.
corporations and fully owned state entities
• The law aims at avoiding monopolistic practices to provide fair competition
– Regulating merger and acquisitions which results in a dominating position in
the market
– Illegalising the abuse of dominant position by a firm (40% of total sales for
12 months)
230 A. Kumar and M. Mehta

– Penalties include
A fine of up to SAR 5 mn, multipliable on reoccurrence
Daily fine of up to SAR 10,000 until violation is removed
– The government can prohibit a bid on the basis of its low price if the bid is
35% below the prevalent prices

Employment Regulations
• A written contract is to be provided to employees. In its absence any term of the
agreement is interpreted in favour of the employee
• Number of working hours per week in general is 8 and 6 h in the month of Ramzan
• As per the Saudisation plan, a certain percentage of Saudi nationals are to be
employed by private sector firms
– Certain positions such as HR, security guards, treasurer and receptionist are
restricted to Saudi nationals
– As of 2016, policies have changed to include a point-based system. Points
are awarded on the basis of number of Saudi staff, average salary, number of
women staff amongst several other criteria18

Existing Players
• Advanced Electronics Company (AEC)

AEC was established in 1988 and has offices in Riyadh and Dammam. Its busi-
ness areas are avionics and electronics, electronic warfare, command and control,
communication.
• Airbus Group
Airbus which is a part of the Eurofighter consortium is developing a local industrial
base in Saudi for maintenance, overhaul and modernisation programmes.
• Al Salam Aerospace Industries
Established in 1988, it undertakes maintenance, repair, overhaul and modernisation
of civil and military aircrafts. It is located in Riyadh. Primarily involved in the F15S
to F15S-A modernisation program
• BAE Systems Plc.
BAE are involved in training the Saudi nationals in high-skilled fields. It also provides
military solutions in the area of IT, electronics and security systems.

18 https://bit.ly/2rvFUBn.
Study on Identifying the Opportunities for Defence Exports … 231

• Boeing
Boeing has a joint venture with Saudi Arabian Military Industries. It is the sole
provider of sustainment services of all planes and helicopters of the Saudi military
fleet.
• Lockheed Martin
Saudi purchased its first C-130J Hercules in 1965. Since then Lockheed Martin as
a result of several joint ventures and partnerships with various firms has established
itself in Saudi.
Some of the significant ones are Lockheed Martin and TAQNIA for manufacturing
two communication satellites. As well as facility in Saudi where the advanced sensor
system of the F15’s would be repaired.
• Northrop Grumman Corporation
Northrop Grumman provides services in the field of defence, security, cyber secu-
rity and communications. Significant services/products being Longbow Fire Control
Radar for AH-64 helicopter. They also work with Aramco for protection of sites.
They have a joint venture with NG Mission systems Arabia and Vinnell Arabia.
As a part of its Vision 2030, Saudi aims to localise production of defence equip-
ment from 2 to 50%. As a result, it is backing Saudi Arabian Military Industries
(SAMI) (Fig. 12).

Opportunities

Self-propelled Artillery
With the M-109 (early 1960-present), M-60 Patton (1960–1987), AMX-GCT (1977-
present) being manufactured about 30–40 years ago, it provides an opportunity for
defence manufacturers to provide alternatives and upgrades to these.
The M-109 is of US origin and has multiple variants with the latest being the
“Paladin” currently being used by the US army. As the Saudi Army currently employs
about 150 M-109 s, it provides an opportunity for upgrades to the existing vehicles
to bring them up-to-speed with the current technologies.19

Tanks
The M-60A3 was produced by the USA from 1960–1987. The Saudi army has
currently 450 of them. Raytheon, the manufacturer, is providing an option to upgrade

19http://www.dsca.mil/major-arms-sales/kingdom-saudi-arabia-155mm-m109a6-paladin-med
ium-self-propelled-howitzer-system.
232 A. Kumar and M. Mehta

Fig. 12 Saudi military capacity. Source https://bit.ly/2kg2Rpi

these tanks to make them up-to-date and competitive with the modern tanks. This
provides an opportunity to upgrade these.20

20 https://www.popularmechanics.com/military/a21009/raytheon-wants-to-hot-rod-old-patton-
tanks/.
Study on Identifying the Opportunities for Defence Exports … 233

Saudi Army owns about 450 M1A2 tanks. As they have requested for acquisi-
tion of M1A2S tanks and upgrade packages for the M1A1/A2 tanks. It provides an
opportunity to upgrade.21

Reconnaissance Aircraft
US DOD announced the modernisation programme for Saudi E-3A AWAC planes.
This provides an opportunity to upgrade these.22

Attack Aircraft
The Pentagon announced the modernisation of Saudi F15S to F15S-A configuration.
This provides an opportunity to upgrade these (Fig. 13).23

Foreign Relations

Iran
• Iran and Saudi Arabia have a very strained relationship, despite being Muslim
dominated countries. Iran consists primarily of Shia Muslims, whereas Saudi
consists of Sunnis. Both the nations want to have Islamic leadership over the Gulf
region
• The relations have further strained over Syrian and Iraq war. Iran is also said to
support extremist groups such as Hezbollah, Hamas and the Houthis which have
anti-Saudi and anti-Sunni motives
• Iran also opposes the monarchy system, saying that it goes against the teachings
of Islam

Israel
• Saudi is a supporter of the creation of Palestine as a separate state and wants Israel
to move out of the areas it occupied post the Yom-Kippur war. They are of the
opinion that Palestinian Arabs should be allowed to back to Israel and reclaim the
lands they held before. Israel which believes in democracy opposes this as this
would lead to the majority population being Arabs and ceasing of Israel’s identity
as a Jew state

21 http://www.dsca.mil/major-arms-sales/kingdom-saudi-arabia-m1a2s-saudi-abrams-main-battle-
tanks-and-m88ala2-heavy.
22 http://www.arabianaerospace.aero/boeing-s-240-million-saudi-awacs-contract.html.
23 http://www.arabianaerospace.aero/saudi-air-force-to-get-upgraded-f-15s-as-part-of-modernisa

tion-deal.html.
234 A. Kumar and M. Mehta

Fig. 13 Brief history

Study on Identifying the Opportunities for Defence Exports … 235

China
• Diplomatic relations between China and Saudi Arabia was established in 1990.
The relations between the two countries grew stronger in 2000
• Saudi was the largest contributor when the Sichuan earthquake occurred in 2008.
• By 2010, China became the largest trading partner of Saudi

India
• Saudi is one of the largest oil suppliers to India. Saudi employs a majority of its
labour force from India to work in the construction and oil business
• It also contributed to India in the 2001 earthquake

Pakistan
• The relations between Pakistan and Saudi have been mostly friendly. Saudi
supported Pakistan when Bangladesh wanted to separate from it
• It is known as the closest non-Arab ally of Saudi Arabia. Pakistan plays an impor-
tant role in the development of Saudi Arabia. It provides assistance in the field of
technology, science and infrastructure development
• Saudi also provided asylum to Nawaz Sharif while he was exiled from Pakistan
for 8 years

United States
• Saudi and the USA have had relations since 1930s when the USA recognised the
government of King Saud. The USA has helped train the Saudi military and has
had full diplomatic relations since 1930
• Relations between USA and Saudi started to strain in 2001 after the World Trade
attacks. The major reason being that majority of the terrorists had Saudi roots.
• The relations were further strained when Saudi refused to support USA in the Iraq
war. Under the Obama administration, USA relations with Iran and the nuclear
deal was a major reason of worry for Saudi

Segmentation

Based on its proximity to countries with which it has conflicts in the region with
which it shares its borders such as Yemen, Iraq, Iran and Israel, Saudi Arabia invests
heavily on its defence and offensive capabilities. It has a large coastline which is close
to strategic entities such as the Gulf of Aden and the Persian Gulf. It is amongst the
largest Gulf countries and enjoys a major decision-making role in the GCC (Fig. 14).

Behaviour
Saudi Arabia in terms of arm imports has become the largest in the world as of 2016
(Source: sipri.org). Ninety-eight percent of the arms imported were from USA and
236 A. Kumar and M. Mehta

Fig. 14 Geography. Source https://sites.google.com/site/kjkmlt/saudi-arabian-flag

Europe. This is further supported by the fact that most of the major arms of Saudi
are either of US or Europe origin. With regard to military expenditure in a span of
10 years, Saudi arms imports have increased by about 200%.

Demographics
Saudi is dominated by Sunni Muslims who comprise of about 90% of the population.
It follows the ideology that the government should only comprise of Sunni. Thus, it
is involved in the ongoing conflicts in Syria and Yemen which it believes are being
influenced by Iran which is a Shia governed country.
• A point for concern for India in terms of trade is Saudi’s relationship with Pakistan
and its opinion of the state of Kashmir. However, several visits by the current
Government has caused the opinion to shift

Targeting

Criteria Size
With several factors contributing to the hike in military spending such as the insta-
bility in Yemen and Iraq, extremist tendencies of ISIS and Al Qaeda and the growing
influence of Iran, military spending has shown an upward trend (Figs. 15 and 16).
Based on the above graph which shows the military imports of Saudi, it shows
that it has a huge market. As of 2017, its arms imports stood at $4.111 billion. As
per SIPRI reports, Saudi is ranked as the second highest arms importer after India.
Study on Identifying the Opportunities for Defence Exports … 237

Fig. 15 Saudi Ministry finance. Sourcehttps://bloom.bg/2wAq524

Arms imports in USD Billion

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2002 2004 2006 2008 2010 2012 2014 2016

Fig. 16 Arms imports. Source data.worldbank.org

Market
Majority of Saudi’s aviation requirements including civil and military fixed wing and
rotary aircraft are met by Boeing, Airbus, BAE and Northrop Grumman as shown
in the analysis. Opportunities for entering the arms market are in the naval and land
forces.
The Government has set a military budget of SAR 210 bn for the year 2018. Addi-
tionally, SAR 26.5 bn is allocated for improving military readiness and capabilities
by the local defence industrial sector.
It has appointed the government body general authority for military industries
as the major source for military procurement. The focus as per Vision 2030 is also
238 A. Kumar and M. Mehta

Fig. 17 Trade imports (https://atlas.media.mit.edu/en/profile/country/sau/)

shifting towards local production rather than imports. This also provides an oppor-
tunity to establish a long-term market in the region. One drawback of the move is
transfer of knowledge and technology (Fig. 17).
As we can see from the above graphic, in terms of trade (imports), USA, Europe
and China dominate in terms of % of total imports.
As of now, the manufacturing of defence and military equipment doesn’t permit
foreign investment. The Saudi govt. handles the import and clearance of customs as
part of the sale and purchase of arms.

Positioning

L&T has an established presence in Saudi Arabia in the construction field, having
built gas production deck modules for Aramco and one of the longest transmission
lines for the government.
However, in terms of defence equipment none of the Indian companies have
achieved any significant success.24 Catering to the products manufactured by L&T,
naval and land forces could be the focus points. Offering in-house solutions should
be the way forward. With in-house built interceptor boats and patrol vessels already
in service with the Indian Navy and Coast Guard and the K9 Vajra-T howitzers with
the Indian Army, solutions like these could be offered.

24 https://www.defenseindustrydaily.com/cat/geographical-focus/asia/asia-india/.
Study on Identifying the Opportunities for Defence Exports … 239

Go-to-Market Strategy

• The analyses suggest that for an entry into the Saudi market, a partnership with a
local firm will have to be formed
• In the case of winning a contract on tender allocation, a Temporary Commercial
registration can be applied for
• As a part of the defence offset, at least 30% has to be subcontracted to local
companies, having a local company as a partner is a feasible approach
• In order to tackle the offset policy, a team should be set up to look into the possible
initiatives which can be taken such as upskilling the Saudi nationals and training
them
• In this case, partnering with an e-learning institution is a feasible idea
• This would help with the Saudisation programme as well which demands a certain
% of the employees to be locals
• L&T should focus on the naval and land forces based on its product portfolio
• Positioning has to be as a solutions provider
• From L&T’s perspective, Interceptor Boats and OPVs should be the products on
offer as Saudi doesn’t have a strong naval presence25
• Another offering could be the modernisation of self-propelled artillery; M-109
and AMX-GCT and M1A2, M-60A3 tanks for which Saudi is planning upgrades26

4.1.2 United Arab Emirates

Current Leaders: Sheikh Khalifa bin Zayed.

Currency: United Arab Emirates dirham.

Political

Government Structure
• The UAE is an absolute monarchy. The ruler of Abu Dhabi is the President of the
Federation. The ruler of Dubai serves as the Prime Minister of the federation
• The Legal system is derived from the Civil Law System as well as Islamic (Sharia)
laws
• Each Emirate has its own ruler who runs his own local government. For the
Seven Emirates, appointed amongst them are the President, Vice President, Prime
Minister, Cabinet Ministers and a 40-member assembly known as the Federation
National Council. The Supreme Court operates as an Independent Judiciary

25
https://bit.ly/2ICNLIK.
26
https://oxfordbusinessgroup.com/overview/forward-facing-defence-increased-spending-and-
modernisation-under-way-sector-continues-expand-and.
240 A. Kumar and M. Mehta

Table 4 Rates of GDP

Last (2016) Previous (2015) Highest Lowest Unit
GDP annual growth 3.00 3.40 9.80 −5.20 %
rate
GDP 348.74 357.95 403.20 2.85 USD billion
GDP per capita 40,864.20 40,159.60 113,682.00 35,049.10 USD

Tax Policies
• As per Index of Economic Freedom UAE ranks 10th in the world with a score
of 77.6. The index takes into account Govt. integrity, Govt. spending, Business,
Trade and Investment freedom amongst several factors
• UAE doesn’t charge corporate tax except for oil companies, production companies
and foreign banks
• Oil and gas exploration companies are taxed on the basis of their working incomes.
Varying from 10 to 55%
• As of 2018, UAE has implemented VAT at rate of 5% which is overseen by the
Federal tax authority

Trade and Entry Mode Regulations

• For doing business in UAE if not a part of the free zone, a foreign business should
have either:
– UAE national sponsor
– Agent
– Distributor
• For a government contract, a company should be pre-qualified and registered
• To bid for federal projects, the individual should be a UAE national or a company
with at least 51% shares held by UAE nationals
• The above won’t be applicable for defence contracts which local companies cannot
fulfil
• There is no formal requirement to subcontract from local companies

Economics

As of 2016, GDP annual growth rate fell by about 0.4% as a result of falling oil
prices.27 As per UAE Central Bank’s forecast estimated growth was predicted at
about 1.6% due to the decrease in production of oil. As a result of a robust non-oil-
based sector and rising oil prices, the GDP growth is said to be at about 3.6% for
2018. This helps us get an idea about their spending capability (Table 4).

27 https://tradingeconomics.com/united-arab-emirates/gdp.
Study on Identifying the Opportunities for Defence Exports … 241

Table 5 Interest rates

Last (2018) Previous (2017)
Interest rate (%) 2.00 2.00
Interbank rate (%) 2.46 2.46
Foreign exchange reserves 326 348
(AED billion)

InflaƟon Rate
14

12

10

0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 2015 2017

Fig. 18 Inflation rates (https://bit.ly/2ILaIsx)

Interest Rates
UAE Central Bank hiked the interest rates by ~25 basis points to 2%. The highest
since 2010. This is said to be in accordance with the hike by US federal reserves
(Table 5).28

Inflation Rate
The inflation rate doubled to 4.8% in 2018 from 2.7% in 2017 as a direct result of
the VAT introduced by the UAE govt. Transport costs increased by about 12.8% as
gasoline prices increased (Fig. 18).29

Military Expenditure
With its involvement in various conflicts such as Syria, Yemen and Iraq as well as
its proximity to Iran, UAE has shown an uptick with regards to arms imports. With
plans to acquire F35’s from the USA and other latest defence equipment, the rate of
arms imports as well as military expenditure is predicted to rise (Fig. 19).30

28 data.worldbank.org.
29 https://www.khaleejtimes.com/uae-inflation-rises-with-new-tax-in-jan.
30 https://wapo.st/2IMkBGm.
242 A. Kumar and M. Mehta

Fig. 19 Military expenditure (https://www.statista.com/statistics/677220/uae-arms-imports/)

Defence Offsets31
• A foreign defence contractor who is awarded a contract worth more than $10 mn
has to participate in the Tawazun Economic Programme.
• Any defence contract when awarded is linked to the signing of TEP agreement.
The defence contractor would have an obligation of 60% of the supply contract
value towards sectors such as aerospace, defence, cyber security or autonomous
systems with capabilities including designing, engineering, manufacturing, etc.
• The project could focus on final or subassembly, key technical services or major
components
• The obligations should be fulfilled over a period of seven years
• The said obligations are fulfilled by earning input (30% of total obligations) and
output credits (70% of total obligations)
• Credits can be earned through
– Joint ventures—51–49% partnership (local–foreign). Input credits are cash,
capabilities or assets transferred to UAE economy. Output credits are profits,
and jobs for locals
– Work package—Providing capabilities or supply contracts to established UAE
company. Input credits are same as above, and output credit is the value of
contract to the UAE company

31 https://tec.tawazun.ae/the-program/.
Study on Identifying the Opportunities for Defence Exports … 243

Fig. 20 Literacy
expenditure (https://bit.ly/ Adult Literacy Rate
2Gexdkm)
100
80
60
40
20
0
1970 1980 1990 2000 2010 2020

Social

Literacy Rates
• As of 2015, adult literacy rate stood at 93%
• Male literacy rate as per UNESCO report 2015 stood at 93.1%
• Female literacy rate stood at 95.8% (Fig. 20)

Population Demographics
UAE as a popular destination for work and its tax laws attracts nationals from all
countries. To an extent that majority of the population of the UAE is comprised of
Indians, Pakistanis and Bangladeshis. The Emirati population stands at about 11%
of the entire population of UAE (Figs. 21 and 22).
• Of the entire population females comprise ~28% and males ~72%
• Median age of males stood at 32.1 years as of 2017
• Female median age stood at 25 years32

Technological

• Amongst the Emirates, Dubai is considered the most developed. It aims to be the
smartest city by 2020
• One advantage UAE has over other developed and developing nations is its
spending power. UAE has launched four satellites between 2009 and 2013
• UAE has a nuclear power plant in the city of Abu Dhabi
• It ranks 31st on the Global Innovation Index

32 https://www.cia.gov/library/publications/the-world-factbook/fields/2177.html.
244 A. Kumar and M. Mehta

Fig. 21 Population demographics (http://worldpopulationreview.com/countries/united-arab-emi

rates-population/)

Environmental

Energy Consumption
• UAE has an annual consumption of 119.70 bn kWh with its own consumption
amounting to 110.6 bn kWh
• Per capita consumption stands at 11,931.5 kWh in comparison to Europe’s
5412.25 kWh
Study on Identifying the Opportunities for Defence Exports … 245

Fig. 22 Comparing population with other nations. http://worldpopulationreview.com/countries/uni

ted-arab-emirates-population/

• Of this the potential energy production value due to fossil fuels stands at 251.9 bn
kWh and renewable energy at 1.21 bn kWh

Environmental Protection Laws

• Each Emirate has its own policy on electricity and are enacted independently
• There aren’t any federal laws in place for governing renewable energy
• With energy demands growing by about 9% every year, Dubai’s Integrated Energy
Strategy Plans to reduce CO2 emissions by about 30% by 2030
• ADWEA and DWEA are the regulatory bodies for power supply, transmission
and distribution of electricity and water in Abu Dhabi and Dubai, respectively
• FEWA is the regulatory body for the northern emirates
246 A. Kumar and M. Mehta

Legal

Competitive Regulation
• The competition law doesn’t apply to SME’s, specific regulated sectors with own
competition rules and Federal or Emirate establishments.
• As per the law, the businesses shouldn’t engage in the following:
– Restrictive agreements such as price fixing, collusion in tenders and offers,
hoarding, excluding new market entrants, etc.
– Any establishment occupying a dominant position (40% of total transactions)
shouldn’t misuse its position such as influencing selling conditions, restriction
on dealing with others, falsifying price information, etc.
– All acquisitions and mergers which result in a business holding a dominant
position have to be approved by the Ministry of Economy

Employment Regulations
• Employers and employee need to enter into two written contracts. The short-form
contract is filed with the Labour Ministry for employment visa and work permit.
The long-form contract provides the terms and conditions in detail
• Any foreign company which wants to hire and conduct business has to be licenced
and established in the UAE
– Foreign employees have to be sponsored by the company for work permits and
residence visa
– Foreign companies not registered in the UAE can hire an independent
contractor for undertaking work

Existing Players

• Emirates Defence Industries Company

EDIC MRO Land: It was established in 2006 and is involved in the maintenance,
repair and overhauling of the equipment and components.
EDIC Geospatial services: Mapping, surveying and geospatial services.
EDIC Tech Services: It is a merger of three companies Naval Advanced Solu-
tions, Secure Communications and C4 Advanced Solutions. It deals with importing
equipment, services and technology.
• Textron
Textron and its sister company Bell have set up offices in Abu Dhabi for maintenance
and providing in country training for its equipment, primarily the Bell Helicopters
and C17 Globemaster.
Study on Identifying the Opportunities for Defence Exports … 247

• Lockheed
Lockheed Martin was established in 1995 in the UAE. It takes care of the mainte-
nance, repair and overhaul of Block 60 F16, THAAD Air Defence System and Black
Hawk helicopters.
• Boeing
Boeing established its defence, space and security office in 1999. UAE operates the
AH-64 Apache and CH-47 Chinook helicopters. Boeing looks after the maintenance,
repair and overhauling as well as marketing and sale of its products in Abu Dhabi
(Fig. 23).

Opportunities

Self-Propelled Artillery
UAE purchased M-109 in the year 1999 after which it hasn’t undergone modernisa-
tion. This provides an opportunity for offering upgrades for these.
K9 Vajra-T guns could also be offered as a solution (Fig. 24).

Foreign Relations

Egypt
UAE since its creation has had strong ties with Egypt. It ranks first amongst the Gulf
countries who invest in Egypt. They have close political, cultural and economic ties.

USA
USA and UAE have strong diplomatic relations. This relationship was further
strengthened when UAE-aided USA during the Persian Gulf War. To an extent
where USA has the maximum number of ships after its own. They signed a nuclear
co-operation deal under the Bush Administration which was further endorsed by the
Obama administration. As a part of the Saudi Navy Expansion programme, a contract
has been signed with Lockheed Martin for four Freedom class frigates.

Iran
Iran and UAE share very close economic relations. There is a matter of dispute over
islands which Iran claims to be theirs.
248 A. Kumar and M. Mehta

Fig. 23 UAE military capacity (https://bit.ly/2IpfOHr)

India
UAE and India share close trade ties, which date back centuries. Both are each other’s
main trading partners.
With its open trade policies and growth opportunities, Indians make up the second
largest ethnic group in UAE which contributes to roughly 30% of its population.
Study on Identifying the Opportunities for Defence Exports … 249

Fig. 24 UAE history

Pakistan
Pakistan and UAE share very close relations based on the shared faith and religion.
UAE is a major source of economic assistance in Pakistan.
Pakistan was the first country to officially recognised UAE as an independent
nation. Pakistan has a majority of its expatriates living in the UAE.
250 A. Kumar and M. Mehta

Fig. 25 Geography of Saudi Arabia

France
France and UAE have a defence co-operation agreement. It is one of the largest
exporters of defence goods and services to UAE.
This agreement was primarily signed to reduce its dependence on the USA. France
has a permanent military base in the UAE.

Segmentation

Geography
UAE is a part of the Saudi-led coalition to resolve the conflicts in Syria, Yemen and
Iraq. It is also located close to Iran which is considered to be an enemy country by
the GCC. It is located close to strategic trading routes such as the Gulf of Oman and
the Persian33 Gulf (Fig. 25).

33 https://www.vecteezy.com/vector-art/126944-uae-map-vector-boundary.
Study on Identifying the Opportunities for Defence Exports … 251

Behaviour
According to SIPRI data, UAE increased their major arms imports by 63% in 2012–
16 from 2007 to 11. Majority of the arms owned by UAE are of US or European
origin. About 62% of the major arms owned by UAE are of US origin.

Demographics
UAE’s population is dominated by Indians, Pakistanis and Bangladeshis. The Emirati
population constituted about 11% of the entire population. Arab is the official
language of UAE. Majority of the population is concentrated in Abu Dhabi, Dubai
and Sharjah.

Targeting

Criteria Size

Arm Imports in USD Billion

2.5

1.5

0.5

0
2000 2002 2004 2006 2008 2010 2012 2014 2016

As the graph indicates in a span of about 20 years, on average UAE has spent
about $1.014bn a year on major arm imports.34 As of 2016, UAE contributed to
about 1.3% of the world’s military expenditure compared to 36% by USA and 3.8%
by Saudi Arabia. With its participation in ongoing conflicts in Yemen and Syria, an
upward trend in spending can be expected.

Market
A majority of the major arms in possession of the UAE is either of US or European
origin. In terms of fixed and rotary wing aircrafts, land-based vehicles, US and Europe

34 https://data.worldbank.org.
252 A. Kumar and M. Mehta

Fig. 26 Other nations exports (https://atlas.media.mit.edu/en/profile/country/are/)

are the leaders. USA accounts for 62% of arms imports of UAE for 2012–16. Russia
has also started to gain a share of the market accounting for about 2.5% of UAE arms
imports for the same period (Fig. 26).
As per the above graphic, India is the major export destination for UAE. Whereas
in terms of imports, India accounts for 10% of UAE’s total imports, ranking 3rd after
China and USA. With both countries looking to establish local defence production
capabilities, UAE could become a destination for India for long-term presence in the
Middle East and African countries.

Positioning

Following a similar trend as Saudi Arabia, majority of the arms imports of UAE are
from USA and Europe. In order to gain a foothold in the UAE market, partnering
with a US- or Europe-based defence firm would be essential.
As 60% of the supply contract has to be invested in UAE (for order >$10 mn), a
training establishment for the nationals or for making the subcontractors able could
be created.
In terms of offerings, L&T should approach with a naval vessel-based mind-set
and to be cost competitive. Fast-attack crafts and offshore patrol vessels along with
maintenance, repair and modernisation is a likely approach.
Study on Identifying the Opportunities for Defence Exports … 253

Go to Market Strategy

• UAE is relatively the most liberal amongst the Gulf states when it comes to ease
of doing business. With its relaxed entry regulations as well as tax policies, it has
resulted in the setting up of branches or offices by several businesses
• As per the PESTEL analysis, a foreign firm looking to enter the UAE market
needs to have either an UAE sponsor, agent or distributor. Partnering with local
firm could be a good approach
• The defence offset accounts for 60% of the value of the contract, partnering with
a local company could be an approach
• A team should be set up to for examining the possibilities for offset opportunities
• Modernisation for M-109 howitzers could be an approach which have been in
service since 1999 and haven’t undergone any upgrades
• Another approach could be offering the K9 Vajra-T

4.1.3 Oman

Current Leader: Qaboos Bin Said Al Said.

Currency: Rial.

Political

• Oman is an absolute monarchy. The Sultan of Oman is the head of the state as
well as the Govt.
• The Sultan also serves as the Prime Minister, Minister of Defence, Foreign
Minister, Supreme Commander of the forces and Chair of Central Bank
• It has no legislature or political parties
• There are three court levels: Elementary, Court of Appeal and Supreme Court

Tax Policies
• Corporate tax rate is set at 15%, increased from 12% in 2017
• A VAT of 5% to be implemented by all the members of the GCC is to be
implemented in 2018
• Tax exemption of OMR 30,000 has been eliminated in the latest budget (2018)
• Companies in the field of oil exploration are charged 55% from the revenue
generated from the sale

Entry and Trade Regulations

• Foreign companies can establish operations in Oman in the following ways
– Limited Liability Company—Omani partner with 30% shares
254 A. Kumar and M. Mehta

Table 6 Oman interest rates

Last (2016) Previous (2015) Highest Lowest Unit
GDP annual growth −5.10 −14.10 13.10 −14.10 %
rate
GDP 66.29 69.83 81.03 0.04 USD billion
GDP per capita 17,071.00 17,132.10 19,408.60 713.67 USD

Minimum share capital of OMR 150,000 is required to register an LLC. At

least two shareholders are required
– Joint Stock Company—Omani partner with 30% shares
Companies whose shares are not offered for public subscription are called
privately held JSC. Min share capital required is OMR 500,000
Companies whose shares are offered for public are called publicly held JSC.
Min share capital required is OMR 2,000,000
– Branch—Only to execute a contract with the govt. or related bodies.
Registration is limited for the period of contract
A company could be allowed to register without a contract if the Council
of ministers deem it to be of national importance
– Commercial Agency—Foreign companies without commercial licence can
do business through commercial agents
– Commercial Representative Office—Purpose of marketing and promotion
of products or services
Not permitted to sell products or services or engage in other forms of
commercial activities
To aid importing products and services

Economical

Oman in the years 2015 and 2016 went through a recession owing to the fall in prices
of crude oil. This was after a 5-year growth period where crude oil prices followed
an upward trend (Table 6).35

Interest Rates
Oman Central Bank hiked rates on capital deposits from 0.5 to 1.5% in 2018 as a
result of rise in market interest rates which in turn were in response to hikes in US
rates (Table 7).36

35 https://tradingeconomics.com/oman/gdp.
36 https://tradingeconomics.com/oman/interest-rate.
Study on Identifying the Opportunities for Defence Exports … 255

Table 7 Oman interest rates’ comparison

Last (2018) Previous (2017) Highest Lowest Unit
Interest rate 2.41 2.38 5.00 1.00 %
Deposit interest rate 3.19 1.90 9.04 1.90 %

Arms Imports in USD Billion

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2001 2003 2005 2007 2009 2011 2013 2015 2017

Fig. 27 Military expenditure of Oman

Inflation Rates
As of April 2018, the inflation rate has risen by about 0.58% over the same period
in 2017. This is due to the increase in cost of segments such as education, transport
and furnishing and household equipment. Others reasons were higher interest rates
and removal of subsidies amongst several.37

Military Expenditure
Oman is amongst the few members of the GCC which has remained largely free
from internal and external conflicts. It hasn’t participated in the Saudi-led coalition
in Yemen. It shares strong diplomatic and military relations with Iran as well. It
hasn’t joined the Arab states either in severing relations with Qatar (Fig. 27).38

Defence Offsets
• The offset obligations are applied through the partnership for development
program. The obligations are applicable when a military or security equipment
contract exceeds OMR 5,000,000. The obligations are 50% of the value of
contracts towards direct or indirect offsets

37 https://knoema.com/atlas/Oman/Inflation-rate.
38 https://bit.ly/2IPlEFx.
256 A. Kumar and M. Mehta

Fig. 28 Adult literacy rate

in Oman (http://worldpopu Adult Literacy Rate
lationreview.com/countries/
oman-population/) 96
94
92
90
88
86
84
82
80
2002 2004 2006 2008 2010 2012 2014 2016

• The Omanisation programme requires at least 35% of the workforce to be Omani

nationals compulsorily.39

Social

Literacy Rates
• As of 2016, female youth literacy rate stood at 98.98%
• Male youth literacy rate stood at 98.51%
• For adults, female literacy rate was at 86.04% and male at 96.63%40

Population Demographics
The official language spoken in Oman is Arabic. About 33% of the entire population
lives in Muscat. The currency in use is the Oman Rial (Figs. 28 and 29).
• The median age of Oman is 25.4 years
• Male median age is 26.5 years
• Female median age is 24 years

Technological

• Oman in 2016, launched a $200 mn Oman technology fund to invest in start-ups

locally and abroad
• Oman is ranked 80th in the Global Innovation Index with a score of 31.8. In
comparison, UAE is ranked 31st, Qatar 49th and Saudi 55th
• Internet content is monitored by the Govt., thus video chat services are not
available

39 https://oapfd.om/en/PFD/Pages/PFDRegulation.aspx.
40 https://knoema.com/atlas/Oman/.
Study on Identifying the Opportunities for Defence Exports … 257

Fig. 29 Population demographics of Oman

Environmental

• Total energy production capacity of Oman is 30.79 bn kWh

• Own consumption is at 27 bn kWh with a per capita consumption of 6242.14 kWh
• It is capable of producing 68.93 bn kWh of energy using fossil fuels
258 A. Kumar and M. Mehta

Environmental Protection Laws

• The UN environment programme credited Oman with having a good record in
environmental conservation, maintenance of ecological balance and pollution
control in 2009
• It has declared 18 natural reserves with the reserves diversified into desert, marine,
mountainous reserves
• The laws are governed by Ministry of Environment and Climate Affairs set up in
2007. It has also ratified the Kyoto protocol

Legal

Competition Law
• It is enforced by the Public Authority for Consumer Protection (PACP)
• It prohibits a company in a dominant position (35% market share) from engaging
in activities which would weaken or prevent competition
• It prohibits businesses inside or outside Oman from entering into contracts or
agreements for the purpose of monopolising the market
• It also requires a company looking to create an economic concentration (35%
market share) to take a clearance from PACP. Above 50% is prohibited
• Consequences for violating the law could result in sanctions ranging from
administrative fines to imprisonment

Employment Regulations
• For a private sector employee, the contract must contain basic details such as
names of parties, place of residence, nationality, etc.
• The contract could be for a definite or an indefinite period
• Working hours of a maximum of 45 h a week is permitted. For Ramzan, a
maximum of 6 h a day

Existing Players

• Thales

It has a presence of over 30 years in Oman. In 2012, it was contracted for supplying
sensors and combat management systems for the Royal Navy.
• Esnaad
It has been certified by the Govt. of Oman to supply military and defence equipment.
It represents US-based companies and has been accredited by the US dept. of state.
Study on Identifying the Opportunities for Defence Exports … 259

• MSA Global LLC

It is an Omani company. Its products include airborne surveillance platforms, military
vehicles, mobile surveillance platforms and security systems.
• Electroman
It is a wholly Omani-owned company with products in the field of security systems
and telecommunications (Fig. 30).

Opportunities

Tanks
Oman purchased the M-60A1 tanks in 1980 and M-60A3 tanks in 1990 after which
they haven’t undergone modernisation. This provides an opportunity for providing
upgrades for these tanks.41

Self-propelled Artillery
Based on the age of inventory, Oman purchased the 155 mm G6 in 1995 after
which they haven’t undergone any modernisation. This provides an opportunity for
upgrading them.
It also provides an opportunity for offering the K9 Vajra-T howitzers.

Foreign Relations

Saudi Arabia
Oman was one of the founding members of the GCC along with Saudi Arabia. It was
a part of the coalition during the Iraq war in 1990.

Yemen
Oman and Yemen were involved in the Dhofar rebellion with the Yemen army helping
the separatists. As of now, both countries share diplomatic relations with Oman
providing refuge to Yemeni nationals affected by the Yemen war.

41 http://www.inss.org.il/he/wp-content/uploads/sites/2/systemfiles/(FILE)1275907930.pdf.
260 A. Kumar and M. Mehta

Fig. 30 Oman military capacity (42 )

India
Oman and India share diplomatic relations. It was the first Gulf nation to estab-
lish defence ties with India. In 2016, various deals including defence were signed
(Fig. 31).

42 https://bit.ly/2IFGFDk
Study on Identifying the Opportunities for Defence Exports … 261

Fig. 31 Oman history

262 A. Kumar and M. Mehta

Fig. 32 Geography of Oman

Segmentation

Geography
Oman is situated at the south-east of the Arabian Peninsula. Its neighbouring coun-
tries are UAE, Saudi Arabia and Oman which it shares its borders with.43 Although
it has some border disputes with Saudi and UAE, it shares a relatively peaceful rela-
tionship with both the countries. It is located close to strategic locations such as the
Gulf of Oman and the Persian Gulf. It shares diplomatic relations with Iran being
one of the few countries in the GCC (Fig. 32).

43 https://www.infoplease.com/country/oman.
Study on Identifying the Opportunities for Defence Exports … 263

Arms Imports in USD Billion

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2001 2003 2005 2007 2009 2011 2013 2015 2017

Fig. 33 Arms imports in Oman (https://bit.ly/2IplEFx)

Behaviour
As per SIPRI data, Oman has a military budget of $8.7bn with majority of the arms
imported from USA and Europe.

Demographics
Primarily, the ethnic groups living in Oman are Arabs, Baluchi and South Asian. The
languages spoken are Arab, Baluchi, English, Hindi and Urdu. Immigrants constitute
about 45% of the entire population. Majority of its population is located in Muscat.

Targeting

Criteria Size
As per SIPRI data in 2016, Oman spent about 16.7% of its GDP on military expendi-
ture. Arms imports accounted for $0.78 bn in 2017. Its arms imports ranked amongst
the highest in the world for % of GDP spent. Majority of the arms imported from
Oman have either US or UK origin. For UK, military exports to Oman account for
14% of its overall sales with Saudi accounting for 49% (Fig. 33).

Market
In terms of explosive ammunition US accounts for 79% of the imports and 100% for
the military weapons. USA accounted for 35% of all major arms imports, whereas
UK accounted for 23% (Fig. 34).
In terms of imports, India accounts for 5.4% of the total imports whereas 4.4%
of its exports. India can capitalise on its trade relations with Oman to extend it to
264 A. Kumar and M. Mehta

Fig. 34 International market. Source https://atlas.media.mit.edu/en/profile/country/omn/

defence equipment as well. With the worsening situation in Yemen and the presence
of extremist forces such as Al-Qaida and ISIS, military expenditure is expected to
show an upward trend.

Positioning

L&T already has a presence in Oman in the form of L&T Oman LLC. It can capitalise
on its reputation and the work already undertaken to gain a market share in the defence
sector as well.
Like most of the GCC countries, Oman too imports its major arms from USA and
Europe. In order to do gain a market share, cost competition would be a good method
to follow. As it is located close to strategic locations such as the Gulf of Oman and
the Persian Gulf, a naval vessel-based approach should be followed. L&T could offer
fast-attack crafts as well as OPVs.

Go-to-Market Strategy

• Possible modes of entry could be partnering with a local firm or to market products
independently by setting up a commercial representative office
• A team should be set up to handle the offset requirement planning
• An approach to tackling the offsets could be upskilling the nationals in order to
cater to the Omanisation requirements
Study on Identifying the Opportunities for Defence Exports … 265

• As L&T already has a presence in Oman (L&T Oman LLC), it could look to
expand its business scope from construction, power transmission and distribution
to defence contracts as well.
• An approach could be offering OPVs as the naval strength of Oman in this area
is weak
• Marketing campaign could be aimed at securing its shores and the safety of its
offshore extraction and exploration vessels
• Another approach could be offering modernisation solutions for 155 mm G6
Howitzers which were purchased in 1995 and haven’t undergone any modernisa-
tion44

4.2 North Africa

4.2.1 Egypt

Current President: Abdel Fattah el-Sisi.

Current Prime Minister: Sherif Ismail.
Currency: Egyptian Pound.

Political

Government Structure
• Egypt follows a semi-presidential system which was implemented after the Arab
Springs in 2011. The President is elected for a 4-year term which can be renewed
once
• The principle legislative body is the House of Representatives. It sits for a 5-year
term
• A new constitution was adopted in 2014 after the removal of Mohamed Morsi
after a coup

Tax Policies
• Corporate tax is levied at a rate of 22.5%. However, different tax rates are appli-
cable for the petroleum authority, Suez canal authority, Central Bank and Oil and
Gas exploration and production companies
• Capital gains tax is applicable for the sale of unlisted shares at the rate of 22.5%
for corporate shareholders
• A VAT of 14% is applicable for all goods and services. An exception is for
machinery and equipment used for production. They are charged at 5%

44 http://www.inss.org.il/he/wp-content/uploads/sites/2/systemfiles/(FILE)1275907930.pdf.
266 A. Kumar and M. Mehta

Entry and Trade Regulations

• For a foreign company to enter the market, the possible forms are:
– Joint Stock Company—At least three shareholders and at least three Board
of Directors. Capital requirement of 250,000 EGP.
Can be 100% foreign owned but doesn’t have the right to import. For
importing company needs to be wholly owned by Egyptian shareholders.
No restriction on activities that can be undertaken
– Limited Liability Company—At least two partners and at least one manager
for administrative work. At least one Egyptian manager
Allowed to engage in all business activities and can be 100% foreign owned.
Not allowed to import unless wholly owned by Egyptian shareholders
– Representative Office—Only for market analysis, no commercial activity. A
manager should be appointed for administrative work
Not liable for corporate tax. Minimum of $1000 to be deposited in the
office’s account by the Head office
– Branch—For the purpose of implementing a contract in Egypt. A manager
has to be appointed for administrative work
No capital requirement but a deposit of 5000EGP in the branch account
• At least 250 Egyptian employees should be employed

Economics

Interest Rates
The Central Bank cut the deposit rates by 100 basis points to 16.75% and 17.75%,
respectively (Fig. 35; Table 8).
This was done because the inflation fell to 14.4% and borrowing costs were
increased. This helps us know the investment and borrowing capability and
tendency.45

Inflation Rate
Inflation rates reached a high of 33% in 2017. This was a result of Egypt devaluing
the pound as well as cuts in energy subsidy. The Consumer Price Index has reached
13.3%, the lowest in two years.46

45 https://tradingeconomics.com/egypt/interest-rate.
46 https://knoema.com/atlas/Egypt/Inflation-rate.
https://knoema.com/atlas/Egypt/Arms-imports.
Study on Identifying the Opportunities for Defence Exports … 267

Inflation Rate
25

20

15

10

0
2006 2008 2010 2012 2014 2016

Fig. 35 Inflation rates of Egypt

Table 8 Interest rates in Egypt

Last (2018) Previous (2017) Highest Lowest Unit
Interest rate 16.75 16.75 21.40 8.25 %
Deposit interest rate 12.09 7.86 12.09 6.02 %
Lending rate 17.75 17.75 19.75 9.25 %

Arms Import is USD Billion

2.5

1.5

0.5

0
2006 2008 2010 2012 2014 2016

Fig. 36 Arms imports in Egypt

Military Expenditure
As per SIPRI data, Egypt was the third largest arms importer in 2013–17. Imports
grew by 215% compared to 2008–2012. Of the total arms imports, France accounted
for 37%, USA for 26% and Russia 21% (Fig. 36).
268 A. Kumar and M. Mehta

Adult Literacy Rate

78

76

74

72

70

68

66

64
2004 2006 2008 2010 2012 2014 2016

Fig. 37 Literacy rates in Egypt

Defence Offsets
• No mentions of an offset policy followed by Egypt was found
• The local defence industry develops defence equipment and systems through
technology transfers and licencemanufacturing
• The procurement programme is largely funded by the USA in the form of foreign
military financing program.47

Social

Literacy Rate
• As of 2015, adult literacy rate stood a 75.8%
• The adult male literacy rate stood at 82.2%
• Adult female literacy rate stood at ~65.4% (Fig. 37)48

Population Demographics
• Total median age stood at 23.8
• Median age for males was 23.4
• Median age for females was 24.1 (Fig. 38)49

47 https://bit.ly/2kmW2Cn.
48 https://bit.ly/2J4AJTT.
49 https://bit.ly/2HpX4XV.
Study on Identifying the Opportunities for Defence Exports … 269

Fig. 38 Pollution demographic of Egypt

Technological

• Egypt ranks 105th on the Global Innovation Index with a score of 26

• As of 2016, 33% of the Egyptian population were Internet users50
• Egypt has set up the HCST and STDF for boosting innovation and development

50 https://bit.ly/2fSdXBg.
270 A. Kumar and M. Mehta

Environmental

Energy Consumption
• Total production capacity of all production facilities is 171.9 bn kWh
• Its own consumption stands at 150.4 bn kWh with a per capita consumption of
1571.76 kWh
• Its energy imports are 43 m kWh and exports 1.16 bn kWh
• Of the total theoretical production capacity of 340.6bn kWh, fossil fuels account
for 308.23 bn kWh, water power 24.86 bn kWh and renewable energy 7.5 bn kWh

Environmental Protection Laws

• Egypt Environment Affairs Agency is the main regulatory body
• Water resources are taken care of by Ministry of Water Resources and Irrigation
• Law 4/1994 is the Environmental law and its most important piece of legislation

Legal

• The competition law prohibits the following

– Agreements and contracts between competing persons leading to fluctuation
of prices for profit, hoarding, territory marking, etc.
– Agreements and contracts between a person and contractors or clients leading
to affecting freedom of competition, decline in quality, etc.
– Abuse of dominant position (market share >25%)

Existing Players

• AOI Aircraft Factory

– It manufactures and assembles aircraft for the Egypt Air Force such as the
Alpha Jet, ordnance and knockdown kits for M-60 and M1A1 tanks
• Sakr Factory for Developed Industries
– It is the primary facility for ballistic missiles and long-range artillery
development. It also produces surface-to-air, air-to-air and anti-tank missiles
• Kader Factory for Developed Industries
– It specialised in the development and production of armoured vehicles, aircraft
guidance systems and aircraft bombs (Fig. 39)
Study on Identifying the Opportunities for Defence Exports … 271

Fig. 39 Egypt military capacity

Opportunities

Self-propelled Artillery
As the M110A2 which were purchased in 1996 haven’t undergone any modernisation
plans yet, it provides an opportunity.
272 A. Kumar and M. Mehta

Foreign Relations

USA
Diplomatic relations were re-established after the Yom Kippur war in order to reach
a peace treaty with Israel in 1974. Post the strengthening of relations, USA has
provided Egypt with military and economic aid. The relations seem to be weakening
after Egypt started to purchase weapons from Russia.

India
Egypt and India together are the founders of the Non-Aligned movement. India
supported Egypt and the Arabs during the Arab–Israeli war. Both nations have strong
diplomatic and trade relations.

Iran
Egypt initially had diplomatic relations with Iran, but they weakened after Egypt
supported Iraq in the Iraq–Iran war. Other reasons were Egypt’s close relations with
USA and other Western countries, Gaza war where both the sides blamed each other
for escalating and Iran’s alleged part in supporting terrorist organisations such as
Hamas and Houthis.

Israel
Egypt and Israel have had a strained relationship over a history of wars and Egypt’s
stance on the Gaza strip (Fig. 40).

Segmentation

Geography
Egypt is bordered on the west by Libya, on the south by Sudan and on the East by
Israel.51 Other countries in the proximity are Saudi Arabia and Syria. It has diplomatic
relations with Libya. Egypt was against the separation of Sudan and relations have
weakened over land disputes. Egypt and Israel have a strained relationship over the
wars fought between the two and Egypt’s stance on Gaza and Palestine. Relations
with Saudi Arabia have weakened after (Fig. 41) Egypt’s limited participation in the
Yemen war. Egypt is situated close to strategic locations such as Port Said and Suez
Canal.

51 https://bit.ly/2LCxdyI.
Study on Identifying the Opportunities for Defence Exports … 273

Fig. 40 Brief history of

Egypt
274 A. Kumar and M. Mehta

Fig. 41 Geography of Egypt

Behaviour
Egypt ranks third in the world in terms of arm imports globally.52 It accounted for 4%
of the arms import globally. Compared to 2008–12 period, in 2013–17 arms imports
increased by 215%. France was the largest contributor during this period, accounting
for about 37% of total arms. Other exporters of arms to Egypt include USA, Russia
and UK.

Demographics
Egypt’s population is predominantly Sunni Muslims, who account for about 99.6%
of the country’s population. Muslims constitute for about 90% of the country’s ethnic
structure. Christianity is the other major religion.

52 https://bit.ly/2sp9UQ8.
Study on Identifying the Opportunities for Defence Exports … 275

Arms Import is USD Billion

2.5

1.5

0.5

0
2006 2008 2010 2012 2014 2016

Fig. 42 Arms imports in Egypt

Targeting

Criteria Size
In terms of military expenditure, Egypt spent about 1.67% of its GDP as of 2016.
In 2017, the arms imports amounted to $2.355 bn. As per SIPRI data, Egypt ranks
3rd in the world in terms of arms imports with the major contributors being France,
USA and Russia (Fig. 42).53

Market
As of 2016, USA accounted for 79% of the explosive ammunition imported by Egypt
(Fig. 43).54
Of the total imports, India accounts for 3.2%. Chemicals, animal products and
transportation account for the majority of the imports. In terms of exports, India
accounts for 2.8% of the total exports with mineral products and textiles accounting
for the majority of the imports.

Positioning

Egypt’s military ranks 12th in the world. Higher than most Arab states and Israel
except Turkey.

53 https://bit.ly/2xnXFcj.
54 https://atlas.media.mit.edu/en/profile/country/egy/.
276 A. Kumar and M. Mehta

Fig. 43 International market of Egypt

Majority of the major arms imported by it are of US, Russian or European origin.
In order to gain a market share in Egypt, partnering with a firm from the above-
mentioned countries could be an approach. As most of the defence industries in
Egypt are Govt. owned partnering with them wouldn’t be a feasible option.
The arms imports when it comes to naval vessels, fixed and rotary wing aircrafts as
well as land vehicles are imported from USA, Europe or Russia. L&T could approach
the market by providing maintenance and repair solutions. Another product L&T
could offer is OPVs.

Go-to-Market Strategy

• From the analysis, the possible mode of entry for a foreign firm looking to capture
market share in Egypt would be to partner with the local defence firms
• Although Egypt allows to establish joint stock companies or LLCs, importing
would be allowed only if the company is wholly owned by Egyptian shareholders.
• Based on its arms import history, the imports are likely to show an upward trend
which would make it a feasible market
• A large proportion of the defence procurement is funded by the foreign military
aid given by the USA, also a reason for the large % of the US origin arms.
• An approach for entering the market could be offering modernisation solutions
for the M110A2 SP howitzer which haven’t undergone modernisation plans55

55 http://armorama.com/modules.php?op=modload&name=features&file=view&artid=6395.
Study on Identifying the Opportunities for Defence Exports … 277

Recommendations
Countries are arranged in the order of priority:
Oman
L&T has an LLC in Oman which would save costs on marketing. A team should be
set up for handling the defence offsets policy.
Marketing strategy can be focused on the security of offshore oil extraction and
exploration vessels as well as proximity to strategic locations such as the Gulf of
Oman and the Persian Gulf.
Naval vessels should be the focus. Products that can be offered are OPVs, fast-
attack crafts, modernisation solutions for M-60A1 and M-60A3 tanks and G6 SP
howitzer.
Saudi Arabia
For entry into the market, partnering with a firm of US, Russian or European firm
could be an approach.
Partnering with local firms to fulfil the 30% subcontracting from local companies
is a feasible solution.
A team should be set up for handling the defence offset policy.
Partnering with an e-learning platform for upskilling Saudi Nationals could be a
possible option. Modernisation solutions for M-109 and M-60 SP howitzers as well
as M1A2 and M-60A3 tanks can be offered which haven’t undergone modernisation
programs. As an alternative K9 Vajra-T SP’s could also be offered as a solution.
Another approach could be offering OPVs and fast-attack crafts with the
marketing campaign focused on protection of its shores and offshore oil extraction
and exploration vessels.
UAE
Amongst the countries which are a part of this research, UAE has the highest defence
offset of 60% of contract value in direct offsets.
Another aspect is that they have a shipbuilding company place (Abu Dhabi Ship
Building) who have already manufactured ships for UAE Navy.
An aspect which could be focused on is the modernisation of M-109 SP howitzers
which haven’t undergone any modernisation programs since their purchase in 1999.
As an alternative, K9 Vajra-T guns could be offered.
Egypt
Egypt has a strong navy in place. It is ranked highest in military ranking amongst all
Middle East nations with the exception of Israel.
Also, technology transfer is an aspect that the Govt. focuses on in the case of
purchase of foreign arms.
An approach which could be followed is the modernisation of M110A2 howitzers
which haven’t undergone any modernisation programs since their purchase in 1996.
278 A. Kumar and M. Mehta

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Effect of Age on Employees’ Attitudes
at Workplace—A Study

N. Srividya and Rita Basu

Abstract The age of a person denotes that how long he has been alive on this earth.
Out of that number of years, except the early years of his birth that is around five years,
all the rest of his life he is learning and moulding himself towards all the situations
and events he comes across. This paper studies the effect of age of a person on his
attitude in workplace. Data is collected through an instrument called questionnaire
with a random sample size of 468 across the country. Few parameters such as attitude
towards efficiency, risk-taking nature and self-image portrait are considered under
employees’ attitude and are analysed against the age of the respondents. The data
is analysed with suitable statistical tools and techniques. The results are interpreted
aptly making some meaning sense out of them. It is observed that with the age of the
person, the attitude of the person towards workplace changes a lot. This research can
further be extended towards career planning and succession planning in corporate
world.

Keywords Attitude · Age · Self-image portrait · Risk taking nature and workplace

1 Introduction

It is quite understood and observed that for higher positions and for certain positions
of jobs in corporate world, the age is mentioned mandatorily, that the criterion should
be met without fail. With the progression of age, the attitude of the person changes
gradually. His learning process is enhanced by his socialisation and observation of
things. That is why we can easily observe a difference between students who are in
hostels, abroad or out of their native places and those who are at home or hometown.

N. Srividya (B)
Techno India School of Management Studies, Techno Main Salt Lake, Kolkata, India
R. Basu
University of Calcutta, Kolkata, India

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 281
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_13
282 N. Srividya and R. Basu

1.1 Background of the Study

Keeping all these in mind, it is desired to do a research to decide how the age and
attitude of a person vary and emerge gradually. While most of the research available
in this field is highly concentrated on the medical terms, this study concentrates
the managerial personnel and their development of attitudes in relation with their
growing age.

1.2 Research Problem

The research problem considered here how the age and their attitudes are connected
with each other. As the attitude is the vast subject involving several aspects of the
personality, few personality traits are considered for the study. Concentrating on few
aspects of personality, an attempt to make an extensive research is made. Moreover,
the sampling population is also considered keeping managerial needs in mind. This
research is mainly helpful to the managers and prospective managers.

1.3 Objectives of Study

Considering the applicability and importance of the managerial traits in a work-

place, the following objectives are considered. Out of many personality traits, atti-
tude towards achieving efficiency, risk-taking nature while doing their jobs and the
way they portray their self-image are considered for in-depth study.
1. To study the effect of age on attitude towards efficiency
2. To study the effect of age on risk-taking nature
3. To study the effect of age on self-image portrait.

2 Review of Literature

Review of literature is done to check the previous literature that exists in the field.
It also provides a broad framework and an idea about the existing literature and its
depth and extent of the topic as well.

2.1 Introduction

As mentioned earlier, there is a huge literature on the said topic in medical field.
There is very less literature in the management field.
Effect of Age on Employees’ Attitudes at Workplace—A Study 283

Rezaei and Zamani-Miandashti (2013) studied the relationship between the self-
efficacy, anxiety and the attitude towards research. They conducted this study on
agricultural graduate students.
This paper studies the association among self-efficacy, the personal and profes-
sional characteristics. Respondents are the agricultural students at Shiraz University
in Iran. A stratified sample of size 210 was selected, and through questionnaire, the
data is collected. A t-test is conducted, and it is proved that reasonable amount of
fretfulness, great self-efficacy and an optimistic approach is maintained towards the
study.
Saleh and SweKhine (2013) study the research about the attitudes in the field of
science. They also considered the measurements that are contemporary and classic.
This manuscript is about examining the classical views on science attitudes in
addition to exploring contemporary attempts in measuring attitudes. This is a book
of edited research papers by various researchers. The chapters of this book consist
of the research papers edited.
Sorce et al. (2005) conducted a research on the relationship between attitude and
the differences in age while buying online.
This research studies the spending behaviour of virtual buyers based on their age
and attitude. A sample of 300 students from a US university is taken for buying 17
products. It is found that younger generations purchase more products online. This
research is helpful to retail managers in understanding the consumer behaviour on
online purchasing.
Klimova et al. (2016) studied the relationship between the attitudes of the senior
citizens while using the information and communication technologies. This is done
in Czech Republic.
This study is on the job of ICT on the living of senior citizens in Czech. Comparison
of various research studies is done along with the review of literature on the topic.
Yim and Kim (2021) conducted a research on the effects of fit and novelty in
collaboration with product attitude with a moderating effect on age.
They conducted in separate ways for novelty and fit each in the impact of brand
collaboration with product attitude and moderating effect of age in association with
novelty and attitude. They used four instruments to match all the scenarios and
real brands. This recommends two paths, namely similar and non-similar to test the
product attitude with each novelty and perceived fit. They also tested the moderating
effect of the age. They tested the effect of perceived novelty fit on product attitude.
They took a sample size of 250, and the study found that the degree of perceived
novelty and fit with the type of brand had a positive influence on product attitude. They
also confirmed that the age has a moderate relationship with novelty and attitude.

2.2 Gap Analysis

A lot of literature is available on the attitudes of the people in workplace. But no

literature is found on the effect of age on the employees’ attitude in the workplace.
284 N. Srividya and R. Basu

Mostly in medical field, this research is done to correct the attitudes or in treating
cancer, etc.

3 Methods

3.1 Background of the Study

Age plays a very important role in the attitude of the employees in the workplace. This
paper tries to study this effect. This is done by considering the following parameters
under the attitude of the employees.
1. Attitude towards efficiency
2. Risk-taking nature
3. Self-image portrait.

3.2 Aim

While doing the career planning or succession planning in the corporate world, the
age is most important factor to be considered. With age, maturity arrives. This paper
tries to explore the effect of age on the attitude.

3.3 Objectives of the Study

1. To study the effect of age on attitude towards efficiency

2. To study the effect of age on risk-taking nature
3. To study the effect of age on self-image portrait.

3.4 Importance of Study

This study is helpful to understand the importance of age in recruitment, promotions

and as a whole career planning.

3.5 Scope of the Research

This research can be helpful in corporate world while planning and devising the
recruitment and career planning. As there is a relationship between the age and his
Effect of Age on Employees’ Attitudes at Workplace—A Study 285

working attitude of a person, it is easily understandable that this can be used in

appraisal system to draw his career planning and goal.

3.6 Sampling Technique

Random sampling.

3.7 Sample Size

468.

3.8 Population

All types of people from all parts of India, covering all ages and educational
backgrounds.

3.9 Data Collection Method

Questionnaire.

3.10 Hypotheses

To analyse the data collected, few hypotheses are framed and are tested with suitable
tests. The following hypotheses are formed based on the objectives and aim of the
study.
Ho 1: Age and attitude towards efficiency of respondents are related each other.
Ho 2: Age and risk-taking nature are related each other.
Ho 3: Age and self-image portrait of respondents related each other.

3.11 Tools Adopted

Descriptive analysis, charts, group statistics, t-test and correlation.

286 N. Srividya and R. Basu

3.12 Analysis of Data

First mean, mode and median, skewness and kurtosis are found using the descrip-
tive analysis for the scale. All these values are calculated for all the item scores
individually and the parameter as whole. Even for the overall total scores are also
calculated.
For t-tests, the age and the educational qualification are grouped further into
two ways, age as above thirty and below thirty. t-tests are conducted at the level of
0.05 significant level for all the parameters as shown in the hypotheses. All those
hypotheses are tested individually.

3.13 Limitations

1. The results hold good only for this research and the study. It cannot be
generalised to all.
2. The research is purely based on the data collected through the questionnaire.
3. The topic of the paper itself is highly subjective dealing with the dispositions
about one’s self, the respondents too might have felt uncomfortable in giving
their true opinions. Even while filling the questionnaire also, they might felt
highly hesitant or scared to reveal their actual dispositions or thoughts about
themselves, how much ever it is ensured that the responses are kept highly
confidential and are meant only the research purpose and nothing else.
4. The research holds good only for the dispositions of the respondents given.
Neither can it be generalised to all the self-dispositions of the respondents nor
to all the people in general.

3.14 Scope for Further Research

This research can be extended to career planning and succession planning.

3.15 Applied Value of the Research

This can be very well applied in workplace while considering the attitudes of the
employees.
Effect of Age on Employees’ Attitudes at Workplace—A Study 287

4 Data Analysis

Before proceeding further to analyse the data, first the validity and reliability test is
done.
For both the scales, item validity and estimation of reliability are considered and
checked.

4.1 Reliability and Validity Test

(a) Item Validity

For item analysis, appropriate constituents and their allied parts are chosen that
highly correlate with the aggregate value. This is done by internal criterion method.
Accordingly, for testing the consistency of the items of the selected domains, as well
as, for total scale, correlations were computed for the following three different sets
of scores for each of the tests.
(i) ‘Individual item score—Individual enquiry area score’.
(ii) ‘Individual enquiry area’s score—Total score of all test items’.
(iii) ‘Individual item score—Total score of all items’.
Suitable and selected components were retained for each of the final scales based
on the correlation results that are more than 0.40. The results of the correlation
analysis of respective scale have been presented in Table 1.
1. Attitude towards efficiency
2. Risk-taking nature
3. Self-image portrait.
The individual item scores which have the value less than 0.4 are removed. Those
are as follows.
The item “Achieve OK”, under the parameter ‘Image’ is deleted due to its low
value.

Table 1 Consolidated picture of item validity measures of core beliefs scale on the basis of data
collected from respondents (N = 468)
S. No. Name of enquiry Correlational values (r)
areas Individual enquiry Individual item Enquiry area—total
area—individual score—item total score
item score score
1 Attitude towards 0.65–0.793 0.303–0.533 0.593
efficiency
2 Risk-taking nature 0.396–0.736 0.031–0.411 0.400
3 Image 0.234–0.642 0.009–0.256 0.342
288 N. Srividya and R. Basu

Table 2 Revised values of item validity measures of core beliefs scale on the basis of data collected
from respondents (N = 468)
S. No. Name of enquiry Correlational values (r)
areas Individual enquiry Individual item Enquiry area—total
area—individual score—item total score
item score score
1 Attitude towards 0.65–0.793 0.303–0.393 0.604
efficiency
2 Risk-taking 0.496–0.746 0.031–0.463 0.400
3 Image 0.584–0.772 0.329–0.516 0.432

Again, the values for individual item scores are calculated, and the correlation
tests for individual item score and item total score are calculated.
Again here, the enquiry areas with low values have been removed, and the values
are recalculated. Further, the correlation test for enquiry area and total score is
calculated.
The revised values are as Table 2.
Results of the correlation analysis for item validity results showed that all compo-
nents of all the scales and subscales for each enquiry areas are content-wise valid
(Table 3).
Again, the results of inter enquiry area correlation matrix showed that any modi-
fication in the values of the components will influence the respective scales. Only
one dimension of the set of domains in each of the scale is also observed. Further,
positive and noteworthy inter-enquiry areas correlation, individual item score—total
score of all test item score correlation, as well as individual item score—individual
component enquiry area score correlation confirmed that the scales are factor-wise
valid.

Table 3 Inter-components correlation matrix for core beliefs scale on the basis of data collected
from respondents (N = 468)
Average attitude Average risk-taking Average self-image
towards efficiency nature
Average attitude 1 0.162 0.213
towards efficiency
Average risk-taking 0.162 1 0.352
nature
Average self-image 0.213 0.352 1
Effect of Age on Employees’ Attitudes at Workplace—A Study 289

Table 4 Group statistics between age and the average of attitude of the respondents
Result of the set
Age N Mean Standard deviation Standard error mean
Average of attitude ≥ 30 336 3.911 0.610 0.033
< 30 132 3.796 0.828 0.072
Var1 = SD21= = 0.686 and Var2 =
(0.828)2 =
SD22 = 0.372
(0.610)2
n1 = 132 and n2 = 336 and the degree of freedom = n1 + n2 – 2 = 466

4.2 Descriptive Statistics

None of the parameters has skewness less than − 1.00 or greater than 0.5 which
means that all of them are approximately symmetrical.
The kurtosis for all the parameters is negative, which means that the peak is
flatter and the tails are thinner. This means that most of the respondents responded
identically.

4.3 Testing the Hypotheses

t-tests are conducted to find whether there is any significant difference between the
said groups. For this, total sample is divided into groups based on education. They
are
i. The people who have their education level less than PG
ii. The people who have their education level more than PG
Hypothesis
Ho 1: Age and attitude of respondents are related (Table 4).
Interpretation
The mean value for the respondents with age more than 30 is greater than that of the
respondents with age below 30. It can be said that the respondents with age more
than 30 are to be more competent, perfect, efficient and generous (Table 4).
Interpretation
Result of t-test (1.654) is significant at 0.01 level. Hence, null hypothesis is rejected.
This means that there is a significant difference for the attitude towards efficiency or
perfection due to variation of age group (less 30 and greater than 30). Hence, we can
infer that attitude towards efficiency or perfection increases with the increases of the
age.
Hypothesis
Ho 2: Age and risk-taking nature of respondents are related (Table 6).
290 N. Srividya and R. Basu

Table 5 t-test for independent samples (age below 30 and above 30) for the average of attitude of
the respondents
t Sig. Difference Difference Confidence
(two-tailed) in mean in standard interval of the
error difference at 95%
Lower Upper
Average Assumption 1.654 0.099 0.115 0.069 − 0.022 0.252
of of equal
attitude variances

Table 6 Group statistics between age and the average of risk taking of the respondents
Results of the set
Age N Mean Standard deviation Standard error mean
Average of risk taking ≥ 30 336 3.536 0.504 0.027
< 30 132 3.250 0.441 0.038

Var1 = SD21 = (0.441)2 = 0.194 and Var2 = SD22 = (0.504)2 = 0.254

n1 = 132 and n2 = 336 and the degree of freedom = n1 + n2 – 2 = 466
Interpretation
The mean value for the item “Willing to take risks in life” is high for the parameter
‘Risk Taking Nature’. This means that most of the respondents are willing to take
risk in life (Table 6).
Interpretation
Result of t-test (5.710) is considerable at 0.01 level. Hence, null hypothesis is not
accepted. This shows that there is a considerable difference in trust of people due
to variation of age group (less 30 and greater than 30). Hence, we can infer that
risk-taking nature increases with the increases of the age.
Hypothesis
Ho 3: Age and image of respondents are related (Table 8)

Table 7 t-test for independent samples (age below 30 and above 30) for the average of risk taking
of the respondents
t Sig. Difference Difference Confidence
(two-tailed) in mean in standard interval of the
error difference at 95%
Lower Upper
Average Equal 5.710 0.000 0.286 0.050 0.187 0.384
of risk variances
taking assumed
Effect of Age on Employees’ Attitudes at Workplace—A Study 291

Table 8 Group statistics between age and the average of image of the respondents
Result of the set
Age N Mean Standard deviation Standard error mean
Average of image ≥ 30 336 3.655 0.595 0.033
< 30 132 3.000 0.285 0.025
Var1 = SD21= = 0.081 and Var2 =
(0.285)2 =SD22 = 0.354
(0.595)2
n1 = 132 and n2 = 336 and the degree of freedom = n1 + n2 – 2 = 466

Table 9 t-test for independent samples (age below 30 and above 30) for the average of image of
the respondents
t Sig. Difference Difference Confidence
(two-tailed) in mean in standard interval of the
error difference at
95%
Lower Upper
Average Assumption 12.101 0.000 0.655 0.054 0.548 0.761
of image of equal
variances

Interpretation
The respondents with age more than 30 feel that they can face the outside world as
they are and feel that if they do so, people would accept them (Table 8).
Interpretation
Result of t-test (12.101) is considerable at 0.01 level. Hence, the hypothesis is not
accepted. This shows that there is a considerable difference in the image of people
due to variation of age group (less 30 and greater than 30). Hence, we can infer that
image towards people increases with the increases of the age.

5 Findings, Suggestions and Conclusions

Before going further towards the findings and suggestions, we glance at the
hypotheses along with interpretations (Table 10).
It is found that age has a major role in moulding the attitude of a person. The
employees with age more than thirty are more competent towards efficiency. They
also take higher risks in their work life. With the age, the employees also gain maturity,
and thereby, their attitude may develop or enhance. With the age, their experience
would increase, and with the help of good amount of experience, they can handle
better their jobs. Their efficiency would also increase with their learning. Experience
is the best teacher.
292 N. Srividya and R. Basu

Table 10 Overview of the hypotheses with respect to age of the respondents

S. No. Hypothesis Accepted/rejected Interpretation
1 Age and attitude of respondents Rejected The respondents with age more
towards efficiency are related than 30 are to be more
competent, perfect, efficient and
generous
2 Age and risk-taking nature of Rejected The respondents with age more
respondents are related than 30 are willing to take risks
in work life
3 Age and image of respondents Rejected The respondents with age more
are related than 30 feel that they can face the
outside world as they are and feel
that if they do so, people would
accept them

With the advance of their age, their exposure to the world or socialisation would
develop them into good and efficient employees. They would probably know where
to take risks and where to not. With the good amount of exposure or socialisation,
they can take good decisions, and they can portray themselves with right attitude.

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03135
An Econometric Approach Towards
Exploring the Impact of Workers
Remittances on Inflation: Empirical
Evidence from India

Vaishali Jain and Monika Mathur

Abstract This paper attempts to study short and long run impact of increased
worker’s remittances on general price level. It uses the real GDP growth, real effec-
tive exchange rate (REER), M3 (broad money), fiscal deficit to gauge the impact of
foreign remittances on inflation. The study makes use of VAR/VECM framework
to gauge the impact of worker’s remittances on inflation. Inflation is measured in
terms of CPI and WPI, real income or GDP at constant prices is taken as a measure
of GDP growth, REER is used for exchange rates and M3 is taken as a proxy for
money supply. Monthly data of all these variables has been taken from Bloomberg
and World Bank data base. The findings provide important insights into the nature
of association between remittances and inflation suggesting causality between infla-
tion, remittances, real GDP, real effective exchange rates and money supply due
to increased worker’s remittances. The findings have policy implications for deci-
sions to channelize worker’s remittances in a way to increase real GDP growth and
money supply while at the same time not causing the general price levels to soar. The
present study focuses on how increased (decreased) worker’s remittances is leading
to increase (decrease) in general price levels in India.

Keywords Worker’s remittances · Consumer price index · Wholesale price index ·

Inflation · Exchange rate · Money supply · GDP · Vector autoregression · Granger
causality

1 Introduction

Workers remittances have been one of the major sources of foreign exchange earnings
for developing countries including India. Due to COVID-19 pandemic, economists

V. Jain (B)
Christ (Deemed University), Lavasa, Pune, India
e-mail: [email protected]
M. Mathur
Manipal University Jaipur, Jaipur, India
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 293
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_14
294 V. Jain and M. Mathur

are of the view that the country requires a huge amount of FDI in order to be able to
compensate for lower remittances in many years that have passed (Singh, 2020). As
per a few estimates, India has earned more than two times in terms of remittances as
compared to FDI in last few years. The remittances which these workers send home
have been increasing every year, and as per World Bank report, high skilled migration
has picked up in last few years. India has led the position in terms of recipient of
worker’s remittances from 2008 to 09 onwards and received 83.132 billion US $ in
year 2019. Thus, workers’ remittances, their importance and their impact on growth
including financial development cannot be ignored and have been studied in detail
by researchers.
On the other hand, inflation is one major issue for all developing economies of the
world including India. Controlling inflation rate and stabilizing price level has been
one of the top agendas of all macroeconomic policies in India. Therefore, study of
its determinants and their relative impact would be crucial for policy making. As per
the World Bank remittance data for April 2020, India received US $ 83,131 million
in 2019 which was 2.8% of its GDP (Bank, 2020). India being one of the economies
with highest growth rate, huge size in terms of GDP (PPP) and scale (number of
consumers) also has been facing the issue of inflation from time to time in its growth
trajectory. But the impact of the same must be analysed, and this paper attempts
the same. Conceptually, if remittances rise in an economy, an increase in consumer
spending and therefore price levels would have an effect. It also impacts the country’s
monetary base, resulting in an increased supply of money that is more inflationary in
nature and has a negative effect on the real exchange rate. Moreover, in developing
countries, the fiscal deficit plays an important role in growing price levels. Thus,
there are three approaches to explain determinants of inflation in any economy, i.e.
monetary approach, public fiancé approach and structural explanations. In context
of India, although the amount of remittances has been high and increasing always,
its ratio with GDP has been constant. Thus, whether inflation in India has been due
to increased remittances is a subject matter of study.

2 Literature Review

Growth impact of remittances has been analysed by various economists in detail

(Fayissa & Nsiah, 2010; Feeny et al., 2014; Javid et al., 2012; Meyer & Shera,
2017; Dahal, 2014; Dastidar, 2017) and many more. Most of the economist suggest
a positive relationship between economic growth and worker’s remittances. But the
workers’ remittances are utilized by people in different forms of expenditures made
and that may lead to increased purchasing power and money supply in the economy
which further results in inflation. There are not very conclusive studies available on
relationship between inflation and worker’s remittances, specifically in India. Studies
by (Iqbal et al., 2013; Streimikiene et al., 2019; Mumuni & Quaidoo, 2016; Narayan
et al., 2011) have tried to assess the impact of remittances on inflation, and findings
suggest a positive relationship in long run. Muktadir-Al-Mukit (2018) studies GDP
An Econometric Approach Towards Exploring … 295

(real), interest rate, imports, money supply and exchange rate as the determining
factors of inflation in Bangladesh. An assessment on investment by Mallick (2008)
reveals that remittances are positively related with private consumption but has a
negative influence on private investment. Using a money demand and supply function,
(Adhikari & Kumar, 2013) try to evaluate impact of remittances on the domestic price
level in India but find an insignificant effect. As per a study, remittances and real
GDP growth had an insignificant effect on inflation rate in South Asia when analysed
through the model adopted for time series data (Upadhyay & Upadhyaya, 2011).
Lim and Papi (1997) study the factors determining inflation in Turkey and find that
exchange rate and public sector deficits plays an important role. A similar study by
Moser (1994) concludes that expansionary fiscal policy and depreciation in Nigerian
currency have been responsible for increasing inflationary pressure on its economy. A
panel data study of 47 countries explains fiscal deficit, flexible exchange rate regime,
wage indexation and central bank’s independence as four major determinants of infla-
tion (Cottarelli, 1998). Studying the impact of nominal exchange rate on inflation,
Ghosh et al., (1997) conclude that inflation is slow and low under pegged exchange
rate regimes. An evaluation of inflation by Kandil and Morsy (2009) studied the
domestic and external factors leading to inflation in oil-producing gulf countries and
found that among foreign factors, inflation in trading partner countries has maximum
influence while credit expansion is one major domestic reason for rising price level
in GCC. On the other hand, government spending to ease out capacity constraints
has a moderating effect on inflation.
Bashir et al. (2011) use the Johansen’s cointegration and vector error correction
approach to conclude that long run consumer price index is positively influenced
by money supply, gross domestic product, imports and government expenditures
in Pakistan. Another study on inflation dynamics in Pakistan by Raza et al. (2013)
analysed data from 1971 to 2012 with the same approach and findings suggested that
GDP, M2, energy crises, import and current government expenditure, output gap and
adaptive expectation generate inflationary pressure while development expenditure
negatively corrected with inflation.
Several papers on determinants of inflation in India have studied gross domestic
product and concluded that broad money supply leads to rise in price level while
interest rate and the exchange rate have a negative influence on inflation (Sahadud-
heen, 2012). Researchers have also found a long-run relationship between inflation,
interest rate, and GDP while no influence of import prices and money supply (Ajmair,
2019). Mohanty & John (2015) concluded a steady influence of monetary policy on
inflation and changed dynamics of various factors were found to affect inflation over
a period of time. Money supply, depreciation of the currency, and supply bottlenecks
are predominating determinants of inflation in the short run while supply bottlenecks
have an insignificant impact in long run (Alam & Alam, 2016). Using Engel Granger
and Johansen—Julius cointegration analysis, Nair (2014) envisages that industrial
production has a negative relationship with inflation while money supply has a posi-
tive impact. Kaur (2019) tries to study the macroeconomic determinants of inflation
in India and effect of fiscal deficit on inflation. Author suggested the presence of long-
term association among inflation, gross fiscal deficit, money supply, exchange rate,
296 V. Jain and M. Mathur

prices of crude oil and output gap. Behera et al., (2018) analyse the determining factor
of inflation in India using a Phillips curve framework and conclude that exchange
rate movements and excess demand have impact on inflation and confirm existence
of a traditional Phillips curve. While studying global inflation trends and their driving
forces, Kamber and Wong (2020) find relatively more impact of global factors on
inflation in emerging economies than developed ones. While discussing properties
of core inflation in India, Durai and Ramachandran (2007) concluded that inflation
is highly correlated with growth of broad money (M3). Perera et al., (2013) studied
the link between the financial strength of central bank and inflation and found an
inverse relationship which was robust for deeper factors of inflation.

3 Research Gap and Objectives

There are indeterminate conclusions related to causal factors of inflation in India in

short and long run. Therefore, objectives of this study are:
(a) To study the short- and long-term causal relationship between worker’s remit-
tances, GDP growth rate, fiscal deficit, real effective exchange rate and money
supply (independent factors) and consumer price index.
(b) To study the short- and long-term causal relationship between worker’s remit-
tances, GDP growth rate, fiscal deficit, real effective exchange rate and money
supply (independent factors) and wholesale price index.

4 Data and Methodology

The present study aims at exploring the impact of workers’ remittances over inflation,
with specific reference to India. Inflation is measured in terms of CPI and WPI, real
income or GDP at constant prices is taken as a measure of GDP growth, REER
is used for exchange rates and broad money or M3 is taken as a proxy for money
supply. Monthly data from 2012 to 2019 for all these variables has been taken from
Bloomberg and World Bank data base.
A unit root test has to be performed as a pre-essential, to study the stationarity prop-
erties of the data, for which, ADF (Dickey & Fuller, 1979) test has been employed. A
time series is considered stationary when the statistical properties are constant over
the time and tends to return to same path aftershock. ADF unit root test holds the
H0 that unit root is present in time series. If the value calculated is lesser than the
value critical, the Ha is accepted, and H0 is rejected. The bigger the negative value,
the stronger is the support for the rejection of the hypothesis.
An Econometric Approach Towards Exploring … 297

4.1 Johansen’s Cointegration Test

Johansen (1988) is used to analyse the indices for the long-run integration. The test is
used to study cointegration among three or more time series. The max eigen value test
confirms the trace test. The H0 of trace test is the rank (π ) = r0. On the other hand,
the Ha of test is r0 < rank (π ) < n, where n is the maximal potential cointegration.
If the H0 is rejected, the test proceeds with new H0, i.e. rank (π ) = r0 + 1 and Ha,
r0 + 1 < rank (π ) < n. The H0 of max eigen value test examines the that rank (π )
= 0 and the Ha is rank (π ) = 1. There is no cointegration and the H0 is accepted
if the rank is 0. If the rank is non zero, then-largest eigen value, λ1 is at least 1 and
there could be more cointegrating vectors. Similarly, a series of tests are conducted
for the null hypothesis, (π ) = 1, 2, 3…. and alternative hypothesis, (π ) = 2, 3, 4…

4.2 VECM and VECM Granger Causality

Granger (1969) is employed to study the short-term causative association among

all the time series. The Granger causality employed to examine if a time series
may be used to use for forecasting another. The test has been performed to test if
X carries any statistical information about variable Y if it does then “X Granger-
cause Y” otherwise “X does not Granger-cause Y”. Granger causality is performed
using VECM model to check the causality relationship and direction determining
the direction of causation between time series.

5 Empirical Results

To begin with the analysis, firstly, descriptive statistics were calculated for all the
variables, and the same are presented in Table 1. After calculating the descriptive
statistics, ADF test was used to check if the data is stationary and at what level. Results
of ADF test, as presented in Table 2, indicate that all the variables are stationary at
first difference at both 5 and 10%.
Since all the variables were found to be I(0), cointegration test was performed to
study the long-term association among the variables. Table 3 presents the outcomes
for assessing the long-term relation between CPI, GDP, fiscal deficit, REER, money
supply and workers’ remittances. Since it is a multivariate model, Johansen’s coin-
tegration test is used. Both trace test and maximum eigen value test indicate four
cointegration equations implying that there is a possibility that at least four out of
the six variables seem to converge in the long term, even if they are found to diverge
in the short run.
Table 4 presents the results for the long run relation between WPI, GDP, fiscal
deficit, REER, money supply and workers’ remittances. Both trace and maximum
298 V. Jain and M. Mathur

Table 1 Descriptive statistics

CPI FD GDP M3 REER RMT WPI
Mean 5.928404 50,588.33 1.557235 0.868395 96.61596 2.363508 3.137340
Median 5.090000 52,761.00 1.699740 0.731330 97.65000 1.176997 3.560000
Maximum 11.24000 209,109.0 6.869909 4.442335 104.5900 38.19708 7.810000
Minimum 1.540000 − − − 84.11000 − −
206,132.0 4.195208 1.888510 23.97571 4.950000
Std. Dev. 2.720888 64,147.13 1.942717 1.057426 5.101199 11.61781 3.162133
Skewness 0.486020 − 0.059328 0.691526 − 0.455000 −
0.648092 0.517898 0.629091
Kurtosis 1.884398 5.721660 3.845625 4.160956 2.524831 3.713380 2.682572
Jarque–Bera 8.575274 35.59280 2.855883 12.77087 5.086413 5.236634 6.594808
Probability 0.013737 0.000000 0.239802 0.001686 0.078614 0.072925 0.036979
Observations 94 94 94 94 94 94 94
Source Own Calculations by Authors

Table 2 Results of stationarity test

Variables At level At first difference
Without With With Without With constant With
constant constant constant constant constant
and trend and trend
CPI − − − − − 6.736553 −
1.128773 1.971965 1.177290 6.761333 (0.0000) 6.907833
(0.2340) (0.2986) (0.9089) (0.0000) (0.0000)
WPI − − − − − 5.900718 −
1.828173 2.327320 2.198221 5.929172 (0.0000) 5.901532
(0.0645) (0.1657) (0.4846) (0.0000) (0.0000)
GDP − − − − − 5.455496 −
0.673463 2.345687 2.985478 5.483727 (0.0000) 5.556921
(0.4224) (0.1604) (0.1426) (0.0000) (0.0001)
M3 − − 1.00819 − − − 8.592797 −
0.551271 (0.2354) 1.643287 8.648077 (0.0000) 8.530705
(0.4754) (0.4721) (0.0000) (0.0000)
REER 0.460294 − − − − 9.082901 −
(0.8121) 1.168127 2.458824 9.079048 (0.0000) 9.016955
(0.6855) (0.3476) (0.0000) (0.0000)
Fiscal Deficit 0.736778 − − − − 13.69154 −
(0.8718) 1.045825 2.532003 13.68724 (0.0001) 13.70976
(0.7333) (0.3124) (0.0000) (0.0000)
Workers’ − − − − − 3.241945 −
Remittances 1.202234 1.837536 1.846024 3.264750 (0.0211) 3.980162
(0.2083) (0.3601) (0.6730) (0.0014) (0.0133)
Source Own Calculations by Authors
An Econometric Approach Towards Exploring … 299

Table 3 Cointegration
Hypothesized Eigen value Trace statistic Max eigen
results for CPI model
No. of CE(s) statistic
None* 0.926719 521.6105 214.3030
(0.000) (0.0000)
At most 1* 0.845521 307.3075 153.1511
(0.000) (0.0000)
At most 2* 0.571886 154.1564 69.56608
(0.000) (0.0000)
At most 3* 0.551198 84.5903 65.69628
(0.000) (0.0000)
At most 4 0.146308 12.89402 12.97113
(0.065) (0.0000)
At most 5* 0.069683 5.922893 5.922893
(0.000) (0.0000)
*Rejection of null hypothesis at 0.05 level

Table 4 Cointegration
Hypothesized Eigen value Trace statistic Max eigen
results for WPI model
No. of CE(s) statistic
None* 0.952035 499.3719 246.0192
(0.0000) (0.0000)
At most 1* 0.868474 253.3527 164.3123
(0.0000) (0.0000)
At most 2* 0.533032 89.0404 61.68112
(0.0000) (0.0000)
At most 3 0.168215 27.3593 14.91864
(0.093) (0.295)
At most 4 0.112275 12.4406 9.646584
(0.137) (0.236)
At most 5 0.033906 2.7941 2.7941
(0.095) (0.095)

eigen value test indicate 3 cointegration equations implying a possibility that at least
three out of the six variables seem to converge in the long term, even if they are found
to diverge in the short run.
Tables 5 and 6 present the error correction terms for the two models. Error correc-
tion terms or ECTs are the speed of adjustment in the dependent variable when the
series deviates from the equilibrium in the previous period. Since it is a correction
term, it has to be in the opposite direction of the disequilibrium, ECT should be
negative and to be significant, absolute value of observed t-statistic should be greater
than 1.64 and 1.96 at 1% and 5%, respectively. The results show that while the ECT
is significant for CPI and the disequilibrium of previous periods are corrected at a
speed of 4.797% in the following period, the ECT is not significant for WPI.
Tables 7 and 8 present the results for Granger causality for CPI and WPI. The
300 V. Jain and M. Mathur

Table 5 Error correction

Cointegrating Eq. CPI Standard error t-statistic
terms for CPI
ECT(-1) − 0.04797 (0.03362) [− 1.92676]
D(DCPI(-2)) − 0.329714 (0.10917) [− 3.02014]
D(DFD(-2)) 4.55E−07 (7.7E−07) [0.59057]
D(DGDP(-2)) − 0.00831 (0.06850) [− 0.12131]
D(DM3(-2)) − 0.02039 (0.05425) [− 0.37583]
D(DREER(-2)) 0.038263 (0.04214) [0.90805]
D(DRMT(-2)) 0.003339 (0.00955) [0.34970]
C 0.022153 (0.07274) [0.30456]
Source Own calculations by Author(s)

Table 6 Error correction

Cointegrating Eq. WPI Standard error t-statistic
terms for WPI
ECT(-1) 1.78E−07 (6.0E−07) [0.29719]
D(DFD(-2)) 8.09E−07 (1.0E−06) [0.78170]
D(DGDP(-2)) 0.045148 (0.08823) [0.51169]
D(DM3(-2)) 0.116444 (0.07048) [1.65226]
D(DREER(-2)) − 0.025275 (0.05473) [− 0.46182]
D(DRMT(-2)) 0.014389 (0.01255) [1.14612]
D(DWPI(-2)) − 0.289331 (0.10982) [− 2.63465]
C 0.022134 (0.09393) [0.23565]
Source Own calculations by Author(s)

Table 7 Granger causality

Dependent variable: D(DCPI)
results for CPI
Excluded Chi-sq. Prob.
D(DFD) 0.646065 0.7240
D(DGDP) 0.914351 0.6331
D(DM3) 1.190459 0.5514
D(DREER) 1.252220 0.5347
D(DRMT) 0.598938 0.7412
All 4.077367 0.9438
Source Own calculations by Author(s)

results envisage that though there is a long-term integration between the variables,
there is no causative association between CPI and the independent variable, i.e.
none of the variables are found to granger cause CPI in short term. Contrary to this,
workers’ remittances are found to granger cause WPI in short run.
An Econometric Approach Towards Exploring … 301

Table 8 Granger causality

Dependent variable: D(DWPI)
results for WPI
Excluded Chi-sq. Prob.
D(DFD) 2.159207 0.3397
D(DGDP) 0.627705 0.7306
D(DM3) 2.809024 0.2455
D(DREER) 0.343135 0.8423
D(DRMT) 10.14994 0.0063
All 16.99551 0.0745

6 Conclusion

The aim of this paper is to study the association between workers’ remittances, money
supply, fiscal deficit, GDP growth rate and real effective exchange rate with inflation
index WPI and CPI in India. The study concludes that while worker’s remittances
does have a causal relationship with WPI in short term, no such relation holds for CPI.
In fact, the analysis shows that CPI does not have causal relationship with any of the
explanatory variables in long run. The Johansen’s cointegration test shows association
between these variables and CPI and WPI in short run. The vector correction term
is insignificant and does not show any convergence in long run. Individually, all
the five variables, i. e. workers’ remittances, GDP growth rate, fiscal deficit, real
effective exchange rate and money supply are granger causing inflation but that is
also not very strong and significant relationship. The other explanatory variables also
fail to show any impact on inflation in long run. Thus, this paper also confirms the
previous conclusions of insignificant positive impact of workers’ remittances in India
and a positive long run relationship. But it also highlights that some of the major
factors like growth rate of GDP, fiscal deficit (which is one of the major problems
of developing economies due to rising developmental expenditure), money supply
and real effective exchange rate were not responsible for the CPI numbers in Indian
during the period of study.
Future study of additional variables may be made to understand the causes of
inflation in India over the period. This study takes into consideration time frame of
2012–2019 due to data availability, a study with extensive period may be made to
deeply study these determinants.

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A Robot Maker for Health Sector

Om Prakash

Abstract Coronavirus infections have once again highlighted the need to accelerate
the companies, especially in health care to adopt automation. Countless robots have
been made since last more than 50 years, but still we do not find their ubiquitous pres-
ence. Consequently, countless doctors, nurses and healthcare workers have risked,
are currently risking and may continue to risk their precious lives, while tending the
dependents. Countless families have suffered as their lone breadwinner succumbed
to a risky act while tending coronavirus-affected patients. The paper suggests that it
is high time now that companies delegate only the risky tasks to robots. The industry
is currently in version 4.0, which is digitalization, and a universal need is felt to accel-
erate the companies toward adopting intelligent automation. While automation is the
next version in industrialization of the world, the question still arises as to whether
the state-of-the-art technologies are available to usher the companies toward the new
era of automation or not. There are innumerable researches on robotics, and even
the kids are being prepared to construct a robot at some places. However, it seems
to be an aimless proliferation of robotics undertaking the ordinary or cliché jobs
so much so that the whole activity appears clichéd. It is high time that a focused
research is undertaken to construct a universal robot that can help to make robots
that are secure and harmless to humans and replace preferably risky tasks. This not
only will prepare the world in moving in right direction, but would also ensure safety
and security of human race as the automation could be directed to replace only the
risky tasks. This work is therefore aimed at constructing a universal “automaton” to
understand any requirement and assist in creating safe and secure robots with the
help of 3D printers. A prototype to this effect was developed and is available for
further research and development in this area.

Keywords Corona virus · Robotics · Humanoid · Robotic assisted surgery ·

Universal automaton

O. Prakash (B)
Real Apps, New Delhi, India
e-mail: [email protected]

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 305
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_15
306 O. Prakash

1 Introduction

As the second wave began, no less than 174 doctors, 116 nurses, 199 health workers
died due to COVID-19 as of February 2021. The list is growing as we have entered the
next wave of infections and some speculate that the 3rd wave, mostly infecting kids,
may be imminent (PTI, 2021). Astonishingly, Amnesty International states that over
17,000 health workers have died due to coronavirus (Amnesty International, 2021).
As the states are again reeling with upsurge in cases and curfew-like situations are
being considered or imposed, the situations in hospitals continue to be grim. While
patients tend to be admitted and discharged and there is an end to their ordeal, but
there is no respite for hospital staff and healthcare workers and experts. Day in and
day out, they have to continuously work with these patients and every single second
they are in real danger of contracting the deadly disease. In some hospitals, they
are working beyond their regular times and they cannot even take a day off as the
situation continues to be very serious. And what do some get as a bargain—nothing
but a deadly disease as a reward to their exemplary social service to mankind (PTI,
2021).
Apparently, there is no alternative for them as they are the best bet for everyone,
as who else can replace them? So, is it not fair that the technologists come forward to
their rescue? If these healthcare workers are risking out their lives for the mankind,
is it not the duty of the society, technology companies, taxpayers, angel investors and
even the government agencies to do a little bit to take them out from such a terribly
sticky situation? So far, a zillion of robots have been constructed and deployed, but
still one does not find them at common healthcare centers or hospitals assisting for
common jobs. This paper considers that certainly one can and a possible answer is
to develop a robot to assist these workers and even the healthcare experts in their
daily chores. Certainly, the robots cannot replace the human nurse or doctors, but can
surely assist them in the tasks like undertaking preliminary diagnosis of a patient like
initial registration, Aadhar Card verification, providing those tokens, recording the
temperature and even tending them for plausible treatment. The object is to simulate
the job of human nurse so that instead of the humans, these robots may come into
the contact with the patient as there is no way that a robot can be affected or contract
the deadly disease (Kaiser et al., 2021).

2 Hypothetical Situation

Shyama (fictitious name) is the only breadwinner for her family. She had been
completely dedicated to the hospital, would leave every day on time and would also
return on time after the completion of her shift. Her old mother would be waiting
for her every single day. Her mother was about 80 years old, would wait for her and
was completely dependent on Shyama. Shyama never married as her father had died
while she was still young, and she sacrificed for the sake of her mother. But, this was
A Robot Maker for Health Sector 307

not the only sacrifice, as after the spread of COVID-19, one day she left her house,
never to return back again (Masceranhas, 2021).
Dr. Ravi recently married and had been happily living with her wife and a little
daughter. His wife and daughter used to take dinner with him, and till date, they never
dined without him, especially his daughter who was absolutely fond of him and her
biggest fan. That day, Dr Ravi promised to come on time for special occasion for
a special dinner, but never returned back. The reason was that he was in charge of
COVID-19 facility and was not feeling well throughout the afternoon. By evening, he
had to be admitted to the ICU of the same hospital. He was responsible to discharge
countless patients, but that day he could not be discharged. Henceforth, his daughter
and wife will have to take the dinners all alone as he will never return (AHA, 2021).
Should we allow this to happen? Perhaps, the real stories could be similar or even
grimmer as so many did sacrifice their lives for us! What if a healthcare worker just
has small kids only, waiting for him or her to come back to them? (AHA, 2021).

3 State-of-the-Art Robotics Helping Healthcare Workers

and Units

There are currently very expensive state-of-the-art robots that have been deployed
so far in various countries. Earlier, USA had identified their first infection by the
coronavirus in its territory. He was admitted to Everett Regional Medical Center
in Washington. There, to prevent the spread of the virus, every detail counts and
technology had become a great ally. From the first minute, doctors had communi-
cated with the patient through a robot called Vici that has a screen, speakers and a
microphone. The device, which looks like a tablet on wheels and was developed by
the company InTouch Health, also has a stethoscope and allows basic tests such as
temperature measurement. Like Vici, there are other machines that can contain the
escalation of the coronavirus and help reduce the workload of doctors. For example,
the Guangdong Provincial People’s Hospital in southern China has started using
robots capable of opening and closing doors and taking the elevator autonomously to
deliver medicines to patients, according to Chinese public television CGTN (Kaiser
et al., 2021).
In the pandemic situations, it is essential to avoid contagion and spread. Robots
can be used to test citizens, detect possible diseases and prevent other people or
medical personnel from being infected. Everything indicates that the coronavirus is
spread between people who are close through contact, for instance, through the small
drops of saliva that the virus carrier excretes when coughing. Therefore, minimizing
human contact is critical. Among those killed is Liang Wudong, who was one of
the doctors treating patients in Wuhan, the epicenter of the corona virus. He was
one of the first health workers killed due to the deadly infection. The death of the
62-year-old doctor has highlighted the risks to which medical personnel are exposed.
Already in 2003, with the severe acute respiratory syndrome (SARS) epidemic, a
308 O. Prakash

large part of the health personnel was affected while caring for infected people.
Therefore, it is rather a pity that robots could not find its place in terms of common
and easily affordable equipment, like other rather ubiquitous machines, for instance,
X-ray machines or ultrasound machines. Currently, the robots are very expensive to
the tune of over 100,000–400,000 Euros which are mostly out of reach for a popular
healthcare center in the 3rd world countries like India (Katevas, 2001).

4 Waitress Robots in COVID Era

But hospitals are not the only places where technology can help. A Chinese urban-
ization uses a drone with thermal cameras to take the temperature of the neighbors
without having them to leave their houses. In addition, at a hotel in Hangzhou, a
city of nine million people in eastern China, an autonomous robot named Peanut
is in charge of bringing food to about 200 quarantined people, according to China
Xinhua News. These guests, as reported by the same media, will remain in isolation
for at least two weeks as a preventive measure because they traveled on the same
plane as passengers from Wuhan. Incidentally, cost of waitress robots is about INR
300,000–400,000 in India (Kaiser et al., 2021).

5 The Peanut Robot

“Hello! Peanut is serving the food,” the machine greets as it moves slowly down the
hall, door-to-door with the aim of having guests grab the menu. In a video uploaded
to Twitter, a man with a mask, wearing a robe and slippers comes out of his room and
takes his food. “Take advantage. Please contact the hotel staff via WeChat if you need
anything else,” adds the robot, after serving the food to the man. By using WeChat, the
most widely used instant messaging application in China, it is intended to avoid any
direct contact with hotel workers. This robot, developed by the Keenon Company, is
designed to serve in restaurants, hotels, hospitals, offices, banks or airports. In fact,
they are already present in a restaurant chain in Madrid. The company explains on
its Web site that Peanut has a voice recognition system and is equipped with artificial
intelligence. To make the communication “more interesting,” you can change the
shape of your eyes to show the emotions of happiness, anger or sadness (Korn,
2019).
A Robot Maker for Health Sector 309

6 Robots that Clean and Disinfect

In addition to the robots that interact with patients and those that bring them food,
there are also those that can clean and disinfect different spaces. Xenex is a Texas-
based company that sells robots to kill pathogens. These machines, as the company
explains on its own Web site, are used to quickly disinfect any room in just five
minutes. “LightStrike disinfection technology has been proven to effectively reduce
coronavirus contamination in clinical settings,” he adds. Another company called
Dimer has offered some airlines a robot to prevent the spread of the virus. The
company states on its Web site that commercial airlines play a direct role in how
diseases spread around the world. “Airplanes have the unique ability to transport
germs across continents and oceans,” he says. The system, which has been developed
specifically for airplanes, uses ultraviolet light to eliminate “99.99% of the germs”
present in these means of transport (Korn, 2019).

7 Other Useful Robots from Pre-COVID Era

Machines that are already used in China on a regular basis could also be useful to the
rest of the world. However, their cost is still somewhat USD 50,000–USD 100,000.
For instance, it is a robot implanted in some preschools in China to detect diseases
in children early, according to the Daily Mail. Every morning, before entering the
school, it performs a medical checkup on the minors in just three seconds. Thanks to
a temperature measurement system and cameras that scan children’s faces, it is able
to detect possible diseases. These robots of less than one meter, would serve to avoid
contagion and keep a temperature control. It would be quite interesting to use them
to diagnose those people who experience the first symptoms. The problem, however,
is that sometimes they can have a risky operation as these are of very hard material
and non-collapsible. In contrast, the robots made through soft material, like the ones
created through 3D printers, are not only soft, but can potentially be constructed with
much lower cost. Such low-cost robots can be useful in common schools and even
healthcare centers in India. Even in China, there is lack of popular use of robots in
common schools and hospitals, as they mostly rely on manual works as carried out
by human workers (Balasubramanian & Santos, 2014).
In the same way, it underlines that Xiaoyi could be used. This robot, developed by
the artificial intelligence company iFlytek, passed with flying colors the examination
that medical students must take to practice as doctors in the Asian country, according
to China Daily. “It is capable of reviewing patient records and giving recommenda-
tions to the specialist,” he says. At a time when hospitals are overwhelmed, it could
be used to “analyze the results of an analytical or temperature check.”
310 O. Prakash

8 Technological Innovations to Face COVID-19

The research and development work carried out by engineers and scientists in univer-
sities, industrial companies and other organizations is reflected in numerous innova-
tions that have a strong positive impact on people’s work, health and social activities.
Hence, there is an importance of promoting the study of Science, Technology, Engi-
neering, and Math (STEM) careers among young people. Robotics is being regarded
as an ally to promote social distancing. Although the use of robots for productive,
educational, health or social purposes was experiencing an expansionary phase before
the pandemic, the arrival of Covid-19 stressed their assessment in terms of the contri-
bution they can make to protect the exposure of humans beings to corona virus or
interact with infected people without unnecessarily exposing health professionals
(Kaiser et al., 2021).
RoomieBot, created by the Mexican company Roomie IT Services, identifies
suspected cases of coronavirus infection in hospitals, taking body temperature and
detecting breathing difficulties. It is a converted prototype, since before the pandemic
it operated in banks and companies, as a customer service device, payment for
services and product guidance.
Pepper, the SoftBank Robotics robot, recognized worldwide for being the world’s
first social humanoid robot capable of recognizing faces and basic human emotions,
is supporting the battle against the coronavirus by fulfilling tasks of detecting the
use of masks in offices, businesses, airports and other closed places. Optimized for
human interaction, it is able to interact with people through conversation and its
touch screen (Korn, 2019).
More than 2000 companies around the world have adopted Pepper as an assistant
to receive, inform and guide visitors in an innovative way. It is also used in educational
institutions.
Tommy, nurse robot, helps save lives of people affected by the COVID-19. As the
newspaper El Comercio points out, it collaborates with doctors and nurses to treat
infected patients at the Circolo Hospital in Varese (Italy).
Moxi is a nursing assistant robot developed by Texas Health Resources. It works
with the clinical staff in the neurology unit at Texas Health Presbyterian Hospital
Dallas, helping to search, collect and deliver intake kits, laboratory samples and linen
bags. It was designed to give clinical staff more time to focus on patient care.
Cruzr: Antwerp University Hospital (Antwerp) uses a robot supplied by the
Belgian company Zorabots, which automatically detects the temperature of patients
and whether or not they are wearing masks when entering the hospital. These types
of robots have been assisting people for years, but the pandemic has made them a
checkpoint in hospitals.
Luchi, humanoid or gynoid robot, treats patients with COVID-19 at the National
Medical Center November 20 in Mexico City. It measures 1.40 m in height, can
receive instructions via Wi-Fi from anywhere in the hospital or outside of it and has
an assisted movement with proximity sensors, an attachment to avoid obstacles in
its transit and a system of recognition of people through vision by computer.
A Robot Maker for Health Sector 311

Spot is the quadruped robot of the Boston Dynamics Company, in Singapore, and
monitors that humans respect social distancing to avoid coronavirus infections.
However, the problem is that such robots are effective, but are highly expensive.
These robots need extensive care in operations, and some of them are built with mate-
rial that may potentially cause risk to patients, if such robot happens to malfunction.
The need of today is to build inexpensive robot, made of soft material, and must
operate in a risk-free manner, with an option to auto-switch off on malfunction.
Apart from providing direct help to patients and healthcare workers, robotics can
also be involved in creating accessories that help in pandemic age. For example,
face shields, masks and equipment like air purifiers can be prepared with accuracy
using robots. Before the pandemic, the market for face masks was limited to a few
models, while full face shields were reserved for use in laboratories, industries and
other work environments. However, the urgency to equip the entire world population
with effective protection elements against the coronavirus in a few weeks led to the
creation of numerous prototypes: from automated versions to those that incorporated
a research process by professors and university students. This involved in develop-
ment of gadgets to offer higher levels of security. Even large industrial corporations
joined in their efforts.
In this research, the object was to collect the details of such developments and inno-
vations in manufacturing of such accessories. Many devices were created in recent
months, including those devised by three academic members of ISTEC: University of
South Florida (USA), University of the Republic (Uruguay) and National University
of La Plata (Argentina).
PuriCare: LG created a portable air purifying mask with a respiratory sensor and
a double fan that features different speeds, allowing you to take in clean filtered air
and achieve normal breathing. Additionally, it has a case with UV rays to sanitize
the device.
LEAF is a transparent mask that offers health security, while others see the identity
of the wearer and read their lips or facial expressions. It is the first FDA-registered
mask to have standard N99 air filtration capabilities, as well as a self-purification
feature, thanks to a built-in UV-C light.
Micrashell Body Suit is the suit created for safe interaction with large groups of
people, including a drink delivery system, smartphone integration, speakers, voice
communicator and security camera. The helmet uses a filtration system based on the
N95 standard to clean the breathing air of any viruses.
HelloMasks is a set of mask that combines transparency, protection and porosity,
developed with a specially designed polymer.
Face shield for health personnel (UNLP) is an initiative of students and teachers
of the National University of La Plata, an academic member of ISTEC that allows
the manufacture of transparent plastic masks for those who are on the front line of
battle against COVID-19. The La Plata Aero-modeling School and the 3D Printing
Community also participate in the project. The mask consists of only 5 pieces (visor,
elastic, fixative to give rigidity to the transparent screen, a wedge to secure the visor
and an A4 size acetate sheet) and is made using 3D printing.
312 O. Prakash

LUCIA Project is a team of technicians from the Faculties of Engineering, School

of Design and Sciences of the University of the Republic (Uruguay), an academic
member of ISTEC, which designed and built a system to disinfect N95 masks using
ultraviolet light. All plans, code, etc., can be accessed of the LUCIA project that
is released under Creative Commons license type 4 (it can be copied, modified and
used, indicating the original reference).
University of South Florida Senior Research Engineer Michael Celestin, PhD
(USF College of Engineering’s Mini-Circuits Design for X Laboratory), developed
an assembly line to produce face shields for Tampa General Hospital medical staff.
Celestin’s team is using materials like Mylar, elastics and foam to produce one face
shield per minute. In addition, the USF Advanced Visualization Center (AVC) also
works to help address the shortage of personal protective equipment and collaborates
on several projects with the institution’s medical and engineering schools, including
the development of nasal swabs printed on 3D. USF is an academic member of
ISTEC (Korn, 2019).
ASICS, a mask for runners developed by the ASICS Institute of Sports Science,
allows them to breathe normally and give their maximum potential.
Tyler Glaiel: The renowned video game creator built a very particular homemade
electronic mask, using an Arduino Nano Development Board and an LED matrix to
produce a light pattern that mimics the movement of the mouth when speaking. It
is not suitable for use by children, but provides a new relationship experience for
young people and adults.
C-Face: Donut Robotics developed a smart mask with technology that translates
Japanese into eight other languages and connects to the Internet. You can record and
transcribe conversations into text messages via Bluetooth. It also amplifies the user’s
voice and makes calls, connected to a smartphone. The goal is to break down the
communication barriers imposed by the pandemic.
BioVYZR 360° face shield and personal air purifier that filters out pathogens,
allergens and pollutants, was created in Canada. It consists of a bubble-shaped case
that fits over the head and wraps around the torso.
ISPHERE is a protective sphere covering the entire head created from the manda-
tory mask use regulations in Berlin (Germany). Inspired by science fiction comics,
it has a built-in microphone and speaker.
Maskalike: Designer Danielle Baskin devised a mask that has the part that is
covering each person’s face printed on it. It allows who is using it to be recognized.
Vue Shield: Joe Doucet designed a face shield with integrated sunglasses.
VitalMask: The device generated by Vita Innovations (a start-up created by a
group of students from Cornell University) consists of a mask for use in hospitals.
Printed in 3D, it has a HEPA filter on the front and sensors around the earlobes, nose
and mouth, which monitor body temperature, heart rate, blood oxygen levels and
respiration.
These are extraordinary creations. But, the mass creations need the intervention
from robotics so that they are produced in a low-cost method and make them available
for the 3rd world countries.
A Robot Maker for Health Sector 313

9 Inventions to Guarantee Social Distancing

M-Rad Test Units: Mobile and transportable test sites detect COVID-19 and the
presence of antibodies in the body, which could help relieve pressure in hospitals.
AIR LOCK is created by Plastique Fantastique so that doctors can treat patients
safely; it is a portable personal space, which has a positive air pressure so that air
flows continuously without leaking contaminated air.
CURA is a container that creates negative pressure and biocontainment levels
similar to normal room insulation. Designed by Carlo Ratti Associati, its first
installation in a temporary hospital took place in Turin, Italy.
Shield is a project that proposes to integrate plexiglass dividers to public seats
to keep people safe and distant, with limited visual impact on the surrounding
environment.
The Vital House is a structure to contain infectious diseases, which can be quickly
built inside a house and allows visual contact with the rest of the family members
during the isolation period. These units would have health parameters monitored.
Plex’Eat is a hanging clear plexiglass protective shield that hang above each diner,
so they can dine or have lunch with others without the need to wear chinstraps. They
can be quickly dismantled and disinfected. It is a solution for restaurants and bars
and even can be extended for their use in hospitals.
Washi: Designers Ana María González Londoño and Farhad Saffari Ghandehari
imagined a small device to save water and better promote hand hygiene, which works
with proximity sensors.
Butterfly seating is a flexible seating solution for economy and premium classes
on airplanes.
Qworktine is an airtight office system in the shape of a hexagon for those
who cannot work from home. The doors are hands-free and controlled by facial
recognition.
Mediamatic is a restaurant in Amsterdam, created through fully glazed private
greenhouses for each table to ensure social distancing.
Soffio is inflatable face shield that creates a wide protective barrier and blocks air
droplets, allowing you to meet friends in restaurants and bars.

10 Technology to Predict Disease Outbreaks

“If something is to kill more than 10 million people in the next few decades, it will probably
be a highly infectious virus, rather than a war,” warned the Microsoft founder in 2015 during
a TED talk. “There will be no missiles, but microbes,” I assure you. Ten years later, the
pandemic that we are suffering today arrived. It is possible to anticipate epidemics the same
way as the climate. Its creators argue that Microsoft Premonition can help in the global fight
against disease outbreaks by predicting the distribution and evolution of disease-carrying
microbes, viruses and animals in the earth’s biome or in life around us. In an article published
in the Microsoft News Center, Suzanne Choney argues that if the biome could be monitored
314 O. Prakash

like the weather, environmental pathogens could be detected earlier and outbreaks could be
predicted before causing major epidemics. “Microsoft Premonition shifts the paradigm from
reacting to known pathogens to continuously looking for them as they evolve,” said Ethan
Jackson, senior director, Microsoft Premonition. “These signals could help us detect potential
threats earlier, respond faster, and develop new interventions before outbreaks occur.”

Microsoft Premonition is an advanced early warning system that combines robotic

detection, artificial intelligence, predictive analytics and cloud-scale meta-genomics
platforms to autonomously monitor disease-carrying animals such as mosquitoes,
robotically collect environmental samples and then scan them at the genomic level
in search of biological threats. Like weather forecasting, your analytics pipelines
use cloud-scale computing to take advantage of the latest advancements in Azure
IoT and Azure Data Lake on Microsoft Azure. Today, Premonition pipelines have
scanned more than 80 trillion base pairs of genomic material from environmental
samples for biological threats (Yogesh et al., 2020).

10.1 Robotic-Assisted Surgery

Today, robotic-assisted surgery and, in general, the use of robots in medicine mark a
qualitatively new stage in the development of minimally invasive technologies and
endovideosurgery due to the high level of accuracy, functionality and ergonomics
of modern robotic systems. With the help of robotic technologies, the quality of
diagnostic manipulations increases, and the results of therapeutic procedures and
surgical interventions are improved, which ultimately leads to an improvement in the
prognosis and quality of life for patients. However, this also significantly expands the
possibilities of clinicians being diminished. Earlier diagnosis, increased efficiency
and the effectiveness of the therapeutic measures in combination with improved
surgical treatment methods led to an improved prognosis and functional results for
patients, increasing in life expectancy and constantly the expansion of the boundaries
of survival. As a result, the role of clinicians undoubtedly became associated with
the processing of a large number of multimodal noisy, multidimensional, multi-scale
intervention on metabolic and systemic information, in addition to the anatomical
details. Early diagnostic provides less lesion in volume of organs in the pathological
process, requiring not only minimally invasive access, but also maximum precision of
intervention, often superhuman agility, vision, analysis and decision making. In this
respect, medical robotics plays an important role in the development of the surgery
of the future (Broadbent et al., 2010).
A Robot Maker for Health Sector 315

10.2 History of Robotic Developments to Assist Surgery

Today, robot-assisted surgery and the use of robots in medicine mark a qualitatively
new stage in the development of minimally invasive technologies called endovideo-
surgery. But, the philosophy of automation was first laid out by the ancient Greek
thinker Aristotle in the fourth century BC. There is evidence that automatic machines
were created on the territory of ancient Greece, ancient China, ancient India and
ancient Rome. In 322 BC, ancient Greek inventor Archytas of Tarentum created a
wooden Blue Bay, flying with jets of steam. Large contribution to the development
of mechanics, hydraulics and pneumatics was contributed by the Alexandrian math-
ematicians Andsofas, Heron and Ctesibius, who lived at the end of the third century
BC, many of whose inventions turned ideas about human capabilities. At the end of
the fifteenth century, the great artist and inventor Leonardo da Vinci for the entertain-
ment of queen’s family designed a mechanical knight, clad in armor, which can be
called the first anthropomorphic robot. Inside the armor, there was a mechanism that
sets in motion the artificial person with the help of the rollers, that allowed him to
imitate human movements. Detailed drawings of this mechanisms were found in the
1950s. Pierre Jaquet-Droz created the surviving to this day “Automatons” (anthro-
pomorphic mechanisms—artist, musician, calligraphers). An important milestone
in robotics is at the end of the nineteenth century. In 1898, the ingenious inventor
Nikola Tesla demonstrated for the first time the possibility of remote control devices
by creating a boat with radio control future (Broadbent et al., 2010).
The term “robot” itself appeared only in 1920, thanks to the Czech science fiction
writer Karel Czapek and his brother and co-author Josef. Into action one of his plays,
“RUR,” the author introduced a human similar mechanisms and called them “robots”
(from Czech “robota”—hard physical labor). In the literature, the theme of robots
was developed by the writer Isaac Azimov, and the collection of stories “I, Robot”
brought him worldwide fame. In 1951, Raymond Goertz, who worked in the nuclear
power missions in the USA, designed a mechanical remote-controlled manipulator
for working with radioactive substances, excluding direct contact with the person.
Several years later, the first industrial robot “Unimate” came into existence, used for
welding and casting at the company’s factories at General Motors. “Unimate” served
as the first prototype robot used in medicine. In 1977, V. Shainman designed a robot
system PUMA 560 (Programmable Universal Machine for Assembly), which was
improved and used in 1985 in neurosurgery for the precise direction of movement
of needles during a brain biopsy of a person. This moment is considered the starting
point in the history of medical robots. In 1988 urologist John Wickham, who owns the
term “minimally invasive surgery”, along with Brain Davis of the Imperial College of
London presented a robotic system PROBOT, created specifically for transurethral
resection of the prostate. The first operation using this system was successfully
performed in London in 1991. A year later, Integrated Surgical Systems presented a
surgical system ROBODOC for use in orthopedics for hip arthroplasty. Subsequently,
similar devices were developed for use when replacing a knee replacement and in
temporal bone surgery, which are used to this day (Katevas, 2001).
316 O. Prakash

In 1993 at Computer Motion Inc., a robotic device was presented to fix and change
the position of the video camera during laparoscopic operations, which received the
name Aesop (“Aesop”). Highly complex surgical robot was attached to the operating
table or cart and moving the endoscope was achieved using voice control or was
allowed to install the endoscope manually. In 1995, Computer Motion Inc. combined
two robot manipulators with tools and Aesop, to create the ZEUS system (“Zeus”) to
manipulate the arms of the robotic complex. These could be guided by the surgeon
who performed the movement using management tools (joysticks) on the surgeon’s
console. Technically, ZEUS was not a robot because it did not follow the programmed
movements, but rather was a computer tele-manipulator with interactive robotic arms.
To improve the accuracy of the movement of the instrument, ZEUS filtered out hand
tremors and could massage the stack sweeping movements of the surgeon’s hand in
short and precise tool movements. ZEUS surgical system has been used for the first
ever trans-Atlantic surgical operation (Lindbergh’s operation).
French professor, Marescaux from New York (USA), performed cholecystectomy
to a patient at a distance of several thousand kilometers, in Strasbourg (France). In
1999, Intuitive Surgical Inc. (USA) put into operation a robotic surgical da Vinci
system. Like ZEUS, da Vinci is a tele-controlled system, which consists of three
components:
• the surgeon’s console on which the manipulator controls;
• patient trolley equipped with four manipulator arms, one of which serves to fix the
endoscope, another is used to transmit image to the monitor built into the console
and the rest are intended for fixing tools;
• endovideosurgical stand (Katevas, 2001).
Precision of movement of mechanical manipulators surpasses the capabilities
of human hands, since they have seven degrees of freedom and bending capacity
by 90°. The screen displays a 3D image of the operated area. Surgeon controls
manipulators using touch joysticks, and this lets movements of the surgeon with
an absolute precision reproduced by robotic tools, providing improved articulation
that increases the ease of overlays and allows you to perform the most complex
manipulation with maximum accuracy. In the end, this ensures high quality of the
operation and increases the safety of its implementation.

11 Modern Robots in Various Fields of Medicine

In 2001, the first clinical trials began on CyberKnife apparatus. It represented a

minimally invasive radio-surgical robotic system used for the treatment of tumors of
the skull and spine, as well as cancer of the prostate gland, lungs, liver and pancreas,
using linear accelerators. The system uses control according to the image and a robotic
arm with a computer control, allowing continuous tracking to live the movement of
the tumor and the patient for at the procedure and carry out the appropriate corrective
actions. Thanks to its exclusive precision, the system does not require invasive frames
A Robot Maker for Health Sector 317

for fixing the head or other parts of the patient’s body, which significantly increases
flexibility of robotic systems. The radio-surgical system has the possibility of online
target tracking and irradiation with breath synchronization. This system is known for
the standard technology of radiation therapy for carcinogenic diseases. More than
100,000 patients are being treated all over the world. CyberKnife is an example of
a commercially available and widely used frameless radio-surgical robot. In 2007
by Endocontrol (France), the first robotic system was developed for Laparoscopic
Surgery with Voice management, called VIKY, which is used in gynecology, general
surgery and urologic, thoracic surgery and includes a number of 150 devices around
the world. In the same year, robotic bathroom magnetic navigation system Niobe
(Stereotaxis, USA) was developed for endovascular operations on the heart, as well
as endoscopic manipulations in gastroenterology (capsule endoscopy). The stem
consists of two magnets with a robotic control next to the operating table. During the
procedure, the doctor uses 3D navigation, an intuitive computer interface for setting
the magnetic field around the patient, so that it allows precise guidance of catheter
movement or capsules with a built-in magnet. Hansen Medical in 2007 released a
specialized robotic system for Sensei for endovascular transcatheter interventions
on the heart, in particular correction of supraventricular tachycardia, tremoratria, as
well as complex ablation procedures for the treatment of atrial fibrillation. Also,
like the Niobe system, there is a remote control version providing stability, precise
positioning and insertion of the catheter, tagged navigation system at Senseiis 3D
mapping, fluoroscopy and ultrasound (Katevas, 2001).
Another example of this is a group of medical robots is a systemCorPath GRX,
created over the years by Corindus Vascular. It was marked by further development of
guided flexible catheters for endoluminal access and work in restricted areas, inacces-
sible for rigid laparoscopy. In 2011, American company Mazor Robotics developed
a specialized robotized complex Renaissance for neurosurgery. The system allows
doctors to advance plan all stages of surgical intervention and think over the size of
the required implant goods and fixing materials. After installation, the robotic plat-
form could be directly placed on the patient’s spinal column and synchronize with
the current position. The platform runs the planned volume of surgical intervention
with a maximum high precision up to 1.5 mm. At this moment, most of the world’s
execution experience robotic interventions on the spine. Over time, the priority in
medical robotics is creating more compact, lighter and safer robotic systems with
improved artificial intelligence that can easily be integrated into the clinical workers
(Karwowsk & Rahimi, 1992).
Due to developments in the field of highly specialized surgical robots, orthopedic
robotic systems Mako (Stryker, USA) and Navio (Smith & Nephew, UK) produce
devices that are semi-active. Robotic systems are used to replace knee joint. Mako
uses a 3D model of the knee of the patient’s joint for preoperative planning and ratio of
surgical intervention. System provides both auditory and tactile feedback, limiting the
workspace borax. Navio does not use preoperative CT scan as the system constantly
monitors both the patient’s anatomy and the robotic device using infrared cameras
and optical instruments. Mako is a parallel manipulator (surgeon and robot work
together to move the tool). Navio is a sequential robot (the surgeon holds and moves
318 O. Prakash

the robot, which moves the tool). Flex Robotic technology has been an approved
platform (Medrobotics, USA), which is the first specialized surgical platform based
on the manageable and customizable volume of robotics. Flexible-tiered single-point
controlled endoscope access can be carried out on nonlinear twisted anatomical paths.
Another promising development in the field of robotic endoscopy is a company
represented in 2018 by Auris Health Inc. Monarch System. This robotic system was
created to carry out diagnostic medical and therapeutic bronchoscopy, and it provides
access to the bronchi of a sub-segmental order. Thanks to 3D-MSCT navigation
in combination with high-definition video transmitted with an endoscope, as well
as ergonomic control, it allows you to perform targeted biopsy of the peripherical
formations of the lungs. Its advantages provide access to anatomical calls within 360
degrees from one port to minimize the invasiveness of the procedure and significantly
increase the efficiency of transoral surgical interventions (Pickover, 2012).

12 Medical Robot Classification

With the advent of medical robotic technologies, new terms have appeared. In
particular, telesurgery has appeared that uses surgery interfering with master-master
devices, in which the master and slave components are physically separated. The
surgeon who is located at a remote distance from the operating room table carries
out active control of the toolcops. Data exchange between the surgeon’s console and
tools is carried out by telecommunication lines. Although the master–slave devices
are usually located in the same room during surgery, the procedure can be performed
using a surgical console, located in another room or even in another region. Today,
all existing surgical robots can be divided as follows:
Passive robots do not have autonomous mode and so are manually operated and
independent movement is not performed (for example, Neuronavigator).
Tele-controlled robots do not possess autonomy. Retain surgical instruments
controlled by a person remotely (e.g., da Vinci).
Semi-active (interacting) robots are “true robot assistants.” Operator constantly
monitors the system. The robot provides some control. Examples include robots with
virtual functions (semi-active—Renaissance, Navio; interacting—Mako).
Active robots have autonomous framework of a specific task. Here, an operator
performs discrete control, and the robot performs a certain task in autonomous mode,
but with the initiative of the operator.
Active robots are autonomously complete with the planned movement, condi-
tionally auto-nominal robots. Operator builds and confirms surgical/treatment plan.
The robot performs the procedure in autonomous under operator control (e.g.,
CyberKnife) (Pickover, 2012).
A Robot Maker for Health Sector 319

13 The Future of Robotic Surgery

Robots are with a high level of autonomy—robots capable of making medical deci-
sions under human control (at the moment does not exist). Fully autonomous robots
that may be capable of performing a complete surgery without human intervention
are at the moment a Science fiction. Also, medical robots can be divided by their
scope:
1. Surgical robots:
• Neurosurgical—during surgical interventions on the spinal column and brain
(Neuromate, Renaissance).
• Endoscopic—used for bronchoscopy (Auris Monarch), ENT surgery
(µRALP), manipulation lesions on the digestive tract and upper respiratory
paths (Flex Robotic System, i-Snake).
• Endovascular—controlled flexible catheters for endovascular intervention
sessions on the heart and blood vessels (Magellan, Niobe, Sensei, CorPath).
• Radiosurgery robots—CyberKnife.
• Universal laparoscopic robots—tele-controlled manipulators (Aesop /ZEUS,
VIKY, Da Vinci).
2. Auxiliary medical robots.
• Rehabilitation—nursing robots (RIBA), companion robots (PARO), robotic
exoskeletons (ALEX, LOPES, RUPERT).
• Pharmacological – robots-pharmacological delivery systems (RPDS),
targeted drugs delivery robots through the bloodstream (micro-bots / micro-
robots / nanobots).
• Service (hospital) robotic for disinfection (Xenex Robot), robots for obser-
vation, training and telepresence (InTouch tele-robotic system), autonomous
mobile manipulators for transporting, equipment, consumables (TUG),
social robot administrators/c-secretaries capable of recognizing dozens of
languages (Pepper, Nao).
3. Other medical robots
• Robotic hair transplant system (ARTAS).
• Venipuncture robot (Veebot).
• Robotic systems for resuscitation branches (The AutoPulse Plus, LS-1). Da
Vinci surgery
In recent years, competition has begun to appear in the market of medical robots.
The most tough of potential opponents of Intuitive Surgery are from the companies
like TransEnterix, TitanMedical, Accuray, MAKO Surgical, Mazor Robotics, Hansen
Medical et al. Despite this, it is Intuitive Surgical that has for a long time monopolist in
the global robotics market. Thanks to the huge number of patented technologies used
in da Vinci, the company possesses over 1700 national and international technology
patents. da Vinci is the only one in the universal world robotic system with remote
320 O. Prakash

control and is widely used on all continents. According to Intuitive Surgical Inc.,
today in the world, almost 5500 robotic da Vinci surgical systems are operative, out
of which about 3000 are in the USA and about 900 in European countries (Pickover,
2012).

13.1 The Universal Automaton

Robotic mechanism intention is to replace manual work with machines, essentially

in intensive operations and tasks that are risky and repetitive, for instance, in hospital
industry. The intent of this research is the development of universal robot as this
sector is characterized by being a great hand absorber in risky chores and dangerous
as well as risky tasks in patient tending. Robots can act as manipulators having the
characteristics with a degree of technical development that proves to be sufficient
to meet the needs in various tasks. Harnessing the potential and virtuosities of the
progress of robotics can lead to changes in the robot construction process from
the conception and project phase up to the execution technologies at the healthcare
sites and at hospitals. Thus, it is investigated for the performance of robots in the
current production sites of the robotic construction as well as hospital sites and the
applicability potential of the robotics in upstream industries with manufacturing tasks
performed in an environment controlled, in the form of constructive processes liable
to be executed in the traditional factory.
In this work, an application of universal robots is developed to help in the execu-
tion of risky chores like human nurse tending a patient affected from significantly
contagious diseases like COVID-19. In recent years, there has been a great tech-
nological development in the mastery of programmable automata (robots) and their
use in various industries, with clear advantages over manual production processes.
In fact, we live in a global and very competitive market, where demands are very
diverse, often defined by the customer himself, looking for a low price and with higher
quality. The industry also experiences continuous pressure to increase productivity
and realize the final product with uniform quality. This pressure from the market
means that the industry has to bet more and more in flexible production systems
(FPSs) that can be easily adapted to changes one want. These FPSs are preferably
computerized systems where the installation of manipulator robots is essential due
to its flexibility (since they are reprogrammable systems), being adaptable to several
functions in which its high precision and repeatability are not affected.
On the other hand, the transition from fully manual processes to automated
processes or quasi-automatons assists to increase productivity, and this is also the key
to the success of robotic systems. Thus, the industrial robot has in many cases become
the ideal solution for automation of production systems, allowing for very flexible
systems and the introduction of frequent product modifications, at a minimum cost.
Besides, the industry is obliged to put aside the rigid production systems, needed in
mass production, and provide for an intermediate stage of storage. Depending, of
course, on our software and the suitability of the tool for the function to be performed,
A Robot Maker for Health Sector 321

there are several industrial sectors that have already invested in making their lines
of automated and robotic production systems, the automotive industry being one of
pioneering examples in several countries. In short, robotics have proliferated and
infiltrated too many different domains.

14 Research Model

A prototype of universal automaton was prepared by taking into account the move-
ment of robots as well as the manipulation of objects that imply the knowledge of
position and orientation, especially at the end of the robot. Particularly important
aspect is the study of the robot control and the analysis of the interaction between the
machine and its surroundings. This section presents different mathematical tools for
that purpose. For the control of robots, a kinematic and dynamic model is required.
The kinematics allows relating the position and orientation of the terminal element
of the robot with the values of its particular coordinates. The dynamics allows one
to know the relationship between the movement of the robot and the forces that
originate it. The prototype development also referred to the fundamental concepts of
kinematics and dynamics of industrial manipulator robots.
The process of designing the universal automaton went through three fundamental
phases:
i. Task analysis.
ii. Robot structure analysis and.
iii. Functional analysis of the robot.
Every one of these phases corresponds to a specific job. The analysis of the task
and the respective production process consists of determining more specific tasks,
methods and tools to be used in each of the stages of its realization. After this first
phase, the analysis of the structure of the robot includes its functional specifications,
the design and software and hardware detail. This phase results in documentation with
all the information relevant to the manufacture, assembly, operation and maintenance
of the robot. The conception and project phase ends with the functional analysis
of the robot allowing to identify the functions and performance levels that can be
automated, specifying the environment in which the task will be undertaken, that is,
the experimental verification of the robot prototype.
However, if deficiencies are found in terms of quality, performance and potential
costs, we must move on to a phase of improvement of robot performances, requiring
the modification and variation of the planned tasks in order to make the performance
more profitable.
The analysis and portraying the development process of a robot allow us to take
the following considerations:
• There is a close relationship between the conception and design of a robot and
the specific requirements of the task to be performed.
322 O. Prakash

• The analysis of the task to be performed by the robot allows us to define some (non-
standardized) parameters that are fundamental for increasing their functionality.
To this end, we must take into account the characteristics of objects to be handled,
transported or worked with.
• The conception and design of the robot has to be developed based on functional
specifications, a process that is essentially intuitive and must be systematic.
• The requirements for the kinematic configuration of the robot are determined by
the complexity of the task to be performed.
• For the determination of the geometric, kinematic and mechanics of the conception
and design of a robot, the work systems must be automated, selected, observed
and described.

15 Creating Prototype of an Automaton

As highlighted, automaton is a robot prototype with an ability to create robots for

industrial use. Today, industrial manipulator robots are very advanced machines of
great precision and repeatability. From a mechanical point of view, they are structures
consisting of a kinematic chain of rigid bodies, interconnected by revolutionary or
prismatic joints which constitute the degrees of mobility of a structure (usually six),
having a fixed end (base of the robot) and another free to move (terminal element). The
resulting movement of the structure is obtained by the composition of the elementary
movements. As in a human arm, the industrial manipulator robots generally use the
first joints to position the structure formed by the others, which are used to guide the
terminal element. The joints used for positioning form the structure called the arm.
The next joints form the fist, by analogy with the human arm.
The handle generally has two configurations: pitch–yaw–roll (YXZ) as the human
handle or roll–pitch–roll (ZYZ) also called spherical wrist. The latter is most used in
robotics manipulation, although its structure presents singular configurations. Robots
also use a revolution arm of anthropomorphic structure and spherical pulse. The
mobility of a manipulator robot is ensured by the presence of the joints. The artic-
ulation between two consecutive links can be prismatic or revolutionary in nature.
A prismatic articulation performs a relative movement that is a translational rela-
tionship between two links, while an articulation of revolution performs relative
rotational movement between two links. The industrial manipulator robots used in
the various manufacturing tasks and assembly use one of the four basic categories
of the definition of movement:
• Cartesian or rectangular coordinates (3 linear axes)—robot Cartesian;
• Cylindrical coordinates (2 linear axes and 1 rotation)—robot cylindrical;
• Spherical or polar coordinates (1 linear axis and 2 rotation axes)—polar robot;
• Articulated or revolution coordinates (3 axes of rotation)—robot revolution.
A Robot Maker for Health Sector 323

A manipulator robot uses the arm joints for the positioning and the knuckle joints
for the orientation function. There are thus five main types of arms in manipulation
robotics: Cartesian, cylindrical, polar, revolution and SCARA.
Cartesian robots use 3 prismatic joints in which the axes are orthogonal. They are
widely used for handling tasks such as palletizing, storage and machining tasks such
as jet and leisure cut in which the robot movements cover large surfaces. On the other
hand, its axes can be organized and sized according to the tasks to be performed.
Cylindrical robots: coordinates of this system are x, y, θ angular. The cylindrical
robot differs from the Cartesian because one of the prismatic joints is replaced by an
articulation of revolution. The advantage of cylindrical systems is that the coordinate
system is easy to view and calculate linear movements where they can be used.
Polar Robots: Coordinates of this system are x, θ 1, θ 2. These differ from the
cylindrical one because one of the two prismatic joints is replaced by a joint of
revolution. The advantages of spherical or polar systems are that they cover a large
volume from a given central point. Their two rotational movements can be easily
isolated, and they can also tilt downward to pick up objects.
Revolution Robots: The coordinates are 3 rotation angles: θ 1, θ 2 and θ 3. The robot
revolution consists of 3 articulations of revolution whose axes of the first articulation
are orthogonal and the axes of the other two joints are parallel. The advantages of
the revolution systems are that all connections are rotating and so it provides for the
maximum flexibility since any location can be achieved. These are useful in dirty or
corrosive environments, or even under water.
It is worth mentioning that the Selective Compliance Assembly Robot Arm
(SCARA) robot is a subclass of cylindrical robots and has 3 revolution joints and 1
prismatic joint. Two of the revolution joints are positioned in the horizontal plane
allowing the extension of the robot arm at any point on the horizontal plane. At
the end of the robot arm, there is a vertical link which can be moved according to
a prismatic joint. The tool placed at the end of the vertical connection can rotate
around vertical axis of this connection (revolution joint), facilitating the control and
orientation of the respective tool in the horizontal plane.

16 Use of Universal Automaton in Hospital Industry

The hospital sector is one of those that mobilize a greater number of economic
resources and humans. It constitutes sector of great economic projection, in terms of
both the number of companies involved and invoicing produced, and in terms of both
quantity and diversity of the workforce employed. One of the main characteristics
of this industry is the great weight on the cost of pandemics, since in the execution
of the undertakings this cost is of about 50% of the total cost, especially in the times
of emergency.
Universal automaton intention is to just replace the human nurse or healthcare
specialists by the machines in only risky manual work operations that are intensive
and repetitive processes. These also require precision and speed, as the hospital
324 O. Prakash

sector has aided field for application development. We will see, however, that this
objective has very broad implications throughout the construction process or the robot
(conception, project, planning and execution). This does not prevent the development
of robotic systems that aim to automate some of the many tasks that are part of the
risky hospital processes. Due to the precision, speed and diverse nature of risky
manual operations, the object of these sections would be the presentation of a concrete
application that develops a prototype of generic robot. This generic robot is captioned
as “universal automaton” as this prototype would help in developing robots dedicated
to a particular risky and manual hospital operation. Extensive use of 3D modeling
and employing 3D printers to develop and create robotic parts are recommended and
presented. These robotic parts can then be assembled and supplied to be used for a
particular risky and manual hospital operation.
To improve current hospital processes, it is advantageous to apply the technology
of robotics because the robots are of high precision and powerful for the execution
of different types of tasks. However, it is necessary to integrate and adapt them to the
hospitals. Thus, for the use of robots in hospital sector, it is important to characterize
the working environment and the type of tasks carried out, as well as the nursing
works during pandemics.

17 Characterization of the Areas

A careful analysis of the specific tasks of the hospital industry allows pointing out
some possibilities for the use of robots in this sector. It is easy to verify that various
hospital activities involve repetitive operations—measuring weight, temperature,
general OPT chores like registering patients, patient verification process, assigning
tickets and tokens, and later on even collection of blood samples and testing. Robots
can immediately be put in use to substitute human nurses with precision, quality and
speed for such homogeneous tasks. At the same time, nurses that were replaced by
robots in these risky manual chores can devote their task in ensuring more complex
works like assuring the quality of patient care, ensuring the oxygen and other supplies
are in place and general hospital administration.
As highlighted earlier and as has been amply exemplified now during the time
of pandemic spread, the hospital business is particularly perilous and continues to
be, and one that surrounds higher number of work accidents, like countless nurses,
healthcare workers and even doctors contracting the deadly disease. They contract
the very disease they are treating as day in and day out they are put on duty with
no respite. There is no “discharge” for them until the disease dies out. Alternatively,
the robots can come to their rescue and provide them some necessary respite and
a time to breath. Otherwise, the frequency and severity of the accidents are set to
increase. This is so as, for one, lack of security and training deficit and tendency
to commit an error on the required protection standards can cause serious harm
to healthcare professional. For another, the high degree of risk inherent in tending
dependents in highly contagious diseases may lead to lowering the standard of care
A Robot Maker for Health Sector 325

due to some inevitable and unavoidable reasons. This will not be the case when
robots are deployed as in no way a robot can contract the deadly disease caused by
the biological germs.

18 Conclusion

In many cases, one may witness a certain disregard for basic personal safety stan-
dards on the part of the healthcare workers. Reluctance to use a PPE, masks or
proper sanitizers to handle appropriate tasks at hand and committing an error to use
gloves, goggles, breathing masks and protection against common risks are evident
and can be inevitable. Workers may continue to fail to comply with safety standards
in collective actions in order to make the work environment less dangerous, namely
when applying proper sanitizers at the floors or properly disposing of the waste,
maintaining protected openings and ventilations at workplaces and providing prop-
erly lit and illuminated areas. Also, the high degree of risk inherent to some tasks
carried out on site is an opportunity to resort to the use of robots. Apart from the
pandemics, there is always risk of chemicals (toxic) or radiation (exposure to high
levels of radiations) is also the potential area where robots can be deployed in normal
times.
The implementation of hospital robot in the process requires prior and detailed
study of the cost (from its acquisition to its effective amortization), weighing the
advantages and disadvantages of its introduction. If it is a fact that the economic
justification for the use of robots determines their viability and profitability, it is also
a fact that, in addition to the cost of acquisition, tools and equipment and installation
of the robot in the factory, we have to consider the benefits that the use of the robot, or
automation in terms of general. The bottom line is to create robots that can just replace
the risky tasks, and not all tasks, in hospital operations. The created robots should
be very cost effective and affordable to common hospitals in 3rd world countries.
Furthermore, the robot itself must operate in risk-free manner and must be durable.
Universal automaton will have the capability to construct such robots that are made
of soft material, operate in a risk-free manner and highly affordable.

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Prevalence of Emotional and Financial
Stress Among Management Students

Preksha Dassani and Deepak

Abstract Good health and a composed mind are a reflection of a person’s well-being.
Nowadays, stress has become an inevitable part of our daily lives. Sometimes, stress is
beneficial as it pushes us to perform well while too much stress has its negative effects.
An individual who is exposed to stress for a prolonged period often experiences
exertion on physical and mental health. Students are the building blocks of a nation
and the leaders of tomorrow. This chapter is an attempt to present the emotional
and financial stress the students are exposed to during their college life. A study on
218 postgraduate management students shows that they experience emotional and
financial stress from moderate to extreme levels. With the use of descriptive analysis
and factor analysis, the findings and the possible way ahead have been presented.
Based on the results, suitable suggestions have been put forth to mitigate the effect of
stress on students. The chapter also links the benefits of emotional intelligence as a
tool to combat stress. Higher emotional intelligence helps to improve understanding,
communicate effectively and assist to manage one’s emotions which relieves stress.
Thus, reduced stress maintains good health and helps them to grow in their personal
and professional domain.

Keywords Emotional stress · Financial stress · Management students · Emotional

intelligence · Conflict management

1 Introduction

Stress has become an inevitable part of an individual’s life. Pressure is felt in a family,
at the workplace, in business, at study or in any social or financial action. In the context
of students, particularly in India, students in the higher educational institution (HEI)
need to deal with varied pressures, namely to maintain one’s academic score assign-
ment deadlines, discussions, project works, quizzes, other challenges when they

P. Dassani (B)
Andhra University, Visakhapatnam, Andhra Pradesh, India
Deepak
Indira Gandhi National Open University (IGNOU), New Delhi, India

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 327
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_16
328 P. Dassani and Deepak

move away from home, i.e. setting into the new culture of the new place, home-
sickness, food habits, new relationships, travelling, and much more. The researchers
conducted their study to examine the stress levels of students in private higher educa-
tional institution (HEI) and government higher educational institution (HEI). Their
results showed that the former was exposed to higher levels of stress when compared
to the latter set of students (Perwez, 2020). Undoubtedly, a controlled amount of
stress is beneficial to reach goals, but a prolonged period of high stress is inju-
rious to health. College students encounter stress due to the workload of classes,
building new interpersonal relationships, preparations for new responsibilities, poor
time management skills, erratic sleep, and eating habits. As one enters the post-
graduation level, students enter with new hopes, dreams, and goals to achieve. The
energy and enthusiasm to kick-start their career slowly become burdened with stress
due to several reasons. As per the research published in the Asian Journal of Psychi-
atry, it was found that students in Indian universities suffered from moderate stress
to extreme stress; i.e. 37.7%, 13.1%, and 2.4% of the students reported moderate,
severe, and extreme severe, respectively. The universities barely have the infras-
tructure to address the mental grievances of students (Kunju, 2017). The purpose
of this chapter is to present the existence of emotional and financial stress among
postgraduate management students.

2 Review on Emotional and Financial Stress Among

College Students

Several professional courses have burdened students to obtain loans for their educa-
tion. The research on 87 college students enrolled for engineering and management
programme in an institute in Uttar Pradesh presents the prevalence of stress among
students. The loan aspect is a primary factor that triggers stress among students which
is further exacerbated with uncertainty regarding their job placements, social expec-
tation, and family pressure. Some students expressed their concerns regarding social
rejection and isolation. They felt unrecognised by their faculty and claimed to be
taken for granted by their peers. These incidents aggravate their socio-psychological
issues (Agrawal & Chahar, 2007). The leading reasons which made college students
suicidal were troubles in relationships, problems in the family, financial stress,
depression, feelings of social isolation, hopelessness, and anxiety (Westefeld et al.,
2005). Increased financial pressure, academic and family stress leads to severe stress.
They authors put forth that reducing financial stress can reduce distress and ameliorate
the performance of the students (Cadaret & Bennett, 2019).
The author conducted a study to find out the harmful effects of financial stress on
the well-being of students. Access to credit cards, the status of the dependent, and
financial knowledge were significant factors that burdened the students (Robb, 2017).
The author investigated the sources of stress among 201 college students in Taiwan,
and the results showed that the male students experienced more stress arising out
Prevalence of Emotional and Financial Stress … 329

of family issues like “lack of support from parents” (mean value = 3.57), “getting
along with siblings” (mean value = 3.55), and “excessively high expectations of
parents” (mean value = 3.33). It was also found that students who had taken a loan
experienced more stress in aspects of emotional factors, physical/mental factors, and
relationship (Kai-Wen, 2009).
A study on 219 students of a B-School was conducted in Ahmedabad where
the results showed that a packed workload was found to be one of the highest
sources of stress. Managing various roles such as an ideal son/daughter along with
the competitive nature to shine out among peers makes the students feel stressed.
Students were constantly under the pressure to fulfil the expectations of their family,
teachers, peers, seniors, and acquaintances. This arduous task of meeting expecta-
tions and the inescapable situation of not disappointing anyone takes a toll on the
health of the student and causes stress (Sinha, 2014). An inverse relation between
emotional intelligence and academic stress was reported; i.e. students with low levels
of emotional intelligence experienced a high level of academic stress (Kauts, 2016).
Therefore, it can be inferred that higher emotional intelligence helps to improve
understanding, communicate effectively and assist to manage one’s emotions which
relieves stress.

3 COVID-19 Pandemic and Stress on College Students

The COVID-19 pandemic has caused severe stress across the globe. Even the student
community has been hit hard which has harmed their emotional, financial, and phys-
ical health. During the pandemic, the students who lived away from home faced
severe distress and worry as they were forced to vacate hostels at a short notice.
Students were under pressure to travel to and fro to attend examinations even during
the most perilous situations. With massive lay-offs of employees and suspension in
several domestic industries burdened with curfew and lockdown, the families are
experiencing financial difficulties. Inability to purchase a laptop, lack of access to
proper electronic devices, and poor Internet connectivity are the glitches students
experienced while attending the online classes in this new era of digital learning.
Several students went back to their villages, and in remote places, they are unable to
manage a Wi-Fi or a stable Internet connection. Furthermore, sticking to the screen
for a prolonged period has made them feel tired and aggravated their mental stress.
Students are finding it difficult to adjust to the sudden shift from traditional class-
room teaching to the online mode. Being glued to the screens for many hours has
affected their mental and physical health. Students are unable to meet and interact
with friends and teachers which are highly essential in terms of the development
of their cognitive, mental, and social skills (Hindustan Times, (2020). A study on
450 students was undertaken to understand the stress among students during the
pandemic, and the results revealed that the students were more stressed due to online
classes and issues related to self-management. The students found themselves more
vulnerable to stress and were unable to adjust to the e-learning platform. The female
330 P. Dassani and Deepak

students were prone to more stress and worry about studies when compared to their
male counterparts. The students were burdened with fear, worries regarding breach
of guidelines, frequent technical issues, and severe pressure which have exacerbated
their academic progress. These factors impact the psychological well-being of the
students. The research also showed that continued online classes have caused stress
among students as they are confined to their spaces for an extended period (Chhetri
et al., 2021).

4 Emotional Intelligence

Findings proved that emotional intelligence is a strong trait in achieving success

in one’s career (Urquijo et al., 2019). A person with high EI functions better as
she/he has the traits to be a good team player, knows how to work under pres-
sure, and consequently contributes to the productivity of the organisation. Not only
does it add an edge at the workplace but it is also advantageous to students in their
pursuit of academic goals and career advancement. An emotionally intelligent person
grows to be a versatile employee as they move into the working environment. This
trait is more important for individuals in the teaching profession as they need to be
adept in handling the classroom atmosphere as they educate the young generations.
A study on 278 college students from diverse fields in Malaysia revealed that the
students who were aware of their emotions could understand and anticipate the kind
of emotion which would help them emerge in varied circumstances. It also prepared
the students to handle pressure effectively to progress towards academic excellence
in high learning institutions (Mohzan et al., 2013).
A renowned psychologist Daniel Goleman popularised the subject of emotional
intelligence. He described emotional intelligence (EI) as an ability to be aware of
one’s emotions as well as understanding the emotions of others. This competency
helps to handle interpersonal relationships and conflicts in a smooth manner. He
claims that emotional aptitude aids to maintain relationships and good health and
enhances success at work (Goleman, 1998). Emotional intelligence (EI) or emotional
quotient (EQ) is an essential aspect that aids an individual’s capacity to identify and
manage one’s emotions and others in a positive way to empathise, conduct effective
communication, build good interpersonal relationships, manage conflicts, and stay
motivated. Not only intelligent quotient (IQ) but having high EI benefits an individual
to perceive things positively and subsequently acquires to de-stress oneself.
Proponents of emotional intelligence argue that in determining leadership success,
EI stands to be more important than IQ. Daniel Goleman’s EI model constituted
of five components, i.e. “self-awareness, self-regulation, motivation, empathy, and
social skills” (Sadri, 2012). Emphasis on the development of emotional intelligence
in education is vital as it enhances the ability of the students to compete in life. The
academic curriculum should be designed in a manner that not only develops credi-
bility but also shapes the personality of the students. It can also introduce programmes
to impart and inculcate decision-making skills among students (Hassan et al., 2009).
Prevalence of Emotional and Financial Stress … 331

Emotional
factors
Stress on
Students
Financial factors

Fig. 1 Conceptual framework. Source Author’s own work

These skills also help the students have a good work-life balance; i.e. high level of
emotional intelligence is interlinked to employee engagement which is beneficial to
the employee as well as the organisation.
The authors studied the influence of the emotional aspect as an element of
employee engagement. They mentioned that emotional and psychological satisfac-
tions are the key factors of employee engagement; i.e. the emotional connection
which an employee feels towards the organisation is linked to their performance.
Moreover, it was observed that individuals with a high level of employee engage-
ment by default turn out to be high performers. Therefore, they stated that apart from
the professional connection, it is necessary to build a strong emotional and psycho-
logical connection with employees to make them perform to their fullest capacity
(Mehta et al., 2016).

5 Conceptual Framework

Apart from the demographic profile of the respondents, questions were designed
on a five-point Likert scale to understand the level of emotional and financial stress
prevailing among the students. Figure 1 shows the conceptual framework of the study.

6 Discussion

The data were collected using a questionnaire from 218 postgraduate management
students of a reputed university in Andhra Pradesh. The analysis is presented using
scale value analysis, frequency tables, and factor analysis in IBM SPSS version 20.
The Cronbach alpha’s value for the factors was observed as 0. 757. Since the value is
above 0.70, the questionnaire’s reliability is considered to be acceptable (Glen (n.d.))
(Table 1).
Out of 218 respondents, 51.8% were male students and 48.2% were female
students, i.e. 113 and 105, respectively. All the respondents were aged between 20
and 30 years. About 31.1% of the respondents (68 respondents) were aged 22 years,
332 P. Dassani and Deepak

Table 1 Reliability statistics

Cronbach’s alpha No. of items
0.757 12
Source Primary data

Table 2 Scale value analysis

Mean Std. deviation N
of emotional factor
Conflict with teachers 2.87 1.177 218
Conflict with friends 2.67 1.095 218
Conflict with others 2.60 1.180 218
Conflicts with parents 2.78 1.139 218
Low self-esteem 2.72 1.121 218
Social media platforms 2.81 1.065 218
Loneliness 2.95 1.229 218
Paying college fees 2.85 1.174 218
Asking money from guardian 3.24 1.163 218
Sticking to budget 3.06 1.296 218
Spending pattern of friends 2.61 1.046 218
Source Primary data

23.8% of the respondents (52 respondents) were 23 years old, and 15.5% of the
respondents (34 respondents) were 24 years old. Except for these ages, the remaining
respondents also age within the 30 years’ bracket.
The highest mean value (3.24) was observed for the response “asking money
from guardian” which added to the respondents’ financial stress (shown in Table
2). The respondents confessed that they feel hesitant to regularly ask for money for
their expenses. A handful of the respondents were involved in a part-time source of
work, while the rest were dependent on their guardians for their expenses. Lack of
awareness to engage themselves in part-time jobs was a reason behind this stress.
Students expressed their interest to work as their class was half day and they were
willing to spend the remaining time fruitfully, but lack of proper guidance makes them
remain idle. Some respondents had work experience and left their jobs to pursue a
full-time course, so this financial constraint stressed them even more. The second
highest mean value was found to be 3.06 for “sticking to budget”; i.e. students found
difficulty in preparing a budget or/and sticking to it. It presents their inability or lack
of skill in financial planning. Interactions with the students also revealed that they
were impulsive in their buying behaviour which was stated as one of the common
reasons for this lapse in financial management. Students also admitted that they were
not good at saving money and did not keep a track of their expenses. This negligence
on their part made them feel stressed and worried.
Prevalence of Emotional and Financial Stress … 333

Frequent advertisements about credit cards with attractive rebates appeal to

college students to use credit cards for their daily financial transactions like enter-
tainment, gasoline, and food. The offers mask the intensity of the credit burdens.
Students need to be taught the responsible use of credit cards along with techniques
to tackle bait advertising which prompts them to adopt the use of such cards (Hayhoe
et al., 2000).
In this era of digitalisation, it is uncomplicated to connect with friends and family.
Despite the advancement in the various modes of communication, the students often
experienced feelings of loneliness (Mean value 2.95). Among the emotional stress
questions, this response showed the highest mean value. Nonetheless, the respon-
dents were associated with numerous groups on WhatsApp, Facebook, Telegram,
Instagram, Twitter, but it seemed like they did not connect with it in a real sense.
This emotional stress was common in the respondents and exposes that technology
has indeed disconnected people from hearts and has not brought them together. Many
students had relocated themselves to pursue their higher education and made their
attempts to be a part of a social group to comfort themselves, but whenever they failed
in their attempts, they succumbed to a feeling of loneliness. Students also faced the
problem of language barrier; i.e. they feel inferior to those who communicate better
than them in the English language. This barrier makes them limit their social circle.
Such a feeling of belongingness was aptly put forth in Abraham Maslow’s hier-
archy of needs theory where he rightly mentions that as a human progresses, he
feels the need to be loved and cared for. This American psychologist designed a
model which elucidated the path to an individual’s self-actualisation. The social
needs include the human bonds (family, friendship, social groups) for belongingness
(Corporate Finance Institute (n.d.)).

6.1 Analysis of Emotional Factors and Students’ Stress

The questions were measured on a five-point scale, i.e. no stress (1), slightly stressful
(2), moderately stressful (3), highly stressful (4), and extremely stressful (5). Table
3 presents the scale value analysis of the questions. Students were prone to stress
ranging from slight to extreme stress when they encountered “conflicts with parents,
teachers, friends, and others”. In case of conflicts with parents, about 11.9% of
the respondents felt extremely stressful and 14.7% felt high levels of stress. “Con-
flict/arguments with teachers” caused stress; i.e. 29.4% of the respondents felt high
levels of stress. About 21.6% of the respondents felt more stressed when they had
conflicts with friends/roommates, while 23.4% of the respondents felt highly stressed
when they had arguments with others. This stress was expressed in terms of feeling
anxiety, nervousness, and frequent emotional turmoil. “Fights between parents” is
another issue faced by the students. When the environment at home is not conge-
nial, students feel stressed and it affects their academic performance also. They feel
disturbed and upset on regular basis. This leads to mood swings and forcibly makes
them get into arguments. Approximately, 16.1% of the respondents felt extremely
334 P. Dassani and Deepak

Table 3 Crosstabulation using frequency between respondents’ opinion and emotional factor
S. No. Emotional factor 5 4 3 2 1
ES HS MS SS NS
1 Conflict/arguments with parents 26 32 40 108 12
100% 11.9 14.7 18.3 49.5 5.5
2 Conflict/argument with professors/teachers 27 37 55 79 20
100% 12.4 17 25.2 36.2 9.2
3 Conflict with roommate or friend 22 25 45 111 15
100% 10.1 11.5 20.6 50.9 6.9
4 Conflict with others 21 30 40 95 32
100% 9.6 13.8 18.3 43.6 14.7
5 Fights between parents 35 28 35 84 36
100% 16.1 12.8 16.1 38.5 16.5
6 Low self-esteem 21 34 47 96 20
100% 9.6 15.6 21.6 44.0 9.2
7 Stress level when you use social media platforms and 20 46 51 86 15
tend to compare your life with others
100% 9.2 21.1 23.4 39.4 6.9
8 How stressful do you feel when you are lonely or out 34 48 33 88 15
of the group?
100% 15.6 22.0 15.1 40.4 6.9
Source Primary data, extremely stressful (ES), highly stressful (HS), moderately stressful (MS),
slightly stressful (SS), and no stress (NS)

stressed and 12.8% of the respondents felt highly stressed when their parents had
tiffs at home. Language barriers and the background of the respondent, i.e. place of
prior education, were the major causes that made the respondents feel inferior or low
self-esteem. Their desire to be recognised in college was an added factor. Over 25%
of the respondents were largely stressed due to “low self-esteem”, while 21.6% of
the respondents felt moderate stress. The use of social media platforms has drasti-
cally impacted the lives of all and in particular the student community. The students
relate their “likes”, “positive comments”, “number of followers” on the social media
platform as a measure to gauge their social acceptance. Many students are keen to
increase their friend list just to increase their likes and followers which adds to their
stress. The craving to be liked has hit this generation which is harmful in the long
run. The fear of missing out on updates and the constant urge to check their phones
for new happenings have hampered their concentration power. Additionally, about
37.6% of the respondents felt lonely when they were left out of a group.
Prevalence of Emotional and Financial Stress … 335

Table 4 Crosstabulation using frequency between respondents’ opinion and financial factor
S. No. Financial factor 5 4 3 2 1
ES HS MS SS NS
1 How stressful do you feel while paying your college fees? 12 67 246 69 17
100% 3 16 60 17 4
2 How stressed do you feel when you frequently have to ask 41 51 65 51 10
for money from your guardians?
100% 18.8 23.4 29.8 23.4 4.6
3 Rate the stress you feel in designing a budget and sticking 39 41 61 60 17
to that
100% 17.9 18.8 28.0 27.5 7.8
4 Mark the stress you feel when you happen to compare 16 29 45 113 15
with the spending pattern of friends
100% 7.3 13.3 20.6 51.8 6.9
Source Primary data, extremely stressful (ES), highly stressful (HS), moderately stressful (MS),
slightly stressful (SS), and no stress (NS)

6.2 Analysis of Financial Factors and Students’ Stress

The results shown in Table 4 present that 19% of the respondents felt more stressed
in paying college fees while 60% felt moderate levels of stress. About 42.2% of the
respondents were too stressed about asking for money from their guardians. They
feel uneasy and hesitant to remain dependant on their guardians for financial support.
More than 50% of the respondents were above 22 years and felt the urge to quickly
make themselves employable. This worry about job placements and insecurity about
the future often concerned them. The respondents were not good at preparing and
following a budget. In this scenario, around 17.9% and 18.8% of the respondents
experienced extreme and high stress, respectively. Over 25% of the respondents were
moderately stressed in sticking to a budget and usually exceeded their budget. It is
natural for students during their adolescence and early twenties to get attracted to
branded products and services that are in vogue. Students feel more pressured when
they find their peers spending well and leading a better lifestyle. Such a comparison
and temptation to imitate is harmful to one’s financial health. It was found that
7.3% of the respondents felt extremely stressed when they compared their spending
pattern with their friends while 13.3% faced high levels of stress. Over 20.6% of the
respondents encountered moderate stress.

6.3 Analysis of Factor Analysis

The use of factor analysis helps to group similar variables; i.e. this technique groups
the variables into homogeneous subsets. The variables must be correlated to run
336 P. Dassani and Deepak

Table 5 KMO and Bartlett’s test

KMO and Bartlett’s test
Kaiser–Meyer–Olkin measure of Sampling Adequacy 0.762
Bartlett’s test of sphericity Approximately chi-square 996.340
Df 66
Sig. 0.000
Source Primary data

the test of factor analysis so that significant factors can be easily identified. Table
5 presents the KMO and Bartlett’s test results; i.e. the KMO value is 0.762 which
indicates that the sample is adequate to run the factor analysis, while Bartlett’s test
value of 0.000 (less than p-value 0.005) is significant at 0.05 level. This value rejects
the null hypothesis at approximately chi-square value 996.340 with 66 degrees of
freedom. The result of KMO is greater than 0.6 (0.762 > 0.6) which is a considerable
value to proceed with further analysis.
The rotated component matrix (Table 7) is the main output of principal component
analysis (PCA) that represents the factor loadings which are the simple correlations
between the variables and the factor. The eigenvalue denotes the total variance (Table
6) explained by each factor. With the use of the varimax rotation method, the factor
loadings are modified and sorted. The size of the loadings describes its significant
contribution to the factor. The variables were extracted into two factors as designed,
and on similar lines, 8 variables were named as “emotional factor” and 4 variables
were labelled under the heading of “financial factor”. The factors comprise 18.14% of
data variance. All the variables/dimensions have values above 0.5 and are considered
to have moderate to significant influence on the student’s stress levels.
From Table 7, it can be observed that the variables were extracted into two factors,
i.e. emotional and financial. The statement “designing a budget and sticking to that”
was found to have the highest factor loading, i.e. 0.778 followed by 0.772 for the
statement “paying college fees” and 0.747 for the statement “frequently asking for
money from guardians”. Out of all the statements, these statements significantly
stressed the students. This shows the presence of financial stress among students.
Apart from this, students expressed “low self-esteem” and conflict/arguments with
parents to be highly stressful with the loading values as 0.727 and 0.721, respectively.

7 The Way Forward

This chapter presented the prevalence of emotional and financial stress among
management students. Stress is unavoidable in every stage of life, but the budding
citizens of the country need to be taught well to handle stress right from a young age.
The analysis shows that the students are under stress and it needs to be addressed
to help improve their well-being. The management stream includes concepts that
Table 6 Total variance explained
Component Initial eigenvalues Extraction sums of squared loadings Rotation sums of squared loadings
Total % of variance Cumulative % Total % of variance Cumulative % Total % of variance Cumulative %
1 3.487 29.058 29.058 3.487 29.058 29.058 3.358 27.980 27.980
2 2.177 18.144 47.201 2.177 18.144 47.201 2.307 19.222 47.201
3 1.077 8.978 56.179
4 0.818 6.816 62.995
5 0.790 6.580 69.576
Prevalence of Emotional and Financial Stress …

6 0.761 6.340 75.916

7 0.660 5.503 81.418
8 0.608 5.068 86.486
9 0.469 3.908 90.394
10 0.448 3.735 94.129
11 0.373 3.107 97.237
12 0.332 2.763 100.000
Source Primary data extraction
337
338 P. Dassani and Deepak

Table 7 Rotated component matrix

Factor Variable Factor loading
1 Conflict/arguments with parents 0.721
Conflict/argument with professors/teachers 0.600
Conflict with roommate or friend 0.692
Conflict with others 0.647
Fights between parents 0.664
Low self-esteem 0.727
Stress level when you use social media platforms and tend to compare 0.534
your life with others
How stressful do you feel when you are lonely or out of the group? 0.536
2 How stressful do you feel while paying your college fees? 0.772
How stressed do you feel when you frequently have to ask for money 0.747
from your guardians?
Rate the stress you feel in designing a budget and sticking to that 0.778
Mark the stress you feel when you happen to compare with the 0.580
spending pattern of friends
Source Primary data

not only prepare the students to face the academic challenges but also gear them up
to tackle the various challenges in life. Discipline and proper communication with
teachers, friends, and roommates will help to reduce conflicts. Since conflicts highly
influenced the students to feel stressed, both parties need to learn to compromise
when needed and try to collaborate. The collaboration conflict resolution helps to
find an amicable solution that will satisfy the respondent and the other party. This is
a win–win situation for both and can ease stress in their lives. When the number of
conflicts/arguments is reduced, the respondent can focus on more important things.
Students felt stressed about asking for money from guardians. To address this
issue, students can take up paid internships. With the time in hand after regular
classes, they can choose from the ample opportunities. Efforts need to be made from
their side to grab the right opportunity. They can also invest time in learning about
trading/investing in the stock market which is another way to invest and earn money.
They must try to refrain from using credit cards as it increases debt and worry. The
researchers recommend classes for managing personal finances as a management
student must be taught the art of planning and controlling one’s expenses and incomes.
At the classroom level, the teachers have the ability to mould and rightly shape the
lives of the students. Apart from the regular curriculum, they can ensure that special
attention is given to grooming the students in aspects like imparting emotional intel-
ligence, regular budget management tips, and meditation programmes. As discussed,
emotional intelligence will help students recognise and acknowledge their emotions
which is the first step to handle or mitigate the negative impact of emotional stress.
With the use of strength, weakness, opportunities, and threats (SWOT) analysis,
Prevalence of Emotional and Financial Stress … 339

every student must be aware of his/her strength and weakness. The peers and faculty
must make efforts to recognise the talent and special skills of each student so that they
feel a part of a group. This will help to reduce their feeling of loneliness. Patience
and positive thinking are required to be imbibed among students. They need to be
taught that one must learn to be content with what they have to that they learn to
tackle their temptations and comparisons with the outside world. Students need to
have a positive attitude to every situation so that they do not feel fearful in times of
difficulty.

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A Study on Perception of Students
Towards Online Classes in India

L. Lavanya

Abstract “eLearning doesn’t just “happen”! It requires careful planning and imple-
mentation” goes an anonymous quote. Unfortunately, the sudden shift to online
teaching due to COVID-19 situation did not leave teachers and students a choice.
The study was conducted in the wake of COVID-19 when colleges had to suddenly
shift to online mode of teaching. Though teachers could get hold of teaching mate-
rials online, were the students comfortable to this shift? The call to shift gained
more significance in some other aspects too—whether the students had the necessary
accessories and connectivity to connect to the classes. Also, when they connected
what were the challenges and how effective was the learning are some questions
which opened up during these pandemic classes. The study was planned with this
background, and the objectives of the study were:

1. To understand the purpose with which online classes started

2. To identify the understanding level of students
3. To bring out the issues felt by students
4. To analyse the differing requirements, if any, among different levels of study
5. To identify the preference of students towards online classes in future.

With this objective, data were collected from 123 students of UG and PG from arts and
science colleges in Chennai. A structured questionnaire was prepared with 17 closed
ended questions. Google Forms was used for data collection, and the students were
reached through WhatsApp group and Email. Convenience and snowball sampling
was used. A target of 100 students was planned, and by the cut-off date planned,
123 responses were received. As there were no missing data or information, all the
samples collected were used for analysis with SPSS V.20. Frequency, chi-square,
Friedman’s test, multiple response set, ANOVA and independent t-test have been
used to analyse the data. The analysis revealed, inter alia, that

1. Majority of the respondents are girls and are in UG.

2. There is no association between demographic factors in the study and the
variables of the study except gender.

L. Lavanya (B)
Head Business Administration, Jeppiaar College of Arts and Science, Chennai, India

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 341
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_17
342 L. Lavanya

3. There is significant difference in certain aspects like need for more e-contents
and class notes being shared among different levels of year of study.
4. More than 20% of the respondents had at least 3 issues related to taking up
online classes.

It is important to note that though many studies have been conducted across the
globe amidst pandemic with respect to students’ perception towards online learning,
it is significant that none of the studies focus on arts and science college students in
Chennai, India. This study brings out the understanding of the problems faced by the
students and the perception of the students to learn in a virtual environment. The scope
of the study is limited to arts and science college students in Chennai and cannot be
generalized to all streams of students. The data were collected in December 2020, and
many changes in virtual platform have aroused interest in the mind of the researcher to
do a follow-up study including the aspects of assessments, gamification in classroom
and LMS which is not taken up in the present study. The practical implication of the
study is that the college management should take into consideration the problems of
the students and fine-tune the online classes accordingly.

Keywords Online classes · Students’ perception · Virtual classroom · Preference ·

Online learning

1 Introduction and Background of the Study

“eLearning doesn’t just “happen”! It requires careful planning and implementation”

goes an anonymous quote. Unfortunately, the sudden shift to online teaching due
to COVID-19 situation did not leave teachers and students a choice. The study was
conducted in the wake of COVID-19 when colleges had to suddenly shift to online
mode of teaching. Though teachers could get hold of teaching materials online, were
the students comfortable to this shift? The call to shift gained more significance
in some other aspects too—whether the students had the necessary gadgets and
accessories and connectivity to connect to the classes. Also, when they connected
what were the challenges and how effective was the learning are some questions
which opened up during these pandemic classes.
While taking up these problems, the researcher went through a lot of existing
theoretical and empirical researches which brought out that all the educational insti-
tutions adopted to this new method of teaching–learning process in a kind of overnight
process, though it was present all along. It could be said that the circumstances forced
the institutions to take this up which otherwise would have taken a really long time.
A Study on Perception of Students Towards Online Classes in India 343

2 Literature Review and Research Gap

A surprisingly large review of the literature is available related to online classes,

and some articles were many decades earlier in which researchers have tried to
understand the perspectives of students in Web-based learning (Bennett & Bennett,
2002; Goodwin, 1993; Hara & Kling, 1999). Most research studies suggest that lack
of immediate feedback is frustrating for the students in online learning.
Yang and Cornelius (2004) used qualitative methods to investigate the perceptions
of students from two universities and one community college regarding the quality of
online education based on their own online learning experiences. The study identified
that lack of technical support from faculty, delayed feedback, monotonous instruc-
tional methods and poorly designed course content were the reasons for negative
feelings of students in online classes.
Smart and Cappel (2006) examined students’ perceptions of integrating online
components in two undergraduate business courses where students completed online
learning modules prior to class discussion. It was found that those who took up
the course found it positive and those yet to opt found it marginally negative. It is
concluded that instructors should be able to select and integrate online into classroom
course where required.
Huss and Eastep (2013) in their study with 1085 college students (highest in any
related research conducted till then) found that majority of the students opted online
classes only when face-to-face was not an option. Preparedness for online classes by
both teachers and students and the communication of work in clear terms were the
major outcomes of the study.
Pasha and Gorya (2019) identified the use of integrated approach in online educa-
tion. In their study in Hyderabad, they have found that the participants are aware of
online learning methods and prefer online classes.
Though the above studies were conducted with the perspective of improvement in
e-learning, the present study is about shifting to online due to pandemic. Interestingly,
many researchers have contributed to this too.
Kulal and Nayak (2020) conducted a study that aims at analysing the perception
of teachers and students about online classes. The study reveals that students are
comfortable with online classes and are getting enough support from teachers, but
they do not believe that online classes will replace traditional classroom teaching. It
also finds that teachers are facing difficulties in conducting online classes due to a
lack of proper training and development for doing online classes. Technical issues
are the major problem for the effectiveness of the online classes.
B˛aczek et al. (2021) conducted a study among Polish medical students. The study
brought out that the main advantages of online learning were the ability to stay at
home, continuous access to online materials, learning at your own pace and comfort-
able surroundings. The study concluded stating that online teaching can be effective
if more planned and active approach is taken up.
Muthuprasada et al. (2021) had studied student’s perception and preference for
online education. The participants were 307 agricultural graduates from different
344 L. Lavanya

universities of National Agricultural Research System (NARS). It was found that

curriculum pressure was the main reason for online classes. Technical competence
of the faculty, interactivity and immediate feedback can make online classes effective.
Khan et al. (2021) in their study identified that online learning has emerged as
the new way of learning for students. In their quantitative study of 184 university
students in National Capital Territory of Delhi, it was found that students show a
positive perception towards e-learning.
The above studies have sure touched on the topic related to student’s perception
on online learning. But, none of the studies have been conducted in understanding
the perception of arts and science college students. The professional students and
their colleges would have better infrastructure compared to arts and science students.
So, this study aims to bridge the gap in the existing literature.

3 Objectives of the Study

The study was taken up in the above-mentioned background, and the objectives of
the study were:
1. To understand the purpose with which online classes started
2. To identify the understanding level of students
3. To bring out the issues felt by students
4. To analyse the differing requirements, if any, among different levels of study
5. To identify the preference of students towards online classes in future.

4 Research Methodology

The study is descriptive research, and data were collected from 123 students of UG
and PG from arts and science colleges in Chennai. A structured questionnaire was
prepared with 17 closed ended questions.
The questionnaire had 3 parts—demographic and general information related
to the study, perception of students towards online classes and problems in online
classes. The questionnaire is provided as part of annexure at the end. The questions
were keyed in on Google Forms and sent to students.
Google Forms was used for data collection, and the students were reached through
WhatsApp group and Email. Convenience and snowball sampling was used. A target
of 100 students was planned, and by the cut-off date planned, 123 responses were
received. Google Forms is closed after the date to accept response. As there were no
missing data or information, all the samples collected were used for analysis with
SPSS V.20.
A Study on Perception of Students Towards Online Classes in India 345

5 Scope of the Study

This study was done in the wake of COVID-19 when colleges had to suddenly shift to
online mode of teaching. The data were collected among students studying in arts and
science colleges in Chennai. The idea is that the students under arts and science stream
do not have the technology access as equivalent to professional college students.

6 Reliability Test

Reliability test was done using Cronbach’s alpha to understand the internal consis-
tency between the items in the instrument to study the perception of students towards
online classes.

Reliability statistics
Cronbach’s alpha Cronbach’s alpha based on standardized items No. of items
0.882 0.899 6

Hotelling’s T-squared test

Hotelling’s T-squared F df 1 df 2 Sig.
105.592 20.426 5 118 0.000

Going by the rule of George and Mallery (2003), Cronbach’s alpha value of above
0.8 is good. Cronbach’s alpha value for the questionnaire is 0.882 which indicates that
the items have internal consistency. This also means that the perception of students
towards online classes varies at 88% and that the statements in the instrument are
understood at this level. Hotelling’s T-squared is also found to be significant.

7 Analysis and Discussion

Analysis of the data is presented below. Part I of the analysis discusses the frequency
analysis of demographic and other variables as mentioned below. Part II of the anal-
ysis brings out the independent T-test, ANOVA, chi-square and Friedman’s test.
Part III brings out the problems in online classes through multiple response set
descriptives.
346 L. Lavanya

7.1 Part I

Part I of the analysis covers the demographic factors in the study like gender, level
of course, year of study and also the other frequency tables related to:
1. Mode of online platform used
2. Objective of taking up online class
3. Preference towards audio or video classes
4. Preferred learning mode
5. Opening up to faculty in case of doubts/clarification (Tables 1, 2, 3, 4, 5, 6, 7,
8 and 9).

Table 1 Gender
Frequency Percent Valid percent Cumulative percent
Valid Male 37 30.1 30.1 30.1
Female 86 69.9 69.9 100.0
Total 123 100.0 100.0

Table 2 Level of course

Frequency Percent Valid percent Cumulative percent
Valid UG 91 74.0 74.0 74.0
PG 32 26.0 26.0 100.0
Total 123 100.0 100.0

Table 3 Year of study

Frequency Percent Valid percent Cumulative percent
Valid I year 23 18.7 18.7 18.7
II year 23 18.7 18.7 37.4
III year 77 62.6 62.6 100.0
Total 123 100.0 100.0

Table 4 Mode of online platform attended

Frequency Percent Valid percent Cumulative percent
Valid Webex 13 10.6 10.6 10.6
Zoom 42 34.1 34.1 44.7
Google Meet 57 46.3 46.3 91.1
Other 11 8.9 8.9 100.0
Total 123 100.0 100.0
A Study on Perception of Students Towards Online Classes in India 347

Table 5 What is the purpose of attending the online class?

Frequency Percent Valid percent Cumulative percent
Valid Syllabus 31 25.2 25.2 25.2
Doubt clarification 41 33.3 33.3 58.5
Knowledge gaining 51 41.5 41.5 100.0
Total 123 100.0 100.0

Table 6 Do you prefer audio classes or video classes?

Frequency Percent Valid percent Cumulative percent
Valid Audio classes 33 26.8 26.8 26.8
Video classes 39 31.7 31.7 58.5
Either 51 41.5 41.5 100.0
Total 123 100.0 100.0

Table 7 Do you feel any topic needed deeper explanation?

Frequency Percent Valid percent Cumulative percent
Valid Yes 32 26.0 26.0 26.0
No 35 28.5 28.5 54.5
Maybe 56 45.5 45.5 100.0
Total 123 100.0 100.0

Table 8 If yes, did you provide your feedback to the faculty?

Frequency Percent Valid percent Cumulative percent
Valid Yes 68 55.3 55.3 55.3
No 55 44.7 44.7 100.0
Total 123 100.0 100.0

• Based on the frequency tables, it can be observed that around 70% of the
respondents are female and around 30% are male students.

Table 9 Given a choice, what would be your preferred learning mode?

Frequency Percent Valid percent Cumulative percent
Valid Virtual classroom 14 11.4 11.4 11.4
Traditional classroom 65 52.8 52.8 64.2
Blended classroom 44 35.8 35.8 100.0
Total 123 100.0 100.0
348 L. Lavanya

• Among the respondents, 74% are students pursuing UG and 26% are pursuing
their PG course.
• 18.7% of the respondents are in I year and II year, and majority (62.6) of the
students are in III year.
• 46.3% of the students are connecting through Google Meet, and the least used
platform is Webex. Zoom is used by 34.1% of the respondents.
• The objective of attending online classes does vary among the students. Majority
of the respondents (41.5%) attend online classes for gaining knowledge, whereas
33.3% attend for clarifying doubts and 25.2% feel it is for syllabus completion.
This is in contrast to another research study Muthuprasada et al. (2021) which
states majority of preferred online classes was for syllabus completion (cope with
the curriculum).
• Majority (41.5%) of the respondents are comfortable with either audio or video
classes. Around 26.8% of the students are not comfortable with turning on their
video and prefer audio only mode during classes.
• 28.5% students feel that topics needed deeper explanation, and 55.3% of the
students do not hesitate to ask their faculty if they need explanation.
• It is interesting to note that the majority of the respondents (52.8%) prefer to
go back to traditional classroom, and 35.8% are in preference towards blended
classroom.

7.2 Part II

Part II of the analysis brings out Friedman’s independent T-test, ANOVA and chi-
square test.

7.2.1 Student’s Perception Towards Online Classes

Friedman Test
Friedman test was conducted to understand the presence of pattern in data and rank
the variables related to the purpose of online class. The test statistics indicate that
the test is highly significant (p < 0.05). The mean ranks reveal that usefulness of
the sessions is the primary reason for attending online classes (Table 10). Additional
e-contents and content clarity ranked second and third which shows that the students
are ready to take classes in which their knowledge gaining can be enhanced. This
can be correlated with Table 5 which shows that the main reason for attending online
classes is knowledge gaining (Table 11).
A Study on Perception of Students Towards Online Classes in India 349

Table 10 Ranks
Mean rank
Objective of the sessions 3.63
Usefulness of the sessions 4.14
Content clarity 3.65
Sufficiency of notes shared 3.51
Additional e-contents shared 3.79
Preference to online class 2.28

Table 11 Test statisticsa

N 123
Chi-square 131.380
df 5
Asymp. Sig. 0.000
a Friedman Test

7.2.2 Testing Difference in Perception Among UG and PG Students

The difference in perception among UG and PG students is tested through

independent t-test.
H0: There is no difference in the perception of UG and PG students towards
e-content requirement, i.e. µ(UG) = µ(PG) (“the two population means are equal”).
H1: There is difference in the perception of UG and PG students towards e-content
requirement, i.e. µ(UG) = µ(PG) (“the two population means are not equal”).
From Table 12, it is found that Leven’s t-test is not significant. It can be concluded
that there is no significant difference between the perceptions of UG and PG students
with respect to:
(a) Sufficiency of notes shared in online class
(b) Additional e-contents being useful for enhancing knowledge
The mean values of UG students (3.84, 4.02) and PG students (3.78 and 3.91)
indicate that they strongly agree towards sufficient notes being shared in class and
the e-contents shared are useful for both the groups.
From Tables 13 and 14, it is found that Leven’s t-test is significant. It can be
concluded that there is a significant difference between the perceptions of male and
female students. The meanwise comparison indicates mean value of male students
is 3.35 and 3.81 which indicates moderate agreement to sufficiency of notes and
e-contents provided. Mean value of female students’ opinion is 4.02 and 4.07 which
indicates strong agreement towards sufficiency of notes and e-contents provided.
350 L. Lavanya

Table 12 Independent sample test

Levene’s test T-test for equality of means
for equality of
variances
F Sig. t df Sig. (2-tailed) Mean
difference
Sufficiency Equal 0.001 0.972 0.215 121 0.830 0.054
of notes variances
assumed
Equal 0.216 54.777 0.830 0.054
variances not
assumed
Additional Equal 1.875 0.173 0.538 121 0.592 0.116
e-contents variances
shared are assumed
useful for Equal 0.475 44.622 0.637 0.116
enhancing variances not
knowledge assumed

Table 13 Independent sample test

Levene’s test T-test for equality of means
for equality of
variances
F Sig. t df Sig. (2-tailed) Mean
difference
Sufficiency Equal 3.074 0.082 − 2.897 121 0.004 − 0.672
of notes variances
assumed
Equal − 2.660 57.060 0.010 − 0.672
variances not
assumed
Additional Equal 0.736 0.393 − 1.265 121 0.208 − 0.259
e-contents variances
shared are assumed
useful for Equal − 1.192 60.077 0.238 − 0.259
enhancing variances not
knowledge assumed

Table 14 Group statistics

Gender N Mean Std. deviation Std. error mean
Sufficiency of notes Male 37 3.35 1.358 0.223
Female 86 4.02 1.095 0.118
Additional e-contents shared Male 37 3.81 1.151 0.189
are useful for enhancing Female 86 4.07 0.992 0.107
knowledge
A Study on Perception of Students Towards Online Classes in India 351

Table 15 ANOVA
Sum of squares df Mean square F Sig.
Sufficiency of Between groups 0.765 2 0.382 0.347 0.707
notes Within groups 132.227 120 1.102
Total 132.992 122
Additional Between groups 0.494 2 0.247 0.165 0.848
e-contents shared Within groups 179.571 120 1.496
are useful for
enhancing Total 180.065 122
knowledge

7.2.3 Testing Difference in Perception Based on year of Study

Testing difference in perception among first-, second- and third-year students with
respect to e-content requirement was done using ANOVA.
H0: There is no significant difference between year of study and e-content
requirement, i.e. µ(I year) = µ(II year) = µ(III year) (no difference among group means).
H1: There is significant difference between year of study and e-content require-
ment, i.e. µ(I year) = µ(II year) = µ(III year) (no difference among group means).
From Table 15, it is found that the students in different years of study—I year, II
year and III year—do not have a difference in the e-content requirement and agree
to the availability of class notes and the additional e-contents from their teacher.

7.2.4 Preferred Mode of Learning—Association Test

The association between preferred modes of learning with level of course, year of
study and gender is done using chi-square test.
H01: There is no significant association between level of course and their preferred
mode of learning (virtual, traditional, blended).
H02: There is no significant association between year of study and their preferred
mode of learning (virtual, traditional, blended).
H03: There is no significant association between gender and their preferred mode
of learning (virtual, traditional, blended).
From Tables 16, 17 and 18, it can be observed that Pearson chi-square is significant
(P < 0.05) and hence the null hypotheses are rejected. It is revealed from the chi-
square tests that the preferred mode of learning varies among students in:
(a) UG or PG.
(b) I year, II year or III year.
(c) Male or female.
So, it is important to understand these differences and plan virtual or traditional
(face-to-face) or blended classroom going forward in future after the pandemic. A
352 L. Lavanya

Table 16 Level of course and learning mode

Crosstab—level of course * preferred learning mode
Given a choice, what would be your preferred learning Total
mode?
Virtual Classroom Traditional Blended Classroom
Classroom
Level of Course UG 5 51 35 91
PG 9 14 9 32
Total 14 65 44 123
Chi-square tests
Value df AmoR-sig. (2-sided)
Pearson chi-square 12.037 2 002
Likelihood ratio 10.450 2 005
No. of valid cases 123

Table 17 Year of study and learning mode

Crosstab—year of study * preferred learning mode
Given a choice, what would be your preferred Total
learning mode?
Virtual Traditional Blended
classroom classroom classroom
Year of study I year 7 11 5 23
II year 5 10 8 23
III year 2 44 31 77
Total 14 65 44 123
Chi-square tests
Value df AmoR-sig. (2-sided)
Pearson chi-square 17.190 4 002
Likelihood ratio 17.010 4 002
No. of valid cases 123

similar finding was reported by B˛aczek et al. (2021) in a research among medical
students.

7.3 Part III

Part III of the analysis brings out the problems faced by students in online classes. It
is done with the help of multiple response set in SPSS.
A Study on Perception of Students Towards Online Classes in India 353

Table 18 Level of course and learning mode

Cross tab—gender * preferred learning mode
Given a choice, what would be learning your preferred Total
mode?
Virtual classroom Traditional classroom Blended classroom
Gender Male 11 19 7 37
Female 3 46 37 86
Total 14 65 44 123
Chi-square tests
Value df Asxim Sig. (2-sided)
Pearson chi-square 19.875 2 000
Likelihood ratio 18.789 2 000
No. of valid cases 123

7.3.1 Challenges in Online Learning

The challenges in online learning had been collected as a multiple response option.
So, data were cleaned and multiple response option was used for understanding issues
faced by students.
Table 19 indicates 66.7% of the students face at least one of the issues during
online classes and 2.4% of the students have about 4 issues. The exact issues chosen
by the students are presented in the below table.

Table 19 Multiple response set

Frequency Percent Valid percent Cumulative percent
Valid 1.00 82 66.7 66.7 66.7
2.00 29 23.6 23.6 90.2
3.00 9 7.3 7.3 97.6
4.00 3 2.4 2.4 100.0
Total 123 100.0 100.0
1—Number of students who chose one issue, 2—students who chose two issues, 3—students who
chose 3 issues and 4—students who chose
354 L. Lavanya

$issues in online class frequencies

Responses Percent of cases (%)
N Percent (%)
Issues 1 63 35.2 51.2
2 13 7.3 10.6
3 36 20.1 29.3
4 25 14.0 20.3
5 16 8.9 13.0
6 26 14.5 21.1
Total 179 100.0 145.5
1—Network issues. 2—Students talking parallelly. 3—Students not having access to laptop or
smartphone. 4—Do not feel connected with the class. 5—Not comfortable with online tools. 6—
Students not having Wi-Fi or data connection

This table provides that network issues are the top problem faced by the respon-
dents. At least, 35.2% of the students are affected by this. 20% of students do not have
access to laptop or smartphone which is another great setback to online classes. This
shows that network and gadget issue need to be addressed on priority. Chakraborty
et al. (2020) in their study concluded that Internet issue is the major thing to be
addressed in the present-day context. Many other studies have also been highlighting
the issue of digital divide in our country.
The least faced problem as observed from the data is students talking parallelly
in the class (7.3%) and comfort level with online tools (8.9%). Yang and Cornelius
(2004), in their study, highlight that monotonous classrooms cause negative opinion
on online classes which is similar to our study which states that 14% of the students
do not feel connected with online classes.

8 Findings and Suggestions

The major findings of the study are:

1. Majority of the respondents are women and are in UG.
2. It is interesting to note that the majority of the respondents (52.8%) prefer to
go back to traditional classroom and 35.8% are in preference towards blended
classroom.
3. Majority attend online classes for knowledge gaining.
4. Students give usefulness of classes as an important factor in attending online
classes.
5. Level of study and e-content requirement did not have a significant difference,
whereas it was significant for gender.
6. Using ANOVA, it was found that year of study and e-content requirement had
a significant difference.
A Study on Perception of Students Towards Online Classes in India 355

7. Using chi-square, it was identified that gender, year of study and level of study
have an association with e-content requirement.
8. Multiple response analysis showed that network issues were a major hindrance
for online classes.
The study identifies that the students are comfortable with online classes though
there are issues in taking up them. Based on the findings, the following suggestions
are proposed by the researcher for the colleges to take up:
1. There is a need to create awareness among PG students in gaining exposure
towards additional e-contents and knowledge gaining activities.
2. The faculty has to provide varying levels of e-contents to the students in first,
second and third year of study.
3. Students can be guided to options of getting recorded materials in case they
miss classes due to network or other issues.
4. Faculty need to provide engaging activities online as many students have the
feeling of not having a connect in the virtual classes.
5. Faculty need to be trained on quizzes and games so that they go beyond PPTs
and Google Forms for teaching and assessment.

9 Limitations and Directions for Further Research

The scope of the study is limited to arts and science college students in Chennai and
cannot be generalized to all streams of students. The data were collected in December
2020, and many changes in virtual platform have aroused interest in the mind of the
researcher to do a follow-up study including the aspects of assessments, gamification
in classroom and LMS which is not taken up in the present study.

10 Conclusion

In conclusion, it can be said that though the shift happened suddenly, despite
constraints, students and teachers have started moving to this new method of
teaching–learning. Considering the digital divide, it may take years to bridge the
gap and have a fully oriented online learning. It is important to note that not only
equipment, electricity and network coverage also to be completely provided for chal-
lenges free learning. The role of teachers cannot be ruled out. Blended learning is
expected to be the way forward. Technology, in the hands of teachers, can really
transform students.
356 L. Lavanya

Annexure I: A Study on Perception of Students Towards

Online Classes in India

Dear Students,
Kindly fill this questionnaire based on your online classroom learning experience.
This is for research purpose and will be strictly confidential.
Regards,
Dr. Lavanya L.
Part I General Information
1. Name
2. Gender
1. Male 2. Female 3. Other
3. Level of Course
1. UG 2. PG
4. Year of Study
1.I year 2. II year 3. III year
5. Mode of online class attended
1. Webex 2. Zoom 3. Google Meet 4. Other
6. Main purpose of attending online classes were for
1. Syllabus 2. Doubt Clarification 3. Knowledge Gaining
7. Do you feel any topic needed deeper explanation?
1. Yes 2. No 3. Maybe
8. If yes, did your provide your feedback to the faculty?
1. Yes 2. No

Part II Perception Towards Online Classes

Statement Strongly disagree Disagree Netural Agree Strongly agree

9. Was the objective of 1 2 3 4 5
the sessions met?
10. Were the sessions 1 2 3 4 5
useful?
11. Was the contents of 1 2 3 4 5
the class clear?
12. Was the notes of the 1 2 3 4 5
class shared sufficient?
(continued)
A Study on Perception of Students Towards Online Classes in India 357

(continued)
Statement Strongly disagree Disagree Netural Agree Strongly agree
13. Are additional 1 2 3 4 5
e-contents shared by
your teacher for
enhancing knowledge?
14. Do you feel online 1 2 3 4 5
classes are better than
traditional classrooms?

Part III Problems in Online Classes

15. Did you face connection issues during the class?
1. Yes 2. No 3. Sometimes
16. Do you prefer audio classes or video classes?
1. Audio 2. Video 3. Either is OK
17. In your opinion, what are the main problems in online class? (you can choose
more than one option)

S. No. Statement Please tick if applicable

1 Network issues
2 Students talking parallely
3 Students not having access to laptop or smartphone
4 Don’t feel connected with the class
5 Not comfortable with online tools
6 Students not having WiFi or data connection

18. Given a choice, what would be your preferred learning mode?

1. Traditional Classroom 2. Virtual Classroom 3. Blended
Thank you for your time!

References

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(2021). Perception of online learning during the COVID-19 pandemic. Medicine, 100(7), e24821.
https://doi.org/10.1097/MD.0000000000024821
Bennett, J. F., & Bennett, L. B. (2002). Assessing the quality of distance education programs: The
faculty’s perspective. Journal of Computing in Higher Education, 13(2), 71–86.
358 L. Lavanya

Chakraborty, P., Mittal, P., Gupta, M.S., Yadav, S., & Arora, A. (2020). Opinion of students on
online education during the COVID-19 pandemic, First published: 17 December 2020. https://
doi.org/10.1002/hbe2.240
George, D., & Mallery, P. (2003). SPSS for windows step by step: A simple guide and reference.
11.0 update (4th ed.). Allyn & Bacon.
Goodwin, B.N. (1993). A study of the perceptions and attitudes exhibited by distance educa-
tion students and faculty at the University of Phoenix online programs, Unpublished doctoral
dissertation, Colorado State University, (UMI No.9424186) cited from Yi Yanga and Linda (2004).
Hara, N., & Kling, R. (1999). Students’ frustrations with a web-based distance education
course. First Monday, 4(12). https://doi.org/10.5210/fm.v4i12.710
Huss, J.A., Eastep, S. (2013). The perceptions of students toward online learning at a Midwestern
University: What are students telling us and what are we doing about it? Inquiry in Education,
4(2), Article 5. Retrieved from https://digitalcommons.nl.edu/ie/vol4/iss2/5
Khan, M.A.; Vivek; Nabi, M.K.; Khojah, M.; Tahir, M (2021). Students’ perception towards e-
learning during COVID-19 pandemic in India: An empirical study. Sustainability, 13, 57.https://
doi.org/10.3390/su13010057
Kulal & Nayak. (2020). A study on perception of teachers and students toward online classes in
Dakshina Kannada and Udupi District. Asian Association of Open Universities Journal, 15(3).
Muthuprasada, T., Aiswarya, S., Adityaa, K.S., Jhaa, G.K. (2021). Students’ perception and pref-
erence for online education in India during COVID-19 pandemic. Social Sciences & Humanities
Open, 3(1), 100101.
Pasha, A., & Gorya, J. (2019). Student preference and perception towards online education in
Hyderabad City. International Journal of Trend in Scientific Research and Development (IJTSRD),
3(3), 656–659. ISSN: 2456-6470. http://www.ijtsrd.com/papers/ijtsrd22876.pdf
Smart, K.L., & Cappel, J.J. (2006). Students’ perceptions of online learning: A comparative study.
Journal of Information Technology Education, 5.
Yang, Y., & Cornelius, L.F. (2004). Students’ perceptions towards the quality of online education:
A qualitative approach. https://eric.ed.gov/?id=ED485012. Retrieved June 10, 2021.
Indian Knowledge Tradition
and Research

Sapna Sharma

Abstract India is not only a historic country but also a cremation ground. All the
Rishi Munis took birth in India. If we talk about knowledge tradition, then the first
word comes to our mind is ‘Veda’. And if the researcher wants to know about the
history, then he quotes Vedas. Scholars of Indian scriptures have come into its grip
and started to interpret Sanatan scriptures. Vedas include social order, policy, etc. The
knowledge tradition has its own characteristics, its place of learning, its texts, and
their classification. India has always been known about the knowledge tradition and
a knowledge culture. Ancient civilizations are accepting India’s debt in the field of
knowledge. If we talk of knowledge, it is based on language, philosophy, inescapa-
bility of knowledge, folk, Sculptures. In India, there has been an unbroken series
of Acharyas, Rishis, Granthas, etc., and teaching and learning took place through
gurukul system. Students learnt about Vedas, Vedangas, Smiritis and Stutis. Educa-
tion was imparted orally. There was a guru–shishya tradition. From the Vedic period,
the knowledge tradition was high. Be it Taxila, Nalanda or Vikramshila University.
But now this is more westward tilt. Indians are getting knowledge but just to get
jobs in sake of earning money. But they are losing their culture, tradition, custom
and ethic. So today, there is a need to find the treasure of this knowledge hidden in
ancient text to groom it and use it for human welfare. There is need to research on
these texts and let India to be connected to its origin.

Keywords Indian knowledge tradition · Research · Vedas · Yoga

1 Introduction

According to Wikipedia, ‘Knowledge is the familiarity, awareness or understanding

of someone or something such as facts, information, description, skills acquired
through experience or education by perceiving, discovery or learning. It can be theo-
retical or learning’. The philosopher Plato defined knowledge as ‘justify true belief’.

Sapna Sharma (B)

Jayoti Vidyapeeth Women’s University, Jharna, Jaipur, India

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 359
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_18
360 Sapna Sharma

Knowledge is related to capacity of acknowledgment in human being (http://www.

wikipedia.org/wiki/knowledge).
According to Wikipedia, ‘Tradition is a belief or behavior (Folk custom) passed
down within a group or society with symbolic meaning. Tradition has been derived
from the Latin word ‘tradere’ meaning to translate, to handover, to give for safe-
keeping. Tradition can also be referred as belief or customs that are of prehistoric age,
passed orally through poetic devices’ (http://www.wikipedia.org/wiki/Tradition).
India has always known to be as ‘knowledge society’. It is derived from the word
VID which means to know ‘Vedas as Shruti’ which is considered as fountain head
which can be known as knowledge tradition.
According to this, Rishi Munis composed the Vedic hymns, mantras. ‘These hymns
are and will be always there unchanging beyond our changing world’ according to
N. Kazanas. So, Vedic mantras are called to be created by god or as ‘Nitya’ and
‘Apaurusheya’.
What we call today modern knowledge has been mastered by our ancient scholar
like ‘Panini’ (fourth century BCE) grammar. ‘The Ashtadhyayi’ is the first completely
developed grammar of any human language. In etymology, Yaska’s Nirukta (seventh
century BCE) was first serious work being Yaska the first scholar to treat etymology.
Calculus was first discovered in Kerala School of Mathematics. If we take today’s
linguistic, the three disciplines are from Vedic knowledge, i.e., ‘Shiksha, Nirukta,
Vyakarna, Jyotisha, Chhanda and Kapla’ (http://www.indiatimes.com/theindicknow
ledgetradition).
According to linguistic and Indologist Kapil Kapoor, ‘Indian thinkers were not
hesitant in drawing information from all sectors of knowledge to build ‘Knowable”.
It is a perception of unity of existence with relativism and truism, and it uses ‘either/or
both logic’.
He also stated that ‘knowledge tradition of India are continuous and cumulative.
They are tactual and exegetical traditions in different areas of thought and experience,
philosophy, medicine, grammar, architecture, geography, literary theory, polity, etc.
Concept and technical vocabulary of these tradition are still a part of thinking and
language of modern India’ (http://www.ancientscienceoflife.org/textbook).

2 Literature Review

If we talk about knowledge, three words come to our mind ‘Darshan’ (system) then
the point of view which reads to ‘Jnana’ (knowledge) gathered in systematized in
organized manner for reflection and pedagogy is called ‘Vidya’ (discipline). Our
entire body is divided into two sets ‘Para Vidya’ and ‘Apra Vidya’, the knowledge of
ultimate principle, i.e., ‘Paramatma’ or ‘Brahma’. The knowledge which is gained
by eyes is ‘Bahirmukhi’ directed toward outer world and the other, and the whole
cognizing self is ‘Antarmukhi’ (turned inward). To acquire ‘Antarmukhi’ knowledge,
the knower has to go through ‘Sadhna’.
Indian Knowledge Tradition and Research 361

As we all know, knowledge is constituted in minds, so there is requirement of oral

culture. Which is transmitted in ‘guru–shishya’ mode? In this, scholar has library in
his mind and with high-speed processing. It also explains the puzzling requirement
in scholastic tradition for a scholar to be master of fourteen disciplines.
The Indian tradition talks about 18 major Vidyas (theoretical) and 64 kalas
applied. 18 Vidyas are ‘four subsidiary Vedas, Puran, Nyaya, Mimasa, Dharma
shastra, Vedangas, six auxiliary science, phonetics, grammar, meter, astronomy,
rituals, philology’. Knowledge is classified into subset, i.e., ‘Satvik Jnana’ of non-
difference, ‘Raj Sika Jnana’ of many existence, ‘Tamsika Jnana’ which clings to
one body, to self and its trivial (http://www.iks.iitgn.ac.in/2016/01/kapilkapoor-ind
ianknowledgesystem).
According to Professor Sharma, the Indian knowledge believes in religion,
meaning, work and salvation. The rise and fall of culture is not its economic status
but a knowledge tradition.
Swami Divyanand Tirth stated that ideology of Karl Marx and Simon Freud
has consumed the whole world. One gives the importance to the other, but Indian
philosophy has given importance to both. Artha is associated with religion, and Kama
is associated with salvation. Indian knowledge considered religion, Artha, Kama and
Moksha only. We cannot go to Bali temple wearing Western dresses.
In a lecture at Hindi Bhawan the president of philosophy department, Sagar
University stated Indian knowledge tradition as it is not root but freedom to use discre-
tion in the continuous migration (http://www.patrika.com/ampnews/indian-knowle
dgetradition).
According to space scientist Om Prakash Pandey, ‘the Indian tradition of knowl-
edge is one thousand year old’. He stated that we once again can become the world
guru by studying the tradition of knowledge. There is a need to change the mind-set
and adapt the Indianness input lives. We have insulted the ancient Indian tradition
by presenting every subject from the perspective of west. There has been hundred of
great men like ‘Aryabatta, Charak Rishi, Nagaarjun, Harshvardhan, Agastya Rishi,
Bhardwaj Rishi’ who have enriched the knowledge tradition of India. He stressed
that youngster should try to understand the knowledge tradition of India by reading
four Vedas and Upanishads, etc. (http://www.bhaskar.com).
According to Wikipedia, the Vedas are large body of religious text originating in
ancient India. Vedas are also called Shruti (what is heard), literature distinguishing
it from other religious text called Smirti (what is remember) (apte, 1965). The Vedic
hymns assert themselves that they were created by rishis (Sages). In Hindu epic
Mahabharata, the creation of Veda is credited to Brahma (Seer of fifth Veda; Krsna
and DVaipayana Vyasa in the Mahabharata). There are four Vedas, i.e., ‘Rigveda,
Yajurveda, Samaveda and Atharvaveda’ (Bloomfield, xxxx; Flood, 1996). Each Veda
has been subclassified into four text types, i.e., ‘Samhitas, Aranyakas, Brahmanas
and Upanishads’ (https://en.wikipedia.org/wiki/Vedas).
The Upanishads are ancient Sanskrit text of spiritual teaching and ideas of
Hinduism. They are part of Vedas also called Vedantas, i.e., last chapter of Vedas.
The concept of Brahman and Atman is central idea of all Upanishads (http://www.
wikipedia.org/wiki/Upnishad).
362 Sapna Sharma

3 Discussion

India has been the treasurer of intellectual activity during ancient and medieval times.
This activity was related to various fields of study of text like Vedas, Upanishads,
scriptures, science and art. India is a diverse country having multiplicity of thoughts,
language, styles of livings with different artistic and scientific works done by the
people. In ancient India, the rich knowledge tradition included branches of knowledge
(Vedangas) and other discipline. Indians believe knowledge (Vidya) as the only real
wealth. Ancient knowledge has been passed from generation to generation in the
form of gurukuls where guru–shishya relationship flourishes. It was totally oral as
only two organs were needed, i.e., guru’s mouth and shishya’s ear (http://google.
com/mow-3rd-conference-sudha-gopalkrishna).
Every Mantra in Veda can be categorized into Rik (Mantra of divine conscien-
tiousness), Yajus (Mantra of divine power), Saman (Mantra of divine Ananda) and
Athavana (incantations) (http://google.com/hsbv.org/vedas).
Shankaracharya, an early eighth-century philosopher consolidated the doctrine of
Advaita Vedanta which refers to idea that the soul or Atman is same as Brahman. He
focused on Brahman, Atman, Vidya, Avidya, Maya, Karma, Moksha. His teachings
and tradition were based on Smartism, founded four Mathas and influenced Santmat
lineages (http://google.com/Wikipedia/adi-shankracharya).
According to Kapil Kapoor, ‘The ancient Indian tradition is oral one but produce
larger body of knowledge test. The sage sees with his eyes shut, and knowledge
arises within. The creation, storage, dissemination and transmission of knowledge
from one generation to other were through oral method’ (http://youtube.com/oraltr
aditionsofindia-Drkapilkapoor).
Indian knowledge tradition also consists of Yoga Sutra. i.e., collection of 196
Sanskrit sutras on practice and theory related to Yoga. It was compiled by sage
Patanjali in India who synthesized and organized knowledge tradition about Yoga. It
relies on three Pranamas, i.e., Pratyaksha, Anumana and Shabda (http://wikipedia.
org/yogasutraofpatanjali).

4 Impact of COVID-19 on Indian Knowledge Tradition

In modern age, we have accepted modern tradition and ignored ancient knowledge
tradition. It’s like we are ignoring the ideals of Gandhi but other countries like
America, University of West Virginia, University of Hawaii have accepted them. We
are ignoring our self-respect, national pride, our culture-rich heritage. This change
is going to take us to decline. In ancient, youth have ideals, principles, ideas. Their
thoughts and behavior were laced with Indian culture but now its not so (www.aar
yalhd.blockspot.com).
Our original culture ‘Vasudhev Kutumbhkam’ is missing in today’s culture. It is
denoted by Mr Rajnath Singh (Former Defense Minister) that it is necessary to give
Indian Knowledge Tradition and Research 363

values to children while imparting them knowledge. Only knowledge which is laced
with values is beneficial for the society (http://www.outlookindia.com).
Several guidelines have been issued by NITI Aayog for the public or their safety
against COVID-19 and suggested people to follow tradition and practice to help in
boosting the body’s defense system. He suggested to eat traditional food, use ‘Mitti ke
bartan, drinking water in tamba pot’, etc., doing Yogasana, washing hands, leaving
footwear outside the house which were practiced by our ancestors as a tradition
(http://www.niti.gov.in/19-traditionandpracticestoboostimmuneagainstCovid19).

5 Conclusion

As we all know, modern science is based on knowledge tradition but it is up to its

extinction, which was helpful to save ourselves from different problems. There is
a need to revive knowledge tradition and establish it with research. Today, we are
getting all education from outside so we are not able to move forward.
The scientific side of our knowledge tradition should be exposed to the people for
their benefit. Various fields like agriculture, art, water, biodiversity should be linked
with knowledge, suggestion and new scientific aspect should be searched.
In every field like maths, linguistic, logic, aesthetic, management, science, the
Indian knowledge tradition insights are developed for its relevancy and valuableness.
Many researchers are discovering new aspect due to their personal curiosity and
dedication. Recent conferences played a vital role in raising awareness of the richness
and necessity of knowledge tradition.
However, it is necessary to educate the younger generation in India’s traditional
knowledge at large scale and curbing their collective intellectual expertise for further
research and innovation under the aegis of formal higher education.
So, it is time to rethink and review our ancient knowledge tradition and transfers it
to our coming generation so that our youth should become responsible and cultured
and try to change their attitude and behavior by teaching them various knowledge of
tradition.

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Vipassana Meditation: An Effective Way
to Enhance Employee Contribution
in Fostering Organizational Growth

Seema Pradhan

Abstract Very rapid and transforming changes are happening in all fields, thanks to
the digital revolution in technology. This has created worldwide challenges as well as
opportunities. However, in addition to technical knowledge and efficiency, psycho-
logical qualities like well-being, interpersonal skills, self-confidence, remain criti-
cally important. This empirical study attempts to measure the effect on employees’
behavior, personality and psychological well-being by using Vipassana meditation
as an intervention. For this purpose, 240 meditator and non-meditator employees
were administered an instrument comprising of a psychological well-being scale
and a specially designed behavior measure scale to study how mindfulness inter-
vention affects personality and behavior. The data was analyzed using SPSS Ver.
20.0. The results indicated higher values for meditator employees on nine measures
of behavior, personality and well-being. These scores indicated that they enjoyed
higher self-confidence, interpersonal skills, equanimity, empathy, engagement and
growth leading to better work ethic, teamwork and growth. It was not possible to
adopt a “Before and After” study design due to the limitation of time available for
completion of the study. The behavioral and personality changes that take place due
to VM practice are subjective. In the future, it will be interesting to study these
subjective changes in meditators by using a long-term study spanning over a few
years.

Keywords Behavior · Employees · Personality · Psychological well-being ·

Vipassana meditation

1 Introduction

It is now widely accepted in business that workplace culture is a critical determinant

of workplace productivity. The combination of behaviors and attitudes of people
is what constitutes their culture and determines what they do and how they feel
about what they do. The fast pace of technological innovations taking place resulting

S. Pradhan (B)
Consultant Psychologist and Psychotherapist, Fortis Hospitals, Bangalore, India

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 365
A. Chandani et al. (eds.), Achieving $5 Trillion Economy of India, Springer Proceedings
in Business and Economics, https://doi.org/10.1007/978-981-16-7818-9_19
366 S. Pradhan

in better workplace productivity is, however, mandating that people change their
attitudes and habits as also their life styles if they are to accept and incorporate
these technological innovations in their daily lives. Over time, this also impacts their
culture and behavior.
The atmosphere at the workplace plays a significant role in shaping an individuals’
life and well-being as well as that of the community (Harter et al., 2002). Spirituality
at the workplace therefore influences human behavioral attributes such as personal
development, honesty, job commitment, trusting others, finding meaning and joy at
work thus enhancing employee well-being (Petchsawange & Duchon, 2012).
Recent scientific discoveries regarding brain development have confirmed that
an individuals’ early formative period plays a primary role in developing reactive
patterns of behavior. Reactive patterns of behavior do not harness the complete
capacity of human energy. Efficient and effective use of this energy is dependent on
the choices we make from moment to moment. The productivity and safety in human
endeavors are related to consciousness (Goleman, 1995). The important role that
consciousness plays in human psyche that modern science is beginning to emphasize
that was articulated by the Buddha 2500 years ago, in his teachings.
According to Ferguson (1981), meditation is a “technique to actualize and inte-
grate the personality of human beings to fulfill states of personal integration”. Maslow
(1968) stated that self-actualization includes “increased acceptance of self, of others,
and of nature’s superior perception of reality” which is in tune with meditation objec-
tives. Of late, significant research efforts are being done to study the benefits of
Vipassana meditation (VM) in a workplace setting. Research on mindfulness, which
stems from VM, has highlighted improvement in many aspects such as memory,
resiliency, interpersonal relationships, enjoyment in addition to job performance and
commitment (Glomb et al., 2011; Levy et al., 2012).
Buddha introduced the concept of “sangha” which espoused democratic principles
of organization such as coexisting in harmony, sharing of knowledge and is similar
to contemporary management principles. Buddha in his teachings emphasized the
value of self-reliance to transform oneself (Gopalakrishna, 2006).
All these aspects suggested that we conduct a study which is empirical in nature
to measure the effectiveness of VM with respect to behavior as well as psychological
well-being of the employees. Coping with stress, emotional intelligence, interper-
sonal relationships and work place spirituality were the four constructs employed to
design a questionnaire for this purpose (Pradhan & Ajithkumar, 2017a). In case of
psychological well-being, a standardized questionnaire (Mehrotra et al., 2013) was
administered. The findings were analyzed statistically, and conclusions were drawn
which validate the research hypothesis put forth by us.
Vipassana Meditation: An Effective Way to Enhance Employee … 367

2 Literature Review

2.1 Behavior and Personality

Behavior is defined as “the way in which one acts or conducts oneself, especially
toward others” (Merriam Webster’s Dictionary, 2015). Ossorio (2006) observed that
“all behavior is describable as an attempt on the part of an individual to bring about
some state of affairs—either to effect a change from one state of affairs to another, or
to maintain a currently existing one”. In the course of their life, individuals attempt
to improve or change their behavior in more desired ways through various methods.
The interventions to alter behavior work best when they are directed toward the real
causes of undesirable behavior while being focused on the removal of barriers that
hinder the change.
Allport’s (1961) view of personality is “… the dynamic organization within the
person of the psychological and physical systems that underlie that person’s patterns
of actions, thoughts, and feelings”. Personality is “individual differences in charac-
teristic patterns of thinking, feeling and behaving. The study of personality focuses
on two broad areas: One is understanding individual differences in particular person-
ality characteristics, such as sociability or irritability. The other is understanding how
the various parts of a person come together as a whole” (Kazdin, 2000).
Personalities are comprised of traits, which are the characteristics influencing
our behavior across many situations. Introversion, friendliness, conscientiousness,
honesty and helpfulness are important personality traits as they help us to understand
consistencies in behavior.
The literature review resulted in the identification of four constructs which influ-
ence individual behavior and personality and have a bearing on their workplace
productivity.

2.2 Coping with Stress (CS)

Stress is caused by facing up to unanticipated changing situations at home, in social

situations as well as at work. It is at once a psychological as well as a physical
body response, whereas when it comes to stressors, “stressors are external objective
events that have the potential to create negative outcomes for individuals” (Lazarus &
Folkman, 1984).
Controlling one’s emotions when attempting to satisfy demands that are
conflicting with each other is what coping with stress is all about. “Stress tolerance”
defined by Bar-On, 1977 is “the ability to withstand adverse events and stressful
situations without “falling apart” by actively and positively coping with stress”.
Employee stress levels are modulated in a positive way by determining the sources
of stress and then realizing how to manage the stress (Tagis, 2002). Employees prefer
meditation as a tool to relieve stress (Nalawade & Pradhan, 2016). Mindfulness helps
368 S. Pradhan

the individual to regulate the reaction to stress (Kadziolka et al., 2016). Practicing
VM helps to reduce stress and enhances productivity, empathy and communication
ability of the employees in the workplace (Hoge et al., 2017; Singh et al., 2017;
Spadaro & Hunker, 2016).

2.3 Workplace Spirituality (WS)

Ashmos and Duchon (2000) stated that WS is “the recognition that employees have
an inner life that nourishes and is nourished by meaningful work that takes place in
the context of community”.
Biberman and Whitty (1997) stated that “rekindling the spirit in work is not only
good business, but also subconsciously sought after by workers and managers alike”.
Cheng (2016) put forth that organizational outcome can be positively affected by
workplace spirituality. Employees perceive a sense of mutual respect and connect-
edness. This inspires them to promote changes and undertake beneficial activities
leading to organizational development and transformation (Garg, 2017). Fulfillment
in the workplace facilitates reduction in absenteeism, conflict and stress reduction
leading to an enhanced work performance, a sense of well-being and improvement
in quality of life (Afsar & Rehman, 2015; Lychnell, 2017; Marschke et al., 2011).

2.4 Emotional Intelligence (EI)

EI is “the ability to be self-disciplined, develop understanding and empathy for

oneself and others and develop personal connection with others”. As Goleman
(1995) has stated, “emotional intelligence is a far more significant factor in personal
performance than is IQ”.
In a workplace context, harnessing emotional insight about oneself and colleagues
and using it to understand and express feelings and emotions leads to enhanced
cooperation and productivity. It is indicated that mindfulness facilitates EI and stress
has adverse effect on EI (Baer et al., 2004, 2006; Brown & Ryan, 2003; Schutte &
Malouf, 2011). Mindfulness is observed to mediate between stress and emotional
intelligence (Oh & Koh, 2014). Subjective well-being (SWB) and life satisfaction are
influenced by EI (Palmer et al., 2002). Further, EI has a positive effect on occupational
stress (Bar-On et al., 2000), academic achievements (Van der Zee et al., 2002) and
interpersonal relationships (Fitness, 2001). Improvement in well-being is observed
due to increase in the level of EI brought about by mindfulness practice (Chu 2010;
Sampaio et al., 2017).
Vipassana Meditation: An Effective Way to Enhance Employee … 369

2.5 Interpersonal Relationship (IR)

According to Bar-On (1997), IR is “the ability to establish and maintain mutually

satisfying relationships that are characterized by intimacy and by giving and receiving
affection”.
Research indicates that satisfaction in relationships is influenced directly by the
degree of mindfulness (Barnes et al., 2007; Michaels, 2007). Similarly, mindfulness
practice enhances psychological well-being (Nyklicek & Kuijpers, 2008), emotional
well-being (Weinstein et al., 2009), emotion regulation (Linehan, 1993) and empathy
(Shapiro et al., 1998). Meditation also promotes the ability to respond adaptively
in case of social conflict (Pepping et al., 2016), and this enhances day-to-day
interpersonal functioning.

2.6 Psychological Well-Being (PWB)

By definition, PWB is “engagement with existential challenges of life” (Keyes et al.,

2002). Ryff (1989), put forth PWB as “the striving for perfection that represents
the realization of one’s true potential”. This is in tune with the Buddhist perspective
where genuine well-being is, “realizing one’s fullest potential in terms of wisdom,
compassion and creativity” (Wallace & Shapiro, 2006).
Individual’s goals for betterment and directions in life are, in themselves, an essen-
tial aspect of PWB. Moreover, achievement of one’s purpose in life is an ardent task
as it requires effort and discipline, which may mismatch with short-term happiness
at times.
As reported by several studies, the focus of treatment programs related to mind-
fulness is reduction in indicators related to psychopathological issues (Reibel et al.
2001), stress (Kabat-Zinn, 1996) and betterment of well-being (Carmody & Baer,
2008). Buddhist view stresses that the basic quality of mindfulness is its ability to
keep the mind in a tranquil state when facing trying situations or experiencing fear
and pain (Goldstein & Kornfield, 2001).
Practicing VM enhances physiological as well as psychological well-being, trig-
gering enhancement in cognitive and attentional abilities (Chambers et al., 2009;
Moore & Malinowski, 2009). Hanley et al. (2017) showed a positive affect between
selflessness, PWB and mindfulness. They further concluded that when self is more
in tune with broader social and natural causes, there is a marked improvement in
psychological well-being and mindfulness.
Meditation or yoga programs in prison demonstrated that inmates participating in
these programs report greater PWB scores (Auty et al., 2015). Research has shown
that those who enjoy supportive relationships develop a sense of well-being (Holt-
Lunstad et al., 2010). Meditation helped students to achieve enhancement in PWB
(Vijayaraghavan & Madhava Chandran, 2019).
370 S. Pradhan

2.7 Vipassana Meditation

Gautama Buddha rediscovered the technique of Vipassana meditation 2500 years

ago. “Vipassana” in the ancient Pali language means, “to see things as they really
are” in a special way, repeatedly in an iterative fashion.
Vipassana is also called as “insight” meditation, because it brings insight into the
functioning of the human psyche. It helps to bring the attention to the physical and
mental phenomenon as they are happening.
It is the practice of a “clear and single-minded awareness of what actually happens
to us and in us, at the successive moments of perception” (Nyanaponika, 1973). This
choice-less observation paves the way to observe and attend to all stimuli equally
without any preference for any one of them. It helps the practitioner to develop non-
judgment, and come out of interpretations, preferences and censorship of selection.
Due to this, one’s mental patterns or processes no longer have control over his/her
personality and behavior. This helps the individual, slowly but surely, come out of
one’s uncontrolled and unaware psychic phenomenon, as the change happens at the
experiential level (Nyanaponika, 1973).
Mindfulness appears to be linked to well-being as it helps to reduce ruminative
thinking (Jain et al., 2007), disorders related to anxiety and mood swings (Goldin &
Gross, 2010; Hofmann et al., 2010) and better emotion modulation (Arch & Craske,
2006). Modinos et al. (2010) have reported that non-meditators and meditator indi-
viduals’ ability to regulate emotional responses is governed by mindfulness. Brain
studies undertaken by many researchers show case how meditation is facilitating
long-term structural changes related to brain affect, positive affect and better immune
system (Davidson et al., 2003; Hölzel et al., 2008; Luders et al., 2009); reduction in
“amygdala response” related to emotional stimuli and increase in brain connectivity
(Desbordes et al., 2012; Luders et al., 2011).
Banerjee (2012) documented that Vipassana meditator employees are more
focused and composed. According to Avey et al. (2008), VM employees are more
positive and optimistic due to being aware of their adverse thoughts, especially when,
organizational change is taking place. Bhatnagar (2014) reported that VM facilitates
productivity as anxiety in employees is reduced. According to Shiera and Graham
(2011), Vipassana meditation has a positive effect on SWB. Marques and Satinder
(2009) opine that VM practice enhances a feeling of well-being at work place paving
the way for better productivity.
Also, it is observed that in addition to well-being, VM has a positive effect on
psychological symptoms (Bowen et al., 2006; Chambers et al., 2008). The changes
due to Vipassana were studied by self-report measures on well-being, cognitive
flexibility and attentional abilities by Hartkamp and Thornton (2017). The studies
showed that improved feelings of well-being are directly proportional to mindfulness
level (Carmody & Baer, 2009; Chiesa & Serretti 2009; Wallace & Shapiro, 2006).
Vipassana Meditation: An Effective Way to Enhance Employee … 371

2.8 Mindfulness

Nyanaponika (1973) said mindfulness is “the clear and single-minded awareness of

what actually happens to us and in us at the successive moments of perception”.
Hanh (1976) stated mindfulness is “keeping one’s consciousness alive to the present
reality”.
Trait mindfulness could be developed as a skill and enhanced (Kabat-Zinn,
1996). Mindfulness practitioner can enjoy benefits in areas such as care giving
(Shiera & Graham, 2011), health and well-being (Kabat-Zinn, 1982), personal growth
(Ruedy & Schweitzer, 2010) and organizational environment (Avey et al., 2008).
Atkins and Parker (2012) documented that employee practicing mindfulness
exhibited “compassionate organizational behavior”. This indicates better psycho-
logical well-being as it is a demonstration of an individual’s awareness and alertness
in daily life situations.
Mindfulness awakens other mechanisms that positively impact PWB (Williams
et al., 2000). Mindfulness also considerably decreases anxiety disorder (Hargus et al.,
2010; Miller et al., 2012; Sharma et al., 2012).
Even brief mindfulness intervention indicated better emotional health and posi-
tive outlook toward life in participants (McCraty et al., 2003; Williams, 2006).
Higher level of psychological well-being goes hand in hand with mindfulness
and experience in meditation. Research has highlighted that mindfulness medi-
tation practice is a useful intervention to enhance well-being (Bear, 2003; Segal
et al., 2002; Wallace & Shapiro, 2006). Mindfulness-based stress reduction program
(MBSR) showed considerable improvement in psychological well-being of partic-
ipant patients who were suffering from rheumatoid arthritis (Pradhan et al., 2007).
Non-clinical patients reported increase in mood and affect after practicing mindful-
ness, such as better mood and happiness even when the jobs were stressful (Davidson
et al., 2003). The same findings were reported by employees working in healthcare
sector (Galantino et al., 2005). Also, enhanced subjective well-being was observed
in nonclinical patients (Orzech et al., 2009).
The literature review of the research conducted on psychological well-being indi-
cates positive results when meditation techniques are used as an intervention. Mind-
fulness fosters positive relationships, increases PWB, creativity and performance
related to task (Brown et al., 2007; Ryan & Deci, 2000). Penberthy et al. (2016)
studied the effect of Tibetan Buddhist meditation on college students’ PWB. The
results suggest a positive outcome on the psychological well-being of participants
and the mediating role played by mindfulness. Similar results are reported by other
studies on college going students related to impact of mindfulness on PWB (Burns
et al. 2011; Roberts-Wolfe et al. 2012).
Employees experience increase in engagement and productivity due to mindful-
ness practice. They also enjoy a sense of community and a greater team spirit which
fosters a work ethic that delivers higher productivity (Krishna Kumar & Robinson,
2015).
372 S. Pradhan

3 Objectives of the Study

1. To study the effect of VM on the behavior and personality scores attained by

meditators.
2. To study the effect of VM on the PWB scores attained by meditators.

4 Methodology

For this study, the research design used was After-Only with Control Design
(Kothari & Garg, 2014).
The VM center selected for data collection was Bangalore Vipassana Meditation
Center (Dhamma Pappula). Judgment sampling method was used for data collection.
The subjects were employees from different organizations, coming to the center for
a ten-day residential VM course. For administering the instrument, following two
groups of employees were selected.
1. Control group = non-meditator employees; participating in their first VM course
2. Experimental group = Employee meditators who have completed minimum-3–
10-day VM courses and have been practicing VM regularly
Participation in the study was voluntary. The questionnaire included clear instruc-
tions on filling it up and no personal details were captured. Participants had 3–4 h for
completing the questionnaire. Questionnaire had a section for collecting demographic
as well as information regarding Vipassana meditation practice being followed by the
meditators. Before the start of the program, completed questionnaires were submitted
by the participants (Pradhan et al., 2016). Total 240 responses were considered from
each group after filtering out incomplete responses.
Aspects of employee’s behavior and personality were measured by a specially
designed Behavior Measure Scale (BMS) for this study. BMS was developed
by incorporating four constructs identified through the literature review. These
constructs were highly indicative of performance of the employee in the workplace.
The constructs were interpersonal relationships, emotional intelligence, coping with
stress and workplace spirituality.
The BMS scale was tested by conducting a pilot study. In the pilot study
exploratory factor analysis (EFA) was conducted for a sample size of 395. Prin-
cipal component analysis or PCA was employed by using varimax rotation to extract
factors. The factors were validated by performing a confirmatory factor analysis
or CFA for final 240 sample size, using R program for this purpose (Pradhan &
Ajithkumar, 2017a).
A 5-point Likert scale was used. 1 = “Never or very rarely true” to 5 = “Very
often or always true”. The questionnaire had items like “I like to challenge myself in
a healthy and positive way”.
The research variables of interest were:
Vipassana Meditation: An Effective Way to Enhance Employee … 373

Table 1 Demographic
Demographics Control group % Experimental group
composition of the two
%
groups
Mean age in years 38 39
Gender Male proportion = Male proportion =
57 57
Marital status Married proportion Married proportion
= 63 = 56
Education Graduate and above Graduate and above
= 90 = 91
Employment Services and Services and
segment software = 57 software = 62
Work position Middle and senior Middle and senior
= 54 = 55

• Equanimity
• Self confidence
• Self-awareness
• Interpersonal skills
• Empathy
To measure the psychological well-being (PWB) of the respondents, a standard-
ized self-report scale modified by Mehrotra et al. (2013) was employed. This scale
was originally developed by Ryff (1989) and is called the model of PWB scale
(Ryff & Keyes, 1995).
This modified scale uses a 6-point Likert scale with: 1 = “Strongly disagree” to
6 = “Strongly agree” to measure four psychological factors. One of the items out of
20 items is “I feel that I get a lot out of my friendships”.
The four factors measured were
• Mastery and competence
• Positive relations
• Self-acceptance
• Engagement and growth
Higher scores meant higher levels of PWB (Pradhan & Ajithkumar, 2017b).
Care was taken to ensure that the two groups did not differ significantly on demo-
graphic parameters and a chi-square test was performed. The test confirmed that the
two groups were independent of demographic factors as p values were greater than
0.05 for all demographic factors (p > 0.05).
The demographics of the group respondents are shown in Table 1.
374 S. Pradhan

4.1 Data Analysis

Quantitative data analysis was performed by employing SPSS Ver. 20.0. Analysis of
the BMS data was carried out for determining the reliability and sampling adequacy
for performing factor analysis using Cronbach Alpha and KMO test of sampling
adequacy. The results for BMS indicated
Cronbach’s Alpha = 0.846
KMO Measure = 0.846
Even though the PWB scale used was a standardized scale, the data collected was
subjected to an EFA to confirm that the factor structure extracted was in line with
the four-factor structure of PWB with the data sample collected. Reliability analysis
was employed to test that the factors obtained were reliable. Kaiser–Meyer–Olkin
(KMO) test was employed to test the sampling adequacy for running factor analysis.
The values are shown below.
Cronbach’s Alpha = 0.894
KMO Measure = 0.886
An independent sample t-Test for both the groups (240 respondents) indicated
that meditator group secured higher mean scores on all five variables of BMS scale
with p < 0.05 and four variables of the PWB scale with p < 0.05 (Pradhan & Ajith
kumar, 2017b). Also, as shown in Table 2, all t values are negative. This shows that
practicing Vipassana meditation makes a difference to all the nine scores achieved
by the control group as compared to the experimental group, and the difference is
statistically significant.

Table 2 Independent sample t-test for nine variables (BMS and PWB)
Factors t-test (equality of means)
t df p value Mean difference Std. error difference
Interpersonal −3.706 478 < 0.001 −0.955 0.258
skills
Empathy −4.465 478 < 0.001 −1.186 0.266
Self-awareness −9.317 455.86 < 0.001 −2.391 0.257
Equanimity −9.452 478 < 0.001 −2.688 0.284
Self-confidence −4.604 462.55 < 0.001 −0.771 0.167
Self-acceptance −5.079 474.42 < 0.001 −2.009 0.396
Mastery and −5.733 478 < 0.001 −3.339 0.582
competence
Positive relations −2.597 478 < 0.010 −1.317 0.507
Engagement and −4.689 474.51 < 0.001 −2.187 0.466
growth
Vipassana Meditation: An Effective Way to Enhance Employee … 375

5 Discussion

The results on BMS and PWB met with the objective of the research and indicated that
Vipassana meditation could be a useful intervention. As indicated in Table 2, above
qualities like self-confidence, equanimity, interpersonal skills, empathy and self-
awareness showed higher scores in meditator employees. The payoff for meditator
employees was that they could remain equanimous and handle stressful situations
better as well as were able to manage interpersonal relations in family and work
arenas. This shows that meditator employees are able to deal with life situations with
better awareness (Goenka, 2002). Also, with better interpersonal skills and empathy,
the employees are better equipped to build teams and lead them well, leading to
higher productivity by being focused on the goals, enabling organizations to become
more productive. It becomes a win–win situation where the organization flourishes
and the employees find that it is an ideal workplace.
When inner peace and calmness is experienced by the practitioner, he/she expe-
riences greater clarity of thought, reduced self-delusion, self-control and is able
understand others’ point of view in an empathetic manner (Bockler et al., 2017).
The increased self-awareness due to practicing VM gives a better sense of balance
between mind and body resulting in reduction of automated non-adaptive reactions
by induction of selective adaptive responses in the event of stressful life situations
(Hart, 1987).
Equanimity helps the meditator to become resilient and handle stress situations
well (Teasdale et al., 2000). Equanimous individuals are able to see that external
events are transitory and will pass on their own. This gives them the ability to remain
calm and becomes a natural stress relieving mechanism.
This research adds to the body of available literature. Experience in Vipassana
meditation strengthens and enhances PWB (Lykins & Baer, 2009). Higher scores on
PWB by meditators indicated development of abilities which helped them to main-
tain a harmonious environment and remain ethical in their dealings at work and life
situations. Higher scores on “positive relations” and “engagement and growth” indi-
cated that the meditator employees were able to form trusting and good relationships
with others, are engaged in the task at hand and felt more positive and hopeful about
themselves and life. They considered life as a process of learning and growth (Ryff &
Keyes, 1995). They strive to attain mastery and competence in their field and show
more responsibility and are more self-accepting. The higher PWB due to practicing
meditation enables the practitioner to face and deal with work situations in a better
and more effective manner. As PWB influences meaning in life, the results suggest
that adopting meditation practice may help make life more meaningful.
These higher BMS and PWB scores would benefit employees in organiza-
tional scenarios because organizations predominantly comprise of teamwork, lead-
ership, conflict management and they are essentially relational, focusing on social
networking, effective communication, psychological safety and trust (Good et al.,
376 S. Pradhan

2016). The meditators with higher scores show that they can become better commu-
nicators through embracing the habit of listening with an open mind and be less judg-
mental of their peers, clients and superiors, resulting in better quality of relationship
(Beach et al., 2013; Beckman et al., 2012).
The self-awareness brought about by practicing mindfulness is particularly rele-
vant in the workplace (Creswell et. al., 2007; Lutz et al., 2016) as lack of self-control
is the biggest block for successful leadership making it a useful key intervention in
organizations (Doll et al., 2016; Marques, 2017). Mindfulness influences important
attributes in organizations such as cognition, relationships and emotional control
which are responsible for important aspects of workplace such as work performance
and well-being (Good et al., 2016). At work, supervisory and managerial relations are
very important as coordination and cooperation between them impacts performance
(Dienesch & Liden, 1986; Mathieu, et al., 2000).

6 Limitations

“Before and After” study design was not implemented keeping in mind time
considerations of the project.

7 Scope for Future Work

Changes occurring in an individual’s personality due to VM practice are subjective. It

would be interesting to study the changes in individual characteristics on a long-term
basis stemming from the practice of Vipassana meditation.

8 Conclusion

The findings of this empirical research are in tune with existing literature. The findings
showed higher scores on all nine behavior and personality research variables in case
of meditator employees.
This study shows that there is a valid rationale to encourage employees in orga-
nizations to adopt and internalize Vipassana meditation as a part of their daily
routine. Businesses attempt to employ various methods to enhance goal congru-
ence in employees while reducing friction and enhancing team play. Adoption of
VM can be an effective method to achieve these goals. This in turn can make the
workplace a good place to be in and at the same time paving the way for commercial
success.
Vipassana Meditation: An Effective Way to Enhance Employee … 377

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