It is my pleasure to bring you Volume 29, No. 2, the June 2017 issue of IIMB Management Review.
The conventional positive risk-return association in economics and empirical finance literature was contradicted by Bowman’s paradox which stated that troubled companies took more risk. The paradoxical risk-return association from the prospect theory perspective is hypothesised that when a firm’s performance is below a given reference return level, managers would be risk seeking and when performance is above that level, they would be risk averse. In the paper, “Risk-attitudes of the NSE 500 Firms – Bowman’s Paradox and Prospect Theory Perspectives”, Professor Ranjan Das Gupta investigates the risk attitudes of NSE 500 firms representing the Indian corporate sector, from the behavioural perspective. To investigate the risk-return association, the study uses accounting variables, namely, Return on assets (ROA), Return on equity (ROE), and the Capital ratio (CR) of 379 NSE 500 firms over the period 2001-2015, which form the sample. The reference return levels are the cross-sectional median returns. The study develops a multi-variate regression model, wherein both firm and cross-sectional industry mean returns for preceding five years on a rolling basis are used to calculate the target return to measure distance from such targets (return measure). The study also controls the size, age, risk, and sector impact of Indian firms on risk-return association, and thereby prospect theory implications. The study controls for core and service sector firms as a proxy for industry-classification -- on this basis, the sample of 379 firms comprises 252 core, and 127 service sector firms. On an overall basis and also under controlled size, age, risk, and sector sub-samples, Indian firms show significant presence of prospect theory implications, and below median firms exhibit presence of Bowman’s paradox. Superior Indian performers who are above median, are risk-averse and exhibit a significant positive risk-return association throughout.
Investments in e-Government projects have grown significantly world over but there have been concerns about the large number of project failures. In India e-Government initiatives have successfully improved public services but there exist management challenges in project structuring that include information and communication technology (ICT) asset management, organisation management, and process management. Most e-Government projects adopt the traditional project financing approach of government funding. However, with public financial resources becoming scarce, other options include the public-private partnership (PPP) model. The National e-Governance Plan, 2006, in India specified that the PPP model is to be adopted wherever feasible.
In their paper, “Management and Financing of e-Government Projects in India: Does Financing Strategy Add Value?” Dr. Shashank Ojha and Professor I M Pandey explore if the source of financing (government/PPP) and the method of financing (traditional/structured) help in improving investment decision making, reducing risk, facilitating optimum structure of resources and solving the funding problem of e-Governance projects. Further, they explore whether alternative financing strategies actually impact the key factors which define the success (or failure) of e-Government projects. Their study is based on an evaluation of four case studies (two with PPP approach and two with traditional financing) with the objective to examine the comparative sources of value-addition in the management of e-Government projects, which are complex and risky, and to prevent loss of investments. The study uses the “within-case analysis” and “paired case analysis” tools for strengthening replication logic for its findings, using multiple case analyses. The final case analysis was based on 11 key dimensions – strategic, technical, organisational, asset ownership and control, risk management, economic, project management, procurement, growth, innovation, and real options.
The results of the study are presented as a set of five propositions with the initial 11 dimensions regrouped into 13 dimensions under five broad areas of assets management, strategic approach, organisational management, process management, and new value addition sources. The findings show that in the PPP based strategic financing of projects, the key dimensions for the project’s success have been addressed more effectively. The main argument against the traditional financing approach adopted in e-government projects is that it fails to take into consideration the project risks and revenues and their optimal allocation to support prudent decision making. The financing strategy adopted was therefore important, as it had significant impact on strategic management, senior level commitment, and eventual success of the projects. The study confirms the potential of the PPP based financing approach and its variants in designing financing strategies for e-Government projects. However, the PPP approach may not be the preferred approach for all e-Government projects. A carefully crafted and customised structuring strategy is thus needed in government organisations.
In the current business environment, firms do align their manufacturing and business strategies, but the appropriate choice of collaboration that benefits this alignment needs examination. The paper, “Supply Chain Collaboration Aligns Order-winning Strategy with Business Outcomes”, by Professors Pongpak Banchuen, Ian Sadler and Himanshu Shee, focusses on the manufacture (buyer) side of the collaboration. Drawing on three theories in the field that have addressed the buyer-supplier collaboration framework -- the strategy-structure-performance (SSP) paradigm, the strategic focussed outcomes model (SFOM) and Fisher’s model on the choice of supply approach, this paper organises all three into a novel, over-archial model. Their model links three sets of variables -- order-winning strategy (cost, quality, delivery, and flexibility); modes of collaboration (operational collaboration, and strategic collaboration), and business outcomes (relationship development, resource efficiency, market development, and innovation development), hypothesising relationships among them using a structural equation modelling (SEM) framework. Data were collected from supply chain professionals across four major manufacturing industries and 184 manufacturing firms in Thailand by mail survey. The proposed model comprises 10 multi-item constructs with a total of 37 scale items. The paper develops two possible supplier collaboration approaches based on the order-winners being pursued by the manufacturing firm: the efficient supply approach, and the market-responsive supply approach.
Findings suggest that the specified model adequately captures the hypothesised relationship among all variables. With all the hypotheses being supported, the study suggests that the efficient supply approach focussing on cost and quality as order winning strategies is pursued by developing operational collaboration that will lead to improvement in resource efficiency. The market responsive supply approach focussing on flexibility, and delivery dimensions is pursued using strategic collaboration, resulting in long term benefits of relationship development and ultimately, market development and innovation development. The paper depicts a clear relationship between specific order-winning strategy, the modes of collaboration, and the business outcomes. The key success factor is for firms to use the right type of collaboration, matching it with the main objectives.
While information and communication technology (ICT) has brought a new dimension in marketing research to help firms maximise revenues by identifying chief attributes affecting decisions, it has also brought in a deluge of information. The challenge lies in converting voluminous marketing data into knowledge. Among the new techniques and tools to enable this is rough set theory to capture indiscernibility among objects so as to model imperfect knowledge, and process uncertain and incomplete information. In their paper, “A Framework for Attribute Selection in Marketing using Rough Computing and Formal Concept Analysis”, Professors D. P. Acharjya and T. K. Das propose an integrated model that combines rough sets and formal concept analysis. The motivation behind this study is that the two theories aim at different goals and summarise different types of knowledge. Rough computing is used for prediction; rough sets on intuitionistic fuzzy approximation space with ordering rules helps in obtaining decision rules about the problem, whereas formal concept analysis is used for description, to better explore knowledge and find the chief attributes affecting decisions. They demonstrate their model with an empirical study in which data were gathered from 10 different companies. The attributes that were considered were expenditure on marketing, expenditure on distribution, expenditure on advertisement, expenditure on research & development, and miscellaneous expenditure, with the model helping the decision maker to identify the factors for total sales. The authors posit that the proposed model is useful for decision makers to take decisions.
This issue features an interview titled “Sustaining Impactful Multidisciplinary Contributions over Five Decades” with Professor Ramadhar Singh, currently Distinguished University Professor, Amrut Mody School of Management, Ahmedabad University, by Professor Kulbhushan Balooni, Director-in-charge, Indian Institute of Management, Kozhikode. Professor Balooni brings out that the challenge for professors lies in continuing to generate relevant knowledge, and profiles the work of Professor Ramadhar Singh. Professor Balooni then discusses with Professor Ramadhar Singh on his sustained contributions, and his journey as a psychological scientist over the last five decades. Professor Balooni concludes by asking for advice for young scholars who are to make contributions in the light of modern advances.
This issue carries a book review by Professor Abhoy Ojha of “How to get Published in the Best Management Journals”, Edited by Timothy Clark, Mike Wright & David J. Ketchen, Jr., Edward Elgar Publishing; 2016.
This issue carries the Call for the Submissions for the IMR Doctoral Students Conference 2018. Doctoral students are encouraged to participate.
Best wishes,
Nagasimha Balakrishna Kanagal
Editor-in-Chief
IIMB Management Review
India
Email address: eic@iimb.ernet.in
