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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Dr Chandan Lal RohraAssistant Professor,Department of Business Administration , SALU , Khairpur(Mirs)Muhammadi SabraDepartment of Management Sciences, CIITDr. S. I. MalikPhD Bio Chemistry & Molecular Biology (National University of Athens)NHEERL. Envrironmental carcinigenei divisionRTP Complex NC 27713US Environmental protection Agency , 919-541-3282Dr. Bhagaban DasReader, Department of Business ManagementVyasa Vihar, Balasore-756019 OrissaT. Ramayah http://www.ramayah.comAssociate Professor , School of ManagementUniversity Sains Malaysia, Tel 604-653 3888Dr. Wan Khairuzzaman bin Wan IsmailAssoc. Professor International Business School, UTM International CampusJalan Semarak 54100 Kuala Lumpur, MALAYSIAZainudin Hj AwangFaculty of Information Technology and Quantitative Sciences, MARA University TechnologyMARA Kelantan 18500, Malaysia ,Tel: 60-9-9762-302Ravi KiranAssociate Professor, School Of Management & Social Sciiences, Thapar University.Dr.Suguna PathyHead, Department of Sociology, VNSG University, SuratBirasnav MAssistant professor, Park Global School of Business Excellence, Kaniyur, CoimbatoreDr. C.N. OjogwuPhd Education Management - University of Benin, Benin City, Edo state, Nigeria.Senior lecturer - University of Benin.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 4

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5HRD roles and competencies: A comparative study of Pakistan 99and China using ASTD modelHassan Rasool, Fuwad Bashir, Muhammad Ismail RamayThe Effect of Demographic and Academic Backgrounds 112on Financial Accounting PerformanceWan Faizah Wan Abdullah. Siti Salmah Abu Bakar. Marzlin Marzuki.Noraini Abdul Rahim. Kamaruzaman JusoffInfluence of Institutional Pressure and Ownership Structure on 123Corporate Social Responsibility DisclosureFaizah Darus, Roshayani Arshad, Suaini Othman, Kamaruzaman JusoffThe Effect of Problem-Based Learning on Students’ Teamwork 151Ability in UiTM Trengganu, MalaysiaNoor Liza Adnan , Wan Karomiah Wan Abdullah, Kamaruzaman JusoffCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 7

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Vitta (1981) suggested that, a basic benefit of enhanced efficiency in banks, is a reductionin the spreads between lending and deposits rates. This would eventually stimulate loan demandfor investment.Economic theory suggested that, other things being equal, firms having significantmarket position in a highly concentrated market will tend to restrict output, change high prices,earn higher rates of return and uses their entrenched position to retard the competitive efforts ofother firms (Allardice and Edervige, 1981).Khartchate and Riechel (1980) opined that, economics scale in financial intermediariesarises from port-folio diversification and management, the minimization of information andtransaction cost. Thus, the authors were thinking of operational efficiency.Bryan (1972) found that, the most important single factor explaining the operationefficiency in terms of profitability performance is the ratio of saving and the time deposits tototal deposit to total deposits. The argument is that, the deposit mix, by determining the liquidityneeds of the banking system affect the volume of the earning assets.Bourne 91986) has suggested the use of sectorial Gross Gomestic Product (GDP). Anincreasing trend in the ratio will suggest allocative efficiency. Operation efficiency refers to theprovision of financial resources to meet the borrowing needs of individuals and households,enterprises, and governments at least cost. It relates to the minimization of operational costs andhence operational efficiency.Howard and Haynes (2001) maintain that, operational efficiency is determined by themarket structure and regulatory framework of financial intermediation. Intermediation cost cantherefore, be used as a measure of allocative efficiency can be measured by the ratio of totaloperating cost to average total assets. The lower the ratio the smaller the spreads between netreturns to savers and gross cost to leader.Revel (1981) defines intermediation cost as sum of non-interest operating cost pretaxprofits and other costs like provisions for depreciation and loan loses. Intermediation costs areidentically equal to gross profit margins defined as net interest earning plus other incomes. Highincome indicates allocative efficiency. This paper, therefore, utilizes the parameters used todetermine the level of efficiency of Community Banks in the study area.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 10

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 53. MethodologyThis study was carried out in Ogbomosho Zone of Oyo State, Nigeria. Both questionnaire andinterviewed techniques were used for data collection. The study considered all registeredCommunity Banks in Ogbomosho Zone as the sampling frame from which 200 clients wereselected via stratified random sampling technique was used in analyzing the data in addition toconventional descriptive statistics such as tables, frequency distribution and percentages.The regression in explicit form isY = f(X 1 , X 2 , X 3 , X 4 , X 5 )Y = Income (Naira)X 1 = Interest RatesX 2 = Amount Obtained (Naira)X 3 = Time Lag between Loan Application and DisbursementX 4 = Type of loan (short-term = 1, others = 0)Three functional forms were fitted namely linear, exponential and log-log. Based on theoreticalexpectation from signs and magnitudes of coefficients, statistical and econometric criteria givenby R 2 , f, t tests and correlation matrix, the log-log function had the best fit and hence the basisfor the foregoing report.4. Estimation ResultsThe regression results showing the relationship between level of performance measuredby income in naira and the following explanatory variables amount of loan obtained, time lagbetween loan application and disbursement, interest rate, type of loan and type of account keptwith the bank were presented in Tables 1.1, 1.2, and 1.3.The R 2 was 43% meaning that about 43% change in income of the loan recipients wereexplained by the explained by the explanatory variables. The f value was 8.964 and statisticallysignificant at 5% probability level. As expected a priori, the amount of loan obtained hadpositive and significant relationship with the income of the respondents. The higher the amountof loan obtained the higher the income generated. This is a welcome development as it is anindication that the loans were not diverted to consumption but specifically for productionpurpose. The relevance of giving loan type (mainly short-term) was positive and significant.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 11

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 55. ConclusionThe sampled Community Banks have enough assets to be converted within a short terminto cash to boost their financial capability, and their credit performance were efficient and thishave paved way for high earning capacity.In order to maintain efficiency level in the community Banks, the directors must adhere strictlyto their resolution and banks policy on credit facility. Besides, the regulatory bodies )NBCB,NDIC,FGN and CBN) should review their policies on community banks to enhance theirefficiency.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 12

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesAlladice, D.R. and Evdevig, E. (1981), ‘The Significance and measurement of Concentration.’Business and Financial Review, Economic prospective, Federal Reserve Bank ofChicago, March/April 1981, pp. 3-5Ayodele, G. (1998), ‘Community Banks As Silent Achiever killing Owen Baby.’ TheSearchlight, Octomber, pp. 18Bourne, C. (1986b), `Structure and Performance of Commercial Banking in Trinidad and Tobagoin 1965-1980` in C. Bourne and Ramsawan (eds.) Money and Finance in Trinidad andTobago Published by St. Augustine, Trinidad.Bryan, W.R. (1972), `The Determinants of Bank Portfolio, Research Report,No. 8. ` AmericanBankers Association.CNFS Report (1976), An overview of the Gambian Financial Sector. Gambian: The Concept ofFinancial Sector p.6Howard M. and Haynes, C. (2001), “Commercial Bank Efficiency in Barbados, `` Savings andDevelopment. No. 3, Vol. 25.Khatkhate, D.R. and Riechel, (1980). Multipurpose Banking: Its Nature, Scope and Relevancefor Less Developed Country: IMF Staff Pappers. Vol. 22, N0.8.NBCB, (1993), Annual Reports and Account. Abuja: National Board for Community Banks.Ojo, A.T. (2001), The Development and Future of Community Banks in Nigeria. CommissionedPaper for Presentation to the Lagos State Association of Community Banks, Dec. 12,2001.Revel, J.R.S. (1981), The British Finance System. London Macmillan.Vitas , D. (1991), `Measuring Commercial Bank Efficiency,’ Policy Research Working PapersSeries, Country Economic Development, the world Bank, Washington, D.C. November.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 13

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5AnnexureTable 1: The Regression Result (Linear)Variable Coefficient Std error T T Prob.Constant 741 0.249 2.972 0.003X 1 -0.0072 0.076 0.948 0.344X 2 0.231 * 0.074 3.124 0.002X 3 0.118 0.080 1.476 0.142X 4 0.248 * 0.074 3.332 0.001X 5 0.0063 0.067 0.942 0.341R 2 0.424F 8.517Dependent Variable = Y* Means significant at 5% LevelSource : Data Analysis, 2005.Table 2: The Regression Result (Exponential)Variable Coefficient Std error T T Prob.Constant -0.0098 0.125 -0.786 0.433X 1 -0.0035 0.038 -0.908 0.365X 2 0.133 * 0.037 3.597 0.000X 3 0.0059 0.040 1.469 0.143X 4 0.126 * 0.037 3.379 0.001X 5 0.0023 0.034 0.686 0.493R 2 0.45F 9.75Dependent Variable = In Y* Indicates significant at 5% LevelSource: Data Analysis, 2005.Table 3: Regression Result (Log-log)Variable Coefficient Std error T T Prob.Constant 0.200 0.083 2.402 0.017In X 4 0.025* 0.078 3.190 0.002In X 3 0.0088 0.085 -1.060 0.290In X 2 0.283* 0.077 3.681 0.000In X 1 0.0095 0.087 1.091 0.277In X 5 0.0041 0.069 0.593 0.554R 2 0.43F 8.964*Dependent Variable = LY* Indicates significant at 5% LevelSource: Data Analysis, 2005.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 14

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSocial Security System in NigeriaSEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SMuftau Adeniyi IjaiyaDepartment of Accounting and FinanceUniversity of Ilorin, Ilorin. Nigeria.AbstractIn Nigeria, family provided assistance had continued to play an important role in taking care ofthe old. The introduction of small family units (nuclear) among other factors weakened theinformal and traditional types of social security system and government has moved towards theformal system through the Pay-as-you-go system which is also faced with a lot of problems. Thismade government to abandon this and re-introduced the defined contribution which covers onlythe federal civil service. The risk here is borne entirely by the individual, and economic stability,inflation and devaluation of the nation’s currency can also produce a negative return. It isrecommended that government should integrate both the formal and informal types, makes lawsthat would make parents educate their children and such children would be responsible tosupport their parents when they become old as well as that the fund should be invested in foreignstocks to save it from the country’s specific risk.Keywords: Social Security, Nigeria1. IntroductionAs people grow old, work and produce, they earn less but people need a secured source ofincome that will see them through life. These incomes are integral part of social security system.This social security system differs in different parts of the world. In some countries, the old arecatered for by extended family arrangements, mutual aid societies and other informalmechanism. The informal arrangements are strained by urbanization, mobility, war and famine,which weakened the extended family and community ties. This strain is felt mostly where oldage population is growing rapidly as a result of improvement in medical facilities and fertility.These rapid changes have forced several countries to consider fundamental changes in the waythey provide old age security (World Bank 1994).COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 15

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5In Nigeria, the family-provided assistance had continued to play an important role wherechildren and extended family members provide income; food, shelter and care for the old people(see Ekpenyong, Oyeneye and Piel, 1986). As families are becoming smaller and moredispersed, this informal and traditional arrangements are weakened, and government have movedtowards formal systems of income maintenance without accelerating the decline in informalsystem and without shifting more responsibility to government than it can handle. Some ofthese formal social security systems are the defined benefits (Pay-as- you-go) and the definedcontribution (Contributory Pension System).Drawing from the above, this paper therefore examines the Social Security System in Nigeria.The rest of the paper is organized as follows: Section two discusses the conceptual issues:Section three examines the Social Security System in Nigeria. The conclusion andrecommendations are contained in the last section.2. Conceptual Clarification: Social Security Systems2.1 Definition, Types, Reasons and SignificancePuffer (1988) describes social security systems as publicly administered sets of Programmeswhich provide for people in the event of loss of income (due to retirement, disability, death of abreadwinner, maternity, work-related injury or unemployment) and often in the event of need formedical care or the expense of raising children. The World Bank (2004) saw social securitysystem as a developed mechanism to provide income security for older citizens as a part of safetynet.Schwarz (2002) inferred that social security systems are designed to provide an income tothose individuals who suffer a loss in earnings capacity through advanced age, the experience ofa disability, or the death of a wage earner in the family. While in some cases, the systems aredesigned to facilitate direct transfers from the government to these particular target groups, andthe emphasis is on providing a mechanism whereby the individual might insure himself againstthe loss of future earnings. The International Labour Organization endorses a minimum standardof 40 percent of an individual’s wage for 30 years of work (see also Gruber and Wise, 1999).2.2 Types of Social Security SystemsThe World Bank (2004) classification of social security type includes the informal andtraditional arrangement where old people receive food, shelter, and care from their children. AsCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 16

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5eligible for a pension. Under the second type, the worker contributions are invested, rather thanspent, and the investment earnings are an integral part of the benefits eventually paid. Theseinvestments can be managed by a monopolistic pubic agency or competitively with participationby the private sector. The benefit mechanism are also of two types: Under the defined benefitmechanism, the pension received is usually a function of income expressed as a percentage ofincome per year of contribution, the benefit provided is specified in some way and if financingfall short, someone, typically either the government in a public plan or the employer in anemployer-base plan, have the responsibility to provide the pension. On the other hand, under thedefined contribution mechanism, the contribution is specified as a percentage of salary, and ratesare specified for employees, employers, and, potentially, the government, but the final pension isdetermined by the amount in one’s pension account at the time of retirement, which includesboth contributions and the investments earnings in those contributions. Under this system, nospecific benefit is promised, the pension is completely dependent on the money in the account,and there is no need for a guarantor of last resort. (See also Diamond and Hausman, 1984; andSchwarz, 2005).2.3 Reasons for Social Security SystemsGiving reasons for social security system, the World Bank (1994) opined that as peoplegrow old, they may change their preference and wish that they had saved more but then it isoften too late. Even if people try to save when they are young, they may find few reliable savingsinstruments or secure financial markets in developing countries. Savings often take the form ofreal estate, livestock, or jewelry, all of which suffer from fluctuations in price and potentialmisfortunes due to disease, theft, or war. Besides, the absence of insurance markets is alsoanother reason, since people are always uncertain about how long they will live they may wish topurchase insurance that will earn them an income, Pension or annuity over their lifetime. Theinsurance companies are also not well developed in many developing countries because ofinformation deficiencies and weak capital markets. For instance, when people have moreinformation about their life expectancy than the insurance company does, a problem known asadverse solution occurs, where good and bad risks are pooled, and premiums are chargedaccording to the average risk of the group. The good risk (those who expect to die young) findthese terms unacceptable. So the insurance company is left with only the bad risks (those whoCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 18

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5expect to live long), the insurance company will raise their premiums leading more good risks toopt out. For these reasons, the government often takes on the role of regulator or mandator ofsocial security system (see also Feldstein and Anthony, 1979; Barr, 2001; and Schwarz, 2006).2.4 Significance of Social Security SystemsExplaining the importance of social security system, the World Bank (1994) opined that socialsecurity system is important to the old and the economy. To the old, it facilitates people’s effortto shift some of their income from their active working years to old age, by saving or othermeans; redistribute additional income to the old who are lifetime poor but avoiding perverseintergenerational redistributions and unintended intergenerational redistribution, and providinginsurance against the many risks to which the old are especially vulnerable. The importance tothe economy includes minimizing hidden costs that impedes growth such as reduced labouremployment, reduced savings, excessive fiscal burdens, misallocated capital, heavyadministrative expenses and evasion, sustainability based on long-term planning that takesaccount of expected changes in economic and demographic conditions. One of which may beinduced by the old age system itself; which enables policy makers to make informed choices,insulated from political manipulations that may lead to poor economic outcomes. (See alsoMunnel and Yoh (1992); , Arrau, (1990); Pesaudo, (1991); Arrau and Klaus, (1993)).Puffert (1988) also argued that social security systems in most developing countrieshave growing reserved funds, which finance much of governments’ deficits, and also,sometimes, provide a pool of investment capital which furthers economic development. Forinstance, the mandatory saving system can be important for increasing long-term saving,accelerating capital market development, development of modern financial investment andinstitutions, boosting investment in productive capital, and monitoring corporate performance.This advantage is possible because of the way social security funds, most especially definedcontribution are invested particularly the larger ones. The investment consists of three sections,the first section is a gilt-edged portfolio which provides the basis of the income yield, this isactively manage by policy switches with the object of maximizing the total return from thissection. The second section is an equity session which is widespread and this includes overseasstocks, this is done not only to obtain diversification but also to ensure marketability ofindividual holdings and the third one is a property folio. The investment policy thus is concernedCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 19

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5with the employment of often quite large sums regularly arising, in addition to the managementof the existing investments (see also Rowlatt, 1979; Roots, 1994 and Barr, 2001).Schwarz (2006) also noted that social security systems often have substantial impact onthe economy in which it exists because it can affect poverty among the elderly, they can alsoaffect relationships between younger and elder cohorts, as well as family living arrangements,they also have a substantial impact on labour markets and employment, particularly if they arefinanced through the contributory systems. The social security system can also impact onnational savings and development of financial markets, they can affect the composition ofgovernment spending by squeezing out other types of spending, and they can even affect theoverall level of government spending (see also Diamond and Hausman, (1984); Disney (1996);Koitz (1998); Gruber and Wise (1999) and Kakwani and Subbarao, (2005) ).The World Bank (2004) noted that there are strong advantages from internationaldiversification of social security system most especially the invested Pension funds, particularlyfor countries with small or concentrated domestic economies. Lower risk and sometimes higherreturns are possible over the long term through international investment, which reduces theexposure of investors to country-specific risks such as inflation. This system also gives countryan opportunity to move their capital to countries that offer the highest return, thus opening up thedomestic economy to become part of the global economy (see also Golf, (1971); Koitz, (1988);Corsetti and Schmidt-Hebbel, (1997); and Barr 2001).Empirical evidence on formal social security system are well documented. For example,the defined contribution was reported to have increased savings in some developing countrieslike Chile, Malaysia and Singapore and this has imparted positively on their Gross DomesticProducts. Furthermore, studies have also shown the importance of informal social securitysystem. For instance in Thailand, a large percentage of married people have children becausethey need children support when they grow old. Besides, in China the 1954 Constitution assertedthat parents have the duty to support and assist their parents. While in Bombay, more than 80percent of the old live with their children; and 95 percent in Nepal.(see Pathak,1978; Knodel,etal, 1984; Knodel, 1987; Martina,1990; Knodel,et al,1992; Davies 1993; World Bank 1994, ).COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 20

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 53. Social Security System in NigeriaNigeria like other developing countries also depended largely on the informal socialsecurity system, where people have voluntarily saved and invested in their children and otherextended family members expecting to reap the return later. As the productive capabilities of theparents decline, the children and their extended family members take up the responsibilities offeeding, clothing and housing their old parents. In fact old parents are seen living with their adultchildren. Ekpenyong, et. al (1986) reported that more than 97 percent of the urban old and 93percent of rural old are receiving some financial or material support from family or kin inNigeria. However, modernization, urbanization, migration, secular education and nuclearfamilies, and the breakdown of traditional social norms have weakened these ties.In addition to the informal types, Nigeria also introduced the formal type that was basedon the defined-benefit otherwise known as Pay- as- you- go that is mostly unfunded.Membership of this social security system is voluntary and it is not transferable. It is usuallymanaged by the state governments and management of the organizations that adopts the type.This social security system has a limited coverage and benefits are usually bias, paymentsdepend on years of service and retirement age is put at either 35 years in service or when oneattains 65 years of age whichever one comes first. This system was faced with some bottleneckssuch as lack of adequate funding, discrimination in coverage, poor record keeping; demographicshifts and weak administration (see Aminu, 2007). These bottlenecks made the government toabandon the system, and re-introduce another pension system called defined contribution whichcovers only the Federal Civil Service. Under this pension system, benefit is attached to workerscontribution and contribution are invested, rather than spent, the invested contribution would beused to pay workers benefit. The scheme is still new, deductions have started and it is 15 per centof emolument. Employees are expected to contribute 7.5 percent of their emolument charged onbasic salary, housing and transport allowances, while the government contributes the balance of7.5 per cent for public sector. In case of the military, it is 2.5 per cent and 12.5 per cent foremployees and government respectively. This system is also faced with some risks and it isborne entirely by the individual worker. For instance, the pension system does not protectworkers with interrupted careers, many of whom are women who spend part of their lives doinghousehold work; low income workers may never accumulate enough in their pensions accountsCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 21

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5to support themselves in their old age; early generations retirees are not protected because ittakes many years for enough pension capital to build up; economic instability, inflation anddevaluation of the nation’s currency can also produce a large negative rates of return on thefunds which can cause dissatisfaction among the contributors. Besides, some contributors mayoutlive their pension contribution, and Government has not also provided a clear cut guideline onhow it would harmonize the Pay –as –you –go with the defined contribution system in thecountry.4. Conclusion and RecommendationsDrawn from the above submission, one can conclude that there are two major types ofsocial security system in Nigeria namely: informal and formal. The informal type is as old asmankind and still plays an important role in supporting the old in Nigeria where children,extended family members, communities’ ties, informal clubs etc play a prominent role. Howeverbecause of modernization, urbanization, nuclear families, secular education, etc theresponsibilities of taking care of the old by the system has diminished greatly. The formal systemwhich includes Pay- as you- go and defined contribution are the major types currently use atState and Federal level respectively in Nigeria. Both have their limitations as highlighted in thepaper.Based on the above, it is recommended that government should encourage and integratethe informal social security system with the formal system. The integration of both forms by thegovernment should make laws that would make parents educate their children and such childrenwould be made responsible to support and assist their parents when they become old.Under the formal system, since Nigeria has adopted pooled fund, government should nothave access to the fund in order not to rub the recipients of the potential benefits; alsogovernment should not force the fund managers to invest in public securities. While prudentcompanies and joint ventures companies should be allowed to manage the fund.Besides, the private institutions vested with power to manage the pension fund should beadvised to diversify their investments, and invest in overseas securities in order to reducespecific risks associated with such funds in Nigeria.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 22

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesAminu, F. (2007) ‘’Overview of the New Pension Reforms’’ in Saliu, H.A.et al. (eds.) (2007)Nigeria’s Reform Programme: Issues and Challenges, Faculty of Business and SocialSciences, University of Ilorin, Ilorin.Arrau, P. (1990) ‘’Social Security Reform: The Capital Accumulation and IntergenerationalDistribution Effect’’. Washington, DC: The World Bank.Arrau, P. and Klaus, S. (1993) ‘’Macroeconomic and Intergenerational Welfare Effects of aTransition from Pay-as-you-go to fully Funded Pension Systems’’. Policy ResearchDepartment, Macroeconomics and Growth Division, Washington, DC: The World Bank.Barr, N. (2001) ‘’The Truth about Pension Reform’’. Finance and Development, InternationalMonetary Fund, Washington, DC: IMF.Corsetti, G. and Schmidt-Hebbel, K. (1997) “Pension Reform and Growth’’ in the Economics ofPensions: Principles, Policies and International Experience, S. Valdes-Prieto ( ed)., Cambridge:Cambridge University Press.Davies, E.P. (1993) ‘’The Structure, Regulation, and Performance of Pension Funds in NineIndustrial Countries’’. World Bank Working Paper No 1229 (December),Policy ResearchDepartment, Washington, DC: The World BankDiamond, P. and Hausman J. (1984) ‘’Individual Retirement and Savings Behaviour”, Journal ofPublic Economics, 23: (.2 ): 81-114.Disney, R. (1996) ‘’can we afford to Grow older ‘’? Cambridge, MA: MIT Press.Ekpenyong, S.O., Oyeneye, O.Y. and Piel, M. (1986) Reports on Study of Elderly Nigerians.Limited Kingdom : University of Birmingham.Feldestein, M. and Anthony, P. (1979) ‘’Social Security and Household Accumulation: NewMicro Econometric Evidence’’. Review of Economic Statistics 61:361-68.Goff, T.G. (1971)‘’Theory and Practice of Investment’’.London:Morrison and Gibbs Ltd.Gruber, J. and Wise, D.A. (eds.) (1999) ‘’Social Security and Retirement around the World’’,Chicago: University of Chicago Press.Kakwani, N. and Subbarao, K., (2005) ‘’Ageing and Poverty in Africa and the Role of SocialPensions’’. Sector Report, Africa Regional Human Development Network, Washington,DC: World Bank.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 23

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Knodel, J; Havanon, N., and Pramualratan, A. (1984) ‘’Family Transition in Thailand’’.Population Development Review 10:297-328.Knodel, J. (1987) ‘’The Politics of Old Age Security on Comparative Perspective’’. LuxemburgIncome Study Working Paper . LuxemburgKnodel, J; Saengtienchai, C; and Sttitrai, W. (1992) ‘’ The Living Arrangements of Elderly inThailand: View of the Populace’’. Population Studies Centre, Comparative Study of theElderly in Asia. Research Report University of Michigan, Ann Arbor.Koitz, D. (1988) ‘’Social Security: Its Funding Outlook and Significance for GovernmentFinance’’. Washington DC: Congressional Research Service.Martina, L. (1990) Changing Intergenerational Family Relations in East Africa, The Annals510:102-114.Munnell, A; and Joh, F. (1992) ‘’What is the Impact of Pensions on Savings’’? In Bodie andMunnell (1992).Pesaudo, J. (1991) ‘’The Multiple Roles of Private Pensions: Effect on savings, Capital Markets,and Labour Market Decisions” Presented at the OECD Conference on private Pensionsand Public Policy. Paris.Pathak, J.D. (1978) ‘’ Our Elderly’’. Bombay : Medical Research Centre.Puffert, D.J. (1988) ‘’Social Security Finance in Developing Countries’’, World Bank WorkingPapers No 36, Washington, DC: The World Bank.Roots, P. (1974) ‘’Success in Investment’’, London: Cox and Wyman Ltd.Rowlatt, J. (1979) ‘’ A Guide to Saving and Investment’’, Bugayi : Richard Clay (The ChaucerPress) Ltd.Schwarz, A.M. (2005) ‘’Old Age Security and Social Pensions’’, Working Paper, SocialProtection Department of the Human Development Network, Washington, DC: TheWorld Bank.Schwarz, A.M. (2006) ‘’ Pension System Reforms’’. Social Protection Department of the HumanDevelopment Network, Washington, DC: World Bank.See The Nigeria Pension Reform Act, 2004.World Bank (1994) ‘’ Averting the Old Age Crisis ‘’ New York: Oxford University Press.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 24

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5World Bank (2004) ‘’ Mexico: Public Expenditure Review’’. “Report No. 27894-Mx, LatinAmerica Economic Policy Sector, Washington, DC: The World Bank.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 25

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSA Study of the Effectiveness of IT as a Resource BasedTool Deployed By Nigerian BanksSEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SDr. J. O. AdewoyeDr. J.R. AworemiOyedokun A. J.Department of Management Science,Ladoke Akintola University of Technology,P.M.B. 4000, OGBOMOSO, NIGERIA.AbstractThis study examines the effectiveness of IT investment as a resource based tool deployed byNigerian banks. The paper presents two propositions about IT investment in Nigerian banks andtested them with quantitative and qualitative data from five major banks in Nigeria. Using asample of 535 respondents, the result provides insights that IT deployed by Nigerian banks donot differ significantly from one bank to the other. It was concluded that, IT deployed byNigerian banks is more of a strategic necessity to be in business rather than a competitiveadvantage.Key words: Information Technology (IT), Resource based tool, Effectiveness, Operationalprocesses, Strategic resources.1. IntroductionInformation technology has become critical to the operations and competitiveness oforganization around the world. Today more than ever organization must capitalize on changingtechnology to increase profitability, expand market opportunity, and improve customer serviceand productivity. Evaluating business value from investment in information technology as astrategic resource weapon in Nigerian banking industry is the main focus of this paper.Two propositions about information technology as a strategic resource in the Nigerianbanking operation were proposed. The first proposition is that Nigerian banks have usedinformation technology to drive their processes and deliver superior performance to meet andsurpass customer expectation. The question then is “Does IT usage has significant differenceCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 26

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5among the performance of the banks?” However a successful IT investment banking operation isa key strategy that must continue to further strengthen the banks position.The second proposition based on the resource based theory of strategy is that Nigerianbanks investment in IT has enable higher volume of transactions processing, low turnaround timeand gradual reduction of cash transactions which informs the need to increase investment in IT.This paper viewed IT as a resource based view strategy (operational processes) usingboth quantitative and qualitative data analysis and series of interviews with senior bankmanagers.2. Literature Review of Past ResearchDespite the growing recognition on the fundamental impact of information technology indetermining a firm competitive strength for future business performance, most researchers areyet to specify the underlying mechanism linking it to firms’ operational processes. Severalstudies have been conducted in a variety of manufacturing and service industries. Studies bystrassmann (1990) found no correlation between IT expenditure and return on investment in asample of 38 service sector firms. Dos santos et. al (1993) complement Strassmann’s findings onIT spending and returns on investments. He concluded that investment in IT has no significanteffect on firm returns. Similar research by Crons and sobol (1983) found that IT impact was notsignificant on firm performances. This perhaps implies that IT has no impact on firm’sproductivity. Brynjolfsson and Hitt (1996) however caution that the findings do not account foreconomic theory of equilibrium. In his own view Alpar and Kim (1990) noted that themethodology used in assessing IT impact can also significantly affect the result. Corroboratingthis view Denison (1989) stressed that the over estimation of IT input for any given amount ofoutput will lessen the unit productivity. This suggest that researcher must endeavor to pay muchattention to the measurement and methodology used in studies before embarking on a thoroughresearch work bearing in mind that key ratios can be misleading.On the other hand Lubbe (2004) studies of IT impact on Small and Medium Enterprises(SME) found a significant correlation between IT and SME performance.The findings falls in line with the work of Dykman (2003) where a correlation between firmsoutput and IT investment was established. More recently, studies by Lucas et al (2002) confirmsCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 27

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5that investment in IT create a sustainable competitive advantage. This finding confirms theargument of Hui and Plant (2001) that the promise of increased advantage in output was thedriving force behind large scale investment in IT since 1970’s.The findings above suggest thattechnology and societal changes are moving the global market. Using a different data set, weil(1990) was able to disaggregate IT by use and found that significant productivity could beattributed to transactional types IT (Data processing). This support the argument of Santhanamand Hortono (2003) that resource based view can be used to investigate the impact of ITinvestment on organization performance. In this paper attention is restricted to research that hasdrawn upon the organization procedure (RBV) of IT investment firms on Nigerian banksperformance.3. Conceptual FrameworkThe study is premised on the resource base theory of firms grounded on the perceptionthat a firm’s internal environment in terms of its resources and capabilities are more critical tothe determination of strategic action than its external environment. Imai (2007) viewed resourcebased view as a strategy that emphasizes economic rent creation through distinct capabilities. Heargued that each organization is a collection of unique resources and capabilities that providesbasis for its strategy. This view was supported by barney (1991) that abnormal rent can be earnfrom firms resources and sustained competitive advantage that are valuable, rare, imperfectlyimitable and non substitutable.Ovia (2006) further attest to this in his study on IT deployment on corporate strategy. Heconcluded that investment in IT resources boost banks performance. This suggests that theperformance of a firm is shaped by its available resources. The basic logic of resource basedview of a firm starts from the claim that the aim of the firm and the desired outcome ofmanagerial effort is sustainable competitive advantage as it allows firms to earn economic rent(kapelko et .al 2005). This theory was supported by Imai (2007), where company’s ability toassemble and exploit an appropriate combination of resources was identified as a key factorrequired to achieving a sustainable competitive advantage. This means that a sustainablecompetitive advantage can be obtained if “the firm effectively deploys the resources in hisproduct market” (Fahy and smithee 1999)COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 28

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 54. MethodologyThe first and the most important step in carrying out the assessment of firms efficiency is theidentification of input–output variable (Thanansoulis 2003). Stingler 1976 noted that “measuredinefficiency may be a reflection of a failure to incorporate the right variables and the rightconstraint to specify the right economic objective of a production unit. “ Paradi and schaffnit(2004) however stressed that no consensus exist on the most appropriate variable to apply inanalysis. For the purpose of the study, the approach taken for the measurement of informationtechnology as a resource input is to produce a given level of operational procedure whereinformation technology is deployed to aid banking operations via a medium that makes forspeed, utmost flexibility, accuracy and convenience irrespective of place, time and distance. Thedeployment of IT to customer service delivery has made Nigeria banks operations synonymousto E-banking, as such E-product which covers the services rendered by the banks was used as aproxy for IT input. The products (input) were however classified in to three broad categories –payment collection, card solution and reporting tools. The approach help capture how the banksdeploy the resources in their product market (Fahy and smithee 1999).The approach is furtherconsistent with the works of Miller and Rose (2003) where resource utilization revealed byefficiency was seen as an important RBV thinking because it reflects productive use ofresources. The used of operating revenue, a single output as a proxy for performance isconsistent with the works of Piesse and Thirtle (2000) and Thore et.al (1994) where technologyperspective was judge against operating revenue (turnover).The study cut across five (Zenith bank, First bank, Union bank, Guaranty Trust bank and Unitedbank for Africa) banks that are well spread across major Nigerian commercial and political cities(Ibadan, Lagos, Abuja, Kano, Enugu, Kaduna and Onitsha)where banking operations wasextremely active . The choice of the banks was due to the huge deployment of IT to aid theoperations the banks coupled with the significant presence of the banks in the identified cities. Atotal of 700 respondents were randomly selected in this study. 100 questionnaire comprising 20for each banks in the identified cities was randomly administered. However 535 questionnaires(76.4%) were retrieved from the respondent. Data for the study were analysed with the use ofstatistical tools (ANOVA and Regression Model) to determine, whether there exist anysignificant difference in the IT deployed by Nigerian banks to aid their operations while theCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 29

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5regression model estimate the value of IT as a resources deployed to aid Nigerian banks. Variousfunctional models where examined to identify relationship among the data with a view toselecting the best fit. The multiple R was use to select the model with the best fit, hence linearregression model with the highest multiple R and R 2 value of (.833, .694 ) was chosen. Thisapproach was consistent with the works of Aworemi (2006).Analysis of Variance was adopted to test the null hypothesis that IT deployed by Nigerianbanks to aid their operations do not differ significantly from one bank to the other was stated as:H 0 = µ 1 =µ 2 =µ 3 ….µ nLinear regression model adopted was mathematically represented as:Y = f(x 1, x 2, x 3, …. x n )Y = Operating RevenueX 1 =Payment collectionX 2 = Card solutionX 3 = Reporting tools.Thus it is explicitly represented as:Y= α + β 1 x 1 + β 2 x 2 + β 3 x 3 +…µ5. Result and DiscussionTable 1 showed an F –VALUE of 2.20 .The ANOVA table tested the hypothesis that IT deployedby Nigeria banks do not differ from one bank to the other.Table: 1 Analysis of Variance result of IT deployed by Nigeria banks.The observed F-value of 2.20 was less than the table F-value of 2.38 which wassignificant at 5% level of significance. This informed the decision to uphold the null hypothesisCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 30

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5that IT deployed by Nigerian banks do not differ significantly from one bank to the other. Thisoutcome implies that information technology deployed by the banks is similar as such it isviewed more as a strategic necessity rather than a competitive strategy. Each bank shouldtherefore focus on the developing technology that is flexible and capable of boosting their coreareas of competence relative to the opportunities in the environment they operate.Table 2 showed the coefficient (β=5.38) of payment collection product.This means that the operating revenue of the bank will increase by 5.38 for every unit patronage ofpayment collection products while holding the effect of other variables constant. This implies thatas the patronage of payment collection product increases the bank operating revenue will increaseby almost triple the rate of increase in the payment collection product and this was significant at5% level of significance. The suggestion therefore is that payment collection product driven by IThas gained customers loyalty and acceptance thus signifying the level of confidence the Nigerianpublic has on IT deployed by banks to aid their services via payment transaction product marketedthe banks. The coefficient (β= 9458.6) of reporting solutions shows that aggressive unit patronageof reporting solutions product will increase the operating revenue of banks by 9458units. This issignificant at 5% level of significance thus suggesting that reporting solutions product are of vitalimportance to the customers and bank operating revenue. The result further confirmed that everyunit patronage of the product resulted to an operating revenue that double the impact of reportingsolutions product. This evidence further renewed the call for increase investment in IT, especiallyCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 31

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5those that are customer driven to boost the banks performance. Availability of card solutionproduct with a coefficient of (β=172.67) was also seen to have improved the operating revenue by172.67 for every transaction per card solutions recorded. This was however not significant at 5%and 10% level of significance.6. ConclusionThe study aimed at evaluating the effectiveness of information technology as a resource tooldeployed by Nigerian banks. The study revealed that information technology deployed by Nigeriabanks do not differ significantly from one bank to the other and this was significant at 5% level ofsignificance. In addition, it confirmed that payment collection product marketed by Nigerian banksincreases the operating revenue of the banks by almost triple the rate of payment collection producteffect if sustained this was also significant at 5% level of significance. The study furtherdiscovered that reporting tools also contributed to the operational revenue of the banks at asignificant level of 5%, a reflection of the unique convenience offered customers through IT.Meanwhile, card solutions were also found to have contributed positively to the bank operatingrevenue, but this was significant at 5% and 10% level of significance.In summary, it was discovered that the Nigerian public has a lot of confidence in the level of ITdeployed by the banks to improve the quality of the service rendered as witnessed in level ofpatronage experienced by the banks.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 32

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesAlpar, P. and Kim, M. (1990) Comparison of Approaches to the Measurement of IT Value. InProceedings of the Twenty-Second Hawaii International Conference on System ScienceHonolulu, HI.Aworemi, J.R. (2006) “Comparative Analysis of the Performance of Public and PrivateTransport Companies in Southwestern Nigeria” A Ph.D. thesis submitted to theDepartment of Management Science Lautech.Barney, J. (1991), "Firm Resources and Sustained Competitive Advantage," Journal ofManagement, Vol. 17, No.1 pp. 99-120.Brynjolfsson, E. and Hit, L. (1996) “Paradox Lost? Firm-Level Evidence on the Returns toInformation Systems Spending,” Management Science, 42 (), 541-558Cron, W.L. and Sobol, M.G. (1983) The Relationship Between Computerization andPerformance: A Strategy for Maximizing the Economic Benefits of Computerization.Journal of Information and Management Vol. 6, pp. 171-181Denison, E.F. (1989). Estimates of Productivity Change by Industry, an Evaluation and anAlternative. The Brookings Institution, Washington, DC, Economist.Dos Santos, B., Peffers, K. and Mauer. D.(1993) “The Impact of Information TechnologyInvestment Announcements on the market Value of the Firm,” Information SystemsResearch, 4, 1-23Dykman C.A. (2003) “Financial Evaluation of Information Systems Investments”¸ Chapter in aBook “Technologies & Methodologies for Evaluating IT in Business” by Charles K.Davis, Idea GroupFahy, J., Smithee, A. (1999), “Strategic Marketing and the Resource Based View of the Firm”,Academyof Marketing Science Review, 10: 1-20.Hu Q. and Plant, R. (2001) An empirical study of the Casual Relationship between IT investmentand Firm Performance, Information Resources Management Journal Jul- Sept pp. 15 –25Lucas, H. C. (2002) Strategies for Electronic Commerce and the Internet, Cambridge: M.I.T.PressCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 33

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Miller, S.and Ross, A. (2003)“An exploratory analysis of resource utilization acrossorganizational units “Understanding the resource- based view.”, International Journal ofOperations and Productions Management”, 23(9): 1062-1083.Ovia (2006) “IT Deployment as a Corporate Strategy in Repositioning Banks” Zenith EconomicQuarterly, VOL .1,NO 7.Paradi, J.and Schaffnit, C. (2004), “Commercial Branch Performance Evaluation and ResultsCommunication in a Canadian Bank – a DEA Application”, European Journal ofOperational Research, 156: 719-735.Piesse, J., Thirtle, C. (2000), “A Stochastic Frontier Approach to Firm Level Efficiency,Technological Change and Productivity during Early Transition in Hungary”, Journal ofComparative Economics, 28:473 -501Santhanam R. and Hartono E. (2003) Issues in linking Information Technology Capability toFirm Performance, MISQ, Vol. 27 No.1, pp. 125-153Strassman, P. (1990): The Business Value of Computers, Information Economics Press, NewCanaan, CT.Thanassoulis, E. (2003), “Introduction to the theory and application of Data EnvelopmentAnalysis. Kluwer Academic Publishing.Thore, S., Kozmetsky, G., Phillips, F. (1994), “DEA of financial statement data: the U.S.computer industry”, Journal of Productivity Analysis, 5: 229-248.Weill, P. (1990) Do computers Pay Off~ ICIT Press, Washington, D.C.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 34

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SAn Empirical Study of SERVQUAL’S Dimensionalityof Credit and Saving Products in Padang, West Sumatra-IndonesiaDr HeryantoRegional Development Bank of West Sumatra, IndonesiaAbstractThe purpose of the present study are to analyze an SERVQUAL’S dimensionlity betweenMinangkabau and Chinese customers. The sample size amount 216 customers consisted ofMinangkabau would amount to 162 persons and Chinese would amount to 54 persons.Systematic sampling is applied in this study and data analysis technique is use consisted of factoranalysis. The result of factor analysis indicates that there are three dimensions of saving productsand three dimensions of credit products. The dimensions for saving products are labelledSSERVQUAL-1 (certain time, sympathy and reassurance, dependability, saving service,accurate records, prompt service, willingness to help consumers, prompt response to consumerrequest, trusted employees, and safe feeling), SSERVQUAL-2 (politeness, best interest at heart,convenient hours, up-to-date equipment and technology, visual appeal, well dressed and neatappearance and service type), and SSERVQUAL-3 (consumer information, adequate support,individual attention, personal attention and consumer needs). Whereas, the dimensions of creditproducts are labelled CSERVQUAL-1 (certain time, sympathy and reassurance, dependability,credit service, accurate records, prompt service, willingness to help consumers, prompt responseto consumer request, trusted employees, safe feeling, and politeness), CSERVQUAL-2 (bestinterest at heart, convenient hours, up-to-date equipment and technology, visual appeal, welldressed and neat appearance and service type), and CSERVQUAL-3 (consumer information,adequate support, individual attention, personal attention and consumer needs).Keywords: SERVQUAL, Credit and Saving Products, Minangkabau, Chinese1. IntoductionThe Minangkabau and Chinese form the majority of financial customers, especially as financialservice users at Bank Nagari. The Minangkabau is a faithful community to the kenagarian(regional) brand. This is proven by the opening of the Jakarta branch office. The bank can attractCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 35

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5bigger savings from this community (“Salah Satu,” 2001). It means Minangkabau customers tendto be ethnic bonding. Conversely the Chinese tend to be business bonding.The value orientation makes Minangkabau customers loyal to the bank. The bank has given themfinancial services in personal basis and this has increased their feeling of security in using theBank Nagari products. The security feeling further encourage them to use the Bank Nagariproducts consistently and continually. The product security is part of security feeling. Consumerwill not buy a product if they do not feel secure. The security feeling influences preference tobuy. The security feeling is obtained from close consumer-business location, close to society,Bank Nagari commitment (to construct image to develop regional), and kenagarian.In terms of security of the product, Chinese customers like Minangkabau value security of thebank products. The consumers are more careful and they have a lot of information especiallybank products. Guanxiwang is an information distribution media among Chinese customers. Thismakes them differ from Minangkabau customers.Bank Nagari has different perception on Minangkabau and Chinese customers in providing creditfacilities. Chinese customers have more knowledge and experience in doing business activitiesand they have very strong capital. Due to this reason Bank Nagari has minimum risk to distributecredit facilities to the Chinese customers. Bank Nagari uses lower technology and providessimple products compared to other banks, it does not seem to be an influencing factor to theMinangkabau and Chinese in choosing Bank Nagari. It might be other factors of service qualitythat influence both ethnic such as prompt service, feel secure, interest rate, accuracy,dependability, and attribute. The present study analyzes an SERVQUAL’S dimensionlitybetween Minangkabau and Chinese customers.2. Literature ReviewParasuraman et al. (1988), based on exploratory research to understand the construct ofSERVQUAL and its determinants, defined SERVQUAL as the degree of discrepancy betweencustomers’ normative expectation for service and their perception of the service performance.Perceived SERVQUAL is then interpreted from the differences in degree and direction betweenperceptions and expectations.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 36

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5responsiveness, assurance, empathy and tangibles to Minangkabau and Chinese customers (Table1).Table 1: Variable, Sub-Variable, Operational Definition, and IndicatorSERVQUALSub-Variable Operational Definition IndicatorReliability1.Certain Time2. Sympathy andreassuringWhen these institutions promiseto do something by a certaintime, they should do soWhen consumers have problems,these institutions should besympathetic and reassuring3. Dependability These institutions should bedependableThey should provide their4. Product services saving/credit services at the timethey promise to do soThey should keep their records5. Accurate records accurately6. Keep consumer secret They should not be expected totell their consumers exactly whensaving/credit services will beperformedIt is realistic for consumers toexpect prompt service fromemployees of these institutions7. Prompt service8.Willingness to helpcustomers9.Prompt response tocustomer requestsAssuranceTheir employees do always haveto be willing to help consumersIt is okay if they are too busy torespond to consumer requestspromptlyRight transactionConcerning toconsumerService guaranteeCredit/SavingtransactionAccurateSecret of theconsumers dataConsumer datasecretConsumer problemdecisionBank sensitive10.Trusted employees Consumer should be able to trustemployees of these institutions TrusteeConsumer should be able to feel Secure transaction11.Safe feeling safe in their transactions withthese institutions’ employees12..Politeness Their employees should be polite Employee attitude13.Adequate support Their employees should get Minimal trainingCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 38

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Empathy14.Individual attention15.Personal attention16.Best interest at heart17.Customer needs18.Convenient hoursTangiblesadequate support from theseinstitutions to do their jobs wellThese institutions should beexpected to give consumersindividual attentionEmployees of this institution canbe expected to give consumerspersonal attentionIt is realistic to expect theseinstitutions to have theirconsumers’ best interest at heartIt is realistic to expect employeesto know what the needs of theirconsumers areThey should be expected to haveoperating hours convenient to alltheir consumersBank intentionEmployee intentionTo have desirehelpingEmployee sensitiveThere is no longqueue19.Up-to-date equipmentand technology20.Appeal visually21.Well dressed andneatAppearanceThey should have up-to-dateequipment & technology.Their physical facilities should bevisually appealingTheir employees should be welldressed and appear neat22.The physical facilities The appearance of the physicalfacilities of these institutionsshould be in keeping with thetype of service providedTechnologysophisticatedAttractiveBank attributeLayoutThe total population of this study was 514 customers, which was divided into two groupsnamely Minangkabau and Chinese. In this study, the researcher wanted to estimate the numberof sample size to be taken with assumption marginal of error 10 %, confidence level 95% andstandard deviation arbitrarily 75%. Thus, c = 10%, s = 75% and Zq = 1.96 (corresponding to aconfidence level of 95%) notice that c and s are expressed in the same unit. The value ofsample size (n) is (1.96)2 (0.75)2 / (0.10)2 = 216 customers, approximately. By virtue of theethnic composition within the bank’s saving-credit customers list 75% Minangkabau wouldamount to162 persons and 25% Chinese would amount to 54 persons.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 39

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Moreover factor analysis is used to reduce recommended variable as independent variables.The KMO test and Bartlett's and correlation anti-image were used to know the feasibility ofthese variables. A Variable is feasible if the KMO test and Bartlet's and anti-image correlationare above 0.50 (Santoso, 2001). If the anti-image correlation from a variable is below 0.50,hence that variable has to be dismissed, and factor analysis have to be carried out again on thevariable until the KMO and Bartlet's and anti-image correlation are above 0.50. After eachKMO test and Bartlett's and anti-image correlation is feasible, this variable can be accepted inthe form of variable which have been reduced.4. Saving & Credit SERVQUALResearch in defining and measuring quality has been mainly developed in manufacturing.Japan’s philosophy is based on the Zero defects concept, whose definition is ‘doing it right thefirst time’. Crosby (1979) defines quality as ‘conformity to needs’. Research on service quality ishowever inadequate which has three inherent characteristics: intangibility, heterogeneity, andinseparability between production and consumption.Thus, customer intentions to use a service may be limited to the benefits they desire and orexpect from the service. Whether a service or a physical good, customer expectations concerninga product are beliefs about its performance which act as working hypotheses regarding its nature.Hence, it is reasonable to use customer expectations as a basis for both formulating purchaseintentions and establishing standards for judging service performance.The benefits that customers desire (i.e., benefit expectations) are considered to be thefundamental reasons behind such anticipated buyer behavior and, of course, are the basis forsegmenting the market. Benefit segmentations is perhaps most successful when derived frommeasures of what customers believe about product delivery, rather than their emotionalresponses toward the offering. Consequently, customer benefit expectation reflect the cognitivecomponent of attitude and are sometimes labeled cognitive attitude.Service dimension consist of tangibles, reliability, responsiveness, assurance, and empathy.Tangibles is looked from physical facility, supply, employees, and communication means usedby a service. Tangible services of banking product are services that have interesting facilities;presentable appearance of service personnels; the availability of information on credit productsand comprehended easy saving, etc. Reliability is ability to execute and fulfill service, whichCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 40

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5have been promised in accurate figure. This is judged from for instance, if bank employee saysthat your loan is being processed and will phone you after half hour, and he actually phones youhalf an hour later. Responsiveness is willingness and ability to assist customer and give correctservice. It is evaluated from the bank’s swift action when customer face problem on credit orsaving. Assurance is knowledge ability of employees in giving trusts to customers. A goodindicator is if the bank has the reputation as a good bank. The provision of service warranty to itsproduct, and empathy as well as attention given are other good indicators.The discussion of this instrument is of value because SERVQUAL instrument is reasonableillustration of the programmatic development of a universal list of service quality dimensions.Research was done to two financial ethnic, known as the merchant ethnics in Padang, WestSumatra. From results of that research present the strong relations among Saving-SERVQUALwith Credit-SERVQUAL while weak relations between Saving-SERVQUAL with and Credit-SERVQUAL and Culture. Figure 1 illustrates this:Figure 1: The Minangkabau-Chinese Inner Factor in ConsumptionBased on the inner factor of consumption above and the factor analysis to financial products ofBank Nagari, three categories of service expectation are identified. They are different from theCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 41

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Relia=∆ 1 /∆=(Servqual-1.res-7.as-12.em-17.0)+(res-6.as-11.em-16.ta-22.Servqual-5)+(as-10.em-15.ta-21.0.Servqual-4)+(em-14.ta-20.0.res-9.Servqual-3)+(ta-19.em-18.as-13.res-8.Servqual-2)-(Servqual-5.res-9.as-12.em-15.ta-19)-(Servqual-4.res-8.as-11.em-14.0)-(Servqual-3.res-7.as-10.ta-21.em-18)-(Servqual-2.res-6.ta-20.em-18.0)-(Servqual-1.ta-19.em-16.as-13.0)(rel-1.res-7.as-12.em-17.0)+(res-6.as-11.em-16.ta-22.rel-5)+(as-10.em-15.ta-21.0.rel-4)+(em-14.ta-20.0.res-9.rel-3)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-4.res-8.as-11.em-14.0)-(rel-3.res-7.as-10.ta-22.em-18)-(rel-2.res-6.ta-21.em-17.0)-(rel-1.ta-20.em-16.as-13.0)Relia=∆ 1 /∆=(res-6.as-11.em-16.ta-22.Servqual-5)+(ta-19.em-18.as-13.res-8.Servqual-2)-(Servqual-5.res-9.as-12.em-15.ta-19)-(Servqual-3.res-7.as-10.ta-21.em-18)(res-6.as-11.em-16.ta-22.rel-5)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-3.res-7.as-10.ta-22.em-18)Respon = ∆ 2 / ∆ =Respon=∆ 2 /∆=(rel-1.Servqual-2.as-12.em-17.0)+(Servqual-1.as-11.em-16.ta-22.rel-5)+(as-10.em-15.ta-21.Servqual-5.rel-4)+(em-14.ta-20.0.Servqual-4.rel-3)+(ta-19.em-18.as-13.Servqual-3.rel-2)-(rel-5.Servqual-4.as-12.em-15.ta-19)-(rel-4.Servqual-3.as-11.em-14.0)-(rel-3.Servqual-2.as-10.ta-21.em-18)-(rel-2.Servqual-1.ta-20.em-18.0)-(rel-1.ta-19.em-16.as-13.0)(rel-1.res-7.as-12.em-17.0)+(res-6.as-11.em-16.ta-22.rel-5)+(as-10.em-15.ta-21.0.rel-4)+(em-14.ta-20.0.res-9.rel-3)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-4.res-8.as-11.em-14.0)-(rel-3.res-7.as-10.ta-22.em-18)-(rel-2.res-6.ta-21.em-17.0)-(rel-1.ta-20.em-16.as-13.0)COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 44

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Respon=∆ 2 /∆=(Servqual-1.as-11.em-16.ta-22.rel-5)+(as-10.em-15.ta-21.Servqual-5.rel-4)+(ta-19.em-18.as-13.Servqual-3.rel-2)-(rel-5.Servqual-4.as-12.em-15.ta-19)-(rel-3.Servqual-2.as-10.ta-21.em-18)(res-6.as-11.em-16.ta-22.rel-5)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-3.res-7.as-10.ta-22.em-18)Assul = ∆ 3 / ∆ =Assul=∆ 3 /∆=(rel-1.res-7.Servqual-3.em-17.0)+(res-6.Servqual-2.em-16.ta-22.rel-5)+(Servqual-1.em-15.ta-21.0.rel-4)+(em-14.ta-20.Servqual-5.res-9.rel-3)+(ta-19.em-18.Servqual-4.res-8.rel-2)-(rel-5.res-9.Servqual-3.em-15.ta-19)-(rel-4.res-8.Servqual-2.em-14.0)-(rel-3.res-7.Servqual-1.ta-22.em-18)-(rel-2.res-6.ta-21.em-17.Servqual-5)-(rel-1.ta-20.em-16.Servqual-4.0)(rel-1.res-7.as-12.em-17.0)+(res-6.as-11.em-16.ta-22.rel-5)+(as-10.em-15.ta-21.0.rel-4)+(em-14.ta-20.0.res-9.rel-3)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-4.res-8.as-11.em-14.0)-(rel-3.res-7.as-10.ta-22.em-18)-(rel-2.res-6.ta-21.em-17.0)-(rel-1.ta-20.em-16.as-13.0)Assul=∆ 3 /∆=(res-6.Servqual-2.em-16.ta-22.rel-5)+(em-14.ta-20.Servqual-5.res-9.rel-3)+(ta-19.em-18.Servqual-4.res-8.rel-2)-(rel-5.res-9.Servqual-3.em-15.ta-19)-(rel-3.res-7.Servqual-1.ta-22.em-18)-(rel-2.res-6.ta-21.em-17.Servqual-5)(res-6.as-11.em-16.ta-22.rel-5)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-3.res-7.as-10.ta-22.em-18)COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 45

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Empa = ∆ 4 / ∆ =Empa=∆ 4 /∆=(rel-1.res-7.as-12.Servqual-4.0)+(res-6.as-11.Servqual-3.ta-22.rel-5)+(as-10.Servqual-2.ta-21.0.rel-4)+(Servqual-1.ta-20.0.res-9.rel-3)+(Servqual-5.as-13.res-8.rel-2)-(rel-5.res-9.as-12.Servqual-2.ta-19)-(rel-4.res-8.as-11.Servqual-1.0)-(rel-3.res-7.as-10.ta-22.Servqual-5)-(rel-2.res-6.ta-21.Servqual-4.0)-(rel-1.ta-20.Servqual-3.as-13.0)(rel-1.res-7.as-12.em-17.0)+(res-6.as-11.em-16.ta-22.rel-5)+(as-10.em-15.ta-21.0.rel-4)+(em-14.ta-20.0.res-9.rel-3)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-4.res-8.as-11.em-14.0)-(rel-3.res-7.as-10.ta-22.em-18)-(rel-2.res-6.ta-21.em-17.0)-(rel-1.ta-20.em-16.as-13.0)Empa=∆ 4 /∆=(res-6.as-11.Servqual-3.ta-22.rel-5)+(Servqual-5.as-13.res-8.rel-2)-(rel-5.res-9.as-12.Servqual-2.ta-19)-(rel-3.res-7.as-10.ta-22.Servqual-5)(res-6.as-11.em-16.ta-22.rel-5)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-3.res-7.as-10.ta-22.em-18)Tangi = ∆ 5 / ∆ =COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 46

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Tangi=∆ 5 /∆=(rel-1.res-7.as-12.em-17.Servqual-5)+(res-6.as-11.em-16.Servqual-4.rel-5)+(as-10.em-15.Servqual-3.0.rel-4)+(em-14.Servqual-2.0.res-9.rel-3)+(Servqual-1.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.Servqual-1)-(rel-4.res-8.as-11.em-14.Servqual-5)-(rel-3.res-7.as-10.Servqual-4.em-18)-(rel-2.res-6.Servqual-3.em-17.0)-(rel-1.Servqual-2.em-16.as-13.0)(rel-1.res-7.as-12.em-17.0)+(res-6.as-11.em-16.ta-22.rel-5)+(as-10.em-15.ta-21.0.rel-4)+(em-14.ta-20.0.res-9.rel-3)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-4.res-8.as-11.em-14.0)-(rel-3.res-7.as-10.ta-22.em-18)-(rel-2.res-6.ta-21.em-17.0)-(rel-1.ta-20.em-16.as-13.0)Tangi=∆ 5 /∆=(rel-1.res-7.as-12.em-17.Servqual-5)+(res-6.as-11.em-16.Servqual-4.rel-5)+(Servqual-1.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.Servqual-1)-(rel-4.res-8.as-11.em-14.Servqual-5)-(rel-3.res-7.as-10.Servqual-4.em-18)(res-6.as-11.em-16.ta-22.rel-5)+(ta-19.em-18.as-13.res-8.rel-2)-(rel-5.res-9.as-12.em-15.ta-19)-(rel-3.res-7.as-10.ta-22.em-18)Factor analysis conducted to financial products especially to credit and saving. This analysisrecommend that SERVQUAL consist of three factors (SERVQUAL-1, SERVQUAL-2, andSERVQUAL-3).5. Saving and Credit ProductsIn the equation rel, res, as, em and ta are coefficients while f is a variable from each coefficient.This credit and saving equation show changes to the formation of SERVQUAL. SSERVQUAL-1represents the result of factor 1 which consists of reliability 1, 2, 3, 4, and 5, responsiveness 7, 8and 9, and assurance 10 and 11. SSERVQUAL-2 represents factor 2 which consists of assurance12, empathy 16 and 18 and tangibles 19, 20, 21 and 22, and SSERVQUAL-3 represents result offactor 3 consisting of responsiveness 6, assurance 13, and empathy 14, 15 and 17.The linear equation showed as follows:COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 47

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5The credit equation ‘CSERVQUAL’ consists of three factor namely CSERVQUAL-1,CSERVQUAL-2, and CSERVQUAL3. CSERVQUAL-1 consists of reliability 1, 2, 3, 4 and 5,responsiveness 7, 8, and 9 and assurance 10, 11, and 12. CSERVQUAL-2: empathy 16 and 18and tangible 19, 20, 21 and 22 while CSERVQUAL-3: responsiveness 6, assurance 13, andempathy 14, 15, and 17.The linear equation showed as follows:Empathy has a big role in forming customer experience. Intangible service result from what isfelt by the customer, and does not seldom awaken the customer’s memorable experience.Customers nowadays do not again see product which offer is exclusive the than itself product,exclusively evaluate feature and benefit (F & B), but also from its consumption situation byholistic. It means people would use a product not only based on the actual product but also thesituation or miscellaneous consorting the product.6. Saving and Credit Products: The Service PerspectiveThe saving and credit behavior usually have different patterns. Customer desire to consume thesaving products generally due to the competitive interest rate, group pushing, excellence service,location and complete facilities. Conversely, customer desire to consume the credit products dueto the competitive interest rate, group pushing, excellence service, and complete facilities. Thelocation consideration is not dominant in making credit decision. They can look at somealternative banks to borrow money as it poses no risk to them. Figure 2 below points thatcustomer perception for credit products indicates subjective satisfaction average 2-9 points andsaving products of 4-9 points between both ethnics. It means that consumption level of savingproducts by both ethnic is better than the consumption level of credit products. There issignificant difference between consumption perception towards saving and credit productsamong the Chinese ethnic. This is because the Chinese ethnic only use credit products to scale-COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 48

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5up their businesses and put their finances some forms of savings in other banks because this bankis not completely interesting in terms of its facilities. This condition is depicted in Figure 2 andwill be explained further.Perception1098765432101 13 25 37 49 61 73 85 97 109 121 133 145 157 169 181 193CustomersSavingCreditFigure 2: The Saving and Credit Average Customer PerceptionFigure 3 explains that Minangkabau customers are loyal customers. They have some irrationalconsiderations e.g., ethnicity, continue customer and insensitive customer. Ethnicity means thatthe customers consider using the bank products based on the culture observed in the bank: theMinangkabau values. Continue customers refer to interactive customers, a son continues from hisfather, a father continues from a grandfather and so on. Insensitive customers, refer to customerswho do not know the situation of the banking industry in their region for example mattersregarding interest rate, administration process in using saving and credit products, new bankingproducts etc in other banks.A Minangkabau customer is a good customer in using the bank products. From Figure 3, we cansee the customer lines of perception in using the saving and credit products are close. It meansthat Minangkabau customers use bank products optimally. They are real customers in using bankproducts who demand deposits, saving deposits, time deposits, and all kinds of credits includingworking capital credit, investment credit and the combination of both.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 49

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Perception1098765432101 10 19 28 37 46 55 64 73 82 91 100 109 118 127 136 145CustomersSavingCreditFigure 3: The Minangkabau Perception of Saving and CreditAverageFigure 4 points that the line of saving product perception is lower from the line of creditproduct perception. It means that in this bank the Chinese ethnic only use credit to support theirbusinesses. They undervalue the saving products. They use the other banks that have giveninteresting rate, modern facilities, innovation products, etc.987Perception65432101 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49SavingCreditCustomersFigure 4: The Chinese Perception of Saving and Credit Average6. The Dimensionality of Credit and Saving ScalesThis sub-heading will discuss the dimensionality of the scales. Firstly this sub-heading discussesabout banking marketing location. Banking marketing location are consisted Pondok and PasarCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 50

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Raya in Padang. Location factor very influencing to customer perception in consuming savingproduct and credit, for example a Chinese customer will like to save to bank which close to theirlocation trade. Secondly this sub-heading discusses dimensionality of the credit and saving scale.Confirmatory factor analysis will be used as a tool for data reduction.Both banks are located in business center in Padang. Pasar Raya is central of Minangkabautraders and Pondok is central of Chinese traders. Both of this ethnic have different idea regardingplace of effort like seen in Chinese picture c-f chosen place of effort, which is direct to be madeby residence at the same time. They think that effort direct become that is residence moreeffective and is efficient. Very rare once Chinese chosen place of effort separated from itsresidence.A-BC-DCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 51

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5E-FFigure 5: Banking Marketing Location in Pondok and Pasar Raya, PadangOn the contrary Minangkabau chosen place of effort separated from its residence, see Figure b.This matter is caused by they chosen to be gathered at one place which provided by localgovernment. Usually in the form of fairish place 'kios-kios' 3 x 3 meter. Therefore such palcesnot possible for them to be made as residence at the same time.Therefore, for Chinese customers apply the adjustment principal and ancestor to moderncondition in Padang. In trading, they still use principles as follow:1. More and more planning will give the more opportunity to win. Lack of planning will lessenopportunity to win. What is going on if there no planning is at all. Chinese always thinkeffectively. They can see to the fore and try to estimate various consequence which possiblehappened. They are habit ‘making a map of battlefield’ as does a military general, see mapgenerally fight and consider various factor. Then, they go forward inch by inch to‘battlefield’ specific.2. Recognize your enemy, recognize yourself, your victory even also will not be threatened(without information, planning become without effect). Recognize its field, recognize itsweather, complete of your victory. Cina information combination people with planning. Aplanning can produce fruitful result when having correct information of time, relevant, andaccurate.3. Speed represent essence a war. Marketing energy of peripatetic Chinese as soon as possible(time of vital importance). Chinese collect and analyses immeasurablely of informationsystematically. They also should be able to project company vision or its production line.Then, they have to specify marketing strategy and target.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 52

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 54. First of all, skillful soldier in epoch first will look for position to themselves so that they donot seen by enemy (thinking is long-range). They will bide time to attack weak point ofenemy. Chinese have idea that marketing do not only destined today or in short-range. Theypattern have to that marketing is an activity yielding advantage on a long term.5. A team win the day if him relate to faced enemy it ... adjustment with field is best ally tosoldier in encounter (product). Chinese always comprehend all its customer and know whatin fact they require.6. A team will win if him braid relation with faced enemy it (price). Chinese in meticulous inpricing product to sell of. Wisdom price very depend on their customer expectancy, abilityand willingness to pay.Finally, analyses dimension from saving scale and credit relied on factor analysis. Perceptionfactor both of this ethnic very influencing at forming of SERVQUAL dimension with financialproduct consumption. Product saving dimension divided to the three dimension. As seen incomponent plot in rotated space below,Figure 6: Saving Product Dimension Component PlotCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 53

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5SSERVQUAL-1 representing combination of reliability, assurance and responsivenesscomponents. This represents subjective factor push which both ethnic of Chinese andMinangkabau to consume saving products. The factors are certain time, sympathy andreassuring, dependability, saving services, accurate records, prompt service, willingness to helpcustomers, prompt response to customer requests, trusted employees, safe feeling.SSERVQUAL-2 representing combination of assurance, empathy and tangibles components.They are politeness, best interest at heart, convenient hours, up-to-date equipment andtechnology, appeal visual, well dressed and neat appearance and the physical facilities inkeeping with the type of service provided. SSERVQUAL-3 representing combination ofempathy, responsibility, and assurance components. They are customer information, adequatesupport, individual attention, personal attention and customer needs.Figure 7: Credit Product Dimension Component PlotLike SSERVQUAL above, CSERVQUAL-1 representing combination of reliability, assuranceand responsiveness components. This represent subjective pushing factor of Chinese andMinangkabau to consume credit products. They are certain time, sympathy and reassuring,dependability, credit services, accurate records, prompt service, willingness to help customers,prompt response to customer requests, trusted employees, safe feeling, and politeness.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 54

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5CSERVQUAL-2 representing combination of assurance, empathy and tangibles components.They are best interest at heart, convenient hours, up-to-date equipment and technology, visualappeal, well dressed and neat appearance and the physical facilities in keeping with the type ofservice provided. CSERVQUAL-3 representing combination of empathy, responsibility, andassurance components. They are information, adequate support, individual attention, personalattention and customer needs.7. DiscussionThe dimension SERVQUAL'S was formed by using confirmatory factor analysis. Based on theanalysis, SERVQUAL'S dimension for the product of saving and credit divided to the three.Dimensions for saving products are SSERVQUAL-1, SSERVQUAL-2 and SSERVQUAL-3 andfor credit products are CSERVQUAL-1, CSERVQUAL-2 and CSERVQUAL-3. The elementsfrom each dimension are discussed in the sub-heading the dimensionality of credit and savingscales above.Thus, from the ethnic graph plot there are differences of the consumption pattern of credit andsaving products. This means that Minangkabau customer have been using bank productsoptimally. On the contrary the plot graph of the ethnic Chinese usage of product is very strange.This means that Chinese customers only use credit products to support business activities. Otherfactor which support the difference of dimension is the incorporation of principles like Sun Tzuprinciples in the conduct of Chinese customers. Practically this traditional principal is stillapparent in a Chinese customer.Results obtained from this research with regard to the dimension of ethnic consumption differfrom a former research by Parasuraman, Zeithaml, and Berry. Parasuraman, Zeithaml, and Berryrecommended SERVQUAL'S five dimensions namely reliability, responsiveness, assurance,empathy, and tangibles. According to this research and by virtue of statistical test, there are threedimensions to SERVQUAL'S. Such disparity is caused by difference in customer type dealt within the former research compared to this present research.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 55

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesBabakus, Emin and Boller, Gregory W.(1992). An Empirical Assessment of the SERVQUALScale. Journal of Business Research, 24, 253-268.Brown, Stephen and Swartz, Teresa A. (1989). A Gap Analysis of Professional Service Quality.Journal of Marketing, 53(April) ,92-98.Brown, Tom J, Churchil, JR Gilbert A and Peter, J Paul . (1993). Research Note: Improving theMeasurement of Service Quality. Journal of Retailing, 69(1) ,127-139.Boulding, William, Kalra, Ajay, Staelin, Richard and Zeithaml, Valarie. (1993). A DynamicProcess Model of Service Quality: From Expectation to Behavioral Intentions. Journal ofMarketing Research, 30(February), 7-27.Carman, James M.(1990). Consumer Perceptions of Service Quality: An Assessment of theSERVQUAL Dimensions. Journal of Retailing, 66(1), 33-55.Cronin, J Joseph Jr. and Taylor, Steven A. (1994). SERVPERF Versus SERVQUAL:Reconciling Performance-Based and Perception-Minus-Expectations Measurement ofService Quality. Journal of Marketing, 58(January), 125-131.Cronin, J Joseph Jr. and Taylor, Steven A. (1992). Measuring Service Quality: A Reexaminationand Extension. Journal of Marketing, 56(July), 55-68.Crosby, P. (1979). Quality Is Free : The Art of Making Quality Certain. NY: New AmericanLibrary.Budnick, Frank S. (1993). Applied Mathematics For Business, Economics, And The SocialSciences. Singapore: McGraw-Hill Book Co pp. 378-381.Parasuraman, A., Zeitham, Valarie A & Berry, Leonard L. (1994). Alternative Scales forMeasuring Service Quality : A Comperative Assessment Based on Psychometric andDiagnostic Criteria. Journal of Retailing, 70(3), 201-230.Parasuraman, A.,Zeitham, Valarie A , & Berry, Leonard L. (1988). SERVQUAL : A Multiple-Item Scale for Measuring Customer Perception of Service Quality. Journal of Retailing,64(Spring), 12-40.Teas, R Kenneth. (1994). Expectations as a Comparison Standard in Measuring Service Quality :An Assessment of a Reassessment. Journal of Marketing, 58(January), 132-139.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 56

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Teas, R Kenneth. (1993). Expectations, Performance Evaluation, and Consumers’ Perception ofQuality. Journal of Marketing , 57(October), 18-34.Santoso, Singgih. (2001). Buku Latihan SPSS Statistik Non Parametrik. Jakarta: PT Elex MediaKomputindo pp. 118-126.Salah Satu Penggerak Ekonomi Sumatera Barat. (2001, March). INFOBISNIS, pp. 42-43.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 57

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSAntecedents of Counter Work Behavior in Public SectorOrganizations. An Asian PerspectiveSEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SSajid BashirRiphah School of LeadershipRiphah International UniversityAbstractThis study attempts to find out some key factors that determine counter work behavior in publicsector organizations of Pakistan. Data was collected from 427 lower level employees working invarious public sector organizations. Results indicate that insufficient salary, cynical behavior andwork family conflict determine counterwork behavior while supervisor support shows a veryweak negative relationship. Public sector organizations have to seriously address these issues asthey are the root cause of inefficiency in these organizations.Keywords: Antecedents, Counter Work Behavior, Public Sector Organizations, AsianPerspective1. IntroductionFor decades organizational researchers are focusing on employee behaviors that affectorganizational prosperity. In this attempt negative behavior are gaining an increased attention. AsMartinko, Gundlach & Douglas(2002) term it as a “proliferation of theoretical explanations forcounter- productive workplace behaviors”. Behaviors like absenteeism, turn over have beenextensively researched while extreme negative behaviors like sabotage, theft, illegitimate politicshave received relatively less attention. These behaviors are intended to hurt organizations oremployees (Miles, Borman, Spector, & Fox, 2002). Apart from explaining the phenomena,studies also attempted to find out factors which determine counter work behavior like personalitytraits (Fox & Spector, 1999; Hepworth & Towler, 2004). Penny (2002) reports a loss of $200billions in USA alone associated with CWB. Mangers and decision makers are concerned toreduce frequency and likely hood of these behaviors as it is costly for organizations. While mostof these studies were conducted in developed countries, the developing or underdevelopedcountries received relatively little attention in this regard. The cost of CWB in these countries isunknown and so are the factors which contribute towards development of such behaviors. TheCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 58

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5employees working in the developing or under developed countries are living in much moremiserable conditions than the developed countries. The economic conditions and poor salariesdefinitely increases the likely hood of counter work behaviors like theft, sabotage etc. Thesefacts necessitate a study which can identify factors causing counter work behavior. Thus we haveidentified the public sector organizations in Pakistan for analysis regarding counterworkbehavior. The findings will help the decision makers and the researchers to explore ways whichcan reduce counter work behavior in these specific organizational settings.2. Counter work behaviorAmong the various definitions of counter work behavior, Robinson & Bennet(1995) defined it isas behavior which violates organizational norms in some harmful manner. This harm can be fororganization in form of any behavior like theft, sabotage, absenteeism etc. and for individual inform of drugs; alcoholism etc. Organizations are increasingly realizing importance of reducingcounter work behavior as cost . They are more interested in identification of factors whichdetermine such behaviors. CWB is quite a complex phenomena as Spector & Fox(2002)points that this behavior is normally hidden. Thus we can argue that it is moredangerous for the organizations. “CWB on the other hand is something which can becomea worse nightmare for an organization’s management, as employees demonstrating such behaviorare not non-productive but are counter-productive, because they tend to play a role whichaltogether reverses the organization’s progression”(Bukhari & Ali, 2009).Researchers have attempted to relate these behaviors with various determinants like organizationaljustice (Fox, Spector & Miles, 2001) and other factors. Organizations where employees perceiveinjustice, they are more likely to engage in counter work behaviors. “Organizational justice is amediator of CWB, as it suggests that individuals who perceived their own workgroup to receivemore justice than other units engaged in less counterproductive work behavior” (Flaherty & Moss,2007). Some researchers have attempted to relate these determinants with types of CWB which arepersonal and organizational. Fox, Spector & Miles(2001) consider organizational injustice andstressors determine organizational CWB while interpersonal conflict determine personal CWB.Similarly satisfied employees show their commitment towards organization by engaging inCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 59

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5behaviors which are beneficial for the organizations rather than engaging in such behaviors whichresult in counter work behavior. Miles, Borman, Spector, & Fox(2002) relate work environmentand emotions with CWB. There are various components of work environment, organizations mustattempt to focus each of these components to reduce incidents of CWB. There has been extensiveresearch on emotions and different studies have established the importance of emotions and theirsubsequent impact on employee and organizational performance. Thus emotions play an importantrole in determining CWB in the originations thus Spector and Fox(2002) consider negativeemotions as a potential determinant of CWB. The negative emotions like hopelessness, frustrationand disgust are generally referred to as cynicism (Anderson & Bateman, 1997) which can result innon productive behaviors(Storm & Spector, 1987). Mount, Ilies & Jhonson (2006) considerpersonality as a determinant of CWB. It is important to note that though external factors contributetowards determining CWB, internal factors do play a role in this regard , thus type of personalityalso contribute towards explaining the phenomena of CWB. Type and level of employment alsoreceived attention by researchers some attempted to show which type of employees is morevulnerable to CWB” Temporary workers had lower job performance and exhibited more counterproductive behaviors”(Posthuma,Campion & Vargas,2005).While CWB is one extreme of employee behavior, the other dimension to continuum isOrganizational Citizenship behavior (OCB) which is described as “defending organization whenit is criticized” (Turnipseed & Rassuli, 2005). Dalal(2005) suggest that these concepts areopposite as one (CWB) is harmful while other(OCB) is beneficial for the organization. SimilarlyBaker(2005) is of the view that CWB and OCB are negatively correlated. Thus the concept ofCWB is important to understand as if organizations are able to reduce or eliminate CWB it willresult likelihood of OCB in the organization which is a beneficial for the organizations.These diverse findings indicate that a number of factors need to be considered before analyzingthe phenomena of CWB. The determinants of CWB can not be confined to few determinantsrather there is an exhaustive list of factors which determine CWB. However it seems difficult toanalyze all factors in one study especially in a country like Pakistan where these behaviorsalready stand under researched. The factors selected for the present study include compensation,supervisor support, work life conflict and an interesting variable i.e. organizational cynicism.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 60

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5These variables have been identified based on findings of different studies relating thesevariables with CWB. Based on findings of earlier studies about CWB, the following hypothesiswill be tested in the present study:H1: Organizational cynicism is positively associated with counter work behavior among civilservants of Pakistan.H2: Good compensation practices are negatively associated with counter work behavioramong civil servants of Pakistan.H3: Supervisor support is negatively associated with counter work behavior among civilservants of Pakistan.H4: Work life conflict is positively associated with counter work behavior among civilservants of Pakistan.3. Methodology3.1 QuestionnaireThe CWB questionnaire was adopted from Bennett and Robinson (2000), Organizationalcynicism was measured using a scale developed by Brandes, Dharwadkar& Dean (2000), Paysatisfaction was measured using Heneman and Schwab (1985) Pay Satisfaction Questionnaire,Supervisor support was measured using a questionnaire developed by Ramus and Steger (2000)while work life conflict was measured through an instrument developed by Pare, Tremblay &Lalonde (2001). The questionnaires were tested for reliability value of each scale showed asatisfactory value.The response was required on five point Likert scale. The questionnaire was accompanied by ashort request explaining the importance of the study. It was distributed to HR managers/administrative officers of different government organizations.3.2 Population & SampleThe data was collected from employees working in various ministries of the Federal governmentof Pakistan. The sample included the lower level employees. A total of 500 questionnaires weredistributed out of which 441 were received back but 427 were valid thus making a response rateas 85%. Following table describes various character tics of sample:COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 61

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Table: 1 Sample CharacteristicsDescription Range Frequency PercentageGender Male 308 72%Female 119 28%Age(years) 20-29 207 48%30-39 145 34%40-49 55 13%50 and above 20 5%Tenure (years) 1-9 288 68%10-19 103 24%20-29 23 5%30 and above 13 3%Native language Urdu 93 22%Punjabi 225 53%Pushto 63 15%Sindhi 22 5%Balochi 11 2%Others 13 3%The sample composition indicates that majority of respondents were male employees. Thepercentage of women working in public sector organizations of Pakistan is quite low. There arecertain reasons for this low percentage like a very low literacy rate in Pakistan especially forwomen. As a cultural norm in most rural part of the country women are not allowed to haveeducation while in urban areas the trend is changing. Still the women who get education aremostly restricted to join organizations as traditionally they are supposed to look after homeaffairs. This makes the percentage of women in the organizations quite low. However women arestriving hard to establish their presence in these organizations and now a days we can findwomen working at quite decisive positions in the organizations as well. The other factorconsidered for data collection is age of respondents. The data was collected mostly fromemployees having age less than 40 years. Since studies suggest possibility of counter workbehavior more in younger employees. Similarly the majority of respondents were having tenurein organizations less than 15 years. To ensure having opinion of respondents from entire country,the languages section indicates that respondents belong to different geographical areas ofPakistan. Thus every possible effort was made to collect data from sample which isrepresentative of populationCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 62

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 54. ResultsTable: 2 Correlation AnalysisVariable Mean SD CWB Org Cyn Comp SS WLCCWB 3.14 0.53 1.00Org Cyn 2.64 0.58 0.55** 1.00Comp 2.03 0.78 -0.22** -0.20 1.00SS 2.09 0.66 -0.039 0.01 0.09** 1.00WLC 2.33 0.68 0.13* 0.10** -0.06 0.42** 1.00**p≤0.01 , n =427, SD= Standard Deviation, CWB= Counter Work Behavior, Org Cyn =Organizational Cynicism, SS= Supervisor Support, WLC= Work Life ConflictCorrelation coefficient matrix indicates a strong and significant relationship betweenorganizational cynicism and counter work behavior (0.55**, **p≤.01) while the relation shipbetween compensation and counter work behavior is significantly negative (-0.22**,**p≤.01). Though the relationship between supervisor support and counter work behavior isnegative (-0.039) but it is very weak and insignificant. Work life conflict is positively correlatedwith counter work behavior (0.13*,*p≤.05), the possible reasons for which will be explained indiscussion.Table: 3 Regression AnalysisIndependent Variable β t-value Sig.Organizational Cynicism 0.52 12.75 .000Compensation -11.55 -2.82 .005Supervisor Support -0.78 -1.76 .078Work Life Conflict 0.11 2.63 0.09n =427, R Square = 0.334, Adjusted R Square = 0.327, F =52.85, Significance F = .000,Dependent Variable = Counter Work BehaviorRegression analysis was used for analyzing various relationships among variables. Value of Rsquare is 0.33, thus the independent variables explain only 33% variation in the dependentvariable. The value is quite low probably due to the reason that very few determinants of CWBwere selected for the present study. There are number of other factors which affect CWB but thepresent study is limited to four factors thus value of R square is relatively low, which can beimproved to a significant level if some other variables are added since 67% variation in theCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 63

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5dependent variable i.e. CWB remains unexplained. In analysis of variance value of F issignificant at 52.85. Regarding individual impact of independent variables on dependentvariables the t value of organizational cynicism is significant at 12.75; the t value ofcompensation is significant at -2.82 while value of supervisor support is insignificant at -1.76.The t value of work life conflict is significant at 2.63.5. DiscussionThe findings indicate some interesting dimensions of CWB in Pakistan. The strong relationshipbetween organizational cynicism and CWB indicate that cynicism in any form is a threat for theorganizations. The findings are indicative of the fact that employees in public sector are havinghigh level of cynicism for which a number of factors can be attributed to this hopelessness orfrustration. During our discussions with public sector employees it was observed that they arehighly dissatisfied with their jobs which ultimately resulted cynicism. The lower level employeesface severe discrimination in the organizations. Their opportunities for development are quitelow ; rewards have no relationship with performance while authority and decision making istotally centralized at top. The working conditions are quite poor. In extreme hot season whentemperature rises up 45 centigrade, there are no proper cooling arrangements, the office layoutand other facilities are quite poor. Employees are forced to sit in very narrow spaces while seniormanagement in public sector organizations enjoy a luxurious life. Spacious offices with all thefacilities and a contingent of personal staff(who are also supposed to work at their homes), rapidcareer growth, foreign trainings etc. are part of their perks. We believe the major cause ofcynicism in public sector employees is this discrimination. Very high rate of absenteeism clearlyindicates that CWB is among the most volatile issues in public sector organizations of Pakistan.Compensation and supervisor support are negatively correlated with CWB in public sectororganizations. This relationship indicates that incidents of CWB can be reduced to a large extentif employees are rewarded fairly. On average a lower level employee earns $100-$120 per monthin which he/she supposed to feed the family, pay the rent, school fees and also survive in acollectivist society where a big chunk of earnings is spent in social events like marriages etc. Thegovernment provides no subsides thus around 60-70% of this meager income is spent in paymentCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 64

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5of utilities and transportation. These public servants and their families are living miserable lives.Obviously in these situations we can only expect CWB as an eminent outcome. Supervisorsupport is negatively related with CWB but the strength of relationship is very weak. Thepossible reasons for this weak relationship can be attributed to lack of trust in leadership inpublic sector organizations. The organizations are following a bureaucratic structure with topmanagement enjoying all the privilege and the mangers are least concerned about the welfare oflower level employees. The approach of supervisors at any level in these organizations is moreproduction oriented rather than employee oriented. Employees are not consulted in any decisionmaking rather they are supposed to follow the orders. Thus supervisors have no role to play toreduce counter work behavior in employees.Work life conflict is positively associated with CWB. The increased pressure for down sizing hasmade life of lower level employees more difficult. Massive layoffs have enhanced the workloadon the existing employees. Employees have to do a lot of additional tasks and that too withoutany additional benefits. The frequent late sittings in the office have badly affected employeeswork life balance and economic conditions. Most of lower level employees make both ends meetby doing some additional job after office hours but now these late sittings do not allow them todo any part time job. Another major impact has been on the health of these employees as theycan not afford to buy food if they have to work for late hours or they are forced to buy unhygienic cheaper food from market. Though no such data was available in these organizationswe found a number of employees being patients of hepatitis and such diseases caused by havingun-hygienic food. The health facilities provided to these employees and their families are verypoor. In case any employee or a family member fell ill they have to wait for days to get anappointment from a government doctor and to get the medicine and other treatment. All thesefactors have made the work life conflict quite severe. As a result the employees are forced toexhibit CWB. For example as per our observation one of the major cause for absenteeism is dueto the reason that employees spent a significant amount of their time standing in queues forhaving a medical check up at hospitals, to deposit utility bills in banks to stand in queues to buycheaper food items from government stores. Although no one in these organizations have everCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 65

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5attempted to calculate cost of this absenteeism, we believe that government is loosing millions ofdollars for this mismanagement by its decision makers in these organizations.6. ConclusionThe world is changing as so are the public sector organizations around the world but the pubicsector organizations in Pakistan are still operating following obsolete styles of managementhaving no concern for employees. There is an urgent need on part of decision makers to addressthis issue and to focus on reducing counter work behaviors among employees. Traditionalcontrol system can force them to work in offices but it can not restrict them from exhibitingcounter work behaviors. This can only be done if employee behaviors are controlled throughconsideration and employee orientation otherwise the CWB will remain an integral part of publicsector organizations of Pakistan.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 66

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesAnderrson L & Bateman TS 1997. Cynicism in the work place: Some causes and effects. Journalof Organizational Behavior,18:449-470.Baker BA 2005. The Good Bad and the Ugly: the mediating role of Attribution Style inrelationship between personality and Performance. Unpublished dissertation: NorthCarolina State University.Brandes P,Dharwadkar R & Dean JW 2000. Organizational cynicism. Academy of ManagementReview, 23(2):41-352.Bennett R J & Robinson S L 2000. Development of a measure of workplace deviance. Journalof Applied Psychology. 85(3): 349-360.Bukhari ZU &Ali U 2009. Relationship between Organizational Citizenship Behavior &Counterproductive Work Behavior in the Geographical Context of Pakistan. InternationalJournal of Business and Management, 4(1): 85-92.Dalal SR 2005. A Metal analysis of relationship between organizational citizenship behaviorand counter work behavior. Journal of Applied Psychology, 9(6): 1241-1255.Flaherty S, Moss S 2007. The impact of personality and team context on the relationshipbetween workplace injustice and counterproductive work behavior. Journal of AppliedSocial Psychology, 37(11): 2549-2575.Fox S & Spector PE 1999.A Model of Work frustration-Aggression. Journal of OrganizationalBehavior, 20: 915-931.Fox S, Spector, PE, & Miles D 2001. Counterproductive Work Behavior in Response to JobStressors and Organizational Justice: Some Mediator And Moderator Tests ForAutonomy And Emotions. Journal of Vocational Behavior, 59; 291-309.Heneman H G & Schwab DP 1985. Pay satisfaction: Its multidimensional nature andmeasurement. International Journal of Psychology, 20:129-141.Hepworth W & Towler A 2004. The Effects of Individual Differences and CharismaticLeadership on Workplace Aggression. Journal of Occupational Health Psychology. 9(2):176-185.Martinko MJ, Gundlach M &Douglas SC 2002. Toward an integrative theory ofcounterproductive workplace behavior: A causal reasoning perspective. The InternationalJournal of Selection and Assessment, 10 (1):19-33.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 67

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Miles DE, Borman WE, Spector PE & Fox S 2002. Building an integrative model of extra rolebehaviors: A comparison of counterproductive work behavior and organizationalcitizenship behavior. International Journal of Selection and Assessment, 10(1&2): 51-57.Mount M, Ilies R, Johnson R 2006. Relationship of Personality traits and counter workbehaviors: the mediating effect of job satisfaction. Personnel Psychology, 59(3): 591-622.Pare G, Tremblay M & Lalonde P 2001. The role of organisational commitment and citizenshipbehaviours in understanding relations between human resources practices and turnoverintentions of IT personnel. Scientific Series #2001s-24, CIRANO, Montreal, Canada, 37.Penney LM 2002. Workplace incivility and counterproductive work behavior (CWB): What isthe relationship and does personality play a role? Unpublished doctoral dissertation,University of Southern Florida.Posthuma RA, Campion MA, Vargas AL 2005. Predicting counter productive performanceamong temporary workers : A note. Industrial Relations, 44(3):550-554.Robinson SL & Bennett RJ 1995. A typology of deviant workplace behaviors: Amultidimensional scaling study. Academy of Management Journal, 38(2): 555-572.Ramus CA & Steger U 2000. The roles of supervisory support behaviours and environmentalpolicy in employees “ ecoinitiatives ” at leading edge European companies. Academy ofManagement Journal,43(4):605–626.Spector PE &, Fox S 2002. An emotion-centered model of voluntary work behavior: Someparallels between counterproductive work behavior and organizational citizenshipbehavior. Human Resource Management Review,12(2):262-292.Storms PL & Spector PE 1987. Relationships of organizational frustration with reportedbehavioral reactions: The moderating effect of perceived control. Journal ofOccupational Psychology, 60: 227-234.Turnipseed DL & Rassuli A 2005. Performance Perceptions of Organizational CitizenshipBehaviors At Work: A Bi-Level Study Among Managers And Employees. BritishJournal of Management, 16: 231-244.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 68

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSPortfolio Diversification and Financial Performance ofMutual funds in IndiaSEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SNidhi WaliaFaculty – PURCITMThapar University, PatialaDr. (Mrs.) Ravi Kiran,Assosiate Professor,SOMSS, Thapar UniversityAbstractFinancial innovations have become the central driving force taking any financial system towardseconomic efficiency. Indian Capital market has shown a spurt growth with financial innovationsbecoming a regular feature leading to change in investor’s preferences for newly fangledfinancial innovations. Mutual fund has become an obvious choice for most of the investorsbecause of its performance in terms of providing higher returns at low risk. Although pastperformance of fund is an important parameter in selecting a particular Asset ManagementCompany (AMC) for investment yet some other parameters that should be considered involvesknowledge and diligence of fund managers in deciding asset mix for funds as it results insignificant difference in financial performance of fund as compared to other funds. This paperemploys Beta (β), Fama, Sharpe (S i ), Treynor (T i ) as a risk measure that measures the variabilityof fund in terms of return provided and if fund manager was able to provide return over andabove risk free return and expected return. Results of the study show that funds under study varyto some extent in terms of risk level assumed and returns generated from investment. Differencein investment style adopted by various funds managers in designing portfolio with updatedmarket knowledge certainly yields them superior returns in comparison to other funds.Keywords: Net Asset Value (NAV), Asset Management Companies (AMCs), Asset mix,Portfolio risk, Financial return, Investment portfolio1. IntroductionMutual fund industry in India has already entered in the world of exciting innovations that haslured investors to invest in Mutual funds as a preferred investment. Intense competition put forthby private players in this industry has forced fund managers to foster innovations in existingschemes that can satisfy the investment objectives of investors. Reduced complexities, strongCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 69

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5integrated network and decreasing market imperfections are luring Indian investors to investtheir domestic savings into capital markets but risk averse attitude of Indian investors do notallow them to directly participate in this race. Thus, investment through mutual fund is mostsuitable option that provides them with maximum return at minimum risk. Mutual funds industryhas moved from offering a handful of schemes like equity, debt or balanced funds to liquid,money market, sector specific funds, index funds and gilt edged funds. Beside this recentlymutual funds have introduced some special specific funds like children plans, education plans,insurance linked plans, and exchange traded funds. This is the reason that over the time Indianinvestors have started shifting towards mutual funds instead of traditional financial avenues.Automated approaches designed by new technology and data mining is helping AssetManagement Companies (AMCs) of mutual funds in strategic planning and investment decisionmaking by uncovering the hidden patterns and predict future trends and behavior in financialmarkets.Mutual fund AMCs take care of every specific need of investors especially their risk appetite andaccordingly design well-diversified portfolio that can provide returns to match investor’sexpectations. Thus, complete focus of fund managers is on striving to achieve not less than rateof return consistent with risk level they assume. On the other side investor’s are generally morecareful while investing and presence of rationality among investors demand more returns at lowrisk. Absence of perfect knowledge about financial markets create problem for investors on theissue of evaluating mutual funds. As a result most investors select AMC on the basis of word ofmouth advertisement and sometimes over tempting returns by a particular fund lure them.However, fund managers vary in investment styles and knowledge they possess that leads todifferent outcomes even for same fund run by different AMCs. This ultimate difference betweeninvestment style opted by fund manager in designing portfolio and investment objective set byinvestors poses a serious threat. Thus, it becomes imperative for investors to thoroughlyinvestigate fund before investing and should not use past returns as only mean in selecting aparticular fund scheme.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 70

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 52. Literature ReviewMutual fund industry in India although working at excellent pace is still far behind from theheights it should have touched as it is still ranked at 19 th position among worldwide mutual fundmarkets. Despite the reason that Indian Mutual fund industry possesses high potential, very fewresearches have been conducted to study the working of mutual funds and which relativemeasure should be used to measure their performance. Huge literature available on predictingstock market returns has proved that generally investors consider stock’s past returns to decidefuture returns (De Bondt, 1993) and past returns are positively correlated with investor’sexpectations from future return (Fisher et. al, 2000) but return alone cannot be used as a measureof evaluating the performance of mutual funds as most commonly some highlighted stocks aretaken into portfolio for cosmetic purposes (Neal, 2001). Return ambiguity and changes in riskperception of individual investor affect action taken in risky financial market. Computationalcomplexities are not only the reason why rationality assumption is challenged rather challengesalso come from cognitive reasoning (Anderson 1991) where question is how optima humanbeings are. Based on different investment objectives fund managers have to use their specializedskills and adopt varied investment styles. Gottesman & Morey (2006) conducted research to findrelationship between manager’s education and mutual fund performance and concluded thatcertainly managers with higher intelligent level acquire advance knowledge on marketmovements and can use these skills to get superior performance.Analyzing the performance of mutual fund is a critical issue. Different researchers have usedvaried parameters to evaluate fund schemes with respect to their ability to generate returns andskills to reduce risk. Haslem (1988) used fund’s systematic risk, beta coefficient to compareportfolio risk relative to market risk. Investment in equity funds is the obvious choice of highriskprofile investors. Treynor (1965) and Sharpe (1966) provided a specialized index to measuresuperfluous returns by equity funds. In this regard they differ in their evaluation criteria asTreynor used only systematic risk to measure portfolio performance but Sharpe used total risk toevaluate fund Performance. Fama (1972) provided a different approach to measure performanceCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 71

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5of mutual funds and accordingly he developed a measure in the form of comparing actualrealized return and expected portfolio return.Financial innovations have become the central driving force taking any financial system towardseconomic efficiency. Similarly innovations in Indian mutual fund industry have completelygiven it afresh look. Study by Kane (1978) has described the process of avoiding regulations, as“loophole mining” which suggests that when regulatory constraints are so burdensome that largeprofits can be made by avoiding them, financial innovations is more likely to occur. Thesefinancial innovations may look for searching either entirely new product or making somestructural changes in already built financial products to focus on investor’s requirement. InIndian context very few studies have been conducted on mutual funds to measure theirperformance. Gupta & Sehgal (1997) performed benchmark comparison of 80 mutual fundschemes during the period from 1992-1996 and concluded that industry performed well duringthis period. Bello (2005) matched a sample of socially responsible funds with randomly selectedconventional funds to investigate difference in characteristics of assets held, degree of portfoliodiversification and effect of diversification on fund performance and concluded that sociallyresponsible mutual funds does not differ significantly from conventional funds in any of theseattributes. Panwar & Madhumati (2006) studied sample of public sector sponsored and privatesector sponsored funds to investigate the differences in characteristic of asset held, portfoliodiversification and variable effect of diversification on fund performance during 2002-2005 andconcluded that private sector funds do not differ significantly in terms of mean return but differsignificantly in terms of average standard deviation and average covariance.3. Research ObjectivesWith Mutual fund luring investors with innovative schemes to satisfy investor’s quest, it hasbecome imperative to study the working of mutual funds in India with reference to strategiesopted by fund managers of different AMCs that result in different return for investors. Moreoverinvestors are also required to analyze some key parameters of fund they are selecting to investbesides looking into the historical returns provided by the fund scheme. To address this issuepresent study was initiated to analyze various parameters of funds that highlight and disclose theoperational efficiency of funds along with different type of risks associated with the fund. Thestudy was conducted with following objective:COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 72

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5To study the investment style and distinguished strategies of mutual funds in India those help aparticular AMC to yield superior return than other funds.To compare the operational performance of selected funds in term of return benefits provided tothe investors.To analyze the risk level assumed by investors that help fund managers to get return above riskfree return.To conduct this study only four mutual funds were taken under study that are most commonlypreferred by a common investor either because of their strong fundamentals or because of theiraggressive marketing that include UTI mutual fund, SBI Magnum mutual fund, Reliance mutualfund and ICICI Prudential mutual fund. Although all these four AMCs have already launchedvaried fund schemes to suit individual investors but only equity, income and balanced fundswere taken under broad research purview.4. Performance evaluation of Mutual fundsA rational investor generally hand over their savings to mutual fund AMCs in the anticipation ofyielding abnormally high return, assuming fund managers possess updated market knowledgeand professional skills. However, despite the fact that fund managers make every possibleattempt to design fund schemes according to investor’s objectives, yet they vary in deciding theproportion of asset mix and their stock selection abilities. These differences in investment styleand market knowledge of fund manager yield different returns even to the funds categorizedunder same umbrella. This study endeavors to identify the hidden practices that fund managersfollow and uses as a key differentiator. The study initially compares the important parameters offour funds under study for their performance evaluation and simultaneously provides acomparable choice of fund managers for deciding asset-mix.4.1 Analysis Of Equity-Growth FundsTable 1 compares the basic parameters of four mutual funds under our study. Expense ratio of allthe four funds when compared shows that SBI Magnum equity fund-Growth has got top positionwith Ep=2.50% and UTI Equity fund takes the next lead with Ep=1.94%. With regard toCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 73

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5volatility in NAV UTI seems to be performing well with 52 week highest on 37.88 whereasReliance equity fund has a slow move with 13.46. UTI seems to be playing well with healthystrategies of investment as the 52 week low NAV in this fund was 23.63 in comparison toReliance Equity Fund at 8.21. As a general practice a fund with higher portfolio turnover rate isnot accepted to be excellent but in case of Reliance Equity Fund-Growth highest level ofportfolio turnover rate i.e 114% should not be given a negative look as it is providing higher rateof return than all other funds under our study. The only negative aspect about higher portfolioturnover rate is that it adds to transaction cost but if this increased return is offsetting theincreased transaction cost it cannot be considered negative. SBI magnum Equity fund has got thelowest portfolio turnover rate and along with it is also providing the highest rate of return, whichreveals that with minimum shifting of funds SBI Equity plan is performing absolutely excellent.Table 2 unveils the comparative returns of four Mutual funds that are known for their excellentperformance and most commonly preferred by general investors because of several reasons. SBIMagnum Equity fund-Growth has been proved to be highly volatile because of higher level ofrisk assumed by it, thus, as expected it has been providing high rate of return in comparison toother three funds under our study. Average results of one-month performance shows that SBIMagnum equity fund-growth has highest return of 27.31% whereas ICICI Prudential AggressivePlan-Growth has lowest return 15.03%. Performance of previous three months average return ispretty appreciable in case of SBI and UTI Equity fund growth with 77.31% and 50.86%respectively. Results of return during last one year are negative for all mutual fund plans underthe study and the condition was quite obvious, escapeless and threatening. This particularnegative trend during last one year’s result shows that financial crisis has also put its shadow onMutual fund industry in India and as a result all top class mutual funds had to suffer despite thebest strategies adopted by them. Data of last three years performance again declare SBI Magnumequity fund as a champion among other three funds under the study with highest return of19.59% followed by Reliance Equity Fund-Growth with 15.06%.Table 3 highlights the various risk estimations that depict the variability or fluctuations in thereturn generated by various funds. Data estimates suggest that among four Mutual funds thatwere selected for this study, highest variation is shown by SBI Magnum equity fund-GrowthCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 74

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5with σ 5.48 whereas least fluctuations are shown by ICICI Prudential Aggressive plan -Growth.As standard deviation is a measure of total risk assumed by securities i.e both systematic andunsystematic risk it means there must be some specific security present in SBI Magnum Equityfund and Reliance Equity fund that is causing more variability in returns. Beta is used as ameasure of systematic risk only and as shown in table above again SBI magnum equity plan-Growth is showing higher level of β=0.92 whereas ICICI prudential Aggressive plan has been atleast level with β= 0.59. Data given in above table can not infer that SBI mutual fund are mostrisky, however it can be interpreted that this plan is suitable particularly for those investors whowant to avail the superlative advantage of market movements as beta signify fluctuation in NAVof a fund vis-à-vis market. Higher level of Beta in case of SBI and Reliance equity plan signifythat their NAVs are more responsive to market.Treynor index of all the four equity fund schemes is showing unfavorable performance as thisparticular measure signify the ratio of return generated by fund over and above risk free return.With regard to this parameter all the four funds are showing negative performance with anegligible difference. Reliance and ICICI Prudential equity funds are showing their equatingunderperformance with negative T i = –0.69. Similarly Sharpe ratio shown in table 3 is showingthe underperformance of all mutual funds taken under sample. Sharpe ratio depicts reward perunit of total risk and in our results all the four funds are showing underperformance with a verythin ignorable difference as Reliance equity fund has an S i =-0.12 and SBI Equity fund has S i =-0.10. Fama as a quantitative measure of risk is here depicting the compared performance ofreturn with required return corresponding to total risk associated with it. SBI Magnum equityfund with highest level of Fama indicates that fund manager has earned returns well above thereturn corresponding to level of risk taken by him whereas UTI Equity fund with lowest level ofFama = 0.02 concludes the poor stock selection skills of fund manager in comparison to otherfunds taken under sample. This particular comparison reveals the fact that out of these fourEquity funds taken under sample SBI Magnum Equity fund is performing reasonably well byproviding excess return over and above required rate of return to compensate total risk assumed.However, Lower level of Fama in case of UTI Equity fund-Growth signify lower level of riskassumed by fund manager and thus it will be suitable more for risk averse investors.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 75

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 54.2 Analysis of Income FundsIncome funds are especially designed for conservative investors who want to get regular periodicincome from their investment instead of capital appreciation with least risk bearing securities intheir portfolio. Majority of investments that comprise of the portfolio of income fund rangesfrom preferred stock, money market instruments, bonds and government securities. Investmentof these funds in low risk bearing securities does not assure average return higher than risk freereturn. Analysis of four income funds under our study show that ICICI Prudential income fund-Growth provides highest variation in NAV during preceding 52 weeks with Range (R) band6.67. UTI Bond fund-Growth are also showing even higher level of variation R= 4.90 (Table 1).Comparison of Expense ratio, which highlights the operational efficiency of fund, also showsthat SBI Magnum Income fund-Growth bears highest expense ratio of 1.85% whereas UTI BondFund-growth bears the lowest expense ratio of 1.40% among the four funds under our samplestudy. Table 2 provides the detailed comparison of historic as well as current returns provided byselected sample funds under the study. An analysis of these returns are clearly depicting thatfinancial crisis putting its impact on all industries has resulted into negative returns for all thefunds during last one year. However in case of income funds private sector funds i.e Relianceincome fund –Growth and ICICI Prudential income fund-Growth are providing pretty goodreturns than public sector funds with ICICI providing highest return of 22.68% during last oneyear and SBI Magnum income fund growth providing lowest return of 3.64%. Analysis ofaverage returns during last three years and five years also declare ICICI Prudential and Relianceincome funds providing higher returns than public sector funds. Table 3 highlights thecomparative risks assumed by different fund schemes. Although comparison of standarddeviation of four funds under study does not reveal any significant difference however ICICIPrudential income fund- growth shows highest fluctuations in returns provided to investors withσ = 1.47 whereas SBI Magnum Income fund-Growth shows lowest fluctuations with σ = 1.03.Unlike balanced and equity funds Sharpe ratio in this case does not show negative results.Highest S i = 0.25 as shown by ICICI Prudential income fund- growth highlights the superiorperformance of fund in comparison to other four funds whereas SBI Magnum income fund withS i= 0.02 shows the underperformance of fund. ICICI prudential income fund-growth with β=11.85 and Reliance income fund-Growth with β= 10.57 explains the intense ability of fund’sCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 76

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5responsiveness to market changes whereas SBI Magnum income fund with β= 6.73 explainsthat this fund is least responsive to market fluctuations. Comparative analysis of Treynor (T i)shows that any fund is not able to provide extreme superior returns over and above risk freereturn and all the funds are ranging in a domain of little significant difference. Risk measure interms of Fama provides negative results for all the four funds that explain that any fund is notable to provide return above the required rate of return.4.3 Analysis of Balanced FundsBalanced fund is a perfect choice for the investors who wish to invest in scheme that can providethem a blend of capital appreciation along with income. Funds collected from unit holders in thiscase are invested in stock, money market instruments and bonds. Although balanced funds areassumed to be less risky than equity funds because of less proportion of funds invested in equityshares yet they are subject to market fluctuations. Balanced funds select some stocks of wellperforming sector and some designated proportion is invested in government securities andbonds making it a well-diversified portfolio. Data in Table 1 highlight the most importantparameters that are evaluated before selecting a particular fact. Among these four funds underour study UTI balanced fund is considered to be performing well with highest NAV but it alsoshow higher volatility with Range= 22.52, whereas Reliance balanced fund seem to move slowlywith highest NAV 16.30 during last 52 weeks whereas it also show less volatility as compared toother funds with range of variation being 6.99. SBI Magnum Balanced Fund-Growth bearsmaximum expense ratio of 2.50% whereas Reliance balanced fund has expense ratio of 2.25%that makes it clear that all funds do not show any meaningful variation with respect to expenseratio. Comparison of portfolio turnover ratio of these funds reveal that Reliance Balanced fundhas highest portfolio turnover ratio of 157% which at some time restrict investors willing toinvest in this fund but comparison of returns provided by this fund highlight that this fund isproviding highest returns to investors as compared to other funds under our study that will subset the extra cost born by fund. Secondary data compiled in table 2 provides a detailedcomparison of historical and current returns provided by selective funds under our study thatreveals that during past performance SBI Magnum balanced fund outperforms all other fundswith highest return however during last one month Reliance Balanced fund provides highestCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 77

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5return of 22.30%. ICICI Prudential Balanced fund is not showing a positive working style with –4.51% return during last one year and 15.69% return during last one month, which iscomparatively awfully less than other funds.Data in table 3 reveals the various risk estimations of four funds under the sample study thathighlights the variation in returns generated by these funds. Most widely accepted measure ofvariation in data is σ and a comparative estimations of selected funds show that UTI balancedfund-growth has least fluctuations in returns provided by them to the investors with σ=3.61.Reliance Balanced fund-growth shows highest variation in returns with σ = 4.35. Beta (β) as arisk measure estimates only systematic risk present in securities held by individual fund scheme.Analysis of (β) of these four funds does not show a significant difference except only RelianceBalanced Fund-Growth least risky among four funds with β= 1.08. Global crisis putting itsimpact on mutual fund industry in India is clearly reflected from negative Treynor (T i ) in all thefour funds. This particular measure signifies the ratio of return generated by fund over and aboverisk free return. UTI Balanced fund-Growth and ICICI Prudential fund-Growth are showingsimilar Ti =-0.48 whereas Reliance Balanced fund shows T i =-0.16. Sharpe ratio depicts rewardper unit of total risk and in our results all the four funds are showing underperformance with avery thin ignorable difference. Fama as a quantitative measure of risk is here depicting thecompared performance of return with required return corresponding to total risk associated withit. Reliance Balanced fund –Growth with high Fama implies that fund manager is able to provehis managerial skills in order to tap market returns whereas UTI Balanced fund-Growth withnegative Fama signifies that fund manager did not performed well to avail the recent up trends inmarket.5. Portfolio diversification: Analysis of Asset mixDifferent investment styles of fund manager are reflected from the diversified portfolio designedby them. These sophisticated strategies adopted by fund managers help them in outperformingtheir performance in comparison to their competitors. Aggressive style of fund managers forcethem to design portfolio with highly risky securities that have tendency to provide high returnswhereas conservative fund managers select securities for their portfolios with minimum expectedrisk and expected calculated returns. However fund managers have to match their knowledge andCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 78

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5investment skills in accordance of investment objectives set by investors. A comparative analysisof portfolio designed by fund managers reveals that among equity-growth fund scheme as per theinvestor’s expectations majority proportion is invested in equity stock that may be risky but hashigh growth potential in terms of regular return and capital appreciation (Table 4). Among fourfunds under study SBI magnum equity fund growth invests majority of funds in equity stock i.e.88.34% whereas ICICI Prudential equity fund growth seems to be taking calculated risk byinvesting only 70.86% funds in equity stock but this high level risk taken by SBI magnum equityfund seems to be paying it highest return 27.31% during last one month whereas ICICIPrudential equity fund- growth gets only 15.03% during same period. In addition to this analysisalso provide that additional risk borne by SBI magnum equity fund- growth has resulted inhighest negative returns –1.85% during last one year when bearish trend was following Indianstock market whereas ICICI Prudential equity fund- growth with its strategy of assumingcalculated risk resulted in –1.03% returns in the same period. Reliance equity fund seems to beadopting a different investment style by assuming high risk for 76.44% investment whereby23.56% investment is held completely risk free as liquid current asset. Ability of fund managerto maintain equilibrium in risk return trade off under this fund resulted in comparatively highreturn of 22.54% during last one month and during negative trends following global financialmarkets Reliance equity fund proved to be least risky with –0.52% returns. UTI equity fundgrowthalso seems to follow a same pattern of SBI magnum equity fund investing more in equitystock (86.36%) but stock selection abilities of fund manager are doubtful in this case as theyprovided 19.04% return during last one month which was comparatively pretty less than 27.31%provided by SBI magnum-equity fund for same proportion of equity stock held in their portfoliowhereas comparison of returns during last one year also show that fund provided highestnegative return (-4.73%) among four fund funds under study.Analysis of balanced growth scheme (Table 4) reveals that UTI Balanced fund held maximumproportion of their stock in equity shares (79.50%) and ICICI Prudential balanced fund held lessproportion in equity stock (57.28%) and a significant gap of returns earned by two funds 20.93%and 15.69% respectively during last one month can be reasoned out as high risk assumed by UTIBalanced fund. Reliance balanced fund again adopts a completely different investment style with67.21% investment in highly risky equity stock and holding remaining funds as a complete riskCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 79

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5free investment. This investment style adopted by Reliance fund manager have resulted themyielding highest return 19.39% during last one year in comparison to SBI Magnum that invested71.69% of total portfolio funds in highly risky equity stock but yield only 6.7% return duringsame period. These results reveal that stock selection capability of fund manager and hisinvestment style decides the extent up to which a particular fund can satisfy investor’sinvestment objectives. Comparison of SBI magnum balanced fund and UTI balanced fund alsoreveal that although both the fund manager believed in putting more proportion of fund in equitysecurities yet fund manager of UTI Balanced fund seem to be less sharp and analytic ascompared to SBI Balanced fund as difference in stock selection philosophy of fund managersresult in significant gap between the returns provided by these funds with respective risksassumed.Comparison of income funds of these four AMCs reveals that as per the fund scheme these fundsare designed for risk averse investors so no proportion of fund is held in equity stock. Fundportfolio is invested in either debt or liquid current assets that are known to be completely riskfree. Among these funds under study ICICI Prudential invst huge proportion of funds in debtsecurities (97.15%) whereas UTI Bond fund with similar vision invest only 63.18% in debt.Comparison of return during last one month yield negative returns for all the funds but returnscalculated during last one year reveals that ICICI Prudential income fund was able to gain prettywell (22.68%) for the level of risk assumed whereas UTI Bond fund yield 8.83% return duringthe same period. SBI magnum Income fund has been showing underperformance as compared toother funds under study with 75.04% investment in debt it yields lowest return 3.64% during lastone year. Again this poor performance of SBI magnum Income fund can be attributed to the incompetencies of fund manager’s stock selection capabilities. Reliance income fund with 72.46%investment in debt securities performs well with its well - designed strategies and yield 15.38%return during last year. Thus, overall investment styles of these selected funds reveal that fundmanager’s vision, investment style and stock selection capability make a significant difference inreturns they offer at a calculated risk.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 80

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 56. ConclusionIncreased risk appetite of investors along with improved regulations of financial market hasattracted the attention of investors towards mutual funds. Comparative analysis of selected fundsoperating in India reveals that a fund manager with different investment style of deciding assetmixes for their portfolio certainly yields higher returns. A general assumption of assuming highrisk by investing in equity stock to yield higher return does not sound valid in absence ofdiligence of fund managers’ knowledge. Financial performance of Reliance Mutual funds revealsthat dissimilar style adopted by fund managers have yield higher return with least calculated riskbecause of their precision in deciding asset mix for their portfolios. SBI magnum fund seems tobe performing well with highest returns offered by them in case of equity-growth and balancedgrowthfunds but analysis of their investment style and asset mix reveals that they assumedmaximum risk by investing maximum funds in equity stock. To conclude investors should notonly consider past performance of funds in order to select AMC for their investment butportfolio evaluation with regard to fund manager’s thoroughness in deciding asset mix is animportant criteria that will eventually match vision of fund managers with investor’s satisfaction.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 81

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesAnderson, J. (1991), Cognitive Architecture in a rational Analysis, Page1-24, Lawrence ErlbaumAssociates, Hillsdale.Bello, Zakri.Y., (2005) “Socially responsible investing and portfolio diversification”, TheJournal of Financial Research, Vol.XXVIII, No.1, pp. 41-57.De Bondt, Werner (1993), “Betting on trends: Intuitive forecast of financial risk and return”International Journal of forecasting, 9(3), Pages 355-371.Fama, E.F., (1972) “Components of Investments Performance’, Journal of Finance, (June), pp.551-567Fisher, Kanneth, and Meier Statman (2000). “Investor sentiments and stock returns” FinancialAnalyst Journal, March/April, Pages 16-23.Gottesman, Aron.A. & Morey, Matthew.R(2006) “ Manager Education & Mutual FundPerformance”, Journal of Empirical Finance, Vol.13, pp. 145-182.Haslem, J.A., (1988) “Investor’s Guide to Mutual Funds’, Prentice Hall International, USA. pp.24-98.Kane, Edward (1978), “Interaction of financial and regulatory innovation”, American EconomicReview, May issue, No. 2.Neal,Edward.S.,(2001) “ Window dressing and Equity mutual funds”,(Accessed online)(www.papers.ssrn.com)Panwar,Sharad & Madhumati, R.(2006) “ Characteristic and Performance evaluation of selectedmutual funds in India”(Accessed online) (www.papers.ssrn.com)Sharpe, W.F. (1966) `Mutual Fund Performance’, Journal of Business, XXXIX, Part-2 (January),pp.119-138Treynor, J.L., (1965) “How to Rate Management of Investment Funds’, Harward BusinessReview, January-February, 1965, pp.63-75.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 82

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5AnnexureTable 1Fund FactsEquity - GrowthBalanced - GrowthIncome - GrowthFundNAV 52-weekHighNAV 52-weeklowExpense Ratio(Ep) (%)PortfolioTurnoverratio(%)UTI equity fund 37.88 23.63 1.94 58.65SBI magnum Equity Fund 32.84 17.51 2.50 48Reliance equity Fund 13.46 8.21 1.89 114ICICI Prudential Aggressive plan 23.1 15.72 0.64 NAUTI Balanced fund 62.8 40.28 2.07 43.14SBI magnum Balanced Fund 42.05 25.55 2.50 70Reliance Balanced Fund 16.30 9.31 2.25 157ICICI Prudential Balanced 36.38 23.17 2.29 1.48UTI Bond fund 28.12 23.22 1.4 1010.6SBI magnum Income Fund 22.9 20.35 1.85 NAReliance Income Fund 14.65 11.88 1.48 NAICICI Prudential Income 30.02 23.35 1.7 NASource: AMFICOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 83

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Table 2 Fund Performance-Return (%)Fund 1 month 3 Month 6 Month 1 Year 3 year 5YearEquity - GrowthBalanced - GrowthIncome - GrowthUTI equity fund 19.04 50.86 45.03 -4.73 14.23 21.97SBI magnum Equity Fund 27.31 77.31 62.14 -1.85 19.59 27.47Reliance equity Fund 22.24 56.36 39.28 -0.52 15.06 NAICICI Prudential Aggressive plan 15.03 42.11 37.43 -1.03 12.4 19.56UTI Balanced fund 20.93 51.34 39.2 6.23 11.18 17.03SBI magnum Balanced Fund 22.03 60.02 44.69 6.7 15.17 26.48Reliance Balanced Fund 22.30 70.87 54.47 19.39 14.30 NAICICI Prudential Balanced 15.69 40.09 31.39 -4.51 8.25 18.24UTI Bond fund -0.62 2.93 -2.13 8.83 6.99 6.33SBI magnum Income Fund -0.73 2.57 -1.03 3.64 4.02 3.16Reliance Income Fund -0.92 3.07 1 15.38 10.5 7.7ICICI Prudential Income -0.71 6.54 3.49 22.68 12.12 8.14COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 84

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Table 3 Analysis of Systematic & Unsystematic riskFund Mean SD S i β T i Correlation FamaEquity - GrowthBalanced - GrowthUTI equity fund -0.39 4.07 -0.12 0.68 -0.73 0.68 0.02SBI magnum Equity Fund -0.46 5.48 -0.1 0.92 -0.61 0.92 0.13Reliance equity Fund -0.4 4.33 -0.12 0.73 -0.69 0.72 0.05ICICI Prudential Aggressive plan -0.3 3.6 -0.11 0.59 -0.69 0.58 0.04UTI Balanced fund -0.34 3.61 -0.12 0.91 -0.48 0.93 -0.05SBI magnum Balanced Fund -0.34 4.08 -0.11 1.05 -0.42 1.06 0.01Reliance Balanced Fund -0.07 4.35 -0.04 1.08 -0.16 1.10 0.30ICICI Prudential Balanced -0.35 4.01 -0.11 0.96 -0.48 0.98 0.02Income - GrowthUTI Bond fund 0.23 1.36 0.09 8.48 0.02 8.32 -1.65SBI magnum Income Fund 0.13 1.03 0.02 6.73 0 6.6 -1.32Reliance Income Fund -0.36 1.32 0.19 10.57 0.02 10.38 -1.47ICICI Prudential Income 0.48 1.47 0.25 11.85 0.03 11.59 -1.55COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 85

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Table 4Portfolio AllocationEquity –GrowthBalanced –GrowthIncome -GrowthFund Equity(%) Debt(%) Others(%)UTI equity fund 86.36 3.20 10.44SBI magnum Equity Fund 88.34 1.49 10.17Reliance equity Fund 76.44 Nil 23.56ICICI Prudential Aggressive plan 70.86 29.14 NilUTI Balanced fund 79.50 17.12 3.38SBI magnum Balanced Fund 71.69 13.52 14.79Reliance Balanced Fund 67.21 Nil 32.79ICICI Prudential Balanced 57.28 8.15 34.57UTI Bond fund Nil 63.18 36.82SBI magnum Income Fund Nil 75.04 24.96Reliance Income Fund Nil 72.46 27.54ICICI Prudential Income Nil 97.15 2.85COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 86

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSOptimization of Design Constraining Factors to ProjectManagement Success of Public and Private SectorConstruction in Nigeria (An Analytical Approach)SEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SDr. C.C Nwachukwu ANIVSFCRMI, Lecturer, Project Management Technology Department, Federal University ofTechnology, Owerri, Imo State, Nigeria, West Africa.AbstractThe failure of many capital projects in the construction sector in Nigeria seems to have emanatedfrom poor design. Looking at it as a virus silently eating into the fabrics of the growth ofconstruction industry in particular and the economy in general called for this analysis. The aim isto identify these factors, determine their individual effect to construction project managementsuccess in Nigeria. Issues that concerns design in any project cannot be undermined as theyprovide perfect guide to the system and the initiators of the project proposals. The study ofdesign related factors to project success is therefore very relevant as any constrain to the successin the construction sector has a significant effect on the overall economic growth of the nation.Data analyses on the subject were computed based on their Relative Relevance Indices ofAttributes. Factor analysis was used to collapse the variables to fewer but interrelated variables.The major finding is that the design factors exact high level negative influence to success in theconstruction project management in Nigeria.Key Words: Analysis of Design, Relative Relevance, Constraints to Project Success1. IntroductionSystems design is like a compass that guide developmental process in both the construction andproduction sectors of the economy. The role of design in the construction industry cannot be overemphasized as it gives direction to the implementation process. The conception stage of anyproject proposal anchors on the effectiveness of design. A good design is always clear onmaterial and time specifications which enables the Quantity Surveyor and other project plannersdetermine realistic time and cost of the project proposal. The client and the financiers relyheavily on appraisal guide for the initial decision to embark on the project proposal. Therefore,any ambiguity will send the wrong signal that will result to an eventual failure or abandonmentCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 87

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5of the implementation process. The findings will help project planners and implementers todesign and execute successful construction projects thereby reducing the rate at which projectsfail, abandoned and or collapse in Nigeria. However, design related factors on its self can notassure project management success in the construction industry as an index without a holisticanalysis of other constraining factors from other subsystems.2. Objective of the StudyThe study is aimed at identifying and analyzing design factors constraining project managementsuccess of private and public sector construction in Nigeria. The analysis will reflect the strengthof each factor and the rate at which it influences failure, abandonment and collapse ofconstruction projects in Nigeria. The result of the findings if implemented is expected to reducethe rate at which projects fail in Nigeria environment.3. MethodologyData for the analysis was through direct and indirect sources. A five point-Likert scale formatwas used in the questionnaire design. Factor analysis was used to collapse the variables to fewerbut interrelated variables; the ANOVA was used to confirm the differences in the level ofrelevance of these factors constraining project success. The analysis focused on clients relatedproblems in the construction of Imo State secretariat by ten different construction firms, theconstruction of Owerri Onitsha road and the construction of Oceanic bank building alongDouglas road Owerri, all in Eastern Nigeria, West African Sub-Region. The analytical formula isRRId = ∑di/DI x 1004. Literature Review/ Historical Background of the StudyConstruction industry has been ranked among the top four out of about twenty economic sectorsin terms of inter-sector linkages. The importance of this sector as an agent of development isenhanced by its ability to provide gainful employment for the teeming population of the nation.According to Roy (2005) “it is evidenced that noticeable development and the aesthetictransformation of the environment is bound up with and predicated on the construction industry”.Construction industry is a major index as a factor in the social and political integration of thesociety and ranks as one of the major budgetary areas of developing economies (Nwachukwu,2008). The construction industry is proven to be the corner stone and bedrock of rapid economicCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 88

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5growth of any nation (Bhavesh, 2006). The products of construction industry are desired not fortheir own sake, but for the services, which they help to create as any business; social, religious,economic, industrial activities etc must have a base in form of structure (Nwachukwu, 2008).According to Eric, 2003, “the industry is likely to remain a major area of development activity asthe need for the provision and replacement of infrastructure become more important in the yearsahead”. The factors that constrain success in project management implementation process, whichinclude time, cost, quality and material as direct factors and indirect factors of Environment,Client, Project management, Design and construction seems not to have been addressedholistically using systems approach. The end result is huge capital expenditure with few or nosuccessful projects to show for it. This research is limited to the design factors as part of theindirect factors constraining project management success of public and private sectorconstruction in Nigeria. Project success constrains as a system are inter-related and havesignificant effect individually and collectively on both public and private sectors of the economy,therefore, no subsystem should be underrated.5. Design Subsystem FactorsThe system designers could be in-house (from the client’s organizations) or consultants fromoutside organizations and these make-up the project team. Variables of the design organizationrelevant to success include the following: The inability of choosing the right team of designers,poor payment strategies in paying designers, Designers are not given adequate authority andfreehand to perform effectively, Some designers do not use modern planning techniques indesigning complex projects, the use of ill-experienced design team in major constructionprojects, Some clients inability to be realistic and thorough in the definition of the scope ofproject before execution, Lack of commitment to the implementation process by the design team,Inability of the client to show commitment in motivating the design team, Implementingambiguous design which can not help in achieving cost schedule and quality objectives, ease inapproving or giving change orders (variations) without thorough consideration of effects onproject objectives by the design team and the client, design not frozen once there is an agreementon cost, time and quality control system by the design team, bribery and corruption of the designteam in case of public projects in producing quality and environmental friendly design,specification of unsuitable and foreign imported materials that may not be environmentallyCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 89

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5friendly, recommendation of unsuitable contractors by the design team in relation to somespecial works, Lack of effective communication among the design team and other projectstakeholders, managerial competence of the Architect if he leads the design team especially inhandling conflicts within the design team, location problems that prevent designers fromattending to project briefing on site, and design team’s timely response to request forinformation and approvals by the project manager.6. Research ModelThe model below was developed as a holistic systems approach to solving the problem of projectfailure, abandonment, and frequent collapse of constructed structures in Nigeria. The arrows inthe model show how the variables interrelate and are intra-dependent. However, this studyconcentrated on design subsystem factors as an integral part of the whole system constraints toproject success.TIMESUBSYSTEMCLIENTSUBSYSTEPROJECTMANAGEMENTCOSTSUBSYSTEMENVIRONMENTALSUBSYSTEMMATERIALSSUBSYSTEMCONSTRUCTIONSUBSYSTEMDESIGNSUBSYSTEQUALITYSUBSYSTEMFigure 1: The Construction Project Management Success Interactive Modelcomposed by the researcher based on existing literature.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 90

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 57. Public Sector Design Principal Factor Analysis ResultsPublic sector construction principal factor analysis results show that the factors extracted fromthe public sector construction accounted for 90% of the total variance. One of the major factorsaccounted for 51.0% of the variance and the next factor for only 10% of the total variations, thethird factor accounted for about 11%, while the remaining factor accounted for only 9%. Thestrongest factor in the design subsystem variable loadings are communication gap betweenproject team, availability of designers to attend to the project and designers timely response torequest for information, approvals, etc. most of the variables load highly and these include- timeand quality control system, recommendation of unsuitable contractor, managerial competence ofthe architect, and conflict within design team, adequacy of remuneration of designers and theirauthority and responsibility, adequate use of modern planning techniques by designers, detailedand their authority and responsibility, adequate use of modern planning techniques by designers,detailed scope definition, build-ability of design, attitude towards and adequacy of cost. The thirdvariable, planning efforts using modern planning techniques loads high. This factor is thereforeidentified as the adequacy of authority and remuneration of design team and their use of modernplanning techniques. The last serious factor is the method and adequacy of remuneration ofdesign team and the adequacy of the authority free hand giving to them.TABLE 1: DESIGN SUBSYSTEM EIGEN VALUES PERCENTAGE VARIANCEFACTORSA – PUBLICB – PRIVATEFactors Eigenvalues PercentageCumulativeEigenvaluesPercentageCumulativevariancepercentage variancevariancepercentagevariance1.1.0028051.0511.0059055.055.02.0.0034010.0610.0053016.071.03.0.0019011.072.00.0047018.089.04.0.0063009.090.0Source: Derived From Computer Analysis ResultThe success of the design subsystem in the public sector construction is determined by thefollowing factors: - specifying unsuitable and imported materials and ease of giving variationsCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 91

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5and the adequacy of the authority and remuneration design team and their use of modernplanning techniques, competent design teams commitment to detailed scope definition, economicdesign and the achievement of cost, schedule and quality objectives, design team’srecommendation of unsuitable contractors, the efficiency and effectiveness of the design teamand the adequacy of cost, time and quality control system by the design team.In the design subsystem, the variables that load moderately and were choosing for this subsystemanalysis are; the right team of designers, ease of approving or giving change orders, bribery andcorruption of the design team and the specification of unsuitable and imported materials. Thisfactor is represented by seventeen variables and was identified as efficient, responsible andcommitted design team, detailed scope definition, recommending competent contractors, allworking together with the overall purposes of achieving cost, time, quality and materialspecification standards as an integral aspect of the construction project management successimperatives.8. Public Sector Design Subsystem Orthogonally Varimax Rotated FactorsThe public sector design subsystem orthogonally varimax rotated factors shows that the strongestfactor in this subsystem that exerts great influence on project success is the efficiency andeffectiveness of the design team and the adequacy of cost, time, quality and materialmanagement control systems. The most highly loading variables are conflict within the designteam and the availability of the designers to attend to the project needs. The other highly loadingvariables are the communication gap between the project team and the adequacy of cost, time,quality and material control system by the design team. The moderately loading variable is thedesign team’s timely response to request for information, approvals. The last but not the least isthe managerial competence of the design team’s leader. The next factor is the ability to choosethe right team of designers and commitment, attitude, and responsibility of designers inachieving cost, schedule and quality objectives loading very high. One variable, realistic andthrough definition of scope load highly. The last variable is the build ability of design, loadmoderately. This factor is regarded as competent design team’s commitment to detailed scopedefinition, economic design, quality objective, achievement of cost and schedule initiatives.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 92

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5TABLE 2: DESIGN SUBSYSTEMSFactor Variable grouping into Dimensions No of Factor Namevariablesloaded perfactor1. D1 D2 D3 D4 D5 D6 D7 D8Efficient, responsible and0.00233 0.00022 0.00869 0.00383 0.00975 0.00766 0.00626 0.00212 14committed design team, detailD9 D10 D11 D12 D13 D14 D15 D16scope definition,0.00995 0.00996 0.00500 0.00813 0.00052 0.00918 0.00786 0.00641recommending competentcontractors all workingamicably together with theoverall purpose of achievingcost, time & quality standard2.NIL NIL NIL3. NIL NIL NIL4. NIL NIL NILSource: Computer Analysis ResultVARIABLE GROUPING INTO DIMENSIONS USING PRINCIPAL FACTORS;Table 3: Public Sector Construction and B - Private Sector ConstructionFactor Variable grouping into Dimensions No ofvariablesloaded perfactorFactor Name1. D1 D4 D5 D6 D7 D8 D9 D100.00375 0.00516 0.00995 0.00685 0.00247 0.00805 0.00286 0.00518D11 D12 D13 D14 D15 D16 D170.00595 0.00352 0.00403 0.00801 0.00593 0.00270 0.0014315Managerial capability,technical competence &commitment towardsachieving cost, schedule& quality control targetsby the design team2. D2 D3Adequate authority and0.00774 0.00289 2 remuneration of designteam3. NIL NIL NILSource: Computer Analysis ResultCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 93

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5DESIGN VARIABLE GROUPING INTO DIMENSIONSTable 4: Public Sector Constructionfactor variable grouping into dimensions no of factor namevariablesloaded perfactor1. D9 D13 D14 D15 D16 D17The efficiency and effectiveness of the design0.00650 0.00617 0.00459 0.00052 0.00279 0.00648 5team & adequacy of cost, time and qualitycontrol systems by the design team2. D1 D5 D6 D74 Competent designers committed to detailed0.00062 0.00169 0.00572 0.00233scope definition on, economic design &achieving cost, schedule and quality objectives3. D8 D10 D11 D124 Designers recommendation of unsuitable0.00816 0.00654 0.00599 0.00123contractors, imported materials & the ease ofgiving variations4. D2 D3 D41 The adequacy of the authority & remuneration0.00793 0.00052 0.00159of designers & their modern planningtechniquesSource: Computer Analysis ResultTABLE 5: PRIVATE SECTOR CONSTRUCTIONFact Variable grouping into DimensionsNo of Factor Nameorvariablesloadedperfactor1. D4 D5 D6 D7 D9 D12 D13 D14Detailed scope definition, economic0.00962 0.005790 0.00586 0.00053 0.00292 0.00040 0.00242 0.00855 5 design & commitment towardsachieving cost, time & qualitytargets2. D8 D10 D11 D15 D16 D175 Bribery and corruption, specifying0.00107 0.00051 0.00496 0.00774 0.00507 0.004962unsuitable materials, variationconflict resolution & the availabilityof the designers to attend to theproject3. D1 D2 D34 Competent designers with adequate0.00500 0.0015 0.00681authority and remunerationSource: Computer Analysis ResultCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 94

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 59. Private Sector Design Subsystems Factor Analysis Results Using Principal FactorsThe private sector design subsystems factor analysis results using principal factors shows that thefactors extracted in construction in design subsystem accounted for about 89.0% of the totalvariance. One of the dominant factors accounted for 55.0% of the variance; the second for only16% of the total variation in data input; the third for 18%. The first and strongest factor describesalmost all the design subsystem variable, except the method and adequacy of remuneration ofdesign team and the adequacy of authority and free hand giving to them which loaded on thesecond factor. Some of the variables load very high, others loads high and moderatelyrespectively. The variables that load very high include: commitment, attitude and responsibilityof design team in the achievement of cost, schedule and quality objectives, the adequacy ofplanning efforts using modern planning techniques, the adequacy of cost, time and qualitycontrol by the deign team, communication gap between the project team and the managerialcompetence of the design team leader. The variables that loads high includes; choosing the rightteam of designers, build ability of design, specification of unsuitable and foreign importedmaterial, recommendation of unsuitable contractor, conflict within the design team,distance/location/availability of the design team and the design team’s timely response to requestfor information, approvals etc. the three variables that load moderately include; realistic andthorough definition of the scope of the project before site work. Ease of approving or givingchange orders and the bribery and corruption of the design team. The next variables that loadmoderately are method and adequate remuneration of design team and the adequacy of authority,and freehand giving to the design team. The last factor is defined by no variable and the loadingsof all these variables are relatively low. In summary, the principal factors that cause designsubsystem failures are directly and indirectly affected by the cost, time, quality and materialmanagement. The target of private sector construction include how to achieve technicalcompetency, optimal in achieving cost, time, quality and materials specifications by the designteam, enhancing managerial skills, and given adequate authority commensurate withremuneration.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 95

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 510. Private Sector Design Subsystem Factor Analysis Using Orthogonally Varimax RotatedFactorsPrivate sector design subsystem Factor analysis using orthogonally varimax rotated factorsshows that the three factors having Eigen value greater than 0.01 are extracted from the factormatrix. The first and dominant factor, is defined by eight out of fifteen variables, the second isdefined by six variables and third factor by one variable only. Some of the variables loaded veryhigh, others loaded high, moderately and low respectively. The two very high loaded variablesare the build ability of design and commitment, attitude and the responsibility of design tem inachieving cost, schedule and quality objectives. The two highly variables are the realistic andthorough definition of scope of project before site works are communication gaps between team.The three moderately loading variables are the adequacy of planning efforts using modernplanning techniques, adequacy of cost, time and quality control system by the design team. Andthe recommendation of unsuitable contractor’s .The last variables, loading low is the managerialcompetence of the design team leader. This facto is termed “detailed scope definition, economicdesign and commitment towards achieving cost, time and quality targets.The variables loading highly are bribery and corruption of design team and specification ofunsuitable and foreign imported materials. The next set of variables that load highly are ease ofapproving or giving change order, conflict with the design team, distance, location and theavailability of the design team. The only variable that loads moderately is the design team’stimely response to request for information. This factor is identified as “bribery and corruption,specifying unsuitable materials, variations, conflict resolution and the availability of the designteam to attend to the project.The last factor from the design subsystem is the ability to choose the right team, methods,prompt remuneration of the design team, the adequacy of authority and free hand giving to thedesign team. In summary, the success of the private sector construction project managementfrom the design subsystem, using orthogonally varimax rotated factor are determined by:-specifying unsuitable materials, giving variations, conflict resolution and the availability of thedesign team to attend to the project and competent design team with adequate authority andremuneration, detailed scope definition, economic design and commitment towards achievingcost, time, quality and materials management targets and finally bribery and corruption.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 96

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 511. ConclusionConstruction sector is seen as the pivot on which every other activity in the economy rotates. Thesignificance of this sector is evidenced in the fact that every business or services must have anaddress, a location in the environment which must be constructed. Therefore, any effort towardsreducing or eliminating the noticeable and silent constrains that directly or indirectly affectproject management success in this sector is a right step in the right direction. Most of theconstraining factors from the design in the public sector came as a result of the systemsinefficiency in employing competent personnel, consultants and contractors to handle design as amajor activity. There should be a thorough scope definition of the project with a clear analysis ofreal cost, time, quality and material targets at the conception stage.12. RecommendationsCompetent professionals from the design sub-sector should be giving free-hand to performespecially in the public sector construction. Attempt must be made to divorce political issuesfrom purely technical and managerial issues involved in construction project managementsuccess. The conception stage which houses the design should handle subsequently any problemof thorough scope definition of project details before or after the commencement of site works.The managerial functions of project management should be separate from the technical functionof the design team. A project manager should be appointed early enough in the project life cycleto handle the management from inception to completion. This project manager, in conjunctionwith the design team members should define the scope of the works in detail in terms of what theconstruction project will cost.The use of modern project management planning and controltechnique methods should be used especially in designing complex projects to achieve therequired quality and environmental targets.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 97

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesAshley, D.B and Lurie, L.S. (2004) Determination of Construction Project Success, ProjectManagement Journal, Vol. XVII No. 2. PP146Baker, M .L (2002) Materials Management Systems Analysis and Project Management, Vol 4.No 8.PP 45.Bhavesh, .M. P (2006) Project Management Strategy Financial Planning,Evaluation andControl, New Delhi, PTV Ltd.Cleland, D.I. and King, W.R. (1988) Project Stakeholders Management, ProjectManagement Journal, Vol. 17, No.4. PP 36CLELAND, D.I (1986) Project management Handbook, Second Edition, New York, U.S.A VanNostrand Reinhold, PP 964Dugun, S.L. and Barry, B.U. (2006), Construction Planning Effects. Journal ofConstruction Engineering and Management. Vo. 115 No. 1 PP 70.Eric, C.E., (2003) Facility Design and Management Hand book, London, McGraw-Hill, PP 531Harold, K. R (2004) Project Management A Systems Approach to Planning Scheduling andControlling, New Delhi, India. S.K Jain Publishers,pp68Hayfield, F. (2006) “Basic Factors for a Successful Project” Proceedings of 6 thInternational Congress, Garmisch Partenkirchen, Federal Republic of Germany.Macomber, E.A (2008) “Reforming Project Management”http:///weblog.halmacomber.com// 5/4/2006Milosevic, D.Z. (2007) Systems Approach to Strategic Project Management.International Journal of Project Management. Vol.7 No.3. PP57Ninos, G.E. and Wearne, S.H (2005) “Control of Projects During Construction”.Proceedings of Institute of Civil Engineers, Part 1, 8 th August 80 EngineeringManagement Groups:PP 913.Nwachukwu, CC (2008) Analysis of Factors that Constrain Project Management Success ofPublic and Private Sector Construction in Nigeria, An unpublished Ph.D Thesis, FederalUniversity of Technology, Owerri.Roy, P.D. (2005) the Construction Project Manager and Human Group Theories Cost Engineering,vol. 31 No. 7PP10COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 98

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSHRD roles and competencies: A comparative study ofPakistan and China using ASTD modelSEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SHassan RasoolUniversity of AgricultureFuwad BashirUniversity of AgricultureMuhammad Ismail RamayInternational Islamic UniversityAbstractThis study provides an in sight to the roles and competencies exhibited by HRD professionals inPakistan. Results show that ASTD model is helpful in the development of HRD in Pakistan. Thereare similarities between HRD practices of Pakistan and China. For Pakistan, dominant work rolefor HRD professionals is of an Administrator and associated competency is relationship buildingskill. Organizational change agent, instructor and evaluator roles are perceived important in future.Keywords: Roles, Competencies, HRD1. Introduction & Literature ReviewIn Pakistan, many public and private organizations have started understanding the significance ofhuman resource development. As Human resource function has started gaining importance,existing HRD practices are transforming and new roles have been emerging. HRD roles studieshave become critical for the professionalization of HRD practices in Pakistan.Professionalization and standardization of HRD can be assisted with the examination of HRDroles. (Xie, 2005). Professionalization of an occupation may come about in four phases. In firstphase, different job tasks are centralized. Then differentiation of jobs occurs and boundaries ofthe occupation are established. In third phase occupation is standardized. In fourth phase,emergence and development of the new occupation goes off. (Odenthal & Nijhof, 1996). InPakistan, for professionalization of HRD, it is of great importance to conduct role studies andidentify task boundaries to standardize the profession. Furthermore it is also helpful indetermining training requirements for HRD professionals.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 99

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5The criteria for defining HRD roles has varied from a focus on activities (what do HRD peopledo) to time (where do HRD people spend time) to metaphors (what identity do HRD peoplehave) to value creation (what value do HRD people create).(Conner et al 1996).A major study in the area of HRD roles and competencies was conducted by ASTD Mclagan(1989). In this study, 35 areas of knowledge and skill or competencies were identified. Thesecompetencies were grouped into four categories: technical, business, interpersonal, andintellectual. Technical competencies include adult-learning understanding, career developmenttheories and techniques understanding, competency identification skill, computer competence,electronic-systems skill, evaluation skill, media selection skill, objectives preparation skill,training and development theories and techniques understanding and research skill. Businesscompetencies include budget and resource management skill, business understanding,organization behavior understanding and organization-development theories and techniques.Interpersonal competencies include coaching skill, feedback skill, group-process skill,presentation skill, questioning skill, relationship-building skill and writing skill. Intellectualcompetencies include Data-reduction skill, information-search skill and visioning skill.Important HRD roles include administrator, evaluator, HRD manager, HRD materials developer,career development advisor, instructor/trainer, marketer, need analyst, organization changeagent, program designer and researcher. Many HRD roles and competencies studies have beenconducted in different countries. In America representative works include Mclagan (1983, 1989)and Rothwell (1996). In Europe among others, HRD role studies have been conducted by Ginkelet al. (1997), O’Brien, Thompson (1999) and Valkeavaara (1998). In Asia representative workon HR roles and competencies include Yang (1994) Lee (1994), Xie (2005), Chen et al. (2005)and Kuo (2002). Using ASTD model, various country level studies are replicated to explore rolesand competencies of HRD professionals.These studies, over the years, have contributed towards the Professionalization of HRD inrespective countries. There is no such study of Pakistan that may explore the work roles andassociated competencies of HRD professionals. This study would be helpful in understandingthe applicability of ASTD model in Pakistan. Furthermore it may help in the professionalizationand standardization of HRD practices in Pakistan.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 100

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Xie (2005) studied HRD roles, required competencies, and outcomes in China. Using ASTD’sHRD model as a reference, he examined HRD roles in seven provinces of China. The dominantHRD role identified is of an administrator. The ASTD model is found effective in a Chinesesetting, and its application can help to promote the standardization of HRD work. Whilecomparing with German studies he found that fewer HRD roles are practiced in Chineseorganizations than in Germany. Our research has used Xie’s study as a reference to findsimilarities between Pakistani and Chineese HRD professionals.2. Research Questionsa. Whether ASTD’s 1989 model fits well in context of Pakistan?b. What is the profile of HRD professionals in Pakistan?c. What job tasks or roles HRD professionals perform?d. What competencies they perceive are important to perform these roles?e. What future roles HRD professionals expect to be important?f. What similarities/dissimilarities exist between roles/competencies of HRD professionalsof China and Pakistan?3. MethodologySince there is no HRD role study of Pakistan, so there is no benchmark to compare with.Research carried out by Xie (2005) is used to develop comparison of HRD roles betweenPakistan and China. A questionnaire modeled after ASTD’s McLagan (1989) was pilot tested tofind appropriateness, gap of understanding some terms existed and was eradicated with the useof description of the terms with the questionnaire. The McLagan model was selected because it isnow mature enough and being tested in many countries. In Pakistan HRD profession is emergingand it is the right time to test the effectiveness of ASTD model. Furthermore same model is usedin Chinese Study by Xie (2005). So it would be helpful in comparing HRD roles in China andPakistan.The questionnaire was filled from HRD professionals. As there is no nationally recognizedorganization of HR professionals, respondents were selected through the following procedure.Four main sectors of the economy were selected - - financial, communication, textile and publicsector. These sectors were selected because of largest contribution in employment and GDP ofCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 101

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Pakistan. To have a better representation, each sector was further divided into three groupsbased on employment size—large companies, medium size companies and small businesses. It isbelieved that this selection resulted in better representation of HRD professionals in Pakistan.From all sectors, a total of 110 representative organizations were selected. These includeorganizations with less than 100 employees to more than 10000 employees. With a response rateof 72.72%, 80 valid questionnaires were short listed for analysis. The study collected informationon profile of HRD professionals, their roles and associated competencies.4. Research Results4.1 Personal information of practitioners4.1.1 GenderHRD function is dominated by males in Pakistan where 72.5 males perform HRD activities.Keeping in view the cultural context of Pakistan, female participation of 27.5% is anencouraging participation rate. HRD jobs are generally back office jobs that are preferred byfemales in Pakistan. As compared to Chinese female participation of 46.8%this is a lowpercentage.4.1.2 AgeAge of surveyed HRD professionals mostly range between 25 and 34 as 50% respondents belongto this category. Individuals in age range 35-44 constitute 32.5 %, while 17.5 % respondentsbelong to 45-54 age range. However professionals below the age of 25 and above 54 years arenon-existed in the surveyed sample. This is an indication that HRD work in Pakistan is executedby young individuals. Like Chinese counterparts, HRD people in Pakistan are moderatelyexperienced. Furthermore, in Pakistan like China, the profession poses certain entry barriers toage groups of less than 25 years.4.1.3 Education levelPakistani HRD professionals, like Chinese counterparts, are highly qualified as 62.5% of thesurveyed professionals possessed master’s degree and 35% are holding bachelors. This indicatesCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 102

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5that HRD profession in Pakistan is ruled by a learned talent pool and future development of HRDprofession is bright in Pakistan4.1.4 Qualification certificatesPakistan has not a well established HRD qualification system. However business schools havestarted recognizing the need for offering HRD programs. Only 20% of practitioners surveyed hadcertificates in HRM.4.2 Company information4.2.1 Ownership of enterprisesOut of 80 surveyed professionals, 15% were from state owned enterprises, 15% from foreigninvested companies, 12.5% from joint venture companies and 57.5% from private companies.4.2.2 IndustriesThe study covered four sectors of the economy that are largest contributor to employment andGDP of Pakistan. The public sector accounted for 10.0%, banking and finance for 25.0%, textilefor 50% and communication services for 33.9%.4.2.3 SizeThe number of employees in the organizations surveyed ranged from fewer than 100 to morethan 10,000. Organizations with fewer than 100 employees accounted for 7.5 %, while thosewith between 100 and 499 employees accounted for 17.5 %. Organizations with 1000-4999,5000-9999 and greater than 10000 employees accounted for 35 %, 10% and 20 % respectively.4.2.4 Department carrying out HRD functions17.5 % of the surveyed organizations had separate HRD department, while 27.5 % had HRMdepartment. 27.5 % companies had personal department that take on HRD functions.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 103

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 54.2.5 Position carrying out HRD tasksDesignation of surveyed professionals that perform HRD tasks vary vastly. 20 % had title of HRmanager, 17.5% hold designation of personnel manager, 27.5% had tag of training managers and20% had other titles.4.3 Profile of HRD practice4.3.1 Number of HRD positions43.5 % of the surveyed professionals belong to organizations that had 1-5 HRD positions and31.5 % organizations had 6-10 HRD positions. Numbers of HRD positions generally depend onthe size of the organization. Results infer that every surveyed organization had significantnumber of HRD positions. This indicates that HRD function has started gaining importance.4.3.2 Training timeTime spend on training by surveyed HRD professionals is mostly short as 60 % of therespondents spend 1 to 4 days training per year and 27.5 HRD practitioners spend 10 to 19 daystraining per year. More than 19 days training is non-existent in the surveyed professionals.Chinese HRD professionals, spend more time in training as most practitioners (53.8%) attendtraining for 5 to 19 days per year, 26.3% spend more than 19 days per year on training.4.3.3 HRD experience of practitionersThe experience level of Pakistani HRD practitioners surveyed is almost confined to less than oneyear (31.2%) to a maximum of 9 years (12.5 %). Most participants (52.5%) like Chinese HRDprofessionals (48.2%) have one to four years of experience.4.3.4 Time spent on HRD activitiesIn Pakistan, most HRD practitioners (80 %) do not spend more than 50% of their work time onHRD activities. This may be due to inconsistent recognition of HRD importance inorganizations. Another reason for this lack of attention towards HRD activities is due to moreinvolvement in HRM activities by professionals.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 104

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 54.3.5 Forms of HRD activitiesTable 1 show that most HRD practice in Pakistan takes the form of training (77.5%).Organizations have a fair understanding of career development. (62.5%). 37.5 % and 35 % ofHRD practice is in the area of organizational development and management developmentrespectively. This indicates that few Pakistani organizations have established systems for humanresource development. Management development is another area that needs attention byPakistani organizations. However HRD activities like organizational development (52.3 %) andmanagement development (48.9 %) are relatively well practiced in China.Table 1: Forms of HRD Activities (Pakistani vs. Chinese respondents)Pakistani Respondents Chinese RespondentsFreq. % Freq. %Training 62 77.5 163 93.7Career development 50 62.5 46 26.4Organizational development 30 37.5 91 52.3Management development 28 35.0 85 48.94.3.6 Roles practicedA limited number of roles (from Mclagan roles) are practiced in Pakistan. Results show that inPakistan, five roles are relatively more in practice. These include administrator (90 %), evaluator(77.5 %), career development advisor (40%), instructor (52.5%) and organizational change agent(42.5 %). It means that HRD professionals are involved in communication and support services,evaluating impact on individual or organizational effectiveness, helping individuals to assesspersonal competencies, presenting information and directing structured learning experiences andinfluencing and supporting change in organizational behavior. Similarly, in the majority ofChinese organizations (70.1%), the administrative role plays an important part in leading teams,coordinating departments and providing support for HRD projects and services. The high ratingsof administrator and evaluator indicate that Pakistani professionals pay great attention to thedelivery of HRD activities and its impact on organizational and individual effectiveness, but lackof understanding the importance of the role of need analyst (35%) which is crucial to ensuringthe success of HRD activities.The survey revealed that roles like HRD materials developer (25 %), marketer (15 %), programdesigner (25 %), researcher (7.5 %) and HRD manager (27.5 5) do not receive much attention inCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 105

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Pakistan. It can be inferred that HRD professionals are less involved in supporting and leadingwork groups, producing written or electronically mediated instructional materials, marketing andcontracting of HRD view points, preparing objectives, defining contents and identifying,developing or testing new techniques for human resource development.4.3.7 Roles thought to be importantThree future roles are considered important by the surveyed respondents. These includeevaluator (75 %), instructor (75 %) and organizational change agent (55 %). A significant changein the role of instructor (from 52.5% to 75%) indicates that directing structured learning is goingto be the key feature of HRD activities in future. To facilitate this phenomenon HRDprofessionals expect to serve as change agents (from 42.5 % to 55%). However diminishingperceived importance of roles like HRD materials developer, program designer and careerdevelopment advisor, indicates that HRD professionals are not clear about the implementationcriteria of the selected future roles. However most of practitioners believe that administrator role(from 90% to 32%) is less important in future. This indicates a transformation in HRD practicesin Pakistan.4.4 HRD Competencies8 competencies are considered significant by HRD practitioners. These include competencyidentification skill (62.5%), computer competence (57.5%), evaluation skill (77.5%), trainingand development theories and techniques understanding (52.5%), budget and resourcemanagement skill (67.5%), business understanding (67.5%), organization behaviorunderstanding (67.5%) and relationship building skill (80%).4.5 Relationship between roles and competenciesRespondents were asked to select the role/roles they practice as a part or whole of their work.Then role holders were asked to select competencies that are used to perform the role. Hence aresult matrix for roles and competencies was formed. Most practitioners practiced more than onerole. Performing a role may require one or more competencies. The mean value and standarddeviation of all competencies and roles are shown in the Table 2. A comparison of mean valuesCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 106

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5indicates that Pakistani HRD practitioners use competencies like evaluation skill (mean value28.9), relationship building skill (mean value 26.3) and business understanding (mean value26.1) most while performing work at their organizations. Standard deviation for businessunderstanding is lowest (13.0) as compared to the other two competencies. This shows aconsistent recognition of this competency in the selected sectors of the economy. For ChinaHRD practitioners, comparison of mean values indicates that Chinese HRD practitioners rankedfour competencies highest: Intellectual versatility (mean value 104.33),Observing/collecting/processing data and module building skill (100.22), Industrial andorganizational behavior understanding (93.67) and Competency identification skill (91.56).Theserankings highlight the importance of intellectual ability for Chinese HRD practitioners. (Xie,2005.)A comparison of mean values of roles performed by Pakistani HRD practitioners indicate thatmost practitioners hold work role of administrator (28.6), evaluator (27.7), instructor (21.1),career development advisor (18.2) and organization change agent (17.6). Standard deviation forthe role of career development advisor is lowest (8.7). While for the role of evaluator it is highest(15.2).4.5.1 30% --50% --70% analytic methodIn Pakistan HRD is evolving, so a variation to the 50%–70% analytic method was used toinclude 30 % values (Table 3). This may ensure better representation of the relationship betweenroles and competencies in Pakistan. To analyze the role/competency matrix conveniently,competencies mentioned more than 32 times and 40 times by respondents (30% & 50% of the 80qualified questionnaires) were marked , as were competencies mentioned more than 56 times(70% of the 80 qualified questionnaires).For the role of Administrator, the most important competencies were found to be relationshipbuilding skill, evaluation skill, competency identification skill and budget and resourcemanagement skill.More than 30% of the practitioners identified 17 competencies and more than 50% ofparticipants identified 7 competencies, while only 2 were identified by more than 70% of therespondents. Competencies mentioned by more than 30% of respondents, were rated importantCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 107

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5for seven different roles. These include administrator, evaluator, HR manager, careerdevelopment advisor, instructor/trainer, need analyst and organizational change agent.Competencies mentioned by more than 50%, were rated important for only administrator andevaluator roles. Competencies (evaluation skill and relationship building skill) mentioned bymore than 70% of respondents, were identified important for the role of administrator andevaluator.5. ConclusionThe results show a profile of HRD practitioners as a young male with experience of 1-5 years inHRD, well educated, dealing mostly with administrative assignments. The practitioner investstime in training to keep him or her prepared for HRD tasks. Like China, Pakistani HRprofessionals have non-HRD responsibilities, and spend even more time on those activities. Thedominant HRD role he or she played is of an administrator. HRD in Pakistan is still in the earlystages of its development. One indication of this is the fact that training is still the dominant formof HRD in Pakistani organizations. Furthermore, there is an inconsistent recognition of HRDimportance among various sectors of the economy.The ASTD model is effective in a Pakistani setting, and its application can help to promote thestandardization of HRD work. But there are some differences in Pakistan. There are fewer HRDroles practiced in Pakistani organizations than in developed countries and even China. Theperceived importance of roles is somewhat similar between Pakistan and China. Administrator,evaluator, career development advisor and organizational change agent are the main rolespracticed in Pakistani organizations.Like China, HRD as an independent academic field of learning has not yet gained nationalrecognition in Pakistan and there are no HRD degree programs offered at Pakistani colleges anduniversities.There are some limitations to this research. First, there is no national association of HRDpractitioners in Pakistan, so probability sampling is not possible; second, not all sectors of theeconomy were covered in this research and keeping in view a national study, sample size issmall. Due to the limitations of the research, the results cannot be generalized. However, thisresearch may provide a base for future research on roles and competencies in Pakistan.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 108

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesChen, A., Bian, M. and Hom,Y (2005)“Taiwan HRD practitioner competencies: an applicationof the ASTD WLP competency model” International Journal of Training and Development9:1, 21-32Conner, J., Ulrich, D. (1996) Human resource roles: Creating value, not rhetoricHuman Resource Planning, 19(3): 38Ginkel, K., Mulder, M. and Nijhof, W. (1997) “Role profiles of HRD practitioners in theNetherlands” International Journal of Training and Development 1:1, 22-33Kuo, M. C. (2002), The history of human resource development in Taiwan: 1950s–1990s.Unpublished doctoral dissertation, the University of Minnesota, Twin Cities.Lee, S. H. (1994), A preliminary study of the competencies, work outputs, and roles of humanresource development professionals in the republic of China on Taiwan: A cross-culturalcompetency study. Unpublished doctoral dissertation, the Pennsylvania State University,University Park.McLagan, P. A. (1989). Models for HR Practice. (Research report). Alexandria, Va: AmericanSociety for Training and Development.O’Brien, G. and Thompson, J. (1999) “The development of Irish HRD professionals incomparison with European professionals: roles, outputs and competencies. InternationalJournal of Training and Development 3:4, 250-268Odenthal, I. and Nijhof, W. (1996), HRD roles in Germany . DeLier: Academisch BoekenCentrum, De Lier.Rothwell, W. J. (1996), ASTD models for human performance improvement. Alexandria, VA:American Society for Training and Development.Schuler, R. S. (1994). The Changing Role of Human Resource: Systematically Linking with theBusiness. Unpublished paper.Xie, J., (2005) “Human resource development roles in the People’s Republic of China:investigation from seven provinces.” International Journal of Training and Development9:1, 33-46.Yang, J. C. (1994), Perceived competencies needed by HRD managers in Korea. Unpublisheddoctoral dissertation, University of Minnesota, Twin Cities.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 109

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Competencies: Technical, Business, interpersonal & intellectualAdult-Learning UnderstandingCareer Development theories andtechniques understandingCompetency identification skillComputer competenceElectronic- system skillEvaluation skillMedia selection skillObjectives preparationT& D theories and techniquesunderstandingResearchBudget and resource managementskillBusiness understandingOrganization behaviorunderstandingOrganization-developmenttheories and techniquesCoaching skillFeedback skillGroup-process skillNegotiation skillPresentation skillQuestioning skillRelationship-building skillWriting skillData-reduction skillInformation-search skillVisioning skillMeanS.D.Administrator1024484030541626344484646262830122832856262018628.6415.11Evaluator826444230621628366404646302430102824450181820827.7615.26Table 2: Result matrix of the relationship between roles and competenciesROLESHRD HRD Career Instructor MarketerManager Materials Development /TrainerDeveloper Advisor44810 018 142022 10202216228162041422202010146121001881210613.286.5018201620812186161816181212410601661210611.925.702630243014202862430262416206161402881614818.248.7828302036122442630363424222681618036101416821.1211.1481010128101261212121068484012461047.923.67NeedAnalyst82222262224142226622262620121881214024121414816.887.42OrganizationChangeAgent62226282232121830620302824121661212030101812817.609.27ProgramDesigner4121418122061218414161816812680148108811.085.21Researcher06466646666666442220624644.402.00Mean5.6417.8223.4524.7318.9128.9110.7317.6424.555.4522.3626.1825.2719.8214.0017.276.6013.6413.091.0926.3610.1813.0912.556.73S.D.3.566.4213.4511.157.7616.814.137.0910.850.9312.6113.0712.887.077.698.592.998.198.922.5915.826.725.014.301.62COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 110

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Competencies: Technical, Business, interpersonal & IntellectualTable 3: Result matrix of the relationship between roles and competencies (recognized by more that 30% of respondents)ROLESHRD Career InstructorAdministrator Evaluator ManagerDevelopmentAdvisor /TrainerNeedAnalystAdult-learning understandingCareer development theories and techniques understanding ♦ ♦Competency identification skill ♦ ♦ ♦ ♦ ♦Computer competence ♦ ♦ ♦ ♦ ♦ ♦Electronic-systems skill ♦ ♦ ♦Evaluation skill ♦ ♦ ♦ ♦ ♦ ♦Media selection skillObjectives preparation skill ♦ ♦ ♦T& D theories and techniques understanding ♦ ♦ ♦ ♦ ♦ ♦ResearchBudget and resource management skill ♦ ♦ ♦ ♦ ♦Business understanding ♦ ♦ ♦ ♦ ♦ ♦Organization behavior understanding ♦ ♦ ♦ ♦ ♦ ♦Organization-development theories and techniques ♦ ♦ ♦ ♦ ♦Coaching skill ♦ ♦Feedback skill ♦ ♦ ♦Group-process skillNegotiation skill ♦ ♦Presentation skill ♦ ♦Questioning skillRelationship-building skill ♦ ♦ ♦ ♦ ♦ ♦Writing skill ♦Data-reduction skillInformation-search skillVisioning skillOrganizationChangeAgentCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 111

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSThe Effect ofDemographic and Academic Backgroundson Financial Accounting PerformanceSEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SWan Faizah Wan Abdullah.Siti Salmah Abu Bakar.Marzlin Marzuki.Noraini Abdul Rahim.Faculty of Accountancy, University Teknologi MARA Kedah, PO box 187, 08400Merbok, Kedah, MalaysiaKamaruzaman Jusoff (Corresponding author)TropAIR, Faculty of Forestry, Universiti Putra Malaysia, 43400 Serdang, Selangor.MalaysiaAbstractThe main objective of this study is to compare the Financial Accounting performancebetween students with and without Sijil Pelajaran Malaysia grades and their demographicbackground. The study was carried out among the Diploma in Accountancy students atUniversiti Teknologi MARA Kedah campus. 190 usable data were obtained from theAcademic Affairs Department at the campus. Independent t-test was used to analyse thedata. The finding shows that the performance of students with SPM Accounting issignificantly higher for FAR 100 and FAR 200. The same result is true for those withSPM Commerce on FAR 100. On the other hand, there is no significant differencebetween those with and without SPM Additional Mathematics and SPM Economicsperformances in all Financial Accounting courses. In terms of gender, females performedsignificantly better in FAR 200 only. For school location, there is no difference betweenstudents from urban and rural schools on the performance of Financial Accounting.Key words: Financial Accounting performance, Demographic background, Academicbackground1. IntroductionDiploma in Accountancy (DIA) programme offered by University Teknologi MARA(UiTM) is a semi professional course. Candidates are required to obtain a credit each inany five subjects in their Sijil Pelajaran Malaysia (SPM) including English andCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 112

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Mathematics. The current open system implemented by the Malaysian Ministry ofEducation on SPM examination allows a student to register and sit for any subjectsoffered by the ministry. This leads to a situation where students have to decide on thesubjects that should be taken at SPM level. For those who plan to take DIA programme,they may need to evaluate the suitability of the subjects taken at SPM level. The resultsof this study may benefit those students in making their decisions. This study would alsobe of great help to institutions offering accounting programme at diploma levelparticularly the Faculty of Accountancy to determine entry requirements. In addition tothat, it may also help lecturers to understand the differential performance among studentsand thus are able to evaluate various teaching methods.Studies have shown that the performance of undergraduate Accounting students wasaffected by their academic background. Mitchell (1985) found that there is a positiverelationship between students’ high school grades and performance in the quantitativeaspects of their first year examination. Baldwin and Howe (1982), Bergin (1983), Canlar(1986), Eskew and Faley (1988), and Bouillon (1990) also found that students who hadstudied Accountancy at high school had superior performance initially in universityAccounting courses, but this early superiority diminished overtime and was completelyeroded by the end of the first year. On the other hand, Keef (1988), Keef (1992), Moses(1987) and Bartlett, Peel and Pendlebury (1993) reported that prior study of Accountinghas no significant advantage for students in the first and third year of the Accountingdegree programme.Similarly, previous knowledge of Mathematics has positive and significant effects onstudent performance in introductory Accounting courses [(Bartlett et al. (1993), Gul andFong (1993), Lai Mooi Tho (1994) and Eskew and Faley (1988)]. English andEconomics have also been found to have positive effects on student performance inintroductory Accounting courses. Gul and Fong (1993) found that certificate levelEnglish grade appears to be a significant variable in first year Accounting students’performance. The study by Bartlett et al. (1993) also showed that the most consistentexplanatory variable of first and third year examination performance is the prior study ofEconomics at ‘A’ Level. A Malaysian study by Lai Mooi Tho (1994) found that SijilCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 113

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Tinggi Pelajaran Malaysia (STPM) Economics influences the performance inintroductory Accounting courses.Besides the academic background, studies on demographic background have also beencarried out particularly on gender and school location. Buckless, Lipe and Ravenscroft(1991) showed that females are perceived to be better than male students. Mutchler,Turner and William (1987), Lai Mooi Tho (1994) and Minga Negash (2002) found thatgender has no significant impact on lower Accounting division courses. There is nodifference in performance between rural and urban status as reported by Lai Mooi Tho(1994).Unlike previous studies which has been carried out at the undergraduate level, this studyfocuses on diploma level. The main objective of the study is to compare the performancein the Financial Accounting courses between students with and without SPM grades forAccounting, Additional Mathematics, Economics and Commerce and their demographicbackground that is gender and school location.2. MethodologyThe study was carried out at the UiTM Kedah. Data were collected from the students’record at the campus. A research form was used to gather information related todemographic information such as gender, previous school; grade history in Accounting,Additional Mathematics, Economics and Commerce at the SPM level; and students’grades for Financial Accounting courses at UiTM (FAR100, FAR150, FAR200 andFAR250). According to the Malaysian Education Department, schools located inMunicipal Councils are considered as urban school whereas schools outside MunicipalCouncils are considered as rural. Samples were selected from the DIA population in Part5, 6, 7 and 8 in the November 2008 - April 2009 semester. Students with incompleterecord in their personal files were excluded from the study.Data were analyzed using the Statistical Package for Social Sciences (SPSS) version15.0. Descriptive statistics were used where appropriate and data were summarized aspercentages. The differences in the performance of students who had studied each SPMsubject and the students’ demographic background were tested using independent t-test.A p value < 0.05 was considered significant.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 114

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 53. Result and Discussion3.1 DemographicThe total number of samples selected for the study was 195 (100% of the totalpopulation) and 5 were excluded due to incomplete data for SPM. The total usable datawere 190. The demographic data of the students are given in Table 1.3.2 The performance in Financial Accounting courses between students with and withoutSPM grades and their demographic background.The performance in Financial Accounting courses between genders is given in Table 2.The results showed that female students performed better than the male students.However, the difference is not significant except for FAR 200. This corresponded tostudies by Mutchler et.al. (1987), and Lai Mooi Tho (1994) where he found that genderhas no impact on lower accounting division courses.The performance in Financial Accounting courses between students from different schoollocations is given in Table 3. There was no significant difference in the performance forall Financial Accounting courses between students from different school locations wherethe students studied for their SPM. The finding corresponded to the study by Lai MooiTho (1994), which found no significant difference in the performance between studentsfrom rural and urban areas. However, Lai Mooi Tho (1994) studied the students’residence and not the location of their school.The performance in Financial Accounting courses between students with and withoutSPM Accounting is given in Table 4. The performance of students with SPMAccounting was significantly better than students without SPM Accounting for FAR 100and FAR 200. The findings on SPM Accounting on the performance of FAR 100correspond to previous studies by Baldwin and Howe (1982), Bergin (1983), Canlar(1986), Gul and Fong (1993), Rohde and Kavanagh (1996), and Moy Yin Koh and HianChye Koh (1998) which found that the performance of students with basic Accountingare better than those without basic Accounting for introductory Accounting.The performance in Financial Accounting courses between students with and withoutSPM Additional Mathematics is given in Table 5. There is no significant difference inCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 115

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5performance between students with SPM Additional Mathematics and students withoutSPM Additional Mathematics for all Financial Accounting courses. This finding did notcorrespond to the findings of previous studies by Eskew and Faley (1988), Barlett et al.(1993), Gul and Fong (1993) and Lai Mooi Tho (1994). In Lai Mooi Tho’s study inMalaysia, she obtained a positive and significant effect of Mathematics on studentperformance in introductory accounting courses. The difference in the result could be dueto the streaming system which has been transformed to the open system implemented bythe Malaysian Ministry of Education. In the streaming system, students who performedbetter are placed in Science stream and the rest are placed in Arts stream. AdditionalMathematics is a compulsory subject for the science students. Those with AdditionalMathematics (science students) perform better because they have a greater affinity forquantitative courses. Under the new system, a student is allowed to register and sit forany subjects offered by the ministry. Therefore, any student may be able to sit forAdditional Mathematics.The performance in Financial Accounting courses between students with and withoutSPM Economics is given in Table 6. Students with SPM Economics perform better inFinancial Accounting courses than those with SPM Economics but the results are notsignificant. This finding contradicted the study by Lai Mooi Tho (1994) where she foundthat Economics in STPM lead to a better performance in introductory accounting at theundergraduate level. The difference in the finding could be due to the different level ofcoverage in SPM Economics and STPM Economics.The performance in Financial Accounting courses between students with and withoutSPM Commerce is given in Table 7. The result showed that students with SPMCommerce performed significantly better than those without SPM Commerce for FAR100 only. This could be due to the topics covered in Commerce at SPM level are beingincluded in the syllabus in FAR 100.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 116

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 54. ConclusionThe performance of students with SPM Accounting and SPM Commerce in FAR 100were better than those without the subjects in their SPM. Besides FAR 100, those withSPM Accounting also performed better in FAR 200 than those without the subject. Onthe other hand, there is no significant difference between students with SPM AdditionalMathematics and SPM Economics in the performance of all Financial Accountingcourses. For demographic background, females performed significantly better in FAR100 only. On the other hand, there is no significant difference in Financial Accountingperformance between students from urban and rural schools.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 117

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesBaldwin, B.A., and Howe, K.R.. 1982. Secondary-Level Study of Accounting andSubsequent Performance in the First College Course. Accounting Review. 57 (3):619 627.Bartlett, S., Peel,M.J., and Pendlebury, M. 1993. From Fresher to Finalist: A ThreeYear Analysis of Student Performance on an Accounting Degree Programme.Accounting Education 2(2): 111 122.Bergin, L.J. 1983. The Effect of Previous Accounting Study on Student Performance inthe First College –Level Financial Accounting Course. Issues in AccountingEducation: 19 28.Bouillon, M.L., Doran, B.M., and Smith, C.G.. 1990. Factors that Predict Success inPrinciples of Accounting Classes. Journal of Education for Business 66(1): 22 27.Buckless, F.A., Lipe M.G. and Ravencooft, C. G., 1991, Factors that Predict Success inPrinciples of Accounting Classes, Journal of Education for Business, 6: 248 261.Canlar,M. 1986. College-Level Exposure to Accounting Study and its effects on StudentPerformance in the MBA-Level Financial Accounting Course. Issues inAccounting Education 1:13 23.Eskew, R.K., and Faley, R.H.. 1988. Some Determinants of Student Performance in theFirst College-Level Financial Accounting Course. The Accounting ReviewLXIII(1):137 147.Gul, F.A., and Fong, S.C.C.. 1993. Predicting Success for Introductory Students: SomeFurther Hong Kong Evidence. Accounting Education 2(1): 33 41.Keef, S.P.. 1988. Preparation for a First Level University Accounting Course: TheExperience in New Zealand. Journal of Accounting Education.6(2), Fall, 293 307.Keef, S.P. 1992. The Effect of Prior Accounting Education: Some Evidence from NewZealand. Accounting Education 1(1): 63 68.Lai Mooi Tho. 1994. Some Evidence on the Determinants of Student Performance in theUniversity of Malaya Introductory Accounting Course. Accounting Education3(4): 331 340.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 118

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Minga Hegash. 2002. Demographic Factors, Accounting grades and Maths Skills:Evidence from a South African University. Paper presented at South AfricanAccounting Association Regional Conference, Grahamstown.Mitchell, F., 1985. School Accounting Qualifications and Student Performance in a FirstLevel University Accounting Examination. Accounting and Business Research15(58): 81 86.Moses, O.D. 1987. Factors Explaining Performance in Graduate-Level Accounting.Issues in Accounting Education 2(2): 281 291.Moy Yin Koh and Hian Chye Koh. 1998. The Determinants of Performance in anAccounting Degree Programme. Accounting Education 8(1): 13 29.Mutchler, J.F., Turner, J.H., and William, D.D. 1987. The Performance of Female versusMale Accounting Students. Issues in Accounting Education. 2(1):103-111.Rohde, F.H., and Kavanagh, M. 1996. Student Performance in the First MBA-LevelFinancial Accounting Course. Issues in Accounting Education 1(1): 13 23.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 119

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5AnnexureTable 1: Demographic DataParameters Number of students Percentage (%)GenderMaleFemale7911341.158.9School locationRuralUrban8410343.853.6Table 2: Performance of each Financial Accounting course between gendersSignificantGender N Mean Std. Deviation(2 tailed)FAR100FAR150FAR200FAR250male 79 2.85 0.869 0.221Female 113 2.99 0.725male 79 2.23 1.059 0.519female 113 2.32 0.987male 76 2.70 0.912 0.021female 112 3.01 0.875Male 68 2.04 1.022 0.484female 106 2.15 1.003Table 3: Performance of each Financial Accounting courses between students fromdifferent school locationsSchoolSignificantN Mean Std. DeviationLocation(2 tailed)FAR100Rural 84 2.86 0.683 0.187urban 103 3.02 0.840FAR150FAR200FAR250rural 84 2.34 0.975 0.581urban 103 2.26 1.044rural 82 2.83 0.924 0.428urban 101 2.94 0.900rural 75 2.27 1.016 0.121urban 94 2.03 0.975COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 120

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Table 4: Performance of each Financial Accounting course between students withand without SPM Accounting.FAR100FAR150SPMAccountingNMeanStd.DeviationSignificant(2 tailed)Without 90 2.63 0.805

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Table 6: Performance of each Financial Accounting course between students withand without SPM Economics.FAR100FAR150FAR200FAR250SPMEconomicsNMeanStd.DeviationSignificant(2 tailed)Without 159 2.92 0.787 0.451With 33 3.03 0.801Without 159 2.28 1.015 0.861With 33 2.31 1.033Without 156 2.88 0.926 0.885With 32 2.91 0.777Without 142 2.10 1.019 0.831With 32 2.15 0.979Table 7: Performance of each Financial Accounting course between students withand without SPM CommerceFAR100SPMEconomicsNMeanStd.DeviationSignificant(2 tailed)Without 166 2.89 0.801 0.049With 26 3.22 0.646FAR150FAR200FAR250Without 166 2.26 1.016 0.417With 26 2.44 1.018Without 163 2.89 0.888 0.788With 25 2.84 0.996Without 151 2.09 1.017 0.403With 23 2.28 0.962COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 122

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSInfluence of Institutional Pressure and OwnershipStructure on Corporate Social Responsibility DisclosureSEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SFaizah DarusRoshayani ArshadSuaini OthmanFaculty of Accountancy, Universiti Teknologi MARA, Malaysia, 40450, Shah Alam,Selangor, MalaysiaKamaruzaman Jusoff (Corresponding author)TropAIR, Faculty of Forestry, Universiti Putra Malaysia, Serdang, 43400 Selangor.MalaysiaAbstractA clear understanding of the effectiveness of regulation is crucial to regulatory bodies intheir efforts to improve corporate transparency. This study examines the effects of theintroduction of regulatory requirements relating to Corporate Social Responsibility (CSR)disclosure, and the impact of institutional pressure and ownership structure onmanagement’s disclosure decisions. Using the annual reports of 144 Malaysian listedcompanies, this study investigates the effects of regulatory efforts in promoting CSRdisclosure in periods of uncertainty before (2005 and 2006) and with the introduction ofregulatory requirements (2007), and the association of ownership structure on the extentof CSR disclosure. The regulatory disclosure environment, managers’ imitation strategythrough board interlock and ownership structure (proxy by family, government andforeign ownerships) relating to CSR disclosure were investigated. Results of this studyprovide evidence that regulatory efforts are important mechanism in promoting greatercorporate transparency in CSR disclosure. This is reflected in the significant associationbetween government ownership and the extent of such disclosure. However, the findingsdemonstrate that such efforts do not appear to promote disclosures of CSR activities infamily owned companies. Nevertheless, the findings indicate strong possibility of raisinginvestors and other stakeholders’ expectations towards expecting more detaileddisclosure of CSR activities in companies’ annual reports through the influence ofregulatory efforts. An implication of these findings is that regulatory efforts have theCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 123

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5prospect of becoming a significant force in promoting the extent and quality of CSRdisclosure.Key words: Mandatory disclosure, institutional theory, ownership structure, corporatesocial responsibility, financial reporting regulation.1. IntroductionThere is growing concern world wide regarding corporate social responsibility (CSR)issues amongst companies. One aspect of CSR that is of concern is the state of CSRreporting. This is because traditional financial reporting does not adequately capture CSRactivities of companies (Yongvanich & Guthrie, 2006) and currently there are variousframeworks that companies could adopt. Given this setting, CSR activities reported incompanies annual reports may not facilitate investors and other stakeholders in assessingwhether corporate social activities are in line with their interests. More detaileddisclosure of CSR activities will thus provide useful information to a range ofstakeholders. However, according to Gray (2006), recent years have witness a substantialincrease in reporting on corporate social responsibility issues by major corporations in theworld. In East Asian countries, the issue of CSR is particularly important because CSR isstill at an infancy stage and there is a relatively low level of transparency amongstcompanies (Thompson & Zakaria, 2004).In Malaysia, the issues of CSR have attracted increasing attention from the government,practitioners and academia (Hackston & Milne, 1996, Mustafa et al., 2006). This isevidenced by the recent government efforts requiring all public listed companies todisclose CSR activities in their annual reports for financial year ending 31 December2007. However, management are still given the discretion of deciding on the extent ofdisclosures to be made. Prior to this, the government has also launched a guide tocompanies with substantial government ownership known as the ‘Silver Book’ in 2006.The ‘Silver Book’ provides the principles and guidelines on how these companies canmanage their contributions to society in an effective and sustainable manner (The Edge,September, 2006). The launching of the ‘Silver Book’ is expected to improve their CSRdisclosure and in turn will encourage other companies to follow their lead. In addition,COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 124

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5the Federal Government’s 2008 and 2009 budget have also incorporated some incentivessuch as tax deductions for companies who provide public facilities and ‘green theme’(such as biomass energy, biodiesel and biogas plants, sale of certified emission reductionor carbon credit etc). The overall regulatory efforts are expected to increase managers’awareness to make detailed disclosure of CSR activities in their companies’ annualreports and consequently affect investors and other stakeholders’ ability in makinginformed judgements regarding such activities. Hence, an improved understanding ofinfluences on management’s decisions to disclose more or less CSR information wouldtherefore be sought by outside investors and other stakeholders such as debt holders,employees and regulators.Empirical evidence in Cheng and Courtenay (2006) indicates that regulatory efforts areassociated with more detailed corporate disclosure. However, Nazli and Weetman (2006)found that the culture of secrecy in owner-managed and family-controlled companies ofMalaysian businesses outweighed the reforming efforts of government to establish aclimate of greater accountability and transparency following reforms that emerged fromthe Asian economic crisis of 1997 -1998. Their results are consistent with several otherprior empirical evidence that indicate companies in East Asian region have lowertransparencies due to the culture of relative secrecy in owner-managed and familycontrolled companies. These studies show that there is an association between ownershipstructure and the level of corporate disclosure (e.g. Eng & Mak, 2003; Haniffa & Cooke,2002; Ho & Wong, 2001). While the presence of substantial family ownership incompanies is associated with lower corporate disclosure, other forms of ownershipstructure are associated with more detailed corporate disclosure. Given the varying formsof corporate ownership structure, it is important to include the influence of ownershipstructure on CSR disclosure.The aim of this study is to examine the effects of external forces as imposed byregulatory authorities, the effects of social influences in situations of uncertaintyfollowing the introduction of regulatory requirements relating to CSR disclosure and theimpact of ownership structure on managers’ incentives to disclose CSR activities. It isCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 125

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5based on the expectation that new coercive forces through the regulatory efforts and theperiod of uncertainty to have an impact on CSR disclosures by Malaysian companies.Two theoretical perspectives are used in this study. First, under the institutional theory,managers have incentives to increase CSR information to comply with regulatoryrequirements and social norms in order to justify their actions and to deflect criticismsregarding their CSR activities and reporting practices. Second, under the agency theory,managers’ CSR disclosure decisions are influenced by the ownership structure of theircompanies as well as their desire to signal that they are acting in the interests of theshareholders.2. Motivation for the StudyThere is a paucity of empirical evidence on issues related to CSR, in particular regardingthe impacts of institutional forces and ownership structure in relation to CSR disclosuresin the East Asian countries. Therefore, this study aims to provide new evidence on howexternal forces, social pressures and the ownership structure of Malaysian companiesinfluence CSR reporting practices. Such an understanding is useful to regulators, policymakers, the professional bodies and to other users of financial information.The context chosen for the study is the CSR disclosure environment in Malaysia during2005, 2006 and 2007. The setting is conducive to the study of incentives for managementto disclose CSR information as public listed companies in Malaysia are required tocomply with the mandatory requirements of CSR activities in their annual reports for thefinancial year ending 31 December, 2007.3. Literature Review and Hypotheses Generation3.1 Isomorphic Pressure and CSR DisclosureOf late, institutional theory has become one of the dominant theoretical perspectives inorganizational theory and increasingly being applied in accounting research to study thepractice of accounting in organizations (Dillard et al, 2004). DiMaggio and Powell (1983)identify three forms of institutional isomorphism: coercive, normative and mimetic. Thisstudy focuses on the influence of coercive and mimetic isomorphism on CSR disclosure.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 126

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 53.2 Coercive Isomorphism and CSR DisclosureCoercive isomorphism results when an organization adopts certain practices due toformal and informal pressures exerted on organizations by other organizations uponwhich they depends on externally, such as government’s regulations, resource providersor head offices control, and by cultural expectations of the society in which theorganizations operate (DiMaggio & Powell, 1983). Coercive isomorphism can influencemanagement to conform to certain disclosure practices through formal and informalpressures (Carpenter & Feroz, 2001; Clemens & Douglas, 2006). While empiricalevidence suggest that legislation plays a significant form of formal pressures (Clemens &Douglas, 2006), a company’s dependence on financial resources from key stakeholdersplays a significant informal pressure on management to conform to certain practices(Carpenter & Feroz, 2001).The introduction of mandatory disclosure requirement by the Malaysian Government, thelaunching of the Silver Book and the Stock Exchange Guidelines on CSR disclosure areefforts exerted on companies by the regulatory authorities to improve transparency andCSR disclosure in Malaysia. It is expected that following the budget announcement in2006, companies in Malaysia will increase their CSR disclosure in their annual reports.Chalmers (2001) provides evidence that the quantity of voluntary derivatives disclosuremade by firms progressively increases over the period leading to the introduction of themandatory disclosure requirements, and that there is a significant increase in voluntarydisclosure in the year when the mandatory disclosure requirements became effective.Chalmers and Godfrey (2004) and Taylor and Darus (2006) confirm these findings. Thus,it is hypothesized that:H1: The likelihood of a disclosure requirements becoming mandatory issignificantly positively related to the voluntary disclosure on CSR.As the mandatory disclosure requirements relating to CSR disclosure give managementthe discretion of deciding on the extent of disclosures to be made, it is expected that theextent of CSR disclosure will increase with the introduction of the mandatory disclosureCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 127

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5requirements. Management are coerced to increase their disclosure relating to CSR withthe regulatory requirements. It is also hypothesized that:H2: An increase in the regulatory disclosure requirements relating to CSRis significantly positively related to an increase in the extent of CSRdisclosure.3.3 Mimetic Isomorphism and CSR DisclosureMimetic isomorphism is a response to a situation of uncertainty, whereby social influenceprocesses lead an organization to imitate or benchmark those firms that are viewed to bemore legitimate and successful than others (Aerts, Cormier, & Magnan, 2006). Insituations of uncertainty, the managers of organizations are more likely to adopt thebenchmark firms, which are either the organizations that exercising the same activity, orthe leaders or the most talented organizations (Touron, 2005).Prior studies provide evidence that board interlocks allow focal company to imitatespecific and multiple policies of other companies (Brandes et al., 2006; Westphal et al.,2001). Board interlock refers to appointment of director, either executive or independentnon-executive director, on multiple boards. Imitation is possible through board interlocksince the directors can learn decision-making processes through monitoring managementdecisions and also from direct participation in decision making of other boards. Throughdirect participation, the directors can rehearse specific behaviors in the decision-makingprocess in other similar situations and reenact the specific decisions at the focal company(Westphal et al., 2001). According to Westphal et al. (2001), this imitation strategy isalso known as second-order imitation. Brandes et al. (2005) find strong support forimitation strategy by managers through board interlocks in relation to imitation ofvoluntary recognition of stock option costs within the income statement.Besides imitation of a specific content of disclosure items, board interlock also has theprospects of facilitating managers to imitate the mimetic decision process of othercompanies. Hence, it is contended in this study that the presence of board interlocks willCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 128

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5facilitate managers’ imitation strategy of other companies’ CSR disclosure practices.Manager’s imitation strategy may result in direct imitation of other companies’ CSRdisclosure practices or indirectly through second-order imitation of the CSR disclosuredecision processes of other companies. Irrespective of the imitation strategy, it isexpected that board interlocks will increase managers’ incentives to increase CSRdisclosure in annual reports. Based on this reasoning, the following hypothesis isformulated:H3: The percentage of board interlocks is significantly positively related tothe extent of CSR disclosure.3.4 Ownership Structure and CSR DisclosureThe effect of the agency theory on managers’ decisions to disclose CSR information inthis study is examined by independent variables related to various elements of corporateownership structures. Prior studies provide evidence that various elements of corporateownership structures influence managers’ disclosure decisions in companies’ annualreports (e.g. Chau & Gray, 2002; Chen & Jaggi, 2000; Eng & Mak, 2003; Gabrielsen etal., 2002; Haniffa & Cooke, 2002; Ho & Wong, 2001). This study focuses on the effectsof family ownership, government ownership and foreign ownership on managers’decisions to disclose CSR information.3.5 Family Ownership and CSR DisclosureSeveral studies focus on family owned companies in examining the impact of controllingowners on corporate disclosures (Chau & Gray, 2002; C. J. P. Chen & Jaggi, 2000;Haniffa & Cooke, 2002; Ho & Wong, 2001; Nazli & Weetman, 2006; D. Wang, 2006).These literatures suggest that gaining control of the company is possible because familymembers usually hold important positions on both the management team and the board ofdirectors. Further, this can also suggests the existence of dominant group of shareholdersor a substantial shareholder with strong influence who can nominate family membersrepresentations on the board. Either argument implies that the company is being managedby family owners and less diffused in terms of ownership structure. As owner managersCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 129

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5have greater access to internal information, they have less incentive to disclose detailedCSR information to outside investors and other stakeholders.Gaining control of the company also enable the owners to influence the appointments ofindependent non-executive directors (C. J. P. Chen & Jaggi, 2000; Ho & Wong, 2001;Wang, 2006). Such influence could impair the directors’ independence and could lead tohigher risk of collusion between independent non-executive directors and family owners(Patelli & Prencipe, 2007). In such situation, the family members may limit themonitoring effectiveness of the board of directors and engage in corporate socialactivities that are not in the interests of outside investors and other stakeholders. Priorempirical evidence suggests that independent non-executive directors appointed throughthe influence of family owners support major decisions in favour of family owners ratherthan outside investors (C. J. P. Chen & Jaggi, 2000; Leung & Horwitz, 2004).The potential entrenchment effect of family owners on corporate disclosure can bemitigated by greater demand for detailed disclosure of CSR information in the annualreports by contracting parties (Wang, 2006). In Malaysia, this demand can come from theminority shareholder watchdog group (MSWG), a group that represents outside investorsinterests. However, the MSWG role in mitigating this entrenchment effect may be anineffective control mechanism as outside investors’ activism is still developing inMalaysia. Hence, the overall arguments suggest that the existence of higher percentage offamily members on the board is expected to reduce managers’ incentives to disclose CSRinformation to outside investors and other stakeholders. Hence, this study formulates thefollowing hypothesis:H4: The percentage of family members on the board is significantlynegatively related to the extent of CSR disclosure.3.6 Government Ownership and CSR DisclosureIn Malaysia, government owned companies are companies owned by governmentinstitutions or government controlled companies. Examples of government institutionsinclude Employees Provident Fund (EPF, a pension fund), Khazanah Nasional BerhadCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 130

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5(Khazanah, an investment fund), Permodalan Nasional Berhad (PNB, an investmentfund) and Kumpulan Wang Amanah Pencen (KWAP, an investment fund). Governmentcontrolled companies comprises of companies that are controlled by the respective StateGovernments and State-level agencies. The source of finance for these companies isgenerally provided through government funding. Given the government’s role inpromoting more detailed disclosure of CSR activities in Malaysia, it is important toexamine the disclosure tendencies of managers in government owned companies.In line with the government efforts, it is expected that managers in these companies havehigher incentives to disclose CSR information to reduce agency conflicts. Prior literatureon corporate disclosure orientation in government owned companies suggest that agencyconflicts in these companies are relatively higher than private owned companies (Eng &Mak, 2003; Luo et al., 2006). These studies argue that while government ownedcompanies are run similar to other private commercial enterprises, their main objectivesdiffer. The primary objectives of enhancing the national welfare and other non-profitconsiderations may not be consistent with value maximization objective of other privatecommercial enterprises, thus contributing to the high agency costs. In such situation,managers in these companies have higher incentives to disclose more detailedinformation to signal the state’s commitment in achieving the various objectives tooutside investors and other stakeholders (Eng & Mak, 2003). Following these arguments,higher disclosure of CSR information is expected among government owned companies.In contrast, where government ownership is substantial, managers can have lowerincentives to disclose more detailed information to outside investors, and otherstakeholders (Nazli & Weetman, 2006). As substantial state ownership suggestsavailability of high government funds and increase monitoring by the government,managers are required to disclose more detailed disclosures to the government.Consequently, this can lower managers’ incentives to disclose more detailed informationto outside investors and other stakeholders. However, it is contented in this study that thestate’s commitment to improve transparency in corporate CSR activities will lead to someCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 131

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5increase in managers’ incentives to disclose CSR information to outside investors andother stakeholders. Based on this reasoning, the following hypothesis is formulated:H5: The percentage of government ownership is significantly positivelyrelated to the extent of CSR disclosure.3.7 Foreign Ownership and CSR DisclosureAgency theory suggests that ownership by foreign owners increases dispersion ofcorporate ownership. In such situation, these owners may demand more detaileddisclosure of CSR in order to aid their decision-making (Haniffa & Cooke, 2002). Inresponse to this, managers may have higher incentives to disclose more detailedinformation to reduce agency conflicts (Barako et al., 2006; D. K. K. Fan, Lui, & So,2005; Firth, Fung, & Rui, 2007; Haniffa & Cooke, 2002; K. Wang, Sewon, & Claiborne,2008). In addition, Haniffa and Cooke (2005) argue that managers in Malaysia havehigher incentives to disclose CSR information due to geographical separation betweenthe managers and owners. Overall, these arguments suggest that managers haveincentives to disclose CSR information that will allow foreign investors to monitormanagers’ disclosure practices and activities are aligned with their interests as owners.Besides reducing agency conflicts, recent empirical studies suggest that managers indeveloping countries have higher incentives to increase CSR disclosure in order to induceand maintain foreign investments (Firth et al., 2007; Haniffa & Cooke, 2005; K. Wang etal., 2008). The overall arguments lead to the following hypothesis:H6: The percentage of foreign ownership is significantly positively relatedto the extent of CSR disclosure.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 132

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 54. Methodology4.1 Sample and Data CollectionThe sample was drawn from non-financial companies listed on the main Board of BursaMalaysia for the year 2005, 2006 and 2007. 144 companies with financial year ending 31December were randomly selected. This is to eliminate the element of bias in theselection process. A three-year window period enables an examination of the trends in thedisclosure practices on CSR disclosure of public listed companies in Malaysia from anunregulated environment (2005 and 2006) to a regulated environment (2007).The finance companies were excluded due to different regulatory requirements and alsomaterial difference in their types of operations (e.g. Ahmed & Courtis, 1999; Cheng &Courtenay,2006; Depoers, 2000; Gray et al., 1995; Raffournier, 1995). In addition,companies were also dropped from the sample due to missing data related to the variablesof interests in this study.The research approach involves the content analysis of listed companies’ publishedannual reports. Content analysis has been widely employed in prior studies to measureCSR disclosure (Hackston & Milne, 1996; Adams et al., 1998; Tsang, 1998; Imam, 2000;O’Donovan, 2002; Rahaman et al. 2002; Al-Tuwaijri et al., 2004; Kuasirikun & Sherer,2004; Hamid, 2004; Smith et al., 2005; Clemens & Douglas et al., 2006).4.2 Empirical SchemaThe relationships developed in the six hypotheses are depicted in an empirical schema asgiven in Figure 1. The dependent variable (CSRD) is based on the aggregate number ofwords related to CSR disclosure in annual reports. Various recording units have beenused by content analysis researchers to measure the extent of corporate disclosures. Forexample Deegan & Rankin (1996) and Wilmshurst & Frost (2000), use word count whileresearchers such as Guthrie & Parker (1989) use number of pages. Other researchers suchas Deegan et al. (2000), Deegan et al. (2002), and Tsang (1998), use number of sentencesas the unit of analysis. According to Gray et al. (1995), there is some uncertainty as to theoptimal measure of the extent of disclosure, with words, sentences and pages being thepreferred units of analysis for written communication. Unerman (1999)’s findingsindicate that testing content analysis of using words, sentences and pages has nosignificant difference among those methods. Following Haniffa and Cooke (2005),COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 133

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5graphical presentation of CSR activities were excluded from the word count in this study.In addition to the identified independent variables, this study also includes two firmcharacteristics identified in prior research as determinants of management disclosuredecisions (e.g. Botosan, 1997; Chau & Gray, 2002; Haniffa & Cooke, 2002) as controlvariables. These variables are size and profitability.The relationships developed in the hypotheses can be depicted in an empirical schema asgiven in Figure 1. The definition and measurement of variables used in this study arelisted in Table 1.Figure 1: Empirical Schema of Proxies for the Institutional and Agency Theory onCorporate Social Responsibility DisclosureDeterminantsExtent of DisclosureProxies for Institutional Theory:Coercive Isomorphism• Anticipation of Government Regulation– AGREGH1 (+ve)• Existence of GovernmentRegulation – EGREGMimetic Isomorphism• Board Interlock – B LOCKH2 (+ve)H3 (+ve)Proxies for Agency Theory:Ownership Structure• Family – FAM• Government – GOVH4H5H6(-ve)(+ve)(+ve)CSR Disclosure(CSRD)• Foreign – FORControl Variables – SIZE,PROFITABILITYCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 134

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Table 1: Definition and Measurement of VariablesVariableAcronymCSRDDefinitionThe extent of CSRdisclosureMeasurementNumber of words counted. (Deegan &Rankin, 1996 and Wilmshurst & Frost,2000).AGREG Anticipated Regulation –one year before theexistence of mandatorydisclosure requirementsEGREG Existence of Regulation –the year mandatoryregulation on CSRdisclosure was introducedDifference in the mean of CSR disclosure(words) in voluntary year (2005) versusthe anticipated year (2006)Percentage difference in the number ofwords of CSR disclosure in anticipatedyear (2006) versus mandatory year (2007)B LOCK Board interlocks Percentage of total number of independentnon – executive directors withappointments on other boards divided bythe number of total board membersGOV Government ownership Percentage of shares owned bygovernment institutions listed in the topthirty shareholdings to total number ofshares issuedFAMFamily members asdefined by S122A of theMalaysian , CA (1965)Percentage of family members on board tototal number of directors on the boardFOR Foreign ownership Percentage of shares owned by foreignowners listed in the top ten shareholdingsto total number of shares issuedSIZE Size of company Total assetsROA Profitability Proportion of profit after tax over totalassets5. Analysis and Results5. 1 Descriptive StatisticsTable 2 provides descriptive statistics of the CSR disclosure (CSRD) and the independentvariables. The mean of CSRD measured by number of words in 2005, 2006 and 2007were 286, 353 and 835 respectively. As expected, the greatest increase in CSRD occurredin 2007, the year of the mandatory disclosure requirements became effective. TheseCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 135

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5values suggest that the mandatory requirements imposed by the regulatory authorities in2007 have coerced companies to increase the comprehensiveness of CSR disclosure intheir annual reports.Table 2: Descriptive statistics for the dependent and continuous independent variablesLabel Minimum Maximum Mean StdDeviationCSR Disclosure 2005 CSRD 05 0.00 6,276.00 286.14 778.63CSR Disclosure 2006 CSRD 06 0.00 4,803.00 353.91 702.18CSR Disclosure 2007 CSRD 07 10.00 4,410.00 835.09 981.79Government EGREG -95.70 4,313.00 385.41 685.29RegulationBoard Interlock B LOCK 0.00 75.00 25.67 15.95Government GOV 0.00 92.38 17.90 24.58OwnershipFamily Ownership FAM 0.00 100.00 17.66 23.81Foreign Ownership FOR 0.00 61.14 6.63 11.31Size SIZE 66.00 67,724.60 3,399.39 9,029.39Return on Asset ROA 44.00 36.07 6.14 8.47The extent of CSRD in words ranges from 0 to 6,276 in 2005; 0 to 4,803 in 2006, and 10to 4,410 words in 2007 respectively. The minimum number of words disclosed improvedfrom 0 in 2005 to 10 in 2007, indicating that companies abide by the new regulation ofdisclosing some information relating to their CSR activities in their annual reports.Interestingly, the maximum number of words decreased from year to year. This couldpossibly be due to the introduction of the CSR Framework by Bursa Malaysia in late2006, requiring CSR disclosures to be more focused based on certain themes. Incomplying with this Framework, companies’ CSR disclosure became more structured.With regards to board interlock, the percentage of independent non-executive directorswith board membership on other public listed companies ranges from 0% to 75%. Of theCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 136

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ownership variables, the results in Table 2 reveal almost similar values for governmentownership and family ownership. Percentage of government ownership ranges from 0%to 92.38%, while family ownership ranges from 0% to 100%. The average values of17.90% for government ownership and 17.66% for family ownership indicate significantpresence of these forms of owners among the sampled companies. Relative to these twoforms of ownership structure, foreign ownership (FOR) has the lowest average value of6.63%. Finally, the size (SIZE) of the companies in the sample ranges from a minimumof 66 million to a maximum of 67,724.60 million while profitability (ROA) of thecompanies on average is 6.14%.Figure 2 presents the trend of CSR disclosures from 2005 to 2007. CSR disclosures haveimproved from year to year. In 2005 and 2006, out of 144 samples, 104 (72.2%) and 68(47.2%) companies respectively made zero CSR disclosure. A marked improvement wasshown in 2007 whereby; all companies made CSR disclosures, with 19 (13.2%)companies disclosed their CSR information in less than 100 words. The number of wordsdisclosed in companies’ annual reports in 2007 have improved substantially as comparedto those of 2006’s and 2005’s. As in previous literature (Clements & Douglas, 2006; andM. Tsamenyi et al, 2006), the findings in this study support that argument that coercivepressures by regulatory authorities encourage companies to embrace new reportingpractices. When coerced by government, companies conscientiously disclose their CSRactivities in the annual reports.Figure 2: CSR Disclosures Year 2005, 2006 and 2007CSR Disclosures in Year 2005, 2006, and 2007120Number of companies1008060402020052006200701 100 1000 10000Number of wordsCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 137

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5To test the effects of anticipation of and the existence of mandatory disclosurerequirements – tests of H1 and H2 an analysis based on descriptive statistic is undertakenof the CSRD between the years 2005, 2006 and 2007. The first hypothesis tests therelationship between voluntary disclosure on CSR (CSRD 05) and the CSR disclosure inthe anticipated year of regulated disclosure environment (CSRD 06).In testing H1, which predicts that the likelihood of a disclosure requirements becomingmandatory increases the voluntary disclosure on CSR, a comparison was made betweenthe means of the CSR disclosure in the unregulated period (CSRD 05 and CSRD 06).Results from Table 2 shows that the means of CSRD increased from 286.14 (CSRD 05)to 353.91 (CSRD 06) indicating that the likelihood of a disclosure requirementsbecoming mandatory encouraged companies to improve their CSR disclosures inpreparation of the impending introduction of the mandatory disclosure requirements bythe regulatory authorities. A paired sample t-test was then undertaken to compare themeans over the two-year period. Table 3 presents the comparison of means for CSRDduring the pre-regulation years.Table 3: CSR Disclosures- Comparison of Means for Pre-Regulation YearsMean number of words of disclosure t-value SigYear 2005 Year 2006CSRD 286.14 353.91 1.125 0.262Results from Table 3 indicate that during the pre-regulation period, there is an increase indisclosure even though the increase is not significant. The increase could be related to theanticipation of legislation, increase awareness through media communication andintroduction of CSR awareness through awards by professional organisations. However,such factors are insufficient to significantly promote CSR disclosure during thisvoluntary period. Hence, H1 is not accepted.H2 predicts that the introduction of regulatory disclosure requirements in 2007 will resultin an increase in the extent of CSR disclosure. To test H2, a comparison was madeCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 138

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5between the means for the CSRD during the anticipated year (CSRD 06) and the meansof CSRD for the post-regulation year (CSRD 07). Results from Table 2 show that themeans of CSRD increased from 353.91 (CSRD 06) to 835.09 (CSRD 07) indicating asubstantial increase in disclosure between the two years due to the introduction ofregulation. To compare the means, a paired sample t-test is again undertaken to comparethe means over the two-year period. The result of this analysis is shown in Table 4.Table 4: CSR Disclosures - Comparison of Means between the Pre and Post-RegulationYearsMean number of words of disclosure t-value SigYear 2006 Year 2007CSRD 353.91 835.09 8.308 0.000**** Significant at the 0.01 levelResults from Table 4 shows that there is a significant increase in CSR disclosure from thepre- to the post-regulation year. While such disclosure is mandatory and there is nospecific requirement regarding the content of disclosure, the results indicate significantdifferences in the extent of disclosure for the two years. This suggests external regulatoryforces from the government are an important mechanism to promote CSR disclosure. Atthe same time this points to the possibility that more detailed and stricter enforcementregarding CSR disclosure could further enhanced the quality of CSR disclosure. CSRdisclosure quality could also be improved by having auditing and assurance certificationof such disclosure.5.2 Multivariate AnalysisIn this study linear multiple regression is used as the basis of analysis for testing H2 toH6. The hypothesized relationships are modeled as follows.CSRD = β 0 + β 1 EGREG + β 2 B LOCK + β 3 FAM + β 4 GOV + β 5 FOR β 6SIZE + β 7 ROA + ε twhere CSRD represents the extent of CSR disclosure while definitions forindependent variables are given in Table 1.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 139

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5In the above regression model, multicollinearity was tested using the variance inflationfactor and tolerance levels, and found to be well within the satisfactory range. The resultsof the regression analysis are presented in Table 5 and are now discussed in terms of testsof each of the hypotheses established in this study.Table 5: Multiple Regression Results for Factors Affecting the Extent of CSR DisclosureDependent Variable: CSRD (Extent of CSR disclosure)R Square = 0.445, Adjusted R 2 = 0.419, F = 16.485, Sig. = 0.000Variables Beta t Sig.(Constant) 0.936EGREG 0.329 4.814 0.000* * *B LOCK 0.050 0.688 0.493FAM -0.154 -2.256 0.026* *GOV 0.125 1.737 0.085*FOR 0.063 0.947 0.345SIZE 0.414 5.762 0.000* * *ROA 0.162 2.483 0.014* *Coefficient for each variable is shown with t – statistics in parentheses* Significant at 10% level (1-tailed test); * * Significant at 5% level (1-tailed test);* * * Significant at 1% level (1-tailed test)Results of the multiple regression analysis report that the F-statistic is 16.485 and theadjusted R 2 is 0.419 and the p-value is significant. The adjusted R 2 value is within therange as reported (0.389, 1996 disclosure and 0.453, 2002 disclosure) by Haniffa &Cooke (2005). H2 predicts that the presence of regulatory disclosure requirementsrelating to CSR will result in an increase in the extent of CSR disclosure. The results inTable 5 show that the change in the extent of CSR disclosure from the pre- to the postperiodis significant (EGERG). This result confirms the findings from the paired-samplet-test as reported in Table 4. Therefore, H2 is accepted.Table 5 also reveals that of the ownership variables, the family and governmentownership variables (FAM) are significant. However, variables relating to board interlockCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 140

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5(B LOCK) and foreign ownership (FOR) reveal insignificant results. As such, only H4and H5 are accepted.The insignificant relationship of B LOCK indicates that independent non-executivedirectors with multiple directorship does not facilitate managers’ disclosure strategies byimitating other companies practicing detailed CSR disclosure. A possible explanationcould be related to the strong influence of family owners on CSR disclosure. In thepresence of significant family ownership there is a high risk of collusion between theindependent non-executive directors and these owners. In such situation, they are morelikely to support the family owners in disclosing less detailed information on CSRdisclosure rather than facilitating managers by re-enacting the CSR disclosure strategiesof other companies of which they are board members.The negative effect reported for family ownership on CSR disclosure is consistent withprevious studies, for example, Ahmed and Nichols (1994), Ho and Wong (2001), Haniffaand Cooke (2002) and Nazli and Weetman (2006). In these companies, the highproportion of family members on the board indicates the existence of a dominant groupof shareholders or a substantial shareholder that could influence the board’s decision tonominate family members to the board (Nazli & Weetman, 2006). Accordingly, thesecompanies are likely to be closely held or owner managed (Claessens, Djankov, andLang, 2000). In such situation, the demand for published CSR information by the ownersis less as they have better access to internal information.The above results also suggest that family owned companies limit CSR information flowsto outside investors and other stakeholders. This indicates potential entrenchment effectof family owners on CSR disclosure because lower disclosure potentially creates greaterinformation asymmetry between inside owners and outside owners and other stakeholders(D. Wang, 2006). The lower extent of CSR disclosure reduces the ability of outsideinvestors and other stakeholders to monitor corporate social activities of family ownedcompanies.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 141

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5With regards to government ownership (GOV), the results indicate that companies withhigher government ownership disclose more CSR information. The results providesupport to the argument that agency conflicts in these companies are relatively higherthan privately-owned companies and are consistent with the findings by Eng and Mak(2003). The high agency conflicts are potentially associated with the government’scommitment to enhance the national welfare and other non-profit considerations. Theseconsiderations may not be directly consistent with value maximization profits ofcompanies with lower government ownership. Accordingly, managers in these companieshave higher incentives to disclose CSR information to reduce the high agency conflicts.Finally, the insignificant result reported for foreign ownership variable is inconsistentwith the findings in Haniffa and Cooke (2005). A possible explanation is that becausethere is a relatively low percentage of foreign ownership (mean = 6.63%) in the sample(as reported in descriptive statistics in Table 2). As such, this group of owners wouldhave low shareholder voting power and would not be able to formally demand greaterpublic disclosure of CSR from their company. Alternatively, the incentives to attract andmaintain foreign funds can induce close working links between management and foreignowners. Accordingly, these managers have higher incentives to supply CSR informationthrough private channels. Where foreign owners can gain informal access to CSRinformation from management in order to aid their decision-making, then they would notneed to push for greater public disclosure of CSR.6. Conclusion and LimitationsThis study makes a contribution to the corporate disclosure literature by providing newevidence that regulatory efforts are important mechanism in promoting greater corporatetransparency in CSR disclosure. The results revealed significant increase in CSRdisclosure in 2007 relative to such disclosure in 2006. This infers that when regulatorybodies emphasize CSR disclosures, managers align their CSR disclosure strategy withthose of the regulatory bodies. An implication of these findings is that regulatory effortshave the prospect of becoming a significant force in promoting the extent and quality ofCSR disclosure.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 142

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5In line with the regulatory efforts, the regression results show that companies withsignificant government ownership are positively associated with the extent of CSRdisclosure. The availability of CSR disclosures of these companies to the public and theemphasis by regulatory bodies and policy makers are important mechanisms that can shiftinvestors and other stakeholders’ expectations toward expecting more adequatedisclosure of CSR activities. This is also consistent with the argument that higherdisclosure of CSR activities are important mechanism in reducing agency costs in thesecompanies. Managers in these companies disclose more detailed CSR information tosignal government’s commitment in enhancing the disclosure of CSR activities to outsideinvestors and other stakeholders (Eng & Mak, 2003).In contrast to government ownership, the regression results revealed significant negativeassociation between family ownership and the extent of CSR disclosure. This resultshould be of interests to regulatory bodies as it demonstrates that the regulatory efforts donot appear to promote disclosures of CSR activities by these companies. In addition, itindicates potential entrenchment effect of family owners by disclosing less detailed CSRinformation to outside investors and other stakeholders. The insignificant results reportedbetween board interlock and the extent of CSR disclosure further corroborate thedominant influence of family owners on corporate disclosure. Instead of promotinghigher CSR disclosure through their participation on other boards, the results indicate theprospect of these directors colluding and supporting the disclosure strategies of familyowners. Hence, these findings provide regulatory bodies with enhanced understanding intheir efforts to improve corporate transparency.In summary, the findings in this study contribute to a better understanding of therelationships between various institutional pressures and ownership structure onmanagement CSR disclosure decisions. The findings also have practical implications toregulatory bodies in promoting and improving corporate transparency, other policymakers in strengthening capital market environment, to investment community and otherstakeholders who rely on corporate social disclosures in making their decisions.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 143

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5There are some limitations in this study. First, this study focused only on CSR disclosuresin companies’ annual reports. Other forms of communication channels such as thecompany’s web site, newspapers and in-house magazines have been used to communicatecorporate social responsibility activities. Hence, future research may consider suchdisclosures.Second, the empirical model adopted in this study may not capture other dimensions thatinfluence managers’ CSR disclosure decisions. Specifically, data collected to measure thevariables are limited to information disclosed in annual reports. Future research couldinclude data collection through more extensive interviews with preparers of the annualreports in order to gain more insights into the determinants of their disclosure decisions.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 144

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesAdams, C. A., Hill, W.-Y., & Roberts, C. B. (1998). Corporate Social ReportingPractices In Western Europe: Legitimating Corporate Behaviour? BritishAccounting Review, 30, 1-21.Aerts, W., Cormier, D., & Magnan, M. (2006). Intra-industry imitation in corporateenvironmental reporting: An international perspective. Journal of Accounting andPublic Policy, 25, 299-331.Ahmed, K., & Courtis, J. K. (1999). Association between corporate characteristics anddisclosure levels in annual reports: a meta-analysis. British Acccounting Review,31, 35-61.A-Tuwaijri, S. A., Christensen, T. E., & II, K. E. H. (2004). The Relations AmongEnvironmental Disclosure, Environmental Performance, and EconomicPerformance: A Simultaneous equations Approach. Accounting, Organizationsand Society, 29, 447-471.Barako, D. G., Hancock, P., & Izan, H. Y. (2006). Factors influencing voluntarycorporate disclosure by Kenyan companies. Corporate Governance, 14(2), 107-125.Botosan, C. A. (1997). Disclosure level and the cost of equity capital. The AccountingReview, 72(3), 323-345.Brandes, P., Hadani, M., & Goranova, M. (2006). Stock options expensing: Anexamination of agency and institutional theory explanations. Journal of BusinessResearch, 59, 595-603.Bursa Malaysia. (14 December, 2006). Bursa Malaysia Issues Significant EnhancementsTo The Listing Requirements For Main Board, Second Board and MesdaqMarket.Bursa Malaysia. (2006). Corporate Social Responsibility (CSR) Framework ForMalaysian Public Listed Companies.Carpenter, V. L., & Feroz, E. H. (2001). Institutional theory and accounting rulechoice:an analysis of four US state governments' decisions to adopt generallyaccepted accounting principles. Accounting, Organizations and Society, 26, 565-596.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 145

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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Westphal, J. D., Seidel, M.-D. L., & Stewart, K. J. (2001). Second-order Imitation:Uncovering Latent Effects of Board Network Ties. Administrative ScienceQuarterly, 46, pp. 717-747.Wilmhurst, T., and Frost, G. (2000). Corporate environmental reporting: a test oflegitimacy theory. Accounting, Auditing and Accountability Journal, 13(1), 10-26.Yongvanich, K., and Guthrie, J., (2006), An extended performance reportingframework for social and environmental accounting, Journal of BusinessStrategy and the Environment, Vol 15, No 5, pp. 309-321COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 150

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSThe Effect of Problem-Based Learning on StudentsTeamwork Ability in UiTM Trengganu, MalaysiaSEPTEMBER 2009VOL 1, NO 5Listed in ULRICH’SNoor Liza AdnanFaculty of Accountancy, Universiti Teknologi MARA, Terengganu, Dungun Campus,Dungun 23000, MalaysiaWan Karomiah Wan AbdullahFaculty of Information Technology and Quantitative Science, Universiti TeknologiMARA, Dungun Campus, Dungun 23000, Terengganu, MalaysiaKamaruzaman Jusoff (Corresponding author)TropAIR, Faculty of Forestry, Universiti Putra Malaysia, 43400 Serdang, Selangor.MalaysiaAbstractOne of the criteria looked for by the employers in employing a staff is the ability to workin a team, especially when employees of an organization could come from diversebackground and culture as a result of globalization. However, many of our graduates donot possess this ability, which later contributes to poor work performance. Many partiesblame the higher institutions as they fail to expose the students to real workingenvironment, since the teaching method used is more centered on delivering knowledgewithout inviting active participation from the students. Hence, this paper attempts toexamine whether Problem-Based Learning (PBL) would give positive effects to teamworkability (TWA) and to determine whether students of different gender and CGPA would evaluateTWA differently. A preferred learning approach was also sought. The respondents consistedof 48 graduating accounting students from UiTM Terengganu. It was discovered thatPBL did affect teamwork ability as measured by Paired Samples t-Test before and afterthe PBL session. They felt that their teamwork ability had been enhanced after a semesterof PBL. Independent Samples t-Test showed that both genders did not differsignificantly in their views of TWA as a result of PBL. However, students with lowerCGPA of below 3.00 felt that PBL had improved their TWA better than students withhigher CGPA of 3.00 to 3.49. When further probed, many preferred a combination ofCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 151

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5PBL and lecture approach rather than learning solely based on lecture. However, thisstudy was conducted on a rather small sample size which limits the scope of the study.Hence, another study which uses bigger sample size, across the whole UiTM campusesand various faculties would give a better picture on the effect of PBL on TWA.Comparison with other universities implementing PBL would provide a more holisticresult.Keywords: Problem-Based Learning, Generic competencies, Teamwork, Student1. IntroductionUnemployment among graduates in Malaysia has still been discussed heatedly bymany parties. To prove just how serious this phenomena is, Quek (2005) cited theresults of a study conducted by the Higher Education Ministry of Malaysia on this matter,which revealed that only 57 per cent of graduates were successful in securing jobs, 29 percent remained jobless while another 14 per cent went on to further their education.Previous researches carried out by Asma and Lim (2000); Lee (2000); Quek (2000) andKanapathy (2001) attempted to obtain feedback from various employers in Malaysia onthe contributing factors to this issue. They pointed invariably to the deficiencies oftertiary education in equipping students with generic competencies to meet the needs ofthe workplace as the lack of it can add liabilities to the corporations. Repeatedly, Quek(2005) cited a press release from the Human Resources Ministry of Malaysia whichexpressed that many graduates are good only in theory and many are unable to meet theexpectations of the corporate sector. Jacobsen (1993) described generic competencies assuccess skills in employees that are needed to transfer learning from the classroom to theworkplace for fulfilling work demands. In other words, Quek (2005) cited from variousresearchers that employers prefer workers who have generic competencies likeinterpersonal skills, leadership skills, teamwork and oral and written skills for workperformance.Albrecht and Sack (2000) had strongly urged accounting educators to take greatereffort to devise new pedagogical approaches by stating that, “Students forget what theymemorize. Content knowledge becomes dated and is often not transferable acrossdifferent types of jobs. On the other hand, critical skills rarely become obsolete and areCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 152

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5usually transferable across assignments and careers.” In addition, Duch, et al. (2001)suggested that accounting educators need to “design educational experiences for studentsthat require them to be active, independent learners and problem solvers rather thanpassive recipients of information.” A few years before, Woods (1997) pointed out thatPBL is the most effective teaching method in the most recent 30 years since the learningenvironment in PBL includes every kind of factors currently known to improve theefficiency of learning, hence equipping students with the generic competencies required.Moreover, according to Haghparast et al. (2007) PBL challenges students to ‘learn tolearn’ and work cooperatively in groups to seek solutions to foster effective learning,while Woods (1994) concluded that PBL is more than an extremely effectiveenvironment to learn subject knowledge as it can be used to help students develop skill inlifetime learning, change management, teamwork, conflict resolution and problemsolving. They learn through experience, through the benefit of working together and theylearn best from teaching each other and in the context of compelling problems (Cross,1998; Annis, 1983; McKeachie et al. 1986; Cross, 1999).Similar outcome was revealed by Margetson (1996) who stated that PBL canchange students’ role from being knowledge receivers to knowledge seekers as studentsare to develop their own plan of direction. However, she added that it can disturb theircomfort zone that leads to the building of tension among them. A key intention of PBL,cited by Alessio (2004), is that such tension may lead to learning material in a differentway, creating opportunities for self-directed and deep learning. Dahlgren & Dahlgren(2002) discovered that deep learning can occur when students work together in smallgroups and in self-directed learning, where independent thinking is encouraged.Apart from that, Prince (2004) stated that in a PBL environment, studentsexperience working as part of a team which provides a natural environment that promoteseffective team work and interpersonal skills. Dishon & O’Leary (1994) defined a teamas "a group of two to five students who are tied together by a common purpose, tocomplete a task and to include every group member." While Moy (1999) definedinterpersonal or team working skills as “the ability to work, adapt and interact withpeople of varied background or discipline, within or across organisations.” This willCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 153

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5obviously form an important experience as part of their preparation for work life in themodern business world. The same opinion was expressed by Krajcik et al. (1999) whosuggested that in order to succeed in the real world; students need to know how to workwith people from different background. This finding conformed to another researchfinding by Cockrell et al. (2000) who discovered that collaborative groups foster students'sense of ownership of the knowledge that is created over the semester and within thegroups, leadership moves from student to student as situations arise and resolve.Similarly, Challenger (2008) in his online newsletter asserted that one of the mostimportant requirements for success in today’s job market is the ability to be a teamplayer, especially now, when companies are beset on all sides by increasing competition.A major measure of what kind of an employee the candidate will be is whether theindividual has demonstrated teamwork ability. Of the same opinion is Firth-Cozens(1998) who stated that major change continues to occur in all successful organizationsand partly as a means of dealing with the changes, there is an increased emphasis on teamworking. Team working is seen as a way to tackle the potential fragmentation of servicesand improve service quality, to widen skills, and acts as an essential part of the need toconsider the complexity of modern services.However, as many researches had discovered, despite their potential benefits, it isclear that not everyone wants to work in team since it can cause some people within themdissatisfaction and unhappiness. Furthermore, not all team are effective, proving thatteamwork has to be trained and is not a byproduct. In the Malaysian context, tertiaryinstitutions should consider the implementation of new curriculum pedagogy that caninstill teamwork ability among the students rather than letting the students getting lost inthe process of acquiring it.The purpose of this study is to urge accounting educators to seriously considerPBL as a pedagogy that can better prepare accounting professionals effectively for thechallenges of the 21 st century, though Hansen (2006) states that PBL is still a relativelynew approach in accounting education. Therefore, this study aims to examine whetherPBL would give a positive effect to teamwork ability of accounting students of UiTMTerengganu and to determine whether students of different gender and CGPA wouldCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 154

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5evaluate TWA differently. A preferred learning approach was also sought. It is hopedthat the positive outcome of PBL will lead to the wide implementation of this approachby the management. Suggestions on the best way to conduct the PBL approach inclassrooms will also be looked into.2. MethodData were collected from all 50 first degree students from the Faculty of Accountancy,UiTM Terengganu undergoing PBL approach for the subject of Strategic Managementfor one semester. The Accounting Faculty was chosen as this was the only faculty thatfully implemented the PBL approach in its teaching of Strategic Management. The PBLapproach was implemented partially in handling other subjects; hence these subjects didnot meet the requirement of the study. After excluding two questionnaires due to missinginformation, the final response rate was 96% (48 students).Only one researcher was directly involved in the data collection. In the first session ofthe semester, students were explained about the PBL approach and were briefed on whatwere required and expected of them. The students were to form their own groupsconsisting of three to five members per group. Work and tasks were also assigned, ofwhich initially each group was assigned six case studies (known as Do-It-First project,DIF) that would cover the whole syllabus of Strategic Management. In the second andthird sessions, the researcher gave the enabling lectures that covered the overall syllabus.The class was conducted twice a week and each session lasted for two hours for a 14-week semester. In the fourth session, students began to brainstorm in order to solve thecase studies given which marked the beginning of the PBL session. At the beginning ofweek six, each group was to submit their written reports of DIF project which would befollowed by group presentations and a quiz. As the semester progressed, more casestudies were assigned and in every session, the groups presented the outcome of theirdiscussions and the researcher and other students participated in a question and answer(Q&A) session at the end of each presentation. Each group was allocated 15 minutes forpresentation and 5 – 10 minutes for Q&A session. Hence, students learned to defendtheir thoughts and were trained to reach a solution within a short span of time.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 155

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5The questionnaire developed was adapted from a few previous researches donethat consisted of two different sections - section A consisted of 6 items on students’background while section B consisted of 23 items evaluating the effect of PBL on thestudents’ teamwork ability. These items were evaluated using Likert Scale from 1, whichrepresented ‘strongly disagree’ to 7, which represented ‘strongly agree’. There wereseveral steps that guided items selection. First, all items which were related to the issuesarose in teamwork were pooled from Khoiny (1995), Bauer (2003) and Haslam et al.(2005). Each item was then scrutinized and only the most appropriate ones were selectedto be included in the questionnaire. However, items which were not that appropriatewere restructured or reworded to suit the course content and the learning experience thestudents had gone through. This was important as most of the items referred to wererelated to nursing or medical studies. Researchers had to use their own expert judgment,considering the long years in teaching experience, to ensure the content validity of theitems measured, guided by theory from several literatures. Data entry and analyses werecarried out using SPSS. Paired Samples t-Test and Independent Samples t-Testwere used to meet the objectives.The above researcher also made observation on thewhole process of PBL approach especially during group discussions and presentationsthat took place in the classroom, noting down the students’ reactions, opinions andremarks.3. Results and DiscussionsThe findings on the effect of PBL on students’ teamwork ability are discussedbelow.3.1 Does PBL Affect Team Work Ability?Most researchers like Parker (1990) and Cohen (1994) agreed that teamworkseems to be a central characteristic of PBL. Therefore, it was hypothesized thatstudents’ teamwork ability will be enhanced after a PBL session. Before furtheranalyses were conducted, an internal reliability test was done to determine if the 23 itemsevaluated were internally reliable to measure teamwork ability. The outcome with thehigh positive value of alpha of 0.925 confirmed that all items did measure the teamworkability. Based on Kolmogorov-Smirnov Test, p-values of 0.560 and 0.404 (which wereCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 156

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5greater than 0.05) for before and after the PBL session respectively denoting thedistribution of both teamwork ability before and after the PBL session were normallydistributed. Paired Samples t-Test was then conducted to see how students evaluatedtheir teamwork ability, before and after the PBL session. The test conducted showed thatthe evaluation after the PBL session generated a mean of 5.799 as compared to before thePBL session with a mean of 5.657. Though it is not significant at a confidence level of95% (p-value of 0.057), but considering that this was the first time the students werebeing exposed to fully PBL approach throughout their learning period, then it would befair to reduce the confidence level to 90% which would make it significant, indicatingthat there was a slight improvement to their team work ability after the PBL session, asshown in Table 1.Table 1 : Mean Comparison of TWA Before and AfterPBLTeam work ability Mean Std. DeviationBefore PBL 5.657 0.533After PBL 5.799 0.604Significant level (2-tailed) 0.057Upon seeing that PBL did give some positive impacts on students’ teamwork ability,further detailed investigations were carried out on how students by different genders andCGPAs perceived teamwork ability as a result of PBL as exhibited in Table 2; and also inrespect of 23 items related to students’ teamwork ability after the PBL session. Table 3listed the 23 items evaluated with the mean value and standard deviation for each item.3.2 PBL and Teamwork Ability Perceived by Gender and CGPATable 2 shows how students of different genders and CGPAs perceived theirteamwork ability as a result of PBL. Independent Samples t-Test conducted discoveredthat both male (mean value of 5.68) and female respondents (mean value of 5.84) gavealmost the same scores, indicating that both genders did not differ significantly in theirview of teamwork ability with a p-value 0.492.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 157

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5However, when examining their perceptions based on their CGPAs, the resultshowed that as a result of PBL approach, teamwork ability was better perceived bystudents with CGPA below 3.00 (mean value of 5.96) as compared to students withhigher CGPA of 3.00 to 3.49 (mean value of 5.48). This was significant at 99%confidence level, with a p-value of 0.008. From the researcher’s observation (who wasdirectly involved in the data collection), this could be due to the teamwork discussion inwhich each team member was expected to contribute ideas equally and this discussionalso ensured that every student in the group would gain the knowledge from the workdone. Therefore, weaker students would feel more at ease learning from their peers forpeer learning tends to eliminate the barrier to ask questions. However, smarter studentsmight feel that the process would slow them down especially when they felt that theycould not really rely on their weaker counterparts to complete their tasks satisfactorilyand this would require more time and commitment from them.Table 2: TWA Perceived by Gender and CGPABackgroundNo. ofStudentsMean *Std.Dev**Std.ErrorGenderMale 8 5.68 0.89 0.31Female 40 5.84 0.54 0.09CGPAUp to 2.99 33 5.96 0.53 0.093.00 – 3.49 15 5.48 0.62 0.16*Std. Dev = standard deviation; **Std. Error = standard error mean3.3 Students Evaluation on Their Team Work Ability as a Result of PBLFurther analysis on 23 items related to students’ teamwork ability as the effect of goingthrough a semester of PBL pedagogy was carried out and listed in Table 3. Mean valuescan be categorized as ‘slightly agree’ when it falls within the scale of 4 to

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5students with experience in both PBL and traditional pedagogy preferred the PBLpedagogy, stating greater independence, more flexibility, self-responsibility, teamwork,more student involvement, better understanding and integration of subjects and anenhanced learning environment working in groups. This satisfaction could be due toseveral factors, such as a more active role of students in a small group-based PBLpedagogy which offers a more holistic view. Conforming to this statement, studentsmoderately agreed that team interactions had certainly enhanced their learning (mean of5.81).With a mean value of 5.80, the respondents moderately agreed that they felt at easesharing their ideas with the team as each team member would prefer to discuss one's ideaeven though it sounds silly rather than totally rejecting it in the first place (mean of 5.96).They would carefully explore alternatives in order to attain maximum group benefit(mean of 5.68). This had somehow made them felt that their team members weresupportive to each other (mean value of 5.77) resulted to stronger ties among them (meanvalue of 5.77). Seaberry (2002) reported similar teacher observations of face to faceinteractions and active discussions among the PBL student groups, during class time.This was supported by Alessio (2004) who observed students using resources other thanthe required text, to search for answers and information designed to fill in gaps andconfirmed statements made by group members making students in the small PBL groupsengaged actively in the learning process and formed a type of learning community, witheach making a meaningful contributions, as they tackled the problems. The second lowestmean at 5.26 was scored for item no. 23 when students moderately agreed that they couldvisualize what was expected of them by their team members, hence enabled them tocomplete the task assigned by their team on time (mean of 5.56).Table 3: Students Evaluation on Their Teamwork Ability as a Result of PBLStandardNo. ItemsMean Deviation1 I always respect my team member's opinions or ideas. 6.30 0.682 I would try my best to contribute ideas in team discussions. 6.19 0.733 I can respect my team members' strength. 6.17 0.63I think it's easier to complete the given task in a group rather4 than working alone. 6.15 0.90COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 159

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5I would prefer to work together in a group in solving the5 same problem rather than working individually. 6.13 1.016 Through team work, I learn how to be responsible to others. 6.02 0.847I adapt well with any new changes/ideas agreed by the teammembers. 5.98 0.798 When working in a team, I can control my emotion. 5.98 0.81I would prefer to discuss one's idea even though it sounds5.969 silly to me rather than totally rejecting it in the first place.0.91I can take rejections and accept comments from my10 team members positively. 5.92 0.9011 My team members respect me well. 5.88 0.8912 I feel the team interactions enhance my learning. 5.81 0.9813 I feel at ease sharing my ideas with the team. 5.80 1.2014 I don't mind working with people with different school of thought. 5.79 1.0315 I feel strong ties with my group. 5.77 0.8616 I feel my team members are supportive to each other. 5.77 1.27I would carefully explore alternatives in order to attain17 maximum group benefit. 5.68 0.8618 I can generate positive effect to my group. 5.58 1.0319 I can always balance my team's interest and my personal interest. 5.57 1.1120 I can complete the task assigned by my team on time. 5.56 1.15Should there is a clash in schedule; I normally give21 priority to my team rather than my own affair. 5.42 1.13I think I can clearly visualize what is expected of me22 by my team members. 5.26 0.9823I am able to motivate my team members to solve difficultproblems. 5.19 1.04Basically, respondents strongly agreed that through teamwork they learnt how tobe responsible to others (mean value of 6.02). Respondents moderately agreed (meanvalue of 5.88) that their team members respect them well. As a result, they admitted thatthey could respect their team member's opinions or ideas (mean of 6.30), accepted theirstrengths (a mean of 6.17) and took rejections and comments positively (mean of 5.92).These have somehow trained them to be successful team players as described byChallenger (2008) who stated that an effective team member could sense whatcontributions need to be made, and how he or she can best support the group in achievingits goals through asking key questions at the appropriate time, or making observationsbased on the statements of others, melding differing views into a cohesive whole andCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 160

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5providing the perspective that is needed to establish a plan of action. In addition, headded that by respecting others, the team player has sensitivity to the needs of others forrecognition and does not propose any course of action without at first considering theviews of all parties who will be concerned with the decisions.Due to the ability to tolerate, working with others with different school of thoughtshould not be a problem to them (mean of 5.79). They also admitted to being able toadapt to any new changes or ideas agreed by other team members (mean of 5.98) as theybelieved that they could control their emotion when working in a team (mean value of5.98). These traits are highly needed in a successful teamwork as stated by Yalcin et al.(2006). They reiterated that an effective and democratically structured small PBL groupmay benefit from its relation with psychotherapeutic principles (listening and toleratinghostility) where group members themselves determine the rules resulting to improvingstudents’ communication skills. As a result, students can acquire abilities to worktogether, take initiative, share knowledge, and show mutual respect.Realizing the benefit and effectiveness of the PBL approach, 20.8% of the studentschose the PBL approach, while another 50% chose a combination of PBL and lecturewhen asked of their preferred learning approach. Only 29.2% of them chose lecturemethod alone (traditional method). It showed that the majority of the students preferred acombination method of PBL and lecture, indicating that students did recognize theeffectiveness of PBL, but somehow, a few lecture sessions were required to clear someambiguities and put things in the right path, especially when this was their firstexperience being exposed to the full PBL approach. PBL was still seen as very essentialto equip them with some soft skills like improving their communication skills, boostingtheir confidence level, stimulating their thinking process and others as shown in theabove tables. Therefore, combining both methods was expected to greatly contribute to amore effective learning.4. ConclusionTeam work is not a natural process arising from a meeting of a group of people.Obviously it needs to be trained and developed. One way to instill teamwork abilityamong the students is through the implementation of PBL sessions since teamwork seemsCOPY RIGHT © 2009 Institute of Interdisciplinary Business Research 161

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5to be a central characteristic of PBL. It trains the students to work in teams, both beforeand during the project. Different genders did not evaluate PBL differently, suggestingthat the method is accepted by all. PBL approach is also suitable to help weaker studentswho can learn more from their peers as it eliminates the barrier to ask questions and beasked as compared to traditional approach. A combination of PBL and lecture is mostpreferred by students who feel that both methods actually complement each other towardsa more effective learning. Besides encouraging deep-learning and life-long learning,students also acquired generic skills when working in group, like communication skills,problem solving, etc which are believed necessary to increase their self confidence and towin the employers’ attention. This will prepare them to cope with conflicts among teammembers, to make group decisions and to accomplish tasks for the necessaryorganizational preparations.This study was conducted on a rather small sample size which limits the scope of thestudy. This was also the students’ first experience learning under the PBL approachwhich might distort their evaluation. Hence, another study which uses bigger sample size,if possible across the whole UiTM campuses, and various faculties would give a betterpicture on the effect of PBL on TWA. Comparison with other universities implementingPBL would also provide a more holistic result.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 162

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5ReferencesAlbrecht, W.S. & Sack, R.J., (2000). Accounting Education: Charting the Course througha Perilous Future. Accounting Education Series, Vol 16, Issue 1.Alessio, H. (2004). Students Perception About and Performance in Problem-BasedLearning: Journal of Scholarship in Teaching and Learning, 4, 25-36.Annis, L. F. (1983). The process and effects of peer tutoring. Human Learning, 2, 39-47.Asma, A. & Lim, L. (2000), Cultural dimensions of Anglos, Australians and Malaysians,Malaysian Management Review, Vol. December, 9-17.Bauer, G. (2003). Summary Report: Qualitative assessment activities for Pew Grant onproblem-based learning (PBL). Unpublished Manuscript, University of Delaware.Challenger, J. E. (2008). Team Players are a step ahead [on-line] Availablehttp://www.mawaride.comCockrell, K. S., Caplow, J. A. H., & Donaldson, J. F. (2000). A Context for Learning:Collaborative groups in the problem-based learning environment. Review of HigherEducation 23 (3), 347-363.Cohen, E.G. (1994). Restructuring the classroom: Conditions for productive smallgroups. Rev. Educ. Res. 64: 1–35.Cross, K. P. (1998). Opening windows on learning: The cross papers number 2. MissionViejo, CA: League for Innovation in the Community College and EducationalTesting Service.Cross, K. P. (1999). Learning is about making connections: the cross papers number 3.Mission Viejo, CA: League for Innovation in the Community College andEducational Testing Service.Dahlgren, A.M., & Dahlgren, L.O., (2002). Portraits of PBL: Students’ experiences of thecharacteristics of problem-based learning in physiotherapy, computer engineeringand psychology. Instr. Sci. 30: 111–127.Dishon, D., & O'Leary, P. W. (1994). A guidebook for cooperative learning : A techniquefor creating more effective schools (2nd ed.). Holmes Beach, Fla.: LearningPublications.Duch, B. J., Groh, S. E., and Allen, D. E. (Eds.) (2001). The Power of Problem-BasedLearning. Sterling, VA: Stylus Publishing, Sterling, VA.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 163

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Firth-Cozens, J. (1998). Celebrating teamwork, Quality in Health Care, 7(Suppl), S3–S7.Haghparast, N., Sedghizadeh, P.P, Shuler, C.F., Ferati, D., & Christersson, C. (2007).Evaluation of Students and Faculty Perceptions of the PBL Curriculum at twodental schools from a student perspective: A Cross-sectional survey: EuropeanJournal of Dental Education, 11, 14–22.Hansen, D.J. (2006). Using Problem-Based Learning in Accounting: Journal ofEducation for Business, 81, 221-224.Haslam, C. (2005). Evaluation of PBL. Unpublished manuscript, University of Exeter,UK.Jacobsen, R.L. (1993). Shaking up the MBA, Chronicle of Higher Education, Vol. 40,18-19.Kanapathy, V. (2001), Building Malaysia's IT society. Raffles Review, 5 (1), 1-14.Khoiny, F.E. (1995). The effectiveness of problem-based learning in nurse practitionereducation. Unpublished doctoral dissertation, University of Southern California.Krajcik, J., Czerniak, C., & Berger, C., (1999). Teaching science: A project-basedapproach. New York: McGraw-Hill College.Margetson, D. (1996). Beginning with the essentials: why problem-based learning beginswith problems? Education of Health, 9, 61-69.McKeachie, W. J., Pintrich, P. R., Lin, Y.-G., & Smith, D. A. F. (1986). Teaching andLearning in the College Classroom: A Review of the Research Literature. AnnArbor: University of Michigan, National Center for Research to ImprovePostsecondary Teaching and Learning.Moy, J. (1999). The Impact of Generic Competencies on Workplace Performance,NCVER, Australia.Parker, M.G. (1990). Team players and team work. New York: Prentice-Hall.Prince, M. (2004). Does active learning work? A review of the research. Journal ofEngineering Education, 93 (3), 223-231.Quek, A.H. (2000). "Career choice and vocational fitness", Asian Psychologist, 2 (1), 56-58.Quek, A.H. (2005). Learning for the workplace: a case study in graduate employees'generic competencies, Journal of Workplace Learning, 17 (4), 231-242COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 164

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESSSEPTEMBER 2009VOL 1, NO 5Seaberry, J. (2002). Introducing problem-based learning into quantitative analyses: Aprimer guide and literature review. Journal of Excellence in College Teaching, 13,19-39.Woods, R. D. (1994). Problem-Based Learning: How to Gain the Most from PBL.Waterdown, Ontario: McMaster University Bookstore, Hamilton, Ontario.Woods, R. D. (1997). Instruction’s guide for problem based learning: how to gain themost from PBL. Retrieved from http://chemeng.mcmaster.ca/pbl/chpl.htm.Yalcin, B.M., Karahan, T.F., Karadenizli, D., Sahin, E.M., (2006). Short-term Effects ofProblem-based Learning Curriculum on Students’ Self-directed SkillsDevelopment, Croat Medical Journal, 47, 491-498.COPY RIGHT © 2009 Institute of Interdisciplinary Business Research 165