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International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comIJCBSVOLUME 4 I NUMBER 2 I FEBRUARY, 2013ISSN 2156-7506International Journal ofContemporary Business StudiesIn this issue:The Concept of Employability& Unemploymentamong Young Graduates in MalaysiaAnantha Raj A. ArokiasamyLife Satisfaction – A Critical Literature ReviewMs. Madhuri Mahato,Dr. Pranab KumarDemographic Segmentation and Its Effects onCustomer SatisfactionSamer Aziz,Dr. Zekeriya NasSurvey of Skills Required by the ForensicAccountants: Evidence from a Developing CountryDr. Madan BhasinNational Culture as a Moderator betweenInternational Diversification Strategy andPerformanceFarooq Ahmed Jam,Imran Saeed,Atif Ullah,Muhammad Arif,Hina GulAn International Journal Published byAcademy of Knowledge Processwww.akpinsight.webs.com2013©Academy of Knowledge Process1Copyright © 2013 IJCBS

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comInternational journal of Contemporary Business Studiesoooopublish monthly (one volume per year) fast publicationis open access to the full texthas the editorial board & reviewers comprise of renowned scholars across the globe,has the quality policy includes indexing according to APA manual and its current status isinternational.IJCBS is indexed & listed in:One of the largest Research Databases of worldIndexed in ProquestIndexed in CABELL-USAOpen Access PolicyThis journal provides immediate open access to its content on the principle that making research freely available to the publicsupports a greater global exchange of knowledge.LanguagePlease write your text in good English (American or British usage is accepted, but not a mixture of these). Authors who feel theirEnglish language manuscript may require editing to eliminate possible grammatical or spelling errors and to conform to correctscientific English may wish to use the English Language Editing serviceSubmissions to this journal proceeds totally online and please submit your article via:editorijcbs@ohio.usa.comCopyright © IJCBSTo protect the copyright of the journal enable, IJCBS and the Publisher, authors must assign copyright in their manuscripts toIJCBS. Authors should make sure on submission that the article is original, is not under consideration for publication by anotherjournal, has not previously been published elsewhere and that its content has not been anticipated by previous publication.2013©Academy of Knowledge Process2

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comInternational journal of Contemporary Business StudiesA journal of Academy of Knowledge ProcessSaddal H.AEditor-in-ChiefEditorial Board2013©Academy of Knowledge Process3

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com2013©Academy of Knowledge Process4

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comVOLUME 4, NUMBER 2February, 2013Contents:The Concept of Employability& Unemploymentamong Young Graduates in MalaysiaAnantha Raj A. Arokiasamy…………………………………………………….6Life Satisfaction – A Critical Literature ReviewMs. Madhuri Mahato,Dr. Pranab Kumar……………………………….32Demographic Segmentation and Its Effects onCustomer SatisfactionSamer Aziz,Dr. Zekeriya Nas………………………………………………….44Survey of Skills Required by the ForensicAccountants: Evidence from a Developing CountryDr. Madan Bhasin………………………………………………………………….54National Culture as a Moderator betweenInternational Diversification Strategy andPerformanceFarooq Ahmed Jam,Imran Saeed,Atif Ullah,Muhammad Arif,Hina Gul………………………………………………………872013©Academy of Knowledge Process5

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comThe Concept of Employability& Unemploymentamong Young Graduates in MalaysiaAnantha Raj A. ArokiasamyQuest International University Perak (QIUP)No. 227, Plaza Teh Teng Seng (Level 2),Jalan Raja PermaisuriBainun,30250 Ipoh,Perak, Malaysia.ABSTRACTThe changing scenario among Malaysian employment sector and career patterns fuelledwith wearing down of job security has led to a growing emphasis on employability issue.This study was conducted as a consequence of Malaysian society’s growing concern overthe issue of high unemployment among young graduates. Fugate et al. (2004),employability was defined as “a psycho-social construct comprised of three dimensions –adaptability, career identity, human and social capital”. A total of 450 young graduatesparticipated in this study to test empirically Fugate et al.’s model. This study explored theindependent variables and identified the issue relating to “adaptability” as the mainreason for today’s high and uprising unemployment among young graduates in Malaysia.Keywords: Employability, Unemployment, Graduates, Career, Adaptability.1.0 INTRODUCTIONTo cope with the pressures of globalization, business entities are witnessing “change” as being constantleading to restricting and downsizing of business processes, mergers and acquisition of technologicaladvancements in the globalized world of business (Greenhaus, Callanan&Godshalk 2000, Appelbaum,Ayre& Shapiro 2002, Baruch 2004). As Baruch (2004) places it, “change has always been with us but itseems that the pace of change is accelerating”.Clarke (2007) cited that organizations that have areputation for hiring or training good caliber people, with many years of experience in a company or in aspecific field highlighted that employability measures the tangible and quantifiable criteria, for exampleemployee’s having the appropriate qualifications, having a particular job title or being identified with aparticular organization. Indeed, education and training play a significant role to employability. Asmentioned by Groot and Maassen van den Brink (2000), education and training are vital as they createworkers who will become more employable within the firm and greater employability increases the levelof internal flexibility.According to Clarke and Patrickson (2008), employees with the right skills and in demand have primarilybenefited by employment. In today’s competitive business environment, long-term job security byemployers is out of the question; organizations are now driven by their sheer need to be flexible,adaptable, dynamic and efficient (Clarke and Patrickson (2008). To remain competitive, manyorganizations are transforming themselves by reorganizing, investing in high-technology and evenconsidering retrenchment as part of their cost-cutting measures to stay competitive in the business world.Groot and Maassen van de Brink (2000) have distinguished between the workers’ internal and externallevel of employability.2013©Academy of Knowledge Process6

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comExternal employability refers to the ability and willingness to switch to a similar or another job in anotherfirm, and therefore reflects the value of the workers’ within the realm of human capital in the externallabor market. For instance, employees who are able to switch to a similar job in another firm, must bewilling to work in another firm provided that he/she will perform a similar job or will not have anyproblems doing a different job in another firm, being confident that with the skills, knowledge andexperiences or confident that he/ she is employable in another firm are considered as having externalemployability.Internal employability refers to a worker’s ability and his willingness to remain employed with the currentemployer, which is the value of a worker’s human capital in the internal labour market. Trainedemployees can be employed within the firm with less supervision. Employees can multi-tasks within thedepartment or firm or relocated/reassigned to different department to perform tasks whereby they becomeemployable to perform different tasks within the firm. Internal employability rate further improves theircareer path as they come prepared with the right skills, education level and qualifications to enhance theirworking career. The idea of employability is of concern nowadays with the uncertain economic situationthat exposes both the employers and employees to various ambiguities. Employees who are less skilledand competent are susceptible to retrenchment. Employers have to juggle between the need to containcost and maintain productivity to ensure efficiency. Having only the right people with the right skills atthe right time is their priority. Thus, employees should have marketable skills that ensure them apromising career ahead.The changes made in today’s organizational context do not only result in the erosion of job security andthe transfer of career-management responsibilities that concerns employability, there is also a change inthe definition of career success itself. According to Baruch (2004), one’s career success was traditionallybased on hierarchical, highly structured, and rigid structures, thus it has a clear linear direction ofprescribed prospects or promotion. In today’s volatile environment however, the nature and notion ofcareers have changed as people now experience different ways of defining career success, for instance, itcould be a sideway move, change of direction, of organization and of aspiration (Baruch, 2004).Finally, with the resurgence of employability issues in the business environment, more detailedexploratory study is needed to address the issues of career and employment in this area. For instance,according to Steward and Knowles (2000), the main motive for students to attend university is no longerto study a particular subject in depth but instead to enhance their employment prospects.In total, thechanges taking place economically and the likelihood of recognizing career self-management will muchdetermine success of individual’s employability. However, despite its widespread use across both theacademicand popular management literature, what exactly constructs employability remainselusive(Clarke and Patrickson, 2008), thus setting a very ambiguous and dynamicworking environment.2.0 LITERATURE REVIEW2.1 EmployabilityEmployability has been in the spotlight since the 1990s (Forrier&Sels, 2003), but the historicalantecedents of the current debate can be traced back almost a century (see Gazier, 1998; McQuaid&Lindsay, 2005). Employability has been conceptualized from three different perspectives, the economicsocial,the individual, and the organizational (Van Dam, Van der Heijden, &Schyns, 2006). Within theeconomic-social perspective, employability refers to the ability of different categories of the labour forceto gain and maintain employment (Finn, 2000). This perspective distinguishes between the employableand the unemployable (McQuaid& Lindsay, 2005), a distinction that is closely related to governmental2013©Academy of Knowledge Process7

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.cominterventions aimed at encouraging unemployed people to enter the labour market (Forrier&Sels, 2003).Over time, these interventions have been targeted at different groups, ranging from the physically andmentally disadvantaged people in the 1960s, women in the 1970s, to young drop-outs and minorities inthe current age.Since the 1990s, an individual perspective on employability has emerged, shifting attention from theunderprivileged unemployed to the entire population. Careers have increasingly become boundaryless. Todate, more boundaries (e.g. occupational, departmental, and organizational) are crossed in comparisonwith earlier and more predictable hierarchical careers (DeFillippi& Arthur, 1996; Gunz, Evans, &Jalland,2000). Employees need to be focused on their adaptability for attaining a job within or outside theirorganization. As such, employability has been considered an alternative to job security (Forrier&Sels,2003). Definitions of employability within the individual perspective are abundant (see Forrier&Sels,2003; McArdle et al., 2007; McQuaid& Lindsay, 2005; Rothwell& Arnold, 2007), emphasizing careeraspects such as adaptability (Fugate et al., 2004), mobility (Van Dam, 2005), career development (Sterns& Dorsett, 1994), occupational expertise (Van der Heijde& Van der Heijden, 2006), and personaldevelopment and lifelong learning (Bezuijen, 2005; Hillage& Pollard, 1998; Rothwell& Arnold, 2007).The concept of employability has been expanded even more to include everyone in the labor market sincethe mid 1990s, focuses on the capacities and abilities of the individual. Being employable is determinedby how well individuals fit into the labor market based on, for example their human and social skills(Berntson, 2008; Fugate, Kinicki, and Ashforth, 2004). Emphasis on the interaction between individualskills and labor market opportunities has developed the concept of interactive employability, discussed byGazier (2001) and McQuaid and Lindsay (2005) (as cited in Berntson, 2008).2.2 Openness to Changes at WorkOpenness to change can be described as one of theattitudes to change. Before mentioning the definition ofopenness to change, it isnecessary to ascertain the meaning behind openness. Openness is defined astheextent to which an individual accept experiences, present responsive thinking,share information for theprogress of others with expecting the protection of his orher well-being (Petersen, 2008).Openness toorganizational change is defined by Miller etal. (1994) as “(a) willingness to support the change and (b)positive affect aboutthe potential consequences of the change (e.g., feeling that the changes willbebeneficial in some way)” (cited in Wanberg&Banas, 2000, p. 132). As Miller etal. (1994) asserted,proposition and implementation of openness to changes in anorganization is a “necessary, initial conditionfor successful planned change”.According to Fugate and Kinicki (2008), openness to change is related withdispositional employability,which refers to individual differences that encompassindividuals for reactive and proactive orientation toadaptability in terms ofknowing the demands of the environment and having perpetual readinessforchange. Dispositional employability perspective suggests that being open to newexperiences fosterscontinuous learning and make individual to understand careeropportunities and improve adaptability ofthe individual. Since open peopleconsider change as a challenge rather than a threat, they are willingly toacceptnew technologies and processes (McCartt&Rohrbaugh, 1995) and becomeadaptable forrequirements of dynamic working conditions with being moreemployable (Fugate &Kinicki, 2008).2.3 Work and Career ProactivitySurvival in turbulent career environment requires workers to continuallymanage change – in themselvesand their contexts. Thus a person’s ability andwillingness to adapt is essential to career success (Hall,2002; Pulakos, Arad,Donovan, and Plamondon, 2000) (as cited in Fugate et al., 2004).Despite different2013©Academy of Knowledge Process8

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comlabels and theoretical underpinnings,concepts that relate to individual-level proactive behaviortypicallyfocus on self-initiated and future-oriented action thataims to change and improve the situation or oneself(Crant, 2000;Unsworth& Parker, 2003). Thus, Crant (2000) refers to proactivebehavior as “takinginitiative in improving current circumstances;it involves challenging the status quo rather than passivelyadaptingpresent conditions”.Bateman and Crant (1993) argued that proactive individuals actively createenvironmental change, whileless proactive people take a more reactive approach towardtheir jobs. Thus, proactive personality refers tothe general disposition to make activeattempts to effect changes in one's environment, and is crucial inmodern organizationscharacterized by fast changes and reduced supervision. Proactive peopleidentifyopportunities and act on them, show initiative, take action, and persevere untilmeaningful changeoccurs (Crant, 1996).2.4 Career MotivationCareer motivation provides many benefits to workers, such as enhanced drive for work-related endeavors,persistence during periods of boredom or frustration, and sustained effort in facing challenges (Fugate,2006). KanferandHeggestad (1997) argued that by setting goals, workers with high motivation control aremore motivated at work, persist during periods of boredom or frustration, and sustain effort in the face ofchallenges (as cited by Fugate et al., 2008). According to JolantaKowal et al. (2009), motivation isconsidered as a state of human readiness to start a certain action. It is also the readiness of an employee toperform organization tasks. Motivation is the action’s wish, consisting in appropriate application of bothrewards and punishments.London (1983) suggested that individuals who have career motivation will have desire for upwardmobility; they would establish career paths to further their advancement possibilities, request to beconsidered for promotions, volunteer for important assignments, request and assume leadership roles, andrequest salary increases (as cited by Day and Allen, 2004). London (1983) also suggested that those whoare high in career motivation might have greater career advancement opportunities since they work harderon career assignment that will affect their career.Career motivation behaviors have been theorized topredict promotions and salaries, yet only one empirical study to date has shown career motivation to beassociated with promotions (Jones and Whitmore, 1995). Furthermore, Day and Allen (2004) extendedthis line of research in the present study by relating career motivation with both objective and subjectivecareer success. The results indicated that there are significant relationships between career motivation andcurrent salary.2.5 Work and Career ResilienceThe term “career resilience” originated in London’s Career Motivation Theory proposed in 1983. Hiscareer motivation theory intended to explain what motivates managers to engage in and meet managerialrole requirements. The theory then expanded beyond managers to all workers, and went further toencompass motivation associated with a wide range of career decisions and related behaviors. Londonand Mone(1987) defined career resilience as “the ability to adapt to changing circumstances, even whenthe circumstances are discouraging or disruptive” (p. 62). London (1983) posited three sub-domains undercareer resilience: self-efficacy, risk taking, and dependency. He elucidated that the self-efficacy subdomainincludes self-esteem, autonomy, adaptability, internal control, need achievement, initiation,creativity, inner work standards, and development orientation.Career resilience is the key to overcoming career stress and career barriers (London &Mone, 1987).People high in career resilience are able to control what happens to them; they are willing to take risks2013©Academy of Knowledge Process9

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comeven when the outcome is uncertain; they can tolerate the unambiguous situation; they get a sense ofaccomplishment and persist in their goals; they are autonomous and able to adapt to changing conditions;and they work independently, but can cooperate with others if they need to. Understanding one’s ownresilience and providing opportunities to enhance it should help the individual overcome career barriers.Waterman et al. (1994) and Collard et al. (1996) promoted building a resilient workforce in response tothe changing and competitive workplace. From their point of view, resilient workers should takeresponsibility for their own career management and enhance their employability skills.2.6 Work IdentityWork identity describes one’s self-definition in the career context; it provides direction for futureopportunities and behaviors, at the same time organizing his or her past experience (Fugate, 2006).According to Fugate et al. (2004), work identity resembles constructs like role identity, occupationalidentity, and organizational identity in that they all refer to how people define themselves in a particularwork context. In other words, people who define themselves as employable tend to exhibit attitudes andbehaviors that are consistent with the perception that they are employable, which also influences theirpersonal career goals and ambitions (DiRenzo, 2010). Specifically, work identity refers to the extent towhich one’s career is central to one’s identity. Research has found that people who have lesser work roleshave lower career aspirations, do less career planning, and are less satisfied with their careers (Valcourand Ladge, 2008).The research done by McArdle et al. (2007) proposes that, by being proactive and adaptable andmaintaining a strong work identity, employable individuals may be more likely to see the positiveoutcomes that can come from unemployment. As a consequence, unemployed people may use job loss asa time for critical reflection on career identity and direction. In other words, unemployment could serve asan opportunity to affect change and strengthen one’s career identity, thus maintaining a positive selfesteemdespite being unemployed.Work identity works together with self-efficacy to facilitateidentification of career opportunities and pursuit of career goals (Valcour et al., 2008). Bandura (1997)refers self-efficacy as individuals’ beliefs about their abilities to solve tasks or take on certain roles (ascited by Berntson, 2008). Meanwhile, Stajkovic, and Luthans (1998) said that self-efficacy also representsan individual‘s confidence in his or her ability to be successful at specific tasks or within a given context(as cited by DiRenzo, 2010).2.7 Human CapitalHuman capital theory suggests that education or training raises the productivity of workers byimpartinguseful knowledge and skills, hence raising workers’ future income by increasing their lifetimeearnings(Becker, 1964). Becker (1964) and Mincer (1974) provide an explanation that links investment intrainingwith workers’ wages. In particular, their theory draws a crucial distinction between generaleducation andfirm-specific training. While Becker (1964) suggests that education or training raise the productivity ofworkers by impartinguseful knowledge and skills, others provide different explanations for how educationis related to worker productivity. One is based on the argument that the higher earnings of educatedworkers simply reflect theirsuperior ability acquired during the process of education, rather than throughskills and knowledge. Spence(1973) argues that education is used as a market signal to indicate thepotential productivity of workers.Human capital is “generally understood to consist of the individual’s capabilities, knowledge, skills andexperience of the company’s employees and managers, as they are relevant to the task at hand, as well asthe capacity to add to this reservoir of knowledge, skills, and experience through individual learning”(Dess&Picken 2000:8).For another example, a recent study by Crossman and Clarke (2009) hasfound2013©Academy of Knowledge Process10

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comemployers to favour graduates with international experience as theywere perceived to have good benefitsand outcomes such as networkingpotential, experiential learning opportunity, additional languageacquisition,and the development of soft skills. Working experience is a good example ofthe significanceof human capital in the role of seeking employment as it isone way for graduates to demonstrate what keyemployability skills they haveacquired by providing this evidence of work-related or experientiallearning(as cited in Crossman and Clarke, 2009).Lastly, according to a study by Bernstein (1976), graduates with practical experience such as workingexperiences have positive changes in feelings of personal and social efficacy, also resulting in showing agreater sense of responsibility and career development which eventually leads toward high employability(as cited in Muhamad, Yahya, Shahimi, and Mahzan, 2009).2.8 Social CapitalThe concept of social capital is currently receiving a lot of attention fromdevelopment agencies andresearch institutions. Falk and Kilpatrick (1999) argue that the accumulation of social capital is theoutcome of the process of learning interactions. Learning interactions require a learning event (an actualoccasion) and occur in a contextual dimension (the broad, socio-cultural and political frame of reference).A precondition to building social capital is the existence of a sufficient quantity and quality of learninginteractions. For example Falk and Kilpatrick suggest that quality learning interactions includes anhistorical context, external interactions, reciprocity, trust, shared norms and values.The planning and implementation of community projects may be one such learning interaction. Uphoff(1999) distinguishes between structural and cognitive social capital. Structural social capital involvesvarious forms of social organization, including roles, rules, precedents and procedures as well as a varietyof networks that contribute to cooperation. Cognitive social capital includes norms, values, attitudes andbeliefs. Structural and cognitive social capital is complimentary: structures help translate norms andbeliefs into well coordinated goal-orientated behaviour.Other authors (Sabel, 1994) argue that social capital builds up as a result of all actors committingthemselves to ongoing negotiations based on shared understanding of common goals. Hechter (1987)suggest a multistage process for building group solidarity. Having joined together members must deviserules and procedures, which get institutionalized over time. Internalizing rules and procedures, membersmoderate their behaviour so that these correspond to the expectations others have. This build up of socialcapital of formal rules and mutual expectations facilitates extending group activities into previouslyunexplored areas.3.0 PROPOSED THEORETICAL FRAMEWORK3.1 Fugate, Kinicki and Ashforth (2004)Fugate et al. (2004) provide not only the conceptual foundation for the construct of employability but alsoprovides the conceptual glue that integrates the component dimensions of employability (i.e. careeridentity, personal adaptability and social and human capital). Fugate et al. (2004) argued thatemployability captures the aspects of each of the three dimensions that facilitate the identifications andrealization of career opportunities within and between organizations. Please refer to figure 3.1 below.2013©Academy of Knowledge Process11

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comFigure 3.1: Employability as a Psycho-social ConstructPersonal AdaptabilityCareer IdentityEmployabilitySocial and Human Capital(Source: Fugate, M., Kinicki, A.J., and Ashforth, B.E. (2004). Employability: A Psycho-social Construct, itsdimensions and applications. Journal of Vocational Behaviour, 65, 14-38)According to Fugate et al. (2004), employability has meaning only when the component dimensions areconsidered collectively rather than independently. In other words, it means that one’s perceived ability toidentify and realize career opportunities (i.e. one’s perceived employability) is derived from their careeridentity, personal adaptability and social and human capital. However, it makes more sense to say thatsocial and human capital cause employability rather than employability causes social and human capital.3.2 Fugate and Kinicki (2008)Objective of Fugate and Kinicki’s (2008) study is to provide an initial validation of a dispositionalmeasure of employability (DME). While many personal characteristics potentially influence thepropensity to identify and realize career opportunities, five dimensions deemed critical and representativeof the active and adaptable nature of dispositional employability were chosen by Fugate et al. (2008):openness to changes at work, work and career resilience, work and career proactivity, career motivationand work identity. Please refer to figure 3.2 below.Figure 3.2: Dispositional Measure of Employability (DME)Openness to Changes at WorkWork and Career ProactivityWork and Career ResilienceDispositionalEmployabilityCareer MotivationWork Identity(Source: Fugate, M., Kinicki, A.J., (2008). A Dispositional Approach to Employability: Development of ameasure and test of implications for employee reactions to organizational change. Journal of Occupationaland Organizational Psychology, 81(3), 503-527)2013©Academy of Knowledge Process 12

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com3.3 Bernston (2008)Bernston (2008) adopted an interactionist’s perspective to interpret perceived employability and he arguesthat individual’s perceptions of being employable is affected by both individual and situational factorsthus combine both individualist and situationalist’s points of view. Ekehammar (1974) definedindividualists as those who argue that situational factors have very little impact on the perception of asituation and therefore maintain that perceptions could be looked upon as nothing but individual factors,while situationalists claim the vice versa (as cited in Bernston, 2008).Situational factors discussed include (i) labor market structure, (ii) labor market opportunities, and (iii)organizational factors. While individual resources refer to (i) knowledge and skills (i.e. human capital),(ii) social capital, (iii) attitudes, (iv) demographics, and (v) dispositions. Please refer to figure 3.3 below.This study pointed out the importance of mere employability perception, as feeling employable providesindividuals with a sense of security and control over one’s career, aligned to the concept of employabilitysecurity. Such perception potentially affects the individual’s ability to handle stress, commitment towardsorganizations and proactivity at work (Berntson, 2008). It is important to understand how perceivedemployability affects actual employability, as the outcome or result of employability (i.e. employment) isviewed as the most significant for employees.Figure 3.3: Determinants of EmployabilitySituational FactorsLabour Market StructureLabour Market OpportunitiesOrganizational FactorsIndividual ResourcesKnowledge and SkillsPerceivedEmployabilitySocial CapitalAttitudesDemographicDispositions(Source: Bernston, E (2008). Employability Perceptions: Nature, Determinants and Implications for Health andWell-being2013©Academy of Knowledge Process13

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comFigure 3.4 below shows the proposed theoretical model of the study, as a result of adaptation andmodification of several relevant theoretical models and constructs. Dispositionalmeasure of employability(DME) by Fugate and Kinicki (2008) is adapted as a complete measurement of disposition in work andcareer context, consists of (i) openness to change at work, (ii) work and career proactivity, (iii) careermotivation, (iv) work and career resilience, (v) career identity.The other part of the model, career capital is adapted from DiRenzo (2010). Career capital as conversedby DiRenzo (2010) consists of (i) social capital, (ii) human capital, and (iii) psychological capital.However, only social and human capitals are included in this model whereas psychological capital is not,to avoid duplication as it displays characteristics similar to disposition in work and career context (Fugateand Kinicki, 2008) mentioned earlier. Meanwhile, dependent variable (i.e. perceived employability) istaken from Berntson‘s (2008) theoretical framework. As perceived employability (Berntson, 2008) isdeemed to share similar elements in conceptual foundation with actual employability (Fugate et al.,2004), thus it is reasonable to presume perceived employability (Berntson, 2008) will result in actualemployability (Fugate et al., 2004). The purpose of this study is to examine the relationship between theseven independent variables and dependent variables. Therefore, eight hypotheses have been developed toallow comprehension of the examination. Please refer to figure 3.4 below for the proposed theoreticalmodel.Figure 3.4: Proposed Theoretical ModelCareer CapitalSocial CapitalHuman CapitalDMEOpenness to changes at workPerceivedEmployabilityActualEmployabilityWork and Career proactivityCareer motivationWork and Career resilienceWork Identity2013©Academy of Knowledge Process14

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com3.4 Research ObjectivesThe research objectives in this study can be categorized into general objective and specific objective.3.4.1 General ObjectivesThis section primarily describes the purpose of the research. In this study, the general objectives are:• To examine the “perceived employability” among young graduates by comparing past models ofemployability with freshly employed graduates (Fugate et al., 2004)• To examine the “dispositional employability” approach to employability with the adoptedvariables; “openness to change at work, work and career proactivity, career motivation, work andcareer resilience and work identity (Fugate, 2006)• To examine the theory of “career capital” with its adopted variables of social capital and humancapital against Bernston’s (2008) concept of “perceived employability”.3.4.2 Specific ObjectivesThe specific objectives in this study are as below:1) To examine the relationship between openness to changes at work with perceivedemployability.2) To examine the relationship between work and career proactivity with perceivedemployability.3) To examine the relationship between career motivation with perceived employability.4) To examine the relationship between work and career resilience with perceivedemployability.5) To examine the relationship between work identity with perceived employability.6) To examine the relationship between social capital with perceived employability.7) To examine the relationship between human capital with perceived employability.3.5 Research QuestionsMore specifically, this study is conducted to ravel out the following questions:1) Is openness to changes at work significantly explaining graduates’ perceivedemployability?2) Is work and career proactivity significantly explaining graduates’ perceivedemployability?3) Is career motivation significantly explaining graduates’ perceived employability?2013©Academy of Knowledge Process15

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com4) Is work and career resilience significantly explaining graduates’ perceivedemployability?5) Is work identity significantly explaining graduates’ perceived employability?6) Is social capital significantly explaining graduates’ perceived employability?7)3.6 Hypotheses of the StudyThe hypotheses of the study are developed as below:H1: There is a significant relationship between openness to changes at work and perceivedemployability.H2: There is a significant relationship between work and career proactivity and perceivedemployability.H3: There is a significant relationship between career motivation and perceived employability.H4: There is a significant relationship between work and career resilience and perceivedemployability.H5: There is a significant relationship between work identity and perceived employability.H6: There is a significant relationship between social capital and perceived employability.H7: There is a significant relationship between human capital and perceived employability.H8: The seven independent variables (openness to changes at work; work and career proactivity;career motivation; work and career resilience; work identity; social capital; human capital) aresignificant in explaining the variance in perceived employability.4.0 METHODOLOGY4.1 Research DesignQuantitative research method is adopted in this research. This technique studies large group of people andmaking generalizations from the samples being studied to broader group beyond these samples.Commonly used methods of research design are exploratory, descriptive and explanatory studies. Thepurpose of this study is to investigate:(1) The perceived employability among fresh graduates against their individual characteristics andcareer-related capitals, in order to determine the relationship between the variables.(2) As descriptive studies are commonly associated with finding out the “what is” question, henceobservational and survey methods are frequently used to collect descriptive data. Positivisticapproach was adopted in this research because this approach: (1) allowed the researcher to searchfor truths of the observation by empirical evidence via the hypothetico-deductive method; and (2)many researches and observations on the consumer attitude towards advertising had beenconducted and the extant literature was well developed (Jankowicz, 2005). Because of the limitedknowledge on employability, study of journals related to the topic is necessary for researchers togain the related knowledge more in-depth. The purpose of exploratory research process is toprogressively narrow down the scope of the research topic, and to transform discovered problemsinto defined ones, incorporating specific research objectives (Zikmund, 2003). After intensiveexploration on employability topics, the researchers decided to investigate how one’s perceivedemployability can help one’s to cope with the changing workplace environment.2013©Academy of Knowledge Process16

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com4.2 Data CollectionIn this research, the primary data are collected using questionnaire survey. A questionnaire, also known asself-administered survey is handed out to certain targets or segments of people to gather data andinformation desired. For the purpose of this study, 450 copies of questionnaire were distributed. Theselected area was in Penang and the institutions selected were UniversitiSains Malaysia, INTIInternational College Penang, SEGi College Penang and Olympia College Penang.5.0 DATA ANALYSISA total of 450 sets of questionnaires were distributed to the potential respondents and a total of 387questionnaires were collected. Out of this, 23 sets of the questionnaires were considered unusable becauseover 25 percent of the questions in Part 1 – Section A of the questionnaire were not answered (Sekaran,2003). It was assumed that the respondents were either unwilling to cooperate or not serious with thesurvey. Therefore, only 364 usable sets of collected questionnaires were used for the data analysis.Thereby, the response rate was 80.89 percent. Section A collects the respondents’ demographic datawhich consists of elements such as gender, age, ethnicity, and marital status. Section B consists of sevenindependent variables, which is of this study’s main purpose: to determine the individual dispositionalcharacteristics and career capitals that affect the respondents’ perceived employability. Each variablecomprises of three to ten questions that are required to be answered by the respondents. Section C consistsof six questions asking about the respondents’ perceived employability. SPSS was used to test therelationship between the independent variables and dependent variable using Pearson Correlation andMultiple Regression Analysis.5.1 Sampling Size and Technique5.1.1 Sampling SizeSampling size was defined as the number of elements to be included in the study (Malhotra, 2005).Creswell (2005) stated that “the larger the sample size, the less potential error”. Thus for this study, thebigger sampling size is more accurate in contrast to smaller sampling size and adequate size of the samplecan be used to estimate accurate actual population parameters and reduce sampling error. Candidates mustmeet three conditions or requirements before qualified as valid respondents. Proper selection ofrespondent is essential for the study to achieve its research objectives. Working fresh graduates, in ourstudy refers to graduates who:(i) Are fresh graduates from their respective institutions within 12 months;(ii) Currently employed and(iii) Have worked for not more than one year (12 months).In other words, graduates who were graduated for more than 12 months or have more than one year ofworking experience would not be deemed as working fresh graduate’s in our research context.5.1.2 Sampling TechniqueNon-probability sampling is used, instead of probability sampling because of unavailability of samplinglist which defines every element in a population. There are four types of non-probability samplingtechniques which are (i) convenience sampling, (ii) judgment sampling, (iii) snowball sampling and (iv)quota sampling. The types of non-probability sampling that were used in this study are judgmentsampling and snowball sampling.2013©Academy of Knowledge Process17

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com5.2 Profile of the RespondentsBased on the survey, the male respondents represented 41.6 percent of the total respondents while femalerespondents represented 58.4 percent. This is a normal phenomenon because majority of the respondentswho are considered fresh graduates are female. The highest proportion of respondents are Chinese (79 %or 288 respondents), followed by Indian (11% or 40 respondents), Malay (9 % or 33 respondents), andothers (1 % or 3 respondents). Majority of the respondents are Chinese, because most students in theselected higher learning institution are Chinese.5.3 Reliability TestAccording to George &Mallery (2003), reliability is the degree to which measure are free from error andtherefore yield consistent results. The reliability of a measure indicates the stability and consistency withwhich the instrument measures the concept and helps to assess the ‘goodness’ of a measure (Cavana,Delahaye and Sekaran, 2001). According to Sekaran (2003), the closer the reliability coefficient gets to1.0, the better it is, and those values over .80 are considered as good. Those values in the .70 is consideredas acceptable and those reliability value less than .60 is considered to be poor (Sekaran, 2003). All theconstructs were tested for the consistency reliability of the items within the constructs by usingCronbach’s alpha reliability analysis. Based on Table 5.1 below, the results indicated that the Cronbach’salpha for all the eight constructs were well above 0.70 as recommended by Sekaran(2003). Cronbach’salpha for the constructs ranged from the lowest of 0.734 (social capital) to 0.884 (openness to changes atwork). In conclusion, the results showed that the scores of the Cronbach’s alpha for all the constructsexceeded the threshold of 0.70 indicating that the measurement scales of the constructs were stable andconsistent.Table 5.1: Cronbach’s Alpha Reliability TestConstructAlphaCoefficientNumber ofItemsOpenness to changes at0.884 3workWork and Career0.735 4proactivityCareer motivation 0.838 3Work and career resilience 0.758 4Work identity 0.882 3Social capital 0.734 5Human capital 0.883 5Perceived employability 0.788 42013©Academy of Knowledge Process18

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com5.4 Inferential Analysis5.4.1 Pearson Correlation CoefficientPearson's correlation coefficient (r) is a measure of the strength of the association between the twovariables. According to Sekaran (2003), in research studies that includes several variables, beyondknowing the means and standard deviations of the dependent and independent variables, the researcherwould often like to know how one variable is related to another. Theoretically, there could be a perfectpositive correlation between two variables, which is represented by 1.0 (plus 1), or a perfect negativecorrelation which would -1.0 (minus 1). While correlation could range between -1.0 and +1.0, theresearcher need to know if any correlation found between two variables is significant or not (i.e.; if it hasoccurred solely by chance or if there is a high probability of its actual existence).As for the information, asignificance of p=0.05 is the generally accepted conventional level in social sciences research. Thisindicates that 95 times out of 100, the researcher can be sure that there is a true or significant correlationbetween the two variables, and there is only a 5% chance that the relationship does not truly exist.The correlation matrix between dependent variable and independent variables are exhibited in Table 5.2below. The findings from this analysis are then compared against the hypotheses developed for this study.Hypothesis 1:Ho:H 1 :There is no significant relationship between openness to change at work and perceivedemployability.There is significant relationship between openness to change at work and perceivedemployability.Table 5.2: Correlation Between Openness to Change at Work and Perceived EmployabilityOpennessPearson CorrelationSig. (2-tailed)NEmployability Pearson CorrelationSig. (2-tailed)NOpenness1364.608**.000364Note: Correlation is significant at the **0.01 level (2-tailed)Employability.608**.0003641364From the table above, there is positive relationship between openness to change at work and perceivedemployability because of the value for correlation is positive (0.608). This means, when perceivedopenness to change is high, perceived employability is high. Based on the result provided, p-value is0.000 which is lesser than alpha value 0.01. Therefore, null hypothesis (H 0 ) is not accepted but alternativehypothesis (H 1 ) is accepted. As a result, there is significant relationship between openness to change atwork and perceived employability.2013©Academy of Knowledge Process19

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comHypothesis 2:Ho:H 1 :There is no significant relationship between work and career proactivity and perceivedemployability.There is significant relationship between work and career proactivity and perceivedemployability.Table 5.3: Correlation Between Work and Career Proactivity and Perceived EmployabilityProactivity EmployabilityProactivity Pearson CorrelationSig. (2-tailed)N1.628**.000364EmployabilityPearson CorrelationSig. (2-tailed)N364.628**.000364Note: Correlation is significant at the **0.01 level (2-tailed)From the table above, Pearson Correlation sign is 0.628. It indicates that there is positive relationshipbetween work and career proactivity and perceived employability. Based on the result provided, p-valueis 0.000 which is lesser than alpha value 0.01. Therefore, null hypothesis (H 0 ) is not accepted butalternative hypothesis (H 1 ) is accepted. As a result, there is significant relationship between work andcareer proactivity and perceived employability.Hypothesis 3:Ho: There is no significant relationship between career motivation and perceived employability.H 1 : There is significant relationship between career motivation and perceived employability.Table 5.4: Correlation Between Career Motivation and Perceived EmployabilityMotivationEmployabilityPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NMotivation1364.574**.000364Note: Correlation is significant at the **0.01 level (2-tailed)1364Employability.574**.000364From the table above, there is positive relationship between career motivation and perceivedemployability because of the value for correlation is positive (0.574). This means, the relationshipbetween career motivation and perceived employability is at the moderate level. Based on the resultprovided, p-value is 0.000 which is lesser than alpha value 0.01. Therefore, null hypothesis (H 0 ) is not13642013©Academy of Knowledge Process20

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comaccepted but alternative hypothesis (H 1 ) is accepted. As a result, there is significant relationship betweencareer motivation and perceived employability.Hypothesis 4:Ho:H 1 :There is no significant relationship between work and career resilience and perceivedemployability.There is significant relationship between work and career resilience and perceivedemployability.Table 5.5: Correlation Between Work and Career Resilience and Perceived EmployabilityResilienceEmployabilityPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NResilience1364.626**.000364Note: Correlation is significant at the **0.01 level (2-tailed)Employability.626**.000364From the table 5.5 above, there is positive relationship between work and career resilience and perceivedemployability because the work and career resilience variable has a positive correlation value of 0.626.Based on the result provided, p-value is 0.000 which is lesser than alpha value 0.01. Therefore, nullhypothesis (H 0 ) is not accepted but alternative hypothesis (H 1 ) is accepted. As a result, there is significantrelationship between work and career resilience and perceived employability.Hypothesis 5:1364Ho:H 1 :There is no significant relationship between work identity and perceived employability.There is significant relationship between work identity and perceived employability.Table 5.6: Correlation Between Work Identity and Perceived EmployabilityIdentityEmployabilityPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NIdentity1364.618**.000364Note: Correlation is significant at the **0.01 level (2-tailed)Employability.618**.00036413642013©Academy of Knowledge Process21

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comFrom the table 5.6 above, there is positive relationship between work identity and perceivedemployability because the work identity and perceived employability variable has a positive correlationvalue of 0.618. Based on the result provided, p-value is 0.000 which is lesser than alpha value 0.01.Therefore, null hypothesis (H 0 ) is not accepted but alternative hypothesis (H 1 ) is accepted. As a result,there is significant relationship between work identity and perceived employability.Hypothesis 6:Ho:H 1 :There is no significant relationship between social capital and perceived employability.There is significant relationship between social capital and perceived employability.Table 5.7: Correlation Between Social Capital and Perceived EmployabilityScapitalEmployabilityPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NScapital1364.168*.039364Note: Correlation is significant at the *0.05 level (2-tailed)Employability.168*.0393641364From the table 5.7 above, there is positive relationship between social capital and perceived employabilitybecause the value of correlation coefficient is positive. The social capital variable has a 0.168 correlationwith the perceived employability variable indicating slight almost negligible significant relationship.Since the p-value is 0.039 which is lesser than alpha value 0.05, null hypothesis (H 0 ) is not accepted butalternative hypothesis (H 1 ) is accepted.Hypothesis 7:Ho:H 1 :There is no significant relationship between human capital and perceived employability.There is significant relationship between human capital and perceived employability.Table 5.8: Correlation Between Human Capital and Perceived EmployabilityHcapitalEmployabilityPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NHcapital1364.574**.000364Note: Correlation is significant at the **0.01 level (2-tailed)Employability.574**.00036413642013©Academy of Knowledge Process22

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comFrom the table 5.8 above, there is positive relationship between human capital and perceivedemployability because the human capital and perceived employability variable has a positive correlationvalue of 0.574. Based on the result provided, p-value is 0.000 which is lesser than alpha value 0.01.Therefore, null hypothesis (H 0 ) is not accepted but alternative hypothesis (H 1 ) is accepted. As a result,there is significant relationship between human capital and perceived employability.5.4.2 Multiple Regression AnalysisIn this study, the multiple regression analysis is used as a statistical technique to analyze the linearrelationship between a dependent variable and multiple independent variables (Hair et al., 2006). This isa way to recognize whether there is significant relationship between independent variables and dependentvariables or not. The model sufficiently explained the variance or coefficient of determination or the RSquared in the effect of control variables relations. According to Hair et al., (2006), the test will besignificant if the p-value is less than 0.05. The beta coefficient is used to determine which independentvariables have the most influence on the dependent variable.Hypothesis 8:Ho:The seven independent variables (openness to change at work, work and career proactivity,career motivation, work and career resilience, work identity, social capital and human capital) arenot significantly explaining the variance in perceived employability.H 1 :The seven independent variables (openness to change at work, work and career proactivity,career motivation, work and career resilience, work identity, social capital and human capital) aresignificantly explaining the variance in perceived employability.Table 5.9: Model SummaryModelRRSquareAdjusted RSquareStd. Error of theEstimate1 .829 .683 .671 .22159a. Predictors: (Constant), Openness to Change at Work and Career Proactivity, CareerMotivation, Work and Career Resilience, Work Identity, Social Capital, Human Capitalb. Dependent Variable: Perceived EmployabilityAccording to Table 5.9, the value of correlation coefficient (R) of seven independent variables (Opennessto Change at Work and Career Proactivity, Career Motivation, Work and Career Resilience, WorkIdentity, Social Capital and Human Capital) with the dependent variable)perceived employability) is0.829. Therefore, there is positive and high correlation between seven independent variables anddependent variable. The R square figure of the seven independent variables is 0.683. This also means thatindependent variables can explain 68.3% of the variation in dependent variable (perceived employability).However, it still leaves 31.7% unexplained in this study. In summary, there are other additional variablesthat are important in explaining perceived employability that have not been considered in this study.2013©Academy of Knowledge Process23

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comThe 7 independent variables that are recognized in this study are Openness to Change at Work and CareerProactivity, Career Motivation, Work and Career Resilience, Work Identity, Social Capital and HumanCapital. The result is illustrated in Table 5.10 below.Table 5.10: CoefficientsUn-standardized Standardize CoefficientsModel B Std. Beta t Sig.ErrorCoefficients(Constant) -.878 .449 -1.954 .053Openness .128 .056 .143 2.290 .024Proactivity.172 .053.204 3.284 .001Motivation .122 .048 .152 2.554 .012Resilience .206 .065 .196 3.188 .002Identity .169 .067 .164 2.519 .013Scapital .070 .111 .031 .627 .532Hcapital .383 .073 .277 5.215 .000R 2 0.656Adj. R 2 0.624Sig. F.000 aF-value 43.5736According to the output of Table 5.10, R square of 0.656 indicates that 65.6% of variation in perceivedemployability is explained by the factors of 7 independent variables; meanwhile 34.4% of the changes areexplained by other factors. The F-statistic is significant at the value of 45.573 indicating the model is agood descriptor of the relation between the dependent and predictor variables. Null hypothesis (Ho) is notaccepted but alternative hypothesis (H 1 ) is accepted.• H1: There is a significant relationship between openness to changes at work andperceived employability. (Reject H 0 if p

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com• H4: There is a significant relationship between work and career resilience andperceived employability. (Reject H 0 if p

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comchange at work and perceived employability is positively linked. The concept of openness was found toassociate positively with employability is being supported by Fugate and Kinicki (2008) in which suggestthat openness to change is essential to personal adaptability as it enables realization of careeropportunities and being optimistic to new experiences.Table 6.1: Summary Results of Hypotheses TestingHypothesesH1: There is significant relationship between openness to changeat work and perceived employability.H2: There is significant relationship between work and careerproactivity and perceivedemployability.H3: There is significant relationship between career motivationand perceivedemployability.H4: There is significant relationship between work and careerresilience and perceivedemployability.H5: There is significant relationship between work identity andperceived employabilityH6: There is significant relationship between social capital andperceived employabilityH7: There is significant relationship between human capital andperceived employability*P denoted as p-valueSupportedP=0.000(P

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comPearson Correlation analysis shows a significant positive correlation between career motivation andperceived employability which carries correlation coefficient value of 0.574 and the p-value of 0.000which is lesser than alpha value of 0.01.This research outcome is being supported by London’s (1983)study which defined that career motivation is associated with a wide range of career decisions andbehaviours (e.g. searching for a job, deciding to stay with an organization, and setting and trying torealize career goals and opportunities). Furthermore, London (1983) also suggested that those who arehigh in career motivation have greater career advancement opportunities since they will work harder oncareer assignment which will affect their career. Therefore, individuals with high career motivation aremore actively identifying and realizing career goal and opportunities.H4: There is significant relationship between work and career resilience and perceivedemployability.Research outcome has showed that there is significant positive relationship between work and careerresilience and perceived employability which carries correlation coefficient value of 0.626 and p-value of0.000 which is significant at the alpha value 0.01. This finding is being supported by Grzeda (1999)which suggest that strengthening career resilience results in a more flexible and adaptable employees withtraits that are preferred by their employer.H5: There is significant relationship between work identity and perceived employability.The results showed that there is significant positive and moderate relationship between work identity andperceived employability which carries correlation coefficient value of 0.618 and p-value of 0.000 which issignificant at the alpha value of 0.01. The finding in this research is supported by several past studies. Forinstance, according to the Fugate et al., 2004, work identity acts as a cognitive compass that motivatesone to actively adapt in order to realize or create opportunities that match one‘s aspirations. In otherwords, individuals with stronger career identity tend to devote more resources to their careers, therebyincreasing their chances of achieving objective career success (Rothbard and Edwards, 2003).H6: There is significant relationship between social capital and perceived employability.Based on the result, there is significant positive relationship between social capital and perceivedemployability which carries correlation coefficient value of 0.168 and p-value of 0.039 which issignificant at the alpha value 0.05. The finding in this research showed that social capital and perceivedemployability is positively linked. This result outcome has been supported by previous research in whichsocial capital is an individual resource consisting of those contacts that are of value when findingemployment. (Berntson , 2008; Nahapiet&Ghoshal, 1998; Seibert, Kraimer, &Liden, 2001).H7: There is significant relationship between human capital and perceived employability.Based on the finding, the relationship between human capital and perceived employability is significantbecause it carries p-value of 0.000 which is lesser than alpha value 0.01. Besides that, it showed thathuman capital and perceived employability is positively related at the moderate level in which it carriescorrelation coefficient value of 0.574. The result outcome is in line with several previous research studies.For instance, according to the Becker (1964) as cited in DiRenzo (2010), human capital represents anindividual’s personal and professional experiences that can boost one’s career. Besides, it is alsosupported by Benhard’s (2002) study where least well-educated employees were proven to experience ahigher risk of unemployment when compared to better educated workers.2013©Academy of Knowledge Process27

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com6.2 Limitation of the StudyThere are a number of limitations of this study. First, the study adopted individualists’ perspective andneglected the significance of situational factors. Even though individual factors play the most importantrole in deciding one’s perception and behavior, there are arguments claims environment affects howpeople interpret and react to a particular situation. Fugate (2006), Fugate et al. (2004), and Fugate andKinicki (2008) are not able to operationalize the term employability. As a consequence, this study is notable to examine the relationship between perceived employability and actual employability but only ableto provide argument and reason without quantitative evidence. Moreover, definitions of employability aretoo diverse in term of contextualization and operationalization, this might creates difficulties andconfusions for practitioners, for example organizations and employees to utilize employability literatureto achieve betterment.6.3 Recommendations for Future ResearchFirst, future study should include situational factors, thus embrace interactionism to study how individualsare affected by environment and how individuals proactively alter the work and career environment. Thestudy should also look into whether employable individuals will demonstrate consistency in theirproactive behavior under different circumstances, for example, extreme level of working stress andreactive organizational culture.Second, researchers should try to operationalize employability in term of absolute level of ability toidentify and realize career opportunities, as proactive people may not be able to realize opportunities eventhough they are willing to do so, due to lack of capabilities. Validity test should be done to assure thevalidity of the measures.Third, employability researchers should achieve consensus on how should they view employability and todevelop a generally accepted definition of employability, thus allow more researches to take place toexplore more benefits and implications of employability towards organizations‘performance. Futureresearches should expand sample size to represent the population for better and more accurate results.7.0 CONCLUSIONFrom the study, it has been revealed how employability was positively related to Fugate and Kinicki’s(2008) dispositional approach such as proactivity. Although proactive behavior leads towards variousbeneficial outcomes to both employers to sustain competitiveness and employees to achieve careersuccess, further empirical studies should be conducted to help realize the concept of employability.REFERENCESAppelbaum, S.H., Ayre H., & Shapiro, B.T. (2002). Career management in information technology: acase study. Career Development International, 7(3), 142 - 158.Arthur, M. B., & Rousseau, D. M. (1996). The boundaryless career: A new employment principle for anew organizational era. New York: Oxford University Press.Bandura, A. (1977). Self-efficacy: towards a unifying theory of behavioural change.PsychologicalReview, 84:191-215.Baruch, Y. (2004). Transforming careers: From linear to multidirectional career paths - organisational andindividual perspectives. Career Development International, 9(1), 58 - 73.Becker, G. S. (1964). Human capital.New York: Columbia University Press.2013©Academy of Knowledge Process28

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comBerntson, E. (2008). Employability perceptions: Nature, determinants, and implications for health andwell-being. Retrieved November 15, 2010 from http://www.divaportal.org/smash/get/diva2:198489/FULLTEXT01.Cavana, R. Delahaye, B. and Sekaran, U. (2001) Applied Buisness Research: Qualitative and QuantativeMethods, John Wiley & Sons, Australia Ltd.Clarke, M., and Patrickson, M. (2008).The new covenant of employability.Employee Relations, 30(2),121-141.Crant J. M. (1996). Proactive Behavior in Organizations.Journal of Management, 26, 435-462.Day, R., &Allen, T. D. (2004).The relationship between career motivation and self efficacywith protégécareer success.Journal of Vocational Behavior, 64, 72-91.DeFillippi, R. J., & Arthur, M. B. (1996).Boundaryless contexts and careers: A competency-basedperspective. In M. B. Arthur & D. M. Rousseau (Eds.), Theboundaryless career. A newemployment principle for a new organizational era (pp. 116–131). New York: Oxford UniversityPress.Dess, G.D. &Picken, J.C. (2000). Beyond productivity: How leading companies achieve superiorperformance by leveraging their human capital. New York: American Management Association.DiRenzo, M. S. (2010). An Examination of the Roles of Protean Career Orientationand Career Capitalon Work and Life Outcomes.Retrieved October 15, 2010,from ProQuest DigitalDissertations.(AAT 3416081).Falk, I & Kilpatrick, S. (1999), Benefits for All: How learning for farming can build social capital incommunities, Paper D6/1999 in the CRLRA Discussion Paper Series,http://www.crlra.utas.edu.au/ downloaded May 2012.Forrier, A., &Sels, L. (2003). The concept employability: A complex mosaic. International Journal ofHuman Resources Development and Management, 3, 102–124.Forrier, A., &Sels, L. (2003). The concept employability: A complex mosaic. International Journal ofHuman Resources Development and Management, 3, 102–124.Fugate M. (2006). Employability in the new millennium.In J. H. Greenhaus and G. Callanan (Eds.),Encyclopedia of Career Development.SAGE.Fugate, M., and Kinicki, A. J. (2008). A dispositional approach to employability: Development of ameasure and test of implications for employee reactions to organizational change. Journal ofOccupational and Organizational Psychology,81(3), 503-527.Fugate, M., Kinicki, A. J., &Ashforth, B. E. (2004). Employability: A psycho-social construct, itsdimensions, and applications. Journal of Vocational Behavior,65, 14–38.Gazier, B. (1998).L’Employabilite´: Bre`veradiographie d’un concept en mutation. [Employability: Shortregistration of a changing concept]. Sociologie du Travail, 32(4), 575–584.George, D., &Mallery, P. (2003).SPSS for Windows step by step: A simple guide andreference. 11.0update (4th ed.). Boston: Allyn& Bacon.Groot, W. & H. Maassen van den Brink (2000), ‘Overeducation in the labor market: a meta-analysis’,Economics of Education Review 19, p. 149-158.Groot, W. and van den Brink, H. 2000 Education, training and employability.Applied Economics 32, 5,573-581.Grzeda, M. M (1999).Re-conceptualizing career change: a career developmentperspective [Abstract].Career Development International, 4/6, 305-311.Gunz, H., Evans, M., &Jalland, M. (2000).Career boundaries in a ‘boundaryless world’. In M. A. Peiperl,M. B. Arthur, R. Goffee, & T. Morris (Eds.), Career frontiers: New conceptions of working lives(pp. 24–53). Oxford, UK: University Press.Hair, Jr., Money, A. H., Samouel, P., & Page, M. (2006).Research Methods for Business. West Sussex:John Wiley Sons.2013©Academy of Knowledge Process29

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comHillage, J. and Pollard, E. 1998 Employability: developing a framework for policy analysis. ResearchBrief 85, Department for Education and Employment, London.Hechter M. 1987. Principles of Group Solidarity.Berkeley: Univ. Calif. Press.Jones, G. R. & Whitmore, R. (1986).Socialization tactics, self-efficacy, and newcomers’adjustments toorganizations.Academy of Management Journal, 29,262–279.Kanfer, R., &Heggestad, E. D. (1997). Motivational traits and skills: Aperson-centered approach to workmotivation. Research in OrganizationalBehavior, 19, 1–56.Kowal J., Kwiatkowska A., Nowak U., Panka E. (2009). Employability as aChallenge of ContemporaryEducation.Retrieved January 27, 2010,fromhttp://eracon.info/assets/files/2009/presentations/ERACON_2009_Employability_as_a_challenge_of_contemporary_education.pdf.London M. (1983).Toward a Theory of Career Motivation.Academy of Management Review, Vol. 8, No.4, Page 620-630.Malhotra, N.K. (2005). Marketing Research: An Applied Orientation (4th ed.).Prentice Hall, UpperSaddle River, NJ.McArdle, W. D., Katch, F. I. &Katch, V. L. (2007). Exercise physiology: Energy, nutrition, and humanperformance (6th ed.). United States of America: Lippincott Williams & Wilkins.McCartt, A. and Rohrbaugh, J. (1995), “Managerial openness to change and the introduction of GDSS:explaining initial success and failure in decision conferencing”, Organization Science, Vol. 6No.5, pp. 569-84.McQuaid, R. W., & Lindsay, C. (2005).The concept of employability. Urban Studies, 42, 197–219.Miller, W. R., Zweben, A., DiClemente, C. C., et al (1994) Motivational Enhancement Therapy Manual:A Clinical Research Guide for Therapists Treating Individuals with Alcohol Abuse andDependence. Project MATCH Monograph Series vol. 2. Rockville, MD: National Institute ofAlcohol Abuse and Alcoholism.Muhammad, R., Yahya, Y., Shahimi, S., &Mahzan, S. (2009). Undergraduate internship attachement inaccounting: the interns perspective. International Education Studies, 2(4), 49-53.Nahapiet, J., and Ghoshal, S. (1998). Social capital, intellectual capital, and the organizationaladvantage.Academy of Management Review, 23(2), 242-266.Pulakos, E. D., Arad, S., & Donovan, M. A., &Plamondon, K. E. (2000). Adaptability in the work place:Development of a taxonomy of adaptive performance.Journal of Applied Psychology, 85,612624.Rothbard, N. P., Edwards, J. R. (2003). Investment in work and family roles: A test of identity andutilitarian motives. Personnel Psychology, 56, 3, 699-732.Seibert, S. E., Kraimer, M. L., and Liden, R. C. (2001).A social capital theory of career success.Academyof Management Journal, 44(2), 219-237.Sabel, C.F. (1994) ‘Learning by monitoring : the institutions of economic development’.In Smelser, N.and Swedberg, R. (eds) op. cit.Sekaran, U. (2003). Research methods for business: A skill building approaches (4 th ed.). New York: JohnWiley & Sons Inc.Stajkovic, A.D. &Luthans, F. (1998). Self-efficacy and work related performance: a metaanalysis.PsychologicalBulletin 124:240-261.Stewart, J. & Knowles, V. (2000) "Graduate recruitment and selection: implications for HE, graduatesand small business recruiters", Career Development International, Vol. 5 Iss: 2, pp.65 – 80.Valcour, P.M. and Ladge, J.J. (2008), “Family and career path characteristics as predictors ofwomen’scareer success outcomes”, Journal of Vocational Behavior, Vol. 73 No. 2, pp. 300-9.Van Dam, K., Oreg, S., &Schyns, B. (2008). Daily work contexts and resistance to organizational change:The role of leader–member exchange, development climate, and change process characteristics.Applied Psychology, An International Review, 57, 313–334.2013©Academy of Knowledge Process30

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comVan der Heijden, C. M., & Van der Heijden, B. I. J. M. (2006).A competence-based and multidimensionaloperationalization and measurement of employability.Human Resource Management, 45: 449-476.Waterman, R. H, Jr, Waterman, J.A. and Collard, B.A. (1994), “Toward a Career-Resilient Workforce”,Harvard Business Review, 72 (4): 87-95.Wise, A.J. and Millward, L.J. (2005), “The experiences of voluntary career change in30-somethings andimplications for guidance”, Career Development International, Vol. 10No. 5, pp. 400-17.2013©Academy of Knowledge Process31

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comLife Satisfaction – A Critical Literature ReviewMs. Madhuri MahatoAsst. Prof (HR)Usha Martin AcademyOpp. Dipatoli CantonmentGymkhana ClubRanchi, IndiaDr. Pranab KumarAsst. Prof.Dept. Of ManagementBirla Institute of TechnologyLalpur Extension CentreRanchi, IndiaABSTRACTThis paper aims to present a literature review of the origin of the concept and the researchin the area of Life Satisfaction with a review of 50 papers published between 1978 till2011. The entire literature review has been segmented based on the contributions madeby each study, major issues it deals with, the sources from which data has been gathered,primary methodologies adopted and country-wise & year-wise publications. Theliterature compilation has revealed that Life Satisfaction has off late been of great interestto the researchers with the growing number of dual-career couples across the world. Thisresearch seeks to identify those areas of Life Satisfaction which are highly influencingand have organizational policy relevance. This paper also researches and introduces newconcepts of “Cumulative Critical Stress Incident Index” and “Personal Space Quotient”in the form of a model.Keywords: Life Satisfaction, Organizational Policy, Cumulative Critical Stress IncidentIndex, Personal Space Quotient1. LIFE SATISFACTION – AN INTRODUCTIONGrowing economies and modern times have witnessed a rise in the number of dual-career families withdeleterious effects on Life Satisfaction. Life satisfaction is defined as an overall, “global assessment” offeelings and attitudes about one’s life at a particular point in time according to that individual’s “chosencriteria” (Kuskova V. Valentina, 2011). With shifting demographics relevant to workplaces placing theresponsibility shroud on the employers, employees themselves seem to be mystified with the growingdemands of both work and family roles.Since most employees feel that work is a way of fulfilling family responsibilities, their time and energypreferences are set primarily for fulfilling the work responsibilities alone. Though Systems theoryadvocates an individual in relation to the family system, the work system, and the work–family system,employees are more likely to perceive work responsibilities as interfering with family demands. (Eng et.al, 2010) have raised employee concerns about managing the two vital parts of their life and which havethe ability to readily lead to a Work Family (WFC) Conflict. Work Family (WFC) Conflict is a negativespillover of the work aspects onto the family, thus creating interference between the two. Some2013©Academy of Knowledge Process32

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comresearchers have also emphasized the spillover caused by the family demands onto the work lives of theemployees. This again is highly relevant in case of dual-career couples. For this group there is a time andenergy deficit where the employee not only strives to meet his/her own work & family demands but alsoof the partner. Even a crossover of emotions between the partners was observed and studied off late(Brummelhuis, Haar & Lippe, 2010). Life satisfaction can create colossal catastrophic consequences forboth, the individual as an employee or the individual as a family member. The catastrophic consequencesfor organizations are generally in the form of job dissatisfaction, reduced job performance and affectivecommitment and high turnover. The catastrophic consequences for a family and its members are spilloverand crossover effects, time and energy deficits.2. RATIONALE AND SCOPE OF THE STUDYThere has been a growing concern about the role of modern day service organizations whose primaryfocus is on customer satisfaction and profit making. This is creating organizational situations in which thework and family roles are getting blurred with the growing responsibilities at work. Against thisbackground, the present study has been conducted to find out the various issues underlying Lifesatisfaction and to present them as a composite whole and in the process identify all the possible futuredirections for research in this area. This paper studies the researches that have been conducted in the areaof Life satisfaction during 1978 to 2011.3. OBJECTIVES OF THE STUDYThis study has been conducted with the prime objectives of organizing the publications on Lifesatisfaction in an orderly manner so as to enable easy and quick access, classifying literature on Lifesatisfaction and analyzing the outcome of the studies reviewed. The paper also seeks to identify the gapsin the existing literature and suggests the future directions for research in Life satisfaction.4. METHODOLOGYThe paper is based upon studies conducted on Life satisfaction in various countries. A total of 50 papers(all from refereed journals) have been reviewed. The distribution of articles reviewed from varioussources is given in Table 4. All these papers are classified on the basis of various approaches & issuescovered and presented in the Literature review. Life satisfaction literature (for the 50 papers reviewed)majorly deals with Job Satisfaction, Work/Family Demands, Education effects, Gender effects and Timeeffects (Figure 1). Methodological classification of the studies has also been represented in Table 2 &Figure 2. Additionally, cataloging of the studies has been done in Table 3 & Figure 3 for year-wise dataand Table 5 & Figure 4 for country-wise data.5. LITERATURE ON LIFE SATISFACTION5.1 Relationship between Life Satisfaction & Job SatisfactionNear, Rice & Hunt (1978) in their research on what actually comprised of the life satisfaction found thatLife Satisfaction was a multi-component concept with Job Satisfaction, Satisfaction with Home & Healthbeing a part of the overall Life Satisfaction. Later studies conducted by (Chacko I. Thomas, 1983)examined the functional relationship between job satisfaction and general life satisfaction. In a generalsense the results are more supportive of the notion that job satisfaction has a greater influence on life ornon-work satisfaction (spillover model) unlike the compensatory model that suggests contrasts or anegative relation or effect between job and life satisfactions. (Schmitt & Pulakos,1985) in their paperexamined the inter-relationships between job & life satisfaction and indicated that, after controlling fordemographic variables, life satisfaction predicted job satisfaction but in the case of retirees, jobsatisfaction predicted life satisfaction. Another study by (Booth & Ours, 2007) investigated therelationship between part-timework and working hours satisfaction; job satisfaction; and life satisfaction.It was found that men have the highest hours-of-work satisfaction if they work full-time without overtimehours but neither their job satisfaction nor their life satisfaction are affected by how many hours they2013©Academy of Knowledge Process33

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comwork. Life satisfaction is influenced only by whether or not they have a job. For women hours satisfactionand job satisfaction indicate that women prefer part-time jobs irrespective of whether these are small orlarge. In contrast, female life satisfaction is virtually unaffected by hours of work. Women withoutchildren do not care about their hours of work at all, while women with children are significantly happierif they have a job regardless of how many hours it entails. (Ayres & Malouff, 2007) have also highlightedthe importance of a brief problem-solving training in the workplace that can increase problem-solvingskills and problem solving self-efficacy in the course of improving positive affect, job satisfaction, andlife satisfaction.5.2 Relationship between Life Satisfaction & Work/Family DemandsKossek, Noe, DeMarr (1999) in their study have attributed the increased worker and family demands tosocial transformations. Work-Family role synthesis was recommended for greater positive selfmanagementof the roles. Employed women should adopt higher care-giving role embracement and lowerwork-family boundaries. Employed women are expected to strategize better than employed men increating a work-family role synthesis. In a unique study conducted by (Bhave & Kramer, 2001) examinedthe relationship between the pay satisfaction and work-family conflict. It was observed that a change inglobal pay satisfaction and facet pay satisfaction (pay rise, pay level, benefits and pay structure) arenegatively related to a change in Work Family Conflict. (Takeuchi, Yun & Tesluk, 2002) collected datafrom a sample of Japanese expatriates, their spouses, and their superiors, strongly supported bothspillover and crossover effects between expatriate and spousal cross-cultural adjustment. In addition,expatriates’ cross-cultural adjustment was found to be related to satisfaction, which, in turn, was found tobe negatively related to expatriates’ intention to return to their homeland early. In the same lines,(Hummer, Cullen, Neal, Sinclair & Shafiro, 2005) assessed longitudinal and cross-sectional relationshipsbetween work–family conflict, positive spillover, and depression in dual-earner couples. The findings ofthe study suggest that (a) positive spillover has a stronger impact on depression than on work–familyconflict, and (b) the effects of spouses’ positive spillover were more strongly related to decreaseddepression than were the effects of one’s own positive spillover. Significant longitudinal effects wererelated to the crossover of positive spillover on decreased spouse depression. Moving away from workimpacts on life satisfaction, (Perrone, Webb & Jackson,2007) found that satisfaction with work andmarriage was significantly related to life satisfaction. (Schaer, Bodenmann & Klink, 2008) also stressedon Couples Coping Enhancement Training to increase dyadic competencies which can have positiveeffects on the general well-being, life satisfaction and other workplace variables like less burnout and lesswork stress.5.3 Relationship between Life Satisfaction & Education effectsCoronel, Moreno & Carssco (2010) in a survey of women administrators in schools, found that womenface several perceived barriers, lack of support from the governing educational authority, insufficientpreparation and in-service training and an absence of equity-based support policies from the governmentand reconciliation policies to make the dual roles of mother–professional compatible. The study furtherfound that role conflict and certain features of the organizational work culture, particularly themanagement culture, was generally strongly masculine, and showed scant appreciation of administrativework. In a similar study on the association between education and work-family conflict (Scheiman &Glavin,2011) concluded that the well-educated tend to occupy professional jobs with more incomes andpressures, and therefore experience greater work-family role blurring activities. These conditionscontribute to greater conflict among the well-educated. In addition, people with less than a high schooldegree report more conflict because of their experience in precarious work with variable shifts.2013©Academy of Knowledge Process34

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com5.4 Relationship between Life Satisfaction & Gender effectsMortazavi et. al (2009) in their study tried to understand the individual experiences of work familyconflict across three different countries and cultures i.e. Ukraine, Iran, and the US. The relationshipbetween gender, nationality, and cultural values of horizontal individualism and collectivism measured atthe national and individual levels revealed no differences in the amount of conflict experienced acrossUkraine, Iran, and the US. This research showed that there is a negative relationship between work-tofamilyconflict and horizontal allocentrism (collectivism) at work and family. Idiocentric (Individualistic)employees reported less family-to-work conflict at work. In another study aimed at addressing theimportance of work-life balance and the associated gender differences therewith, (Smith, Smith &Brower, 2010) found that work-life balance is very important in career decisions. Their findings alsorevealed that a healthy work-life balance is associated with job satisfaction, job performance, and ethicaldecision-making. (Ergeneli, Ilsev & Karaapinar, 2010) investigated the effects of gender and interpretivehabits (deficiency, /necessitating, skill recognition) on the relationship between work–family conflict(WFC) and job satisfaction. The results suggest that interpretive habits moderate the relationship betweenWFC and job satisfaction such that the negative effect of WFC and job satisfaction is stronger foremployees focusing highly on deficiency, with high necessitating, and low skill recognition, referred to asstress-predisposing interpretive habits. Furthermore, WFC had a negative association with job satisfactionfor stress-predisposed male employees while no relationship was found between WFC and jobsatisfaction for men with a low focus on deficiency, low necessitating and high skill recognition namely,stress-resilient interpretive habits. Moreover, although WFC had a negative association with jobsatisfaction for female employees, this relationship was even stronger for stress-resilient females. In a rareand interesting study, (Powell & Greenhaus, 2010) examined whether gender, identity, boundary, and roletheories explained effects of sex on work-to-family conflict and positive spillover for full-time managersand professionals. Women were found to experience higher positive spillover than men, primarilybecause of higher femininity. Although women did not experience different levels of conflict than men,individuals who scored higher on measured family role salience, which was positively related tofemininity, experienced lower levels of conflict. Role segmentation not only reduced conflict but also hadthe unintended consequence of reducing positive spillover.5.5 Relationship between Life Satisfaction & Time effectsIn a study by (Karimi Leila, 2008) on Iranian employees from a variety of organizations, using a sixdimensionalmodel of work-family conflict (Time, Strain & Behavior based WFC & FWC), supported thegeneralizability of the six dimensional model of work-family conflict across cultures. The results alsoshowed that the experience of time-based work-to-family conflict was greater than the others. In a similarstudy on the interaction of managerial workload with time flexibility and task autonomy to predict thedivision of household labor (division of housework activities) and its influence on family satisfaction,Mayo, Pastor & Sanz (2008) found that time flexibility and task autonomy at work moderated therelationship between managers work demands and their spousal ratings of housework overload. As timedemands increased, managers with low time flexibility contributed less than their spouses in householdwork (as reported by the spouse) than managers with high flexibility. A similar pattern emerges regardingtravel and task autonomy. In turn, spousal housework overload had a negative impact on familysatisfaction. In a rare study by Mitchelson K. Jacqueline (2009) on the relationship between perfectionismand perceptions of work family conflict established that perfectionism predicts work-family conflict,beyond the effects of the Big Five, trait affectivity and achievement. Further, findings indicate those withadaptive perfectionism (AP; work and home) tend to have lower strain and time-based family interferingwith work and lower behavior-based work interfering with family, compared with maladaptiveperfectionists (home) and non-perfectionists (work and home).2013©Academy of Knowledge Process35

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comLife satisfaction linkages with time effects was also found for waged construction workers by Lingard,Francis & Turner (2010) that reported higher levels of time-based and strain-based Work Interferencewith Family (WIF) than salaried workers, who work predominantly in office-based roles. The experiencesof WIF varied by workers’ employment situation, sex, and work location, while the experience of FIWvaried by workers’ age. Male employees were found to experience higher WIF & FIW than their femalecolleagues.WIF was highest for 31-40 years age category, but the FIW was low for the below 30 yearscategory. Life satisfaction can create multiple negative effects for both partners as studied byBrummelhuis, Haar & Lippe (2010) by looking at their work and family demands and the resulting timeand energy deficits experienced by each partner. The results showed that for both partners work andfamily demands increase time deficit and energy deficit. Energy deficit due to heavy demands resulted inmore feelings of distress, whereas time deficit did not contribute significantly to distress. Feelings of timedeficit and energy deficit crossed over from the man to the woman, whereas feelings of distress crossedover from the woman to the man. Life satisfaction can also be directly linked to the impact of transitionsfrom unemployment to full-time employment, with special focus on the influence of job quality (selfreportedjob satisfaction, wages, type of contract, and indicators of the fit between the worker and jobrequirements). (Grun, Hauser & Rhein, 2010) suggest that job quality only matters to some extent, andoften people in bad jobs are still better off than those who remain unemployed. This effect is statisticallysignificant for most indicators of job quality, except for workers with low job satisfaction and for thosewhose new job is much worse than their pre-unemployment job.6. PROPOSED RESEARCH MODELThis paper, a conceptual review of the studies conducted in the area of Life Satisfaction proposes tointroduce the following model.Cumulative Criticalstress incident indexWork-FamilyRole DistortionPersonal SpaceQuotientTaking cues from the performance management literature, the above model can form a precedent topolicy makers to ensure that they help their employees to overcome time and energy deficits arisingthereof due to heavy workloads.This model introduces the concepts of Cumulative Critical Stress Incident Index (CCSII) which makes acumulative compilation of the stress levels for each category of job keeping in mind the critical incidentsthat create stress. This cumulative index helps in understanding and measuring the extent of work-familyrole distortion arising thereof. Work-Family role distortion highlights the extent of blurred activities dueto excessive demands from both work and family roles. This equation in turn determines the PersonalSpace Quotient experienced by an employee. Personal space quotient can potentially lower the lifesatisfaction experienced by employees as it creates higher unsatisfied family demands due to overengagementwith the work related aspects. Personal space quotient can be decisively taken as a workinghours’ satisfaction or a workday satisfaction from a critical incident perspective. Higher the CumulativeCritical Stress Incident Index (CCSII), greater the Work-Family role distortion and hence lower is thePersonal Space Quotient for an individual employee.7. FUTURE DIRECTIONS AND SCOPE FOR RESEARCHThere are several limitations that point to potential areas for future research. Most studies till date haveconsidered life satisfaction as an aftermath consequence of work related aspects. Its effects have beenobserved with the job level or the organizational level taken as an antecedent to the creation of2013©Academy of Knowledge Process36

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comsatisfaction or dissatisfaction for an individual. Early researches have linked job satisfaction directly withlife satisfaction. Job satisfaction was considered as a primary determinant of Life satisfaction.Dissatisfaction on the job was believed to create an overall dissatisfaction with life also. Few researchersalso considered the effects of an individual’s personality, gender and education effects on LifeSatisfaction. Work-Family role synthesis or conflict was also an area of interest to the researchers. Theconflict between the two roles brought in deficits of time and energy and equally contributed to thespillover and crossover effects for the partners.But what seemed as a limitation in the early researches was, there was no industry-wise or professionwisesegregation of the life satisfaction effects. Life satisfaction was only assessed from a conflictperspective. Even the generalizations of the results associated with Life satisfaction does not call forconsensus because of the intermediating effects of a number of variables. Furthermore, the effects of Lifesatisfaction can be observed for various keystones like culture, lifestyle, economic aspects, dual/singleincomes, family relations and the like. All the stated future directions serve to provide an impetus toresearch in the area of Life satisfaction by extending beyond the western or developed research settingsand even going beyond the organized sector to research about the presence of Life satisfaction in theunorganized sector as well.8. REFERENCESAyres Jody & Malouff M. John (2007). Problem-solving training to help workers increase Positive effect,Job satisfaction, and Life satisfaction. European Journal of Work & Organizational Psychology,16 (3):279 – 294.Bhave D.P & Kramer Amit (2010). Pay Satisfaction and Work-Family Conflict across Time. Academy ofManagement Proceedings, 1:1-6, doi:10.5465/AMBPP.2010.54500862.Blomme J. Robert et. al. (2010). Work-family conflict as a cause for Turnover Intentions in theHospitality Industry. Tourism & Hospitality Research, 10(4):269-285.Booth Alison & Ours Van Jan (2007). Job Satisfaction and Family Happiness: The Part-time WorkPuzzle. IZA Discussion Papers No. 3020.Brummelhuis Lieke L. Ten et. al. (2010). Crossover of distress due to work and family demands in dualearnercouples: A Dyadic analysis. Work & Stress, 24(4):324-341.Chacko Thomas I. (1983). Job and Life Satisfactions: A Causal Analysis of Their Relationships.Academy of Management Journal, 26(1):163–169.Coronel M. Jose et. al. (2010). Work–family Conflicts and the Organizational Work Culture as Barriers toWomen Educational Managers. Gender, Work & Organization, 17(2):219-239.Cowlishaw Sean et. al. (2010). Work-family conflict and Crossover in Volunteer emergency serviceworkers. Work & Stress, 24(4):342-358.Darrat Mahmoud et. al. (2010). An Investigation into the Effects of Work–Family Conflict and JobSatisfaction on Salesperson Deviance. Journal of Personal Selling & Sales Management,30(3):239-251.Duffy D. Ryan & Sedlacek E. William (2010). The Salience of a Career Calling Among CollegeStudents: Exploring Group Differences and Links to Religiousness, Life Meaning, and LifeSatisfaction. The Career Development Quarterly, 59:27-41.Eng Wylie et. al. (2010). What Influences Work-Family Conflict? The Function of Work Support andWorking from Home. Current Psychology, 29:104–120.Ergeneli Azize et. al. (2010). Work–family Conflict and Job Satisfaction Relationship: The Roles ofGender and Interpretive Habits. Gender, Work and Organization, 17(6):679–695.Greguras J. Gary& Diefendorff M. James (2010). Why does Proactive personality predict Employee Lifesatisfaction and Work behaviors? A Field Investigation of the Mediating role of the SelfconcordanceModel. Personnel Psychology, 63:539–560.2013©Academy of Knowledge Process37

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comGrun, Carola et.al. (2010). Is Any Job Better than No Job? Life Satisfaction and Re-employment. Journalof Labor Research, 31:285–306.Hall B. Garry et. al. (2010). Job demands, Work–family conflict, and Emotional exhaustion in Policeofficers: A Longitudinal test of Competing theories. Journal of Occupational and OrganizationalPsychology, 83:237–250.Hammer B. Leslie et. al. (2005). The Longitudinal Effects of Work–Family Conflict and PositiveSpillover on Depressive Symptoms among Dual-Earner Couples. Journal of Occupational HealthPsychology, 10(2):138-154.Hayes Caleb T. & Weathington Bart L. (2007). Optimism, Stress, Life Satisfaction, and Job Burnout inRestaurant Managers. The Journal of Psychology, 141(6):565–579.Ilies Remus et. al. (2009). The Spillover of Daily Job Satisfaction onto Employees’ Family Lives: TheFacilitating Role of Work-Family Integration. Academy of Management Journal, 52(1):87-102.Karatepe M. Osman & Kilic Hasan (2009). The Effects of two directions of conflict and facilitation onfrontline employees’ job outcomes. The Service Industries Journal, 29(7):977-993.Karimi Leila (2008). A Study of a multidimensional model of Work-Family conflict among Iranianemployees. Community, Work & Family, 11(3):283-295.Kassenboehmer C. Sonja& Haisken-DeNew P. John (2008). You’re Fired! The Causal Negative Effect ofUnemployment on Life Satisfaction. Ruhr Economic Papers No. 63.Kendall E, Muenchberger H (2009). Stressors and supports across work and non-work domains: Theimpact on Mental health and the Workplace. Work, 32(1):27-37.Kossek Ernst Ellen et. al. (1999). Work-Family Role Synthesis: Individual and OrganizationalDeterminants. The International Journal of Conflict Management, 10(2):102-129.Kossek Ernst Ellen et. al. (2011). Workplace Social Support and Work–Family Conflict: A Meta-Analysis Clarifying the Influence of General and Work–Family-Specific Supervisor andOrganizational Support. Personnel Psychology, 64:289–313Kumari Patiraj & Mishra Richa (2009). Effect of Job Stress and Personal Life Stress on Mental Healthand Job Outcomes of Medical Professionals. Retrieved from: http://ssrn.com/abstract=1437409.Kuskova V. Valentina (2011). A Longitudinal Analysis of the Relationship between Life Satisfaction andEmployee Volunteerism. Academy of Management Proceedings, doi:10.5464.AMBPP.2011.198.a.Lingard Helen et. al. (2010). Work-Family Conflict in Construction: Case for a Finer-Grained Analysis.Journal of Construction Engineering & Management, 136 (11): 1196–1206.Malik Imran Muhammad et. al. (2010). Examining the Relationship of Work Life Balance, JobSatisfaction and Turnover in Pakistan. International Journal of Sustainable Development, 02(1):27-33.Mayo Margarita et. al. (2008). Enabling Managers to Achieve Work-Family Balance: A Demands-Control Model of Housework Behavior and Family Satisfaction. IE Business School WorkingPaper WP08-20.Mitchelson K. Jacqueline (2009). Seeking the perfect balance: Perfectionism and Work-Family conflict.Journal of Occupational and Organizational Psychology, 82:349-367.Monahan John & Swanson Jeffrey (n.d.). Lawyers at Mid-Career: A 20-year Longitudinal study of Joband Life Satisfaction. Journal of Empirical Legal Studies. Retrieved from:http://ssrn.com/abstract=1268948Montgomery, A. J. et. al. (2005). Emotional labour at work and at home among Greek health-careprofessionals. Journal of Health Organization and Management, 19, 395-408.Montgomery, A. J. et. al. (2006). Work-family interference, emotional labor and burnout. Journal ofManagerial Psychology, 21:36-51.Mortazavi Shahrnaz et. al. (2009). Work-family Conflict related to Culture and Gender. Community,Work & Family, 12(2):251-273.2013©Academy of Knowledge Process38

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comNear Janet P. et. al. (1978). Work and Extra-Work Correlates of Life and Job Satisfaction. Academy ofManagement Journal, 21(2):248–264.Perrone K.M. et. al. (2007). Relationships between Parental attachment, Work and Family roles and Lifesatisfaction. Career Development Quarterly, 55: 237-248.Powell N. Gary & Greenhaus H. Jeffrey (2010). Sex, Gender, and the Work-to-Family Interface:Exploring Negative and Positive Interdependencies. Academy of Management Journal,53(3):513–534.Promislo D. Mark et. al. (2010). Valuing money more than People: The Effects of Materialism on WorkfamilyConflict. Journal of Occupational and Organizational Psychology, 83:935-953.Proost Karin et. al. (2010). Work–family conflict and Facilitation: The combined influence of the Jobdemand–control model and Achievement striving. European Journal of Work and OrganizationalPsychology, 19 (5):615–628.Schaer Marcel et. al. (2008). Balancing Work and Relationship: Couples Coping Enhancement Training(CCET) in the Workplace. Applied Psychology: An International Review, 57: 71–89.Schieman Scott & Glavin Paul (2011). Education and Work-Family Conflict: Explanations,Contingencies and Mental Health Consequences. Social Forces, 89(4):1341 -1362.Schmitt N. & Pulakos E.D. (1985). Predicting Job satisfaction from Life satisfaction: Is there a generalsatisfaction factor? International Journal of Psychology, 20:155-168.Shih Hsi-An et. al. (2010). High involvement Work system, Work–family conflict, and Expatriateperformance – Examining Taiwanese expatriates in China. The International Journal of HumanResource Management, 21 (11):2013–2030.Shields A. Michael et. al. (2009). Life satisfaction and the economic and social characteristics ofneighbourhoods. Journal of Population Economics, 22:421–443.Slan-Jerusalim Rebecca & Chen P. Charles (2009). Work-Family Conflict and Career DevelopmentTheories: A Search for Helping Strategies. Journal of Counseling & Development, 87:492-500.Smith T. Katherine (2007). An Examination of Work-Life Balance Perspectives of Accountants.Retrieved from Social Sciences Research Network: http://ssrn.com/abstract=1247762.Takeuchi Riki et. al. (2002). An Examination of Crossover and Spillover Effects of Spousal andExpatriate Cross-Cultural Adjustment on Expatriate Outcomes. Journal of Applied Psychology,87(4): 655-666.Werbel D. James & Danes M. Sharon (2010). Work Family Conflict in New Business Ventures: TheModerating Effects of Spousal Commitment to the New Business Venture. Journal of SmallBusiness Management, 48(3):421–440.Williams Alysha et. al. (2006). Examining the Relationship between Work–Family Spillover and SleepQuality. Journal of Occupational Health Psychology, 11(1):27-37.Zijlstra, F.R.H., and Sonnentag, S., (2006). After Work is done: Psychological perspectives on recoveryfrom work. European Journal of Work and Organizational Psychology, 15(2):129-138.2013©Academy of Knowledge Process39

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comTable 1 - Break-up of Literature on Life Satisfaction (LS)S.No.Focus on1 Life Satisfaction & Job Satisfaction2 Life Satisfaction & Work/Family Demands3 Life Satisfaction & Education effects4 Life Satisfaction & Gender effects5 Life Satisfaction & Time effectsTable 2 – Distribution of various methodologies used in studies under reviewMethodologyNo. ofPapers PercentageEmpirical 47 94Conceptual 3 6Total 50 100%Table 3 - Year wise break-up of studies on Life Satisfaction (LS)S.No. Year No. ofStudies1 1978 12 1983 13 1985 14 1999 15 2001 16 2002 17 2005 28 2006 39 2007 510 2008 411 2009 812 2010 1913 2011 3GRAND TOTAL 502013©Academy of Knowledge Process40

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comTable 4 –Distribution of reviewed articles from various sourcesS.No. PARTICULARS No. of Papers1 Academy of Management 62 Applied Psychology 13 Career Development Quarterly 24 Community, Work & Family 25 Current Psychology 1European Journal of Work & OrganizationalPsychology 367 Gender, Work & Organization 28 IE Business School Working Paper 19 Institute for the Study of Labor (IZA) 110 International Journal of Psychology 111 International Journal of Sustainable Development 112 Journal of Applied Psychology 113 Journal of Construction Engineering & Management 114 Journal of Counseling & Development 115 Journal of Empirical Legal studies 116 Journal of Health Organization & Management 117 Journal of Labor Research 118 Journal of Managerial Psychology 119 Journal of Occupational & Organizational Psychology 220 Journal of Occupational Health Psychology 321 Journal of Personal Selling & Sales Management 122 Journal of Population Economics 123 Journal of Psychology 124 Journal of Small Business Management 125 Personnel Psychology 226 Ruhr Economic Papers 127 Social Forces 128 Social Sciences Research Network 229 The International Journal of Conflict Management 1The International Journal of Human ResourceManagement 13031 The Service Industries Journal 132 Tourism & Hospitality Research 133 Work 134 Work & Stress 2GRAND TOTAL 502013©Academy of Knowledge Process41

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comTable 5 –Country-wise publication of studies on LSS.No. CountryNo. of StudiesConducted1 US 262 UK 163 Netherlands 24 Germany 35 Spain 16 Others 2Grand Total 50Figure 1 – Classification of LS LiteratureWork/FamilyDemandsEducationeffectsJob SatisfactionLIFESATISFACTIONGender effectsTime effects2013©Academy of Knowledge Process42

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comFigure 2 – Methodologies used in the Studies under ReviewFigure 3 – Year-wise publication of Studies on ELFigure 4 – Country-wise publication of Studies on EL2013©Academy of Knowledge Process43

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comDemographic Segmentation and Its Effects onCustomer SatisfactionSamer AzizM-Phil. Scholar, Department of Management SciencePreston University, Islamabad, PakistanDr. Zekeriya NasHOD TurkishNUML, Islamabad, PakistanABSTRACTSegmentation by demographic factors is widely used in marketing, despite the fact thatthe correlation of such factors with the needs of customers is sometimes weak.Segmentation by expected benefits and attitudes could enhance ability to address theconflict between individual service and cost-saving standardization. Using clusteranalysis segments were formed based on combinations of customer ratings for differentattitudinal dimensions and benefits of products/services. The clusters generated in thisway were superior in their homogeneity and profile to customer segments gained by onlyreferring to demographic differences.1. INTRODUCTIONA Market segment is a subgroup of people or organizations sharing one or more characteristics that causethem to have similar product needs. The purpose is to increase marketing efficiency by focusingmarketing efforts to a particular group (Green, 1977).Quite recently the concept of market segmentationwas presented by Wendell Smith in 1956 again. This concept is significantly impacting many otherestablished concepts in the field of marketing. For each and every product the result in which all partiesare interested is called Profit. And by introducing differences for comparison leads to profitable situation(Homburg, Schäfer, & Schneider, 2012)Nowadays when there is a lot competition amongst people for their products and where the similaritiesexist, this concept of market segmentation achieves the so called rule “Divide and conquer”. This meansthat you target a specific set of customers for your products differently each set and win their trust andsatisfaction in an accumulating manner (Shaw, 2012).Market segmentation provides us to do extensive research and analysis to study different types ofconsumer behavior with respect to their preferences and then keeping track of the trend so as to fulfilltheir needs and demands thru proper product development that satisfies each type.Segmentation criteriacan be categorized as Geographic, Demographic, Psychographic, Behavioural mostly. In Marketsegmentation process first identify the bases for segmenting the market and then develop profiles ofresulting segments (Jones, Shaw, & McLean, 2009).2013©Academy of Knowledge Process44

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com2. PROBLEM STATEMENTThe problem statement explains us the need for customer centric marketing and to focus on how tosegment the market which in turn will affect the profit margins and eventually will lead towards thegrowth of the organization (Chen & Green, 2009).Market segmentation is complete concept ofunderstanding the needs of different sets of people. This method can be related to one-to-one marketing.Similarly market segmentation also focused on different parts of market and create and makestrategieswhich leads to one-to-one marketing. Still some differences remain between present marketsituations of segmentation and marketing approach of one by one; however we may also requireddeveloping customer oriented products and plain the production as per market segmentation (Chen &Green, 2009).3.RESEARCH QUESTIONSThe study is based on the following research questions;• How a multinational company can becomes more customer focused through market segmentation(Breman, 2009)?• What do the customers need and how will they change (Barat, 2010)?• Explain the characteristics of Market segmentation. How it differs in each type of segment(Madhavan, 2012)?• What are key areas of market segmentations for your product (Fuller, 2008)?• Describe different targeting strategies (Walsh, 2001)?• What is distinct in each group (Shaw, 2012)?• How is the customers buying trend and what will it change (Hansen, 2009)?• What all other past segmentation studies have been engaged and to what level those were useful(Walsh, 2001)?4.RESEARCH OBJECTIVES:The objective of this research article is to perform a conceptual as well as practical study to demonstrateand enlighten the following objectives:1. To make Market segmentation a creative and interactive process. The aim is to satisfy customerneeds(Ponder,2011).2. To develop complete hypothetical study, to assist researchers in creating modelpattern(Shaw,2012).3. To develop models which integrate the concepts of segmentation, One-to-one marketing,targeting and positioning and facilitate empirical validation of the segmentation(Meer,2007).4. Analysis of segment solutions and to study the stability of segments over time(Dipp,2010).5.RATIONALE OF STUDYMarket segmentation is a concept that interests both customer as well as marketers. It is to treat bothcustomers and marketers are alike and most will be less satisfied this market segmentation is a trend oftoday modern market practice (Domowitz, Glen, & Madhavan, 2012).Before 1980 marketers are verymuch crazy and focused on mass marketing. The main reason behind mass marketing is that one productwas used to satisfy large number of peoples and same manufacturing and communication techniques areused for same Product (Dickson & Ginter, 1987). But in recent years marketers feel that if they divert2013©Academy of Knowledge Process45

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.commass markets product into small products and introduce many products then they may satisfy theircustomers in a better way. If you introduce customer oriented products and target specific group ofcustomers and introduce product for that specific group then you may not only meet their needs but youwill also satisfy customers on minimum cost (Walsh, Hennig-Thurau, Wayne-Mitchell, & Wiedmann,2001).We may have more chances to win their satisfaction and market product easily. So now if we carefullyconsider reason for market segmentation is that this is a technique through which we try to focus on smallgroup and try to satisfy this group. Anything that we can do is to maximize organizational profit that ispossible only through increase customer number and satisfied existing customers. If we focused on smallnumber of peoples and try to introduce product as per their needs then it is better approach to satisfiedpeople (Debo, Toktay, & Van Wassenhove, 2005).Another reason of market segmentation is homogeneous needs of small number of group. 10 peoples havesame choice and needs as compare to group of 10000 peoples. The idea of Viable segments shows us howan organization is capable of satisfying large groups and captures the market. Let’s take an example ofgarments or cloth. Imagine as per mass production concept we introduce same color and size of garmentfor large number of peoples. Although this concept lead to economy of scale in production anddistribution but this may not consider gender , size, color and style of peoples (Yankelovich & Meer,2006). So this concept may be profitable for organization in short run but this may not satisfied customerso customer numbers may not increase. If we used second technique and introduce garments as percustomer age, color, size and style this may be increase cost of organization but this lead to customersatisfaction and in long run organization achieved goal of profit maximization and increase number ofcustomers however it is almost impossible to satisfy everyone because some time some individual maynot like the style and color of fashion but mostly peoples like this. other hand let’s we may considermarket segmentation in another style we design garment product for individual as per their age group thenpick the best suitable color make the best stitching that you like and which suits on you; size that fits toyour body etc. You immediate response is that this company design this product specifically for me and Ilove it you may introduce other friends this produce (Yankelovich & Meer, 2006).Another aspect of market segmentation is that it was much expensive so organization may not afford it.So the best approach is that organization considers both two extremes market segmentation and massproduction and focus on in between these two extremes. Market segmentation must be identifiable andeasily reachable and also affordable for customers. If you design specific product for individual and hemay not able to purchase and afford this then this may not be appreciable approach. Another idea forsegmentation is that we may produce mass production for those groups which have maximum samecharacteristics. For example we introduce fashionable jeans for teenagers in black color if our analysis isthat teenager of that city like black jeans. We may identify group on the basis of gender, age and income.It could be a psychographic variable (Activities, Interests, or opinions etc). We may also consider locationand weather of specific area and introduce product on the basis of this common characteristic(Hung &Tsai, 2008).Another example is that highly paid female employees of age 20-30 like shopping and like to purchaseproduct as per style and fashion. You have to target these groups with some preparation to promote ormarket your product/activity with proper communication that they would like (Armstrong, Harker, Kotler,& Brennan, 2009). Organizational approach must be that they introduce product for that group which canafford this product and able to pay reasonable price for it. This will definitely vary a lot amongst groups.Because this concept of market segmentation is based on qualitative measure of interests and needs. Priceof a product varies as per the basic economic concept of demand and supply. As per economic theory ifdemand of product is greater than supply of that product then this product price increases and this productmaximized profit of organization (Kotler, Keller, Brady, Goodman, & Hansen, 2009).2013©Academy of Knowledge Process46

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comMarket segmentation is a concept that interests both customer as well as marketers. It is to treat them likethey are alike and most will be less than well satisfied. This is the trend today. Thirty years ago marketerswere crazy about mass marketing. The rationale behind mass marketing included the level you achieve inboth manufacturing and communication by reaching a large group of people with the same product andmessage. In recent years, however, marketers found that if the mass market was divided into smallersegments yet similar groups these smaller segments could be better satisfied.If you target customers basedon the similarity of the benefits that meet their needs, you will have more chances to win their satisfactionand market product easily. So now we get back to the rationale of market segmentation: it is easier tosatisfy a smaller group than a larger group. Anything that we can do is in turn to satisfy people better andis of direct benefit to our organization(Kotler, 2007).The smaller and less heterogeneous the group is, the easier it is to satisfy people in the group. That makesperfect sense because a group of ten is generally more homogeneous than a group of 1,000. The conceptof viable segments shows us how an organization is capable of satisfying large groups and captures themarket. Let’s take an example of garments or cloth (Homburg et al., 2012).Imagine no segmentation whatsoever exists. The result would be that we would have one garment foreveryone in the world without any considerations of size, gender, color, style, etc. We know immediatelythat the price would be low because of economies of scale in production and distribution. But we alsoknow that satisfaction would be minimal. It is almost impossible to satisfy everyone. Some wouldn't likethe color or style.On the other hand let’s assume the ultimate in segmentation: products designed for each individual. Youpick the cloth; discuss the style for stitching; color that you like and which suits on you; size that fits toyour body etc. You know immediately that you would love it - after all, it would be designed for youindividually. But we also know that it would be so expensive that we might possibly not afford it. Thebest is to fall somewhere in between these two extremes(Füller & Matzler, 2008).Practically, segments must meet three criteria: they must be identifiable, reachable, and affordable.Meaning how small can a segment be and still be worth targeting?First identify the individuals in a group on the basis of some common characteristics that they possess. Itcould be a demographic variable (Age, Gender, Income etc). It could be a psychographic variable(Activities, Interests, or opinions etc). It could be geographic (Based on location or climatic factors). Or,to make things really interesting and generic it could be some combination of these (Females, Age 20-30,with high incomes who are into fashion and styling, interested in shopping and who live in the samecity)(Füller & Matzler, 2008).You have to target these groups with some preparation to promote or market your product/activity withproper communication that they would like. You have to be able to produce an offer for product orservice the group want and can pay reasonable price for it. This will definitely vary a lot amongst groups.Because this concept of market segmentation is based on qualitative measure of interests and needs. Priceof a product varies as per the basic economic concept of demand and supply. If demand is greater thansupply, price can be high. If it isn't high, there will be a waiting list (Füller & Matzler, 2008).6.SIGNIFICANCE OF STUDY1. Facilitates concept of effective product strategy: Due to market segmentation, productdevelopment is well suited with consumer needs. This is because there is clear understandingthat if organization introduce product for specific customer group and target specific market.Market segmentation encourages the close matching. Eventually it gives satisfaction toconsumers and higher sales and profit (Hultman, Robson, & Katsikeas, 2009).2013©Academy of Knowledge Process47

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com2. Facilitates management and utilization of better marketing opportunities: Market segmentationhelps to identify promising market opportunities because it builds interest in the marketing manto distinguish one customer group from another within a given market. So due to this awarenesshe is able to decide his target market. It also enables the marketer for optimal utilization ofmarketing resources, as the exact target group is identified at the early stages(Quinn & Dibb,2010).3. Facilitates effective advertising for better sales: Advertising media can be more effectivelyutilized because only the media that reach the segments can be employed. It makes advertisingresult oriented with lot of other benefits(Rennhak,2011).4. Provides special endeavors to small organization: Market segmentation offers special benefits tosmall organizations. Such organizations can select only suitable market segment and concentrateall efforts within that segment only for better marketing performance. And also can competeeven with large firms by offering personal services to customers within the specific segmentselected(Hansen,2009).5. The association of American Marketing explains the market segmentation as subdividing amarket into different homogeneous groups of customer which have same character, samebehaviors and demand. So this focused group of customer will be targeted and make theproducts as per their choice and need(Madhavan,2012).There are mainly three criteria that are used to determine market segments:1. Homogeneous nature (common attributes within a segment)2. Uniqueness from other groups)3. Reaction (similar response to market)The other considerations within the criteria above can be: Age, Gender, Education, Marital status,Lifestyle, Income, Family life cycle, Interests and beliefs.After gathering data and performing thoroughanalysis all this information has been compiled a description about potential customers can be made. Itmay be easier to locate them or even for expansion. Therefore, it is important that organizations mustcarry out good Market Segmentation. This way eventually they will enjoy the benefits from showingconsistency with their marketing strategy, and become more competitive with their target audience (Füller& Matzler, 2008).7. DE-LIMITING FACTORSIt is for a company where the focus is from product oriented to become truly customer oriented. Allprocess in the company should be devoted to satisfy customer needs and generate profit. We limit thescope of our research to analyze and give recommendations and feedback only for the marketing and salesactivities.8.LITERATURE REVIEWMarket segmentation is to make groups of customers based on common attributes and similar priorities.People in a segment possess same buying behavior. Therefore, same marketing strategies can be used forthem. According to Venkatesh (2011) market segmentation involves viewing a heterogeneous market as anumber of smaller homogenous markets in response to differing preferences, attributable to the desire ofcustomers for more precise satisfaction of their verifying needs(Venkatesh,2011).The market segmentation now in these days one of the best techniques of modern marketing anddistribution and dividing the group of customers on the basis of their common character like behavioral,2013©Academy of Knowledge Process48

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comdemographic, psychological, geographic, and focused on these groups or segments. so this action makemarketer more focused on their target audience and make plans and products for this specific group ofcustomer. When we discussed market segmentation we need to consider three important areas ofmarketing also when and how we introduce and market our product (Tu, 2008). This first and mostimportant area of marketing is mass marketing. This mass marketing area consists of mass production,mass distribution and mass promotion of product for their customer. The second prime area isdifferentiated marketing of that product. The organization introduces different products for differentgroup of customers on the basis of their features, styles, quality and size. The last area is marketing oftargeted group of customers. The marketer choice large number of customers then pick up a group thathave common character on the basis of their age, size gender and choice then targeted specific group ofcustomers there are many common characters of consumers but normally we consider psychographics,geographic, demographics and behavioral segments(Zhang, Jiao, & Ma, 2007).8.1 Demographic segmentationThe marketer choice large number of customers then pick up a group that have common character on thebasis of their age, size gender and choice then targeted specific group of customers there are manycommon characters of consumers but normally we consider psychographics, geographic, demographicsand behavioral segments. In a demographics segment we also consider family size, family style, age,gender, family life cycle, income education, religion, generation, social class, occupation and nationality.Demographic segmentation is often used because the areas or variables of demographics are easilyidentify and measurable. Moreover demographic segmentation variables are common used for manyproducts and they provide common group of customers which facilitate marketers so they can approachthem easily. Demographic variable is useful for market segmentation and easy to use (Reichardt &Bornholdt, 2008)8.1.1 Age and life-cycle segmentationWe have another economic theory that each customer has different choice because of their age and whentheir age change their need, choices and preferences also change. Due to that reason many companies uselife cycle segmentation and age factor for common character. Age and life cycle play important role formarketers to choose targeted area(Barat, 2010). For example peoples of age 60 above used normallylandline telephone because mobile phones used modern technology so these peoples hesitate to usemobiles. On the other hand, teenager likes mobile phone due to their age and life cycle. So age and lifecycle play important role when we like to segment the market on the basis of landline and mobile phone.Although age and life- cycle segmentation is easy but marketers always careful y used these because ofstereotypes(Bauer & Auer-Srnka, 2012).8.1.2 Gender segmentationMale and female have different nature, attitude and their behavior is also different so gender segmentationis also used for market segmentation. We consider men and women on the basis of their different attitudeabout different products. When we consider gender segmentation then we also consider hairstyling,cosmetics, clothing, and their magazines. Marketers carefully introduce product on the basis of theirgender and metro sexuality (Wyly & Ponder, 2011).8.1.3 Income segmentationAnother very important factor of market segmentation is income segmentation we divided peoples on thebasis of their income, because income lead to expense and choice. Income segmentation is normally usedin automobiles, cosmetics, clothing, fashion, travel, and financial service industry. Because manycompanies of these above mention industries try focusing on high income customer because theseindustries products are expensive. Some other industries focused on low income customers because ofloyalty and prevent them from competitive pressure. Although income segmentation is important formarket segmentation but some time income segmentation not always predict more appropriate and2013©Academy of Knowledge Process49

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comsuitable customers for given product because some customers have some other preference and choicesand they like to use their money in some different ways(Bauer & Auer-Srnka, 2012).9.RESEARCH HYPOTHESISThe following hypothesis is to verify the relationship between the constructs:H1: Behavioral attributes have significant impact on market segmentation.H2: Psychographic variables have significant impact on market segmentation.H3: Geographic attributes have significant impact on market segmentation.H4: Demographic variables have significant impact on market segmentation.10. RESEARCH METHODOLOGYThe research methodology that used to prove these above mention hypothesis enclose research designprocedure, instrument of study, statistical tool and method of analysis will be explained.10.1 Research study designNon experimental research method is used in this methodology which companies normally used toestablish and applying marketing principles. This research focused small companies that if they usedprinciple of segmentation of market and they target group of customers as per their common character.Through questioner and personal interview primary data has collected and instruments are used to foundnew market trends.10.2 Theoretical frameworkThe following diagram represents four major criteria of Market Segmentation.10.3 ProcedureQualitative research in segmentation is to segment effectively, we need to understand what drives thesegments, not just how to mean them.2013©Academy of Knowledge Process50

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com10.3.1 Qualitative Market Segmentation ResearchIn this, we use judgment regarding segment configuration and product brand positioning. We considerpreliminary groups/ other qualitative methods -- such as in depth interviews -- among market segmentsfor which we have hypotheses. We listen to their language. In focus groups, we investigate how they talkabout the product or service category.Our research about market segmentation focused on proving hypotheses, increase knowledge aboutconsumers’ behavior. Consumer may be businessman or may be low income employee. Our prime objectis to develop dimensions of new market techniques not to conclude new trends as per their size andimportance(De Mooij, 2010).10.3.2 Quantitative Market Segmentation Research:Market segmentation has various dimensions. It may include behavioral, attitudinal, and demographic ormay be mixed of these segmentations form psychographic segments. Factors may also consider consumerfrequency to buy, product category, and most important is estimated or expected price of product andconsumer attitudes. Peoples like those products which provide them maximum satisfaction so marketerstry to consider and plain the product to fulfill maximum desire of consumer like economic, maximumutility, style and as per attitude(Bauer & Auer-Srnka, 2012).Instrument of StudyThe scale constructed to measure basis of market segmentation. Scale used for measuring marketsegmentation includes demographic and psychographic questions.Statistical ToolOne of the basic decisions was about preparation of data for statistical analysis. We standardized allvariables and used the principal components method for determining the importance of selected variablesand within variables standardization because not all variables were measured in the same units ofmeasurement. Common statistical techniques for segmentation analysis are used (Kesting & Rennhak,2011).11.CONCLUSION:Research findings determine a range of barriers exist which vary in different organizations. Companiestry to enjoy the benefits of database on the basis of structure collect data manage data and try to handlethis data. Companies make researches on consumer behavior and try to focus on customer orientedproducts and develop and make a system that fulfills the needs of customers on present situation (Chen &Green, 2009).The area of market segmentation has now been discussed in order to realize the purpose of this thesis i.e.to provide a framework for exemplifying how market segmentation can determine the right targetaudience. In discussing these areas it can be concluded that the market segmentation can determine theright target audience by following the market segmentation process and thus help a company to design anappropriate marketing strategy (Kotler, 2007).In regards to the market segmentation, the different concepts within market segmentation wereestablished. The reason for choosing the demographic segmentation is due to the fact that most companiesmust consider e.g. the ages of their target customer in order to create an appropriate marketing strategy(Kotler et al., 2009).2013©Academy of Knowledge Process51

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comIn conclusion, the explanation of the market segmentation process, i.e. identifying the target customers,market targeting and positioning, and the analysis using the Minerva model and the Mosaic modelprovide a framework for market segmentation. Consequently it can now be concluded that a frameworkfor exemplifying how market segmentation can determine the right target audience has been succeededand thus the purpose of this thesis has been realized(Chen & Green, 2009).Questionnaire:The aim of this thesis was to understand the market segmentation process and as a result being able tomake an analysis based on a questionnaire conducted as follows:Confidentiality Statement:(Please note, your information will not be sold or given to outside entities. It is for internal use only)1 Name2 Age Below 10 11-17 18-25 26-40 41-59 60 and Above3 Gender Male Female4 Education Elementary Middle High College DegreeGeneralPublic5 Type Teacher Student6 Race7 Language Urdu English Other:8 Skin Type Dry Oily Mix9 Hair Type Curly Straight Wavy Bold1011PreferredClothing Formal Casual Semi FormalHouseholdIncome10,000 – 20,000-(per month) < 10,000 20,000 40,00012. FUTURE LINE OF RESEARCH41,000-55,00056,000-70,00071,000 andAboveWhen literature reviewed it is found that there are many factors and reasons that create difficulties to usemarket segmentation approach for example presently our distribution system create difficulties for marketsegmentation, unorganized structure and existing relation with other stakeholder create barriers so thosewho try to make a research on this line they may try to focused on this reasons and explore the factorswhich create difficulties in a way of market segmentation(Bauer & Auer-Srnka, 2012).REFERENCESArmstrong, G., Harker, M., Kotler, P., & Brennan, R. (2009). Marketing: an introduction: FT Press.Barat, S. (2010). Market Segmentation Success–Making it Happen! Journal of Consumer Marketing,27(1), 86-87.Bauer, M., & Auer-Srnka, K.J. (2012). The life cycle concept in marketing research. Journal of HistoricalResearch in Marketing, 4(1), 68-96.Chen, H.C., & Green, R. (2009). Marketing mix and branding: competitive hypermarket strategies.International Journal of Management and Marketing Research, 2(1), 17-34.De Mooij, M. (2010). Consumer behavior and culture: Consequences for global marketing andadvertising: Sage Publications, Incorporated.2013©Academy of Knowledge Process52

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comDebo, L.G., Toktay, L.B., & Van Wassenhove, L.N. (2005). Market segmentation and product technologyselection for remanufacturable products. Management Science, 51(8), 1193-1205.Dickson, P.R., & Ginter, J.L. (1987). Market segmentation, product differentiation, and marketingstrategy. The Journal of Marketing, 1-10.Domowitz, I., Glen, J., & Madhavan, A. (2012). Market segmentation and stock prices: Evidence from anemerging market. The Journal of Finance, 52(3), 1059-1085.Füller, J., & Matzler, K. (2008). Customer delight and market segmentation: An application of the threefactortheory of customer satisfaction on life style groups. Tourism Management, 29(1), 116-126.Green, P.E. (1977). A new approach to market segmentation. Business Horizons, 20(1), 61-73.Homburg, C., Schäfer, H., & Schneider, J. (2012). Customers: The Focus of the Sales Strategy. SalesExcellence, 27-39.Hultman, M., Robson, M.J., & Katsikeas, C.S. (2009). Export product strategy fit and performance: anempirical investigation. Journal of International Marketing, 17(4), 1-23.Hung, C., & Tsai, C.F. (2008). Market segmentation based on hierarchical self-organizing map formarkets of multimedia on demand. Expert systems with applications, 34(1), 780-787.Hunter, L., McGregor, A., Maclnnes, J., & Sproull, A. (2009). The ‘flexible firm’: strategy andsegmentation. British Journal of Industrial Relations, 31(3), 383-407.Jones, D.G.B., Shaw, E.H., & McLean, P.A. (2009). The Modern Schools of Marketing Thought. TheSAGE Handbook of Marketing Theory, 42.Kesting, T., & Rennhak, C. (2011). Market segmentation in German business practice: relevance,procedures and challenges. World Review of Entrepreneurship, Management and SustainableDevelopment, 7(4), 361-379.Kotler, P. (2007). Marketing management: Pearson Italia Spa.Kotler, P., Keller, K., Brady, M., Goodman, M., & Hansen, T. (2009). Marketing management: firstEuropean edition: Pearson.Quinn, L., & Dibb, S. (2010). Evaluating market segmentation research priorities.Reichardt, J., & Bornholdt, S. (2008). Market Segmentation: The Network Approach. ManagingComplexity: Insights, Concepts, Applications, 19-36.Shaw, E.H. (2012). Marketing strategy: From the origin of the concept to the development of a conceptualframework. Journal of Historical Research in Marketing, 4(1), 30-55.Tu, Y. (2008). Segmentation, adjustment and disequilibrium. Housing economics and public policy, 38-55.Venkatesh, R. (2011). New Parameters in Market Segmentation-Ethnic Marketing is the Key. AdvancesIn Management.Walsh, G., Hennig-Thurau, T., Wayne-Mitchell, V., & Wiedmann, K.P. (2001). Consumers' decisionmakingstyle as a basis for market segmentation. Journal of Targeting, Measurement andAnalysis for Marketing, 10(2), 117-131.Wyly, E., & Ponder, CS. (2011). Gender, age, and race in subprime America. Housing Policy Debate,21(4), 529-564.Yankelovich, D., & Meer, D. (2006). Rediscovering market segmentation. harvard business review,84(2), 122.Zhang, Y., Jiao, Jianxin, & Ma, Y. (2007). Market segmentation for product family positioning based onfuzzy clustering. Journal of Engineering Design, 18(3), 227-241.2013©Academy of Knowledge Process53

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comSurvey of Skills Required by the ForensicAccountants: Evidence from a DevelopingCountryDr. Madan BhasinBang College of Business, KIMEP UniversityDostyk Building, 2 Abai Avenue,Almaty 050010, Republic of KazakhstanABSTRACTAccounting frauds and scams are perennial. They occurred in all eras and in all countries,and affected many organizations, regardless of their size, location, or industry. FromEnron and WorldCom in 2001 to Madoff and Satyam in 2009, accounting frauds andscams have been dominating news items in the past decade. Corporations and regulatorybodies are trying their best to analyze and correct existing defects in their reportingsystem. After having an overview of the fraud scenario in India, it is apparent thatcriminals have become technology-savvy, and invented newer schemes to perpetuatecrimes. In the current reporting environment of “digital-age,” forensic accountants (FA’s)are in great demand for their ‘niche’ accounting, auditing, legal and investigative skills.Hence, ‘forensic’ accounting has been thrown in the “forefront of the crusade” againstfinancial deception and accounting scandals.The present study investigates through a questionnaire, which was conducted in threeleading States of the national capital region (NCR) of India during 2011-12, “if there aredifferences in the views of the relevant skills of FA’s among accounting practitioners,academics, and users of forensic accounting services.” From the statistical test of thehypotheses propounded for this study, we discovered that “core skills are not enoughrequirements for FA’s, there are significant differences in the relevant skills of FA’s, asgiven by previous researchers with the current research, and the necessary skills of FA’s,as identified by both academics and professionals, will hopefully meet employers’expectations too.” Therefore, FA’s, being professional experts having ‘sixth’ sense andpossessing ‘special’ skills are urgently required to counter all the ingenuity of thesecriminals. At present, some Universities in India are considering adding forensicaccounting course to their curriculum. The results of this study may provide someguidance to educators for the development of forensic accounting curriculum byidentifying the pertinent skills to accompany such a program of study.Keywords: Accounting frauds, scams, forensic accounting and forensic accountants,skills required, academics, practitioners, users of services, corporate governance.INTRODUCTIONAccounting scandals and frauds are perennial. Innumerable instances of scandals and frauds have plaguedour society since before the “Industrial Revolution.” They occurred in all eras and in all countries. Duringthe last few decades, there have been numerous financial frauds and scandals, which were milestones withhistorical significance. Enron, WorldCom and Parmalat are just few examples of the well-knownaccounting scandals and/or frauds. However, what is not so well-known is that almost every country hadits own accounting scandals and frauds. The media has fortunately reported scandals and bankruptcies in2013©Academy of Knowledge Process54

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comcompanies, from time to time, both from the ‘developed’ and ‘developing’ countries. Some of them arelisted here to give examples. HIH Insurance, Harris Scarfe and One.Tel (Australia), Global Crossing(Bermuda), Nortel Networks (Canada), Zhengzhou Baiwen, Shandong Bohai, Jinzhou Port, Kelon(China), Vivendi Universal (France), ComRoad, Phenomedia, MLP, Hugo Boss, Nici, Zapf Creation(Germany), Dynamic Life, Ipirotiki Software (Greece), Parmalat, Freedomland, Finmatica (Italy), Elan(Ireland), JVG Group of companies, UTI, Global Trust Bank, Citibank, Wipro, Satyam (India), IHI,Sanyo Electric (Japan), Baan Company, Ahold NV, LCI Computer, Landis (Netherlands), Gescartera,Bafisa, Afinsa and Forum Filatelico (Spain), ABB, Skandia, Prosolvia (Sweden), Adecco International(Switzerland), Barings Bank Equitable Life, Wiggins, Versailles (UK), and Adelphia Communication,IBM, Enron, Xerox, Madoff Securities, Lehman Brothers (U.S.). In addition, some of the Asian countrieshave also experienced similar fraud/scam cases, such as, PT Bank Bali, Sinar Mas Group (Indonesia),Bangkok Bank of Commerce (Thailand), United Engineers Bhd (Malaysia), Samsung Electronics,Hyundai (Korea). Surprisingly, this list is rapidly growing every year. The corporate collapses of recenttimes, culminating with massive collapses has suggested that “there are major systemic problems facingthe way in which corporations and corporate governance (henceforth, CG) systems operate” (Bhasin,2012).Indeed, fraud is a world-wide phenomenon that affects all continents and all sectors of the economy, andmost organizations may face regardless of their size, industry or country. If the organization has valuableproperties (like cash, goods, information, or services), then fraud may be attempted. It is often “highprofilefrauds in large multi-national organizations that are reported on in the media and the smallerorganizations may feel they are unlikely to be a target of fraudsters.” Periodically, the latest major fraudhits the ‘headlines’ as other organizations sit-back and watch, telling themselves that “it could not happenhere!” But the reality is that fraud can happen anywhere and anytime. While only relatively few majorfrauds are picked up by the media, huge sums are lost by all kinds of businesses as a result of the highnumber of smaller frauds that are committed.The term ‘fraud’ essentially “involves using deception to dishonestly make a personal gain for oneselfand/or create a loss for another.” Although the legal definitions of fraud may vary from country tocountry, most are based around these general themes. Examples of fraud commonly include activities,such as, theft, corruption, conspiracy, embezzlement, money-laundering, bribery and extortion. This paperfocuses on fraud against businesses and corporate-sectors, typically by those “internal to theorganization”. According to the Association of Certified Fraud Examiners (ACFE, 2010), “there are threemain categories of fraud that affect organizations: asset misappropriations, fraudulent financialstatements, and corruption. Surveys in the past have shown that “asset misappropriation is the mostwidely reported type of fraud in India, although corruption and bribery are growing the most rapidly.”The risks of fraud may only be increasing, as we see growing globalization, more competitive markets,rapid developments in technology, and periods of economic difficulty.There have been many attempts to measure “the true extent of fraud, but compiling ‘reliable’ statisticsaround fraud is not easy.” As one of the key aspects of fraud is ‘deception’, it can be difficult to identifyand survey results often only reflect the instances of fraud that have actually been ‘discovered’. It isestimated that “the majority of frauds go undetected and, even when a fraud has been found it may not be‘reported’. One reason for this may be that a company that has been a ‘victim’ of fraud does not want torisk ‘negative’ publicity.” Although survey results and research may not give a complete picture, thevarious statistics do offer a useful indication as to the extent of the problem. Findings vary, and it isdifficult to obtain a complete picture as to the full extent of the issue, but these surveys all indicate thatfraud is prevalent within organizations and remains a serious and costly problem. According to a study oforganizations world-wide, 30 percent of companies were victims of an economic crime (or fraud) in thelast year (Murphy and Dacin, 2011). From Enron to WorldCom in 2001, and Madoff to Satyam in 2009,it appears that corporate accounting fraud is a major problem that is increasing, both in its frequency and2013©Academy of Knowledge Process55

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comseverity. According to the Association of Certified Fraud Examiners’ (ACFE, 2012) ‘Report to theNations,’ “the cost of fraud to the U.S. organizations is extensive—5 percent of annual revenues, despiteincreased emphasis on anti-fraud controls and recent legislation to combat fraud.” Indeed, the ACFEsurvey found that “whistle-blowing is the single most common method of fraud detection” (Robinson andRobertson, 2012). Although it is generally accepted that the Sarbanes-Oxley (SOX) Act of 2002 hasimproved ‘corporate governance’ (henceforth, CG) and decreased the incidence of fraud, recent studiesand surveys indicate that investors and management continue to have concerns about financial statementfraud as summarized in Table 1.Table 1: Magnitude of Losses Suffered due to Frauds-A Global ScenarioReporting Authority Main FindingsThe ACFE “Report to the The Association of Certified Fraud Examiners’ (ACFE) found that financial statementNations on Occupational fraud, while representing less than 5 percent of the cases of fraud in its report, was byFraud and Abuse” (2010) far the most costly, with a median loss of $1.7 million per incident. Survey participantsestimated that the typical organization loses 5 percent of its revenues to fraud each year.Applied to the 2011 Gross World Product, this figure translates to a potential projectedannual fraud loss of more than $3.5 trillion. The median loss caused by the occupationalfraud cases in our study was $140,000. More than one-fifth of these cases caused lossesof at least $1 million. The frauds reported to us lasted a median of 18 months beforeThe COSO Fraud Report(2010)The KPMG Survey(2009)Deloitte Forensic CenterWebcastNational Fraud Authority(U.K.), Annual FraudIndicator (2012)The Ernst & Young’s“India Fraud Indicatorreport” (2012)being detected.The Committee of Sponsoring Organizations of the Treadway Commission analyzed347 frauds investigated by the U.S. Securities and Exchange Commission (SEC) from1998 to 2007 and found that the median dollar amount of each instance of fraud hadincreased three-times from the level in a similar 1999 study, from a median of $4.1million in the 1999 study to $12 million. In addition, the median-size of the companyinvolved in fraudulent financial reporting increased approximately six-fold, from $16million to $93 million in total assets, and from $13 million to $72 million in revenues.A Survey of 204 executives of U.S. companies with annual revenues of $250 million ormore found that 65 percent of the respondents considered fraud to be a significant riskto their organizations in the next year, and more than one-third of those identifiedfinancial reporting fraud as one of the highest risks.Fifty-six percent of the approximately 2,100 business professionals surveyed in awebcast about reducing fraud risk predicted that more financial statement fraud wouldbe uncovered in 2010 and 2011, as compared to the previous three years. Almost half ofthose surveyed (46 percent) pointed to the recession as the reason for this increase.The scale of fraud losses in 2012, against all victims in the U.K., is in the region of £73billion per annum. In 2006, 2010 and 2011, it was £13, 30 and 38 billions, respectively.The 2012 estimate is significantly greater than the previous figures because it includesnew and improved estimates in a number of areas, in particular against the privatesector. Fraud harms all areas of the UK economy.The losses suffered due to fraud amount to INR 66 billion. Delhi witnessed the largestnumber of fraud cases and suffered the highest aggregate losses by fraud (as comparedto the rest of the country) in 2011–12. The financial-services sector was the worst hit,with more than 63 percent of the total fraud cases reported in 2011–12, followed bytechnology and transportation. In the financial-services sector, banking was the majorvictim with 84 percent of the total number of reported fraud cases. According to thedata compiled by the Reserve Bank of India (RBI), the money lost by banks due toscams and fraud has doubled in the past four years. Losses incurred by banks due tofraud increased by 88 percent in 2010-11 to exceed INR 37.9 billion (more than INR20.1 billion in 2009–10).No doubt, economic crime and fraud remains an intractable problem for companies globally and India isno exception. As India Inc. goes global, economic crime is emerging as a bigger threat than before. Whencompanies in India expand their reach to other countries, they are exposed to not just ‘home-grown’2013©Academy of Knowledge Process56

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comfrauds, but also frauds prevalent in other markets. In fact, economic crime continues to be an expensiveproposition for companies, both in terms of losses due to such crimes and the cost of managing frauds.According to PwC (2007) ‘The 4 th Biennial Global Economic Crime Survey: India,’ “Companies in Indiasuffered average direct losses of US $ 1.5 million (INR 6 crores) due to fraud in the preceding two years.More importantly, the cost of managing fraud–that includes legal costs, the cost of investigating frauds,stakeholder management and public relation costs–is also very high. Respondents in India reportedaverage management costs of US $1 million (INR 4 crores)–almost twice that of the global and Asia &Pacific region’s average of US $0.55 Million (INR 2.2 crores) and US $ 0.41 Million (INR 1.6 crores),respectively, which is in addition to direct loss caused by fraud” (see Table 2). It is important to note thatthe reported averages do not include the opportunity loss suffered due to counterfeit products. Nor do theyconsider ill-gotten revenues associated with sales contracts procured through payment of a bribe.However, damage from intangible factors such as damage to reputation or brand, decline of staff moraleand impaired business relations cannot be underestimated as these elements can be undermined by theoccurrence or even perception of fraud. To conclude, “Companies in India are more exposed to fraudlosses and costs than their global counterparts.”Table 2: The Cost of Fraud in India, Asia & Pacific, and GlobalItems of Loss India Asia & Pacific Global1. Direct loss (average in US$) +2. Management cost (average in US$) +3. Damage to reputation or brand (% of cases) +4. Decline in staff morale (% of cases) +5. Damage to external business relations(% of cases) +6. Strained relations with regulator (% of cases)1,535,2171,029,184928884751,438,526416,393899287832,420,700550,35588888480Total Cost of Fraud 2,564,401 1,854,919 2,971,055(Source: PwC: The 4 th biennial Global Economic Crime Survey: India, 2007, page 4)Unfortunately, the corporate collapses of recent times have suggested that there are major ‘systemic’problems facing the way in which corporations and CG systems operate across the globe. On a number ofoccasions, over the past few decades, major public companies have experienced financial reportingfrauds, resulting in sudden turmoil in the US capital markets, a loss of shareholder value, and, in somecases, the bankruptcy of the company itself. During the recent series of corporate fraudulent financialreporting incidents in the US, “almost all cases of foreign corporate accounting frauds were committed bythe entities that conducted their businesses in more than one country, and most of these entities are alsolisted on U.S. stock exchanges.” The corporate scandals of the last few years came “as a shock not justbecause of the enormity of failures, but also because of the discovery that questionable accountingpractice was far more insidious and widespread than previously envisioned” (Bhasin and Shaikh, 2013).No doubt, fraudulent financial reporting can have significant consequences for the ‘organization’ and its‘stakeholders,’ as well as, for ‘public-confidence’ in capital markets. For instance, according to COSOReport (2010), “Periodic high-profile cases of fraudulent financial reporting raise concerns about thecredibility of the US financial reporting process and call into question the roles of management, auditors,regulators, and analysts, among others.”The wave of financial scandals at the turn of the 21st century elevated the awareness of fraud and theauditor’s responsibilities for detecting it. Unfortunately, the frequency of financial statement fraud has notseemed to decline since the passage of the Sarbanes-Oxley Act in July 2002 (Hogan et al., 2008). Thehigh-incidence of fraud is “a serious concern for investors as fraudulent financial reports can have asubstantial negative impact on a company’s existence, as well as, the market value.” For instance, the lostmarket capitalization of 30 high-profile financial scandals caused by fraud from 1997 to 2004 is more2013©Academy of Knowledge Process57

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comthan $900 billion, which represents a loss of 77 percent of market value for these firms, while recognizingthat the initial market values were likely inflated as a result of the financial statement fraud. Despiteintense efforts to stamp out corruption, misappropriation of assets, and fraudulent financial reporting, itappears that fraud in its various forms is a problem that is increasing in frequency and severity.As pointed out by Black (2010), “Financial statement fraud was a contributing factor to the recentfinancial crisis and it threatened the efficiency, liquidity and safety of both debt and capital markets.”Furthermore, it has very significantly increased ‘uncertainty’ and ‘volatility’ in financial markets, shaking‘investor’ confidence worldwide. It also reduces the creditability of financial information that investorsuse in their investment decisions (Rezaee and Kedia, 2012). When taking into account the loss of investorconfidence, as well as, reputational damage and potential fines and criminal actions, it is clear whyfinancial misstatements should be every manager’s worst fraud-related nightmare (E&Y, 2009). Fromtime-to-time, corporations and regulatory bodies have tried to analyze and correct any existing defects, ifany, in their reporting systems. In addition, discussion on the relevance of “forensic accounting” indetecting accounting scandals has emerged in recent years. All theses cases imply that the corporationshave failed to supply accurate information to their investors, and to provide appropriate disclosures of anytransactions that would impact their financial position and operating results. The recent accountingscandals have induced a crisis of confidence in financial reporting practice and effectiveness of CGmechanisms (O’Connell, et al. 2005). No doubt, recent corporate accounting scandals and the resultantoutcry for transparency and honesty in reporting have given rise to two disparate yet logical outcomes.First, forensic accounting skills have become crucial in untangling the complicated accounting maneuversthat have obfuscated financial statements. Second, public demand for change and subsequent regulatoryaction has transformed CG scenario (Bhasin, 2007). Therefore, more and more company officers anddirectors are under ethical and legal scrutiny. In fact, both these trends have the common goal ofaddressing the investors’ concerns about the transparent financial reporting system. However, the failureof the corporate communication structure has made the financial community realize that there is a greatneed for skilled professionals that can identify, expose, and prevent structural weaknesses in three keyareas: poor corporate governance (CG), flawed internal controls, and fraudulent financial statements.Forensic accounting skills, therefore, are becoming increasingly relied upon within a corporate reportingsystem that emphasizes its accountability and responsibility to stakeholders.In general, it can be claimed that the above accounting scandal occurred because of integrated factors,such as, lack of auditor independence, weak law-enforcement, dishonest management, poor internalcontroland inability of CG mechanisms in monitoring top-management behaviors. The SOX 2002imposes potentially serious penalties on firm executives with fines of up to $5 million and/orimprisonment up to 20 years. At the same time, this legislation requires that these firms tighten theirinternal controls over financial reporting (Barra, 2010). Unfortunately, it is also true that most frauds areperpetrated by people in positions of trust in the accounting, finance, and IT functions (Carpenter et al.,2011). Consequently, there should be alternative tools to detect the possibility of financial frauds.Forensic accounting can be seen as one of such tools. An understanding of effective fraud and forensicaccounting techniques can assist forensic accountants (henceforth, FA’s) in identifying illegal activity anddiscovering and preserving evidence (Bhasin, 2007). According to Christensen et al., (2005), “Someregulators have apparently noticed the need for forensic accounting.” For example, the Sarbanes-OxleyAct (SOX), the Statement on Auditing Standards-99 (SAS 99), and the Public Company AccountingOversight Board (PCAOB) have not removed the pressures on CFOs to manipulate accountingstatements. The PCAOB recommends that “an auditor should perform, at least, one walk-through for eachmajor class of transactions.” However, SAS 99 does not require the use of forensic specialists but doesrecommend brainstorming, increased professional skepticism, and unpredictable audit tests. The PCAOBhas raised concerns about auditors’ fraud judgments and the quality of their brainstorming sessions(Chariri, 2009; Brazel, 2010).2013©Academy of Knowledge Process58

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comThe Institute of Chartered Accountants of India (ICAI) has taken the challenge of training some CharteredAccountants to become Certified Forensic Accountants (CFAs). It is providing a “Certificate Course onForensic Accounting and Fraud Detection using IT and CAATs,” with 100 hours spread over 6 weekends.This challenge is yet to be embraced by most of the Indian Universities providing higher education. Atpresent, very few academic institutions are offering a full course on forensic accounting, either atundergraduate or graduate level, despite the high need for this category of professionals. For example,Indiaforensic (Pune) is one of the few, which conducts a Certificate course in Bank Forensic Accounting(CBFA), Certified Anti Money Laundering Expert (CAME), and Certified Forensic AccountingProfessional (CFAP). The Institute of Chartered Financial Analysts of India University (Tripura) alsooffers a “Postgraduate Diploma in Forensic Accounting.” However, some colleges/universities areproviding “Forensic Science” courses in India. Most probably, this is on account of lack of informationabout universally accepted skill-mix of FA’s. Both academics and professionals should agree on therequired skill-mix of FA’s, which could be embedded in their course structure. This scenario highlights agap between forensic accounting practice and education in the country. As academic institutionscontemplate the addition of fraud and forensic accounting into their curricula, there is a need for an indepthexamination of the knowledge, skills and abilities necessary for individuals to function in thesefields. In spite of the fact that forensic accounting is offered by some professional accountancy bodiesand Universities in the United States, Canada, United Kingdom etc., controversies are still looming theacademic environment on the best skills needed for this crucial function. The international academiccommunity has tried to address the question: who are the right people to suggest forensic accountingskills?This paper is organized as follows. Section 2 briefly summarizes the creative and fraudulent accountingpractices followed by some of the Indian companies. In the current reporting environment, FA’s are ingreat demand for their accounting, auditing, legal, and investigative skills. Therefore, section 3 highlightsthe need for forensic accounting and the skills required on the part of FA’s. The review of literature thatmotivates this study is performed in section 4. Section 5 discusses the methodology and procedures usedin gathering and analyzing the survey data for the study. Section 6 presents the results and discussion ofthe implications of the study. Last section summarizes the conclusion.Fraudulent and Creative Accounting Practices Used by the Indian CompaniesFraudulent financial reporting, no doubt, can have significant consequences for the organization and itsstakeholders, as well as for public confidence in the capital markets. Periodic high-profile cases offraudulent and creative financial reporting in India have raised concerns about “the credibility of thefinancial reporting process and called into question the roles of management, auditors, regulators, andanalysts, among others.” India has been amongst the fastest growing economies in the world in the lastdecade. In spite of global economic slowdown, the Indian economy grew by 8 per cent in 2010–11 and isestimated to grow by 7 per cent in 2011–12. There is significant foreign investor interest as shown by a50 per cent increase in FDI this year. Fortunately, it has remained relatively unaffected by the globaleconomic crisis, thanks to strong fundamentals of the economic policy. However, despite this situation“the confidence of international investors and domestic entrepreneurs has been low in the last two years,thanks to the various scams and frauds that have come to light during this period.”The frauds in the ‘Indian financial markets’ have been known for many years. According to CapitalViaGlobal Research Ltd. (www.capitalvia.com), “The following are examples of some of the popular IndianFinancial Market Scams (losses suffered): 1992 Harshad Mehta Securities Scam (Rs. 5,000 crores), 1995Bhansali Scam (Rs. 1,200 crores), 2001 Ketan Parekh Scam (Rs. 1250 crores), 2001 The UTI Scam (Rs.4,800 crores), 2008 Satyam Scam (Rs. 10,000 crores), 2008 The 2-G Spectrum Swindle (Rs. 60,000crores), 2009 Madhu Koda Scam (Rs. 4,000 crores), etc. etc. Fruad committed by the Satyam ComputerServices Ltd. has been labeled by the media as “India’s Enron.” Some other popular scams were: Indian2013©Academy of Knowledge Process59

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comCoal Allocation Scam, Commonwealth Games Scam, Bofors Scam, Fodder Scam, Hawala Scam, TheIPL Scam, Adarsh Housing Society Scam, Barak Missile Scam, Kargil Coffin Scam, Mining Scam, TelgiScam and so on. The list of scams in India is never ending and unfortunately growing very fast, everyyear. The need for improving “CG and ethical culture across public and private sector companies hasnever been felt as acutely as is being felt now.” This resounding sentiment is echoed in the ‘KPMG IndiaFraud Survey (2012)’ as: “The last few years have seen increased number of frauds reported in India, aswell as, globally. From Satyam, Adidas-Reebok, Common Wealth Games and OnMobile in India toLIBOR manipulation, securities trading, over-riding international sanctions on the global front, we haveseen some of the more sophisticated and large frauds coming to light.” With reports indicating that asmuch as 5 percent of annual revenues could be lost due to frauds (ACFE 2012), organizations today arerequired to be more cognizant of the damages that frauds can do. Despite the serious risks that fraudpresents to business, “many organizations still do not have ‘formal’ systems and procedures in place toprevent, detect and respond to fraud. While no system is completely foolproof, there are steps which canbe taken to deter fraud and make it much less attractive to commit.” All businesses are confronted withthe risk of fraud. How they respond—the nature of their approach to prevention, detection, investigationand disclosure—will separate those who manage through the issues from those who suffer significantlosses.In addition, cyber crime incidents are on the rise across the world and India is no exception to this trend.As per Norton’s Cybercrime Report (2011), “cyber crime cost the global economy (in both direct damageand lost productivity time) USD 388 billion in 2011. India is estimated to have damages of USD 7.6billion (INR 341 billion) due to cyber crime in 2011. The high cost of cyber crime is a direct result of thenumber of people defrauded by it.” Another major concern with cyber crime is its low detection level andnegligible prosecution. The monetary loss due to information theft is impossible to assess as it dependsupon the nature of information stolen. However, such losses can neither be recovered through insurancecoverage nor is the law able to protect from such incidents. However, Norton’s Cybercrime Reportmentions that close to 30 million people were affected by cyber crime in 2011 in India as against 431million globally. National Crime Records Bureau (2012) states, “India has seen an increase in the numberof cyber crime cases filed. In 2011, a total of 1,791 and 422 cyber crime cases were registered under theInformation Technology Act, 2000 and the Indian Penal Code respectively, as opposed to 217 and 328 in2007.” Similarly, according to Havoscope Global Black Market Index (2012), “Intellectual propertyfraud, counterfeiting and piracy are rampant in India and no industry has been spared. Counterfeit andpirated goods in India are estimated to be worth over USD 5 billion. The global value of counterfeit andpirated goods, currently at $650 billion, is likely to more than double by 2015.” Moreover, TransparencyInternational’s ‘Global Corruption Report (2011)’ states, “The everyday face of corruption—bribes,kickbacks, tax avoidance, selling influence—is well-known and has distorted economies, demoralizedpublics and torn asunder the moral fabric of many a society.” While there is greater awareness of fraudand misconduct among corporate-sector of India, the associated risks need to be considered at a ‘strategic’level. Investments need to be prioritized to build a sustainable ecosystem that can mitigate fraudsefficiently, including frauds of the future. The KPMG India Fraud Survey (2012) has highlighted theemergence of newer forms of fraud and reliance on technology to perpetrate them. Cyber crime,intellectual property (IP) fraud, piracy and counterfeiting, and identity theft have been identified as thekey fraud risks of the future. However, in order to maintain this robust economic growth, we need anenvironment free from major risks. With terrorism going digital, we are at the threshold of ‘new’emerging risks. It is, thus, imperative for all the stakeholders, the corporate sector, government and civilsociety, to understand, analyze and address these risks.India is a ‘developing’ economy where corporate-sector is contributing a major part in national income.Most of the Indian corporations are spreading their wings all over the world where they get lots ofopportunities to go for “creative” accounting since all countries have different accounting systems whichcreates ambiguity in investor’s mind. Thus, the number of accounting scandals is increasing in India.2013©Academy of Knowledge Process60

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comOver the recent years, “India has developed its corporate-sector, stock-markets and the accountingprofession.” The growing importance of the corporate-sector calls for its ‘efficient’ working and ‘greater’transparency. However, the prevalence of creative (or fudging) accounting, and fraudulent practicesfollowed by some of the Indian companies hinders this. In spite of number of checks and balancesrequired by regulatory agencies, there have been number of accounting scandals since the 1980s. Firmsadopt accounting procedures that “minimizes unfavorable economic effects and enhance favorable ones.”The following are some of the motives for fraudulent financial reporting by management: (1)management is under pressure from sources outside or inside the entity, to achieve unrealistic targets,where consequences of failure are very significant, (2) to increase the entity’s stock prices or earningstrends, (3) to keep the results attuned to knowingly unrealistic non-achievable forecasts/commitmentsmade to creditors and lenders, (4) tax-motivated reasons, and (5) to raise capital either by the issue ofshares at a premium and/or through borrowings (Orumwense, 2013). Thus, corporate frauds are results ofmanipulation of accounts and accounting ‘jugglery’ designed to deceive others for wrongful gains. Suchcreative accounting by ‘fudging’ the accounts is attributed to the ‘flexibility’ provided by the ‘accounting’system (Jones, 2011). The accounting systems in the “Anglo-Saxon” countries have been designed to beflexible enough to accommodate a variety of situations and present them ‘fairly’ in the accounts. In India,the Companies Act requires that accounts must be “true-and-fair”. Sometimes, however, management‘abuses’ the freedom of choice in the accounting systems. Methods are adopted to ‘hide’ the true-picture,and show an ‘improved’ performance of the firm. Company management may adopt various methods todress up financial statements to show improved performance. In respect of profit and loss account, theaccounting risk is usually the overstatement of income or understatement of expenses. For the balancesheet, it may exist in three areas: the correct valuation of company’s assets, accounting for all liabilitiesand over or understatement of net worth. The effect of creative accounting may defeat the purpose ofpresentation of “true and fair” financial statements, as required by Section 211 of the Indian CompaniesAct. Table 3 shows some examples of Indian companies practicing creative accounting from 1996-97 to2008-09.Table 3: Creative Accounting and Fraudulent Practices followed by the Indian CompaniesCompany Years Nature of FraudWIPRO Ltd. 1996-97 to Transfer of land to stock creating capital reserve with the fair value and using it1999-2000 to neutralize the effect on profit of reduction of land value.Bombay Dyeing &Manufacturing CompanyLimited2003-04 and2004-05Creating provisions for possible loss on firm purchase contract and subsequentwrite-back of such provision thereby converting operating losses into operatingprofit.Larsen & Toubro Limited 1999-2000 Income recognition through transfer of loan liabilities at a lower consideration.and 2001-02Apollo Tyres Ltd. 2004-05 Debiting profit and loss account with additional excise duty payable to thegovernment and transferring equivalent amount from general reserve toneutralize the effect.Asian Electronics Ltd. 2004-05 Impairment of assets: treatment of deferred tax.Oil and Natural GasCommission, MukundLtd., Torrent Power ACELtd. and Tata Motors Ltd.Hindustan Zinc LimitedTata Motors, BombayDyeing, Mahindra andHimachal FuturisticSatyam Computers2004-05 Capitalization of interest as well as other intangible assets to show fixed assetsvalue upward and understating revenue expenses.2003-04 and Reclassifying assets in the balance sheet.2004-052001-02 Direct write-offs from reserves.2008-09 Fraudulently incorporated a non-existent cash component by inflating the bankbalances, fudging bills, accounts receivables, interest, and liabilities.Services Limited(Source: Jones, M. (2011) ‘Creative accounting, fraud and international accounting standards,’ John Wiley & Sons,London, page 235)2013©Academy of Knowledge Process61

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comManagement of the firms could indulge in the above-mentioned practices because of flexibility inaccounting standards and other regulatory provisions, thus, leading to fraudulent accounting practices.The best thing about the Satyam episode, as far as investors are concerned, is that it forced morecompanies to clean up their account books and governance practices. As Mampatta and Shrivastava(2010) remarked, “The year after the Satyam Computer Services fiasco came to light, corporations wereless inclined to indulge in “creative accounting.” With the stocks of companies perceived to be floutingprudent CG practices—particularly real estate companies—taking a beating, India Inc. had little choicebut to take notice. In a report, Noble Group (a UK-based investment bank) has evaluated the accountingpractices for 313 BSE 500 companies. Sixty-three BSE 500 financial services sector companies wereexcluded because they do not lend themselves to the ‘forensic accounting’ techniques used and 124companies were excluded because their ‘consolidated’ financial statements for the past two financialyears were not available. According to Nobel Research Report (2009), “We estimates that 20 percent ofIndia’s top 500 companies indulge in accounting malpractices, such as recording revenue ahead of time,booking fictitious sales, and manipulated cash figures. We find that the incidence of ‘creative’ accountinghas abated in 2008-09, as compared to the previous financial year. This could be due to the corporation’sapprehensions after Satyam. This could be because of companies and auditors taking fright following theSatyam scam. It could also be that in a bear market year like 2008-09, when all the stocks werehammered globally, corporation’s incentive to flout the accounting rules were muted,” says SaurabhMukherjea, head (Indian equities), Noble Group (Raj, 2010). Unfortunately, this means that as morecompanies look at tapping the market, the holier-than-thou act that India Inc. has been putting up may beon its way out. If the ‘incentive’ to cook books is indeed back, investors need to be more careful. Thesectors where creative accounting was the most popular in 2007-08 were, as shown in Table 4, housing(including firms related to real estate, construction and cement), information technology, and capitalgoods (such as companies in construction, power T&D and materials). In 2008-09, there was a shake-upin the defaulter list. Healthcare replaced IT among the worst performers. Also, the top 50 stocks in theBSE 500 (by market capitalization) were the most likely segment of the market to have a company inNoble’s creative accounting “blacklist of the 50 worst companies” for 2008-09. Family-controlled groupsalso switch funds between their companies for personal gain or to improve stock prices. Many familypromoters compromise the interests of shareholders in pursuit of immediate personal wealthaccumulation. Check out the consolidated annual statements that a company provides. Pay particularattention to revenue, expense and cash pilferage, the three most common ways of manipulating accounts.Meanwhile the forensic accounting business remains a growth segment, growing at 40-50 percent a year.Table 4: Industry Sectors Using Creative Accounting in IndiaSector Per cent of 50 worst companies Probability of fudging books(in per cent)Housing-related 16 25Healthcare 12 21Capital goods 10 14Metal, metal products and mining 10 21Information technology 8 12(Source: Raj, Rakesh (2010), “BSE’s Top 50 may be worst at Accounting,” Business Today, January 21, 2010available at www.businesstoday.intoday.in)Forensic Accounting Provides the Connecting LinkWhat the use of fingerprints was to the 19 th century, and DNA analysis was to the 20 th century, sofinancial information and forensic accounting has come to be one of today’s most powerful investigativeand intelligence tools available. There is no doubt that “qualified, trained and mature accountingprofessionals, possessing forensic skills, can prove to be a valuable asset to the corporate-sector, andgradually help to improve their CG systems.” Initially, forensic accountant’s (FA’s) were used by the2013©Academy of Knowledge Process62

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comgovernment agencies (such as, the CIA, the FBI, the IRS etc.) to uncover and investigate leading frauds.They became financial detectives—independent experts employed by management to uncover fraudulentfinancial reporting and misappropriated assets. To combat the frauds effectively one needs the activesupport of government at every stage. There are three-four such agencies in India, which are dedicated tothe mission of combating frauds. Serious Fraud Office looks into violations of Income Tax, FEMA, RBIAct, etc.; CBI (Economic Office Wing) deals with big financial frauds; Central Vigilance Commissiondeals with corruption are the major government agencies that combat frauds of different types. In thecurrent reporting environment, undoubtedly, FA’s are in great demand for their accounting, auditing,legal, and investigative skills. They can play a vital role in coordinating company efforts to achieve acohesive policy of ethical behavior within an organization.The definitions of forensic accounting are changing in response to the growing needs of the corporations.Bologna and Lindquist (1995) have defined forensic accounting as “the application of financial skills, andan investigative mentality to unresolved issues, conducted within the context of rules of evidence. As anemerging discipline, it encompasses financial expertise, fraud knowledge, and a sound knowledge andunderstanding of business reality and the working of the legal system.” Another view, held by Singletonand Singleton (2010), is that “forensic accounting is the comprehensive view of fraud investigation. Itincludes preventing frauds and analyzing antifraud controls… It also includes the gathering of nonfinancialinformation.” According to the definition developed by the AICPA’s ‘Forensic and LitigationServices Committee,’ “forensic accounting may involve the application of special skills in accounting,auditing, finance, quantitative methods, the law, and research. It also requires investigative skills tocollect, analyze, and evaluate financial evidence, as well as the ability to interpret and communicatefindings. Forensic accounting encompasses litigation support, investigation, and dispute resolution and,therefore, is the intersection between accounting, investigation and the law.” In deed, forensic accountingincludes the use of accounting, auditing and investigative skills to assist in legal matters. Similarly,Golden et al., (2011) describes as, “Forensic accounting consists of two major components: litigationservices that recognize the role of an accountant as an expert consultant, and investigative services thatuse a forensic accountant’s skills and may require possible courtroom testimony.” This implies that theFA’s should be skilled not only in financial accounting, but also in internal control systems, the law, otherinstitutional requirements, investigative proficiency, and interpersonal skills. Corporations can rely on“FA’s skills for developing a consistent system of CG, disseminating such information within and outsidethe company, ensuring that governance policies and objectives are interwoven into the internal controlsystem, setting up fraud prevention systems, and investigating any existing fraud.” The accountants arealready trained in many of the skills required for such tasks, but they need some additional specializedskills to the skills of a traditionally trained accountant.FA’s are expected to be a ‘specialist’ in accounting and financial systems. Yet, as companies continue togrow in size and complexity, ‘uncovering’ fraud requires FA’s to become ‘proficient’ in an everincreasingnumber of “professional skills and competencies”. So what personal ‘skills’ are required tobecome an efficient FA? So far, several studies have been conducted to find out the core skills andcompetencies required on the part of FA’s. Unfortunately, there is a lack of consensus on this issue.In addition to the specialized knowledge about the techniques of finding out the frauds, one needspatience and analytical mindset. One has to look beyond the numbers and grasp the substance of thesituation. It is basically the work of the intelligent accountants. There is a need for the same basicaccounting skills that it takes to become a good auditor plus the ability to pay attention to the smallestdetail, analyze data thoroughly, think creatively, possess common business sense, be proficient with acomputer, and have excellent communication skills (Bhasin, 2007). A “sixth” sense that can be used toreconstruct details of past accounting transactions is also beneficial. A photographic memory helps whentrying to visualize and reconstruct these past events. The forensic accountant also needs the ability tomaintain his composure when detailing these events on the witness stand. Finally, a forensic accountant2013©Academy of Knowledge Process63

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comshould be insensitive to personal attacks on his professional credibility. Wells (2011) very aptlyremarked: “A fraud accountant (forensic accountant are sometimes called) should also observe and listencarefully. By this, you can improve your ability to detect lies whether they involve fraud or not. This is sobecause “not all liars are fraudsters, but all fraudsters are liars.” It is clear that auditors and professionalaccountants should have investigative skills in performing their jobs. Consequently, accountingcurriculum should consider subjects discussing forensic accounting/auditing. Such curriculum should alsobe directed to provide students with understanding of organizational culture, business and professionalethics, corporate governance issues, and investigative skills (Fortin and Legault, 2010).What does the above statement imply for the accounting education? While the forensicaccounting/auditing practice had commenced in the U.S. as early as 1995, the seed of this specializationhas yet to take off in India. For instance, Groomer and Heintz (1994) analyzed the topics covered ininternal auditing courses in the United States and Canada, and found that fraud related topics were taughtin more than 31 percent of examined internal auditing courses. Similarly, Rezaee et al. (1996) examinedthe coverage of forensic accounting in the accounting curriculum and found that only a handful ofuniversities offer a fraud and/or forensic accounting course, and suggest that the accounting curriculumprovide a knowledge acquisition base in forensic accounting as part of curriculum changes in response tothe mandated American Institute of Certified Public Accountants (AICPA) 150-hour accounting program.Unfortunately, almost none of the academic institutions in India are offering a full-course on forensicaccounting, either at undergraduate or graduate level, despite the high need for this category ofprofessionals. Most probably, this is on account of lack of information about universally accepted skillmixof FA’s. Both academics and professionals should agree on the required skill-mix of FA’s, whichcould be embedded in their course structures. This scenario, thus, highlights a wide-gap between forensicaccounting practice and education in the country.REVIEW OF LITERATUREIn this section, related literatures on the subject matter are briefly reviewed with a view to showingvividly the gap in knowledge. Many researchers have indicated that “technical skills are regarded asimplicit in the skills base of a person entering an accounting career, but that it is a range of broaderpersonal characteristics that facilitate career success and make accounting graduates more valuable toemployers.” Furthermore, long-back Lee and Blaszczynski (1999) suggested that “employers expectedaccounting students to learn a multitude of skills, not simply how to generate and use accountinginformation. These skills include being able to communicate, work in a group environment, solve realworld problems, and use computer and Internet tools.” Aderibigbe (2000) in his study suggested that“FA’s requires high-level of competence, integrity and honesty to perform his job.” Moreover, he is of theopinion that FA’s must be thoroughly trained, must prove his competence by passing all relevantexaminations to become a member of a recognized accountancy body, should always be outstanding interms of integrity, honesty and probity, and must maintain a professional attitude in the performance ofhis responsibilities.” Similarly, Harris and Brown (2000) have identified “specialized skills and technicalabilities of FA’s.” FA’s are usually familiar with criminal and civil law, and understands the courtroomprocedures and expectations. These researchers also stressed investigative skills, including theories,methods, and patterns of fraud abuse. FA’s thinks creatively to consider and understand the tactics that afraud perpetrator may use to commit and conceal fraudulent acts. Additionally, they need to clearly andconcisely communicate findings to various parties, including those with less knowledge of accountingand auditing.In 2002, Rezaee examined a sample of under-graduate and graduate accounting students, and the resultsindicated that “the students believed that forensic accounting is a viable career option but is not gettingthe proper attention in Colleges and Universities.” However, Grippo and Ibex (2003) illustrated that “themost important skills of FA’s come from experience in accounting and auditing, taxation, business2013©Academy of Knowledge Process64

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comoperations, management, internal controls, interpersonal relationships, and communication.” Furthermore,Akers and Porter (2003) advocated that “the AICPA and the Institute of Management Accountantsrecognize emotional intelligence skills as critical for the success of the accounting profession.” Similarly,Messmer (2004) stated that “successful FA’s must have analytical abilities, strong written and verbalcommunication skills, a creative mindset, and business acumen. They must be able to interview and elicitinformation from potentially uncooperative people and possess a strong amount of skepticism.” Thechallenge of delivering graduates with a more extensive and special skill sets is highlighted in a recent‘European’ study (Hassall et al, 2005). Their research points to similar employer demands for nontechnicalskills, but reported at the same time that employers were unsympathetic with claims fromUniversities that they had limited capacity to deliver on these greater demands. Consequently, a specialtraining process can be fashioned out to give interested accounting graduates an opportunity to acquirethese special skills that will make them specialists.Ramaswamy (2005) believed that “FA’s are distinctively positioned to be able to uncover financialdeceptions,” his prominent skills being an in-depth knowledge of financial statements, the ability tocritically analyze them, and a thorough understanding of fraud schemes. He also believed that FA’sshould have the ability to comprehend the internal-control systems of corporations and be able to assesstheir risks. The knowledge of psychology helps FA’s to understand the impulses behind criminal behaviorthat motivate and encourage financial deception. Also, interpersonal and communication skills that aid indisseminating information about the company’s ethics and an understanding of criminal and civil law andof the legal system and court procedures are skills that aid FA’s. Moreover, Rezaee, Crumbley andElmore (2006) surveyed opinions of practitioners and academics regarding the importance, relevance, anddelivery of forensic accounting education. Their results indicated that “the demand for and the interest inforensic accounting will continue to increase.” Their study further shows that both practitioners andacademics viewed accounting education as relevant and beneficial to accounting students. However, thegroups differed in opinions regarding topical coverage of forensic accounting. In searching for the skillarea of FA’s, DiGabriele (2008, 2009), in a US study found that “both academics and practitioners agreedthat critical thinking, unstructured problem-solving, investigative flexibility, analytical proficiency, andlegal knowledge are important and core skills for FA’s.”Ahadiat (2010) conducted a study in which he asked respondents to rate the skills expected of anaccountant and the auditor. The results from his study shows that “accounting curricula across the UnitedStates were revised to include instructions aimed at improving students’ knowledge, skills, and abilities,which would go beyond their technical knowledge. These skills included, communication skills,analytical skills, presentation skills, team orientation, critical thinking, among others.” However, a studyconducted by Sugahara and Coman (2010) attempted to compare the differences in ‘Japanese’ accountingfaculty and practitioners’ perceived importance of generic skills for CPAs in order to assess the CPA LawAmendment of 2003. It was found that “Japanese accounting faculty and practitioners commonlyperceived the information skill type as the most important, and the behavioral skill type as the secondmost important, but they tended to regard the interpersonal skill type as less important.” Severalimplications are also raised from the findings to improve the quality education of Japanese CPAs and alsoto facilitate the international harmonization of accounting education. Studies by scholars, such as Davis,Farrell and Ogilby (2010) and Ekeigwe (2011), highlighted that “analytical skill remains the foremosttrait that FA’s are expected to possess.” Their results also revealed that the skill sets of FA’s are eclectic.These include general civilization, communication, accounting, business, auditing, technology,psychology, criminology, courtroom behavior, and meta-thinking skills are critical to the effectiveness ofa FA. Similarly, in a study conducted by Chukwunedu and Okoye (2011) revealed that “forensicaccounting techniques injected in an audit and given cost/benefit considerations is capable of increasingthe ability of the auditor to detect fraud and thus help bridge the audit expectation gap. This finding hasimplications for both accounting education and accounting practice.2013©Academy of Knowledge Process65

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comIt is apparent that the “academic literature has identified some of the forensic accounting courses andcourse contents, whereas the practitioner literature suggests core skills necessary in practice.” However,the literature has not yet empirically identified the views of three major stakeholders—accountingacademics, forensic accounting practitioners, and users of forensic accounting services—regarding whichskills are important for FA’s. All the three stakeholders will be significant in shaping the future offorensic accounting. An attempt is made here “to uncover the basic skills needed for traditionalaccounting and auditing services, and the ones required for specialized services in the areas of fraudinvestigations, forensic accounting and forensic auditing.”OBJECTIVE OF THE STUDYThe ‘primary’ objective of this study is “to assess the necessary skills required by forensic accountants(FA’s) in India and make a case for the development of a standardized curriculum for the study offorensic accounting as a course in the Universities.” However, three ‘specific’ objectives are:1. To determine the extent to which financial and economic crimes have impacted on the Indianeconomy and the effectiveness of forensic accounting functions;2. To establish the need for incorporating forensic accounting courses in the academic curriculum ofIndian Universities; and3. To determine whether the necessary skills required by the FA’s in the developed countriessignificantly differs from the expectations of clients and accountants in India.HYPOTHESIS FORMULATIONTo achieve our primary objective, the following three propositional and non-affirmative hypotheses areformulated and statements made:Hypothesis-1: “Core skills are not enough requirements for FA’s to investigate economic andfinancial crimes in the Indian economy;”Hypothesis-2: “There are no significant differences in the relevant skills of FA’s as given byprevious researchers with the current research study;” andHypothesis-3: “The necessary skills of FA’s, as identified by both academics and professionals,will not meet the employers’ expectations.”RESEARCH METHODOLOGYDuring 2011-12, we conducted a survey of three States in the National Capital Region (NCR viz., Delhi,Gurgaon and Ghaziabad) of India using a random sample of 120 practicing accountants, accountingacademics, and users/potential users of forensic accounting services. This study classified lawyers andanti-graft agencies personnel as the primary users of forensic accounting services. The researchinstrument (or questionnaire) was divided into three sections, and it was sent out and retrieved as follows:120 questionnaires were given hand-to-hand by trained assistants to members of the stakeholders’ groups.40 for each group of professional accountants, accounting academics and lawyers/anti-graft agenciespersonnel. However, only 70 questionnaires were finally retrieved as per schedule, with 65 found to bereasonably complete in most respects.We prepared and pre-tested our survey instrument before sending it out to all our respondents. Thequestionnaire was structured into three Sections, as shown in Annexture-1. In Section A, first-sixquestions attempted to map the biographical profile of the respondents, such as, primary profession,gender, education, experience, professional qualification/license, and involvement with forensicaccounting services. Here, one question specifically asked the participants to “identify, at least, five core2013©Academy of Knowledge Process66

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comskills (out of 19 skill options) that FA’s needs to posses, and rank them on a 5-point Likert-type scale,ranging from 4 (strongly agree) to 0 (strongly disagree).” Similarly, in Section B, 9 skill-related broadstatements were presented being the important skills of FA’s. As suggested by DiGabrielle in 2008, “The9 skills required for the FA’s to be rated were: deductive analysis, critical thinking, unstructured problemsolving,investigative flexibility, analytical proficiency, oral and written communication, specific legalknowledge and composure. You are expected to answer them on a 5-point Likert-type scale, ranging fromranging from 4 (strongly agree), 3 (Agree), 2 (Neutral), 1 (disagree) to 0 (strongly disagree).” Moreover,in Section C, we asked the respondents to answer some questions regarding basic education and careerpathsof FA’s, their likely demand in the future—next 5, 10 and 20 years, and need to know computerbasedforensic techniques and software tools.” The scales were anchored at each end with the descriptors“extremely unimportant” to “extremely important,” respectively. The responses from the above statedaspects of the survey instrument enabled us to assess participants views on the ‘core’ skills of FA’s, theextent of differences in views about these skills between current and previous research, and general trendsabout FA’s education, career-path, demand-supply scenario, and computer-proficiency.Some Universities in India are considering including forensic accounting courses to their curriculum. Thisevolution has unearthed an absence regarding the significant skill-set outcome that should accompanyforensic accounting education. One of the objectives of this study is to examine the necessary skills thatwill be required by would-be FA’s for the purpose of recommending them to Indian Universities forpossible inclusion in their syllabi. The current study complements the two prior-studies undertaken byRazaee, Crumbley and Elmore (2004, 2006) by surveying “forensic professionals for their perceptions ofthe necessary skills and characteristics for FA, as well as the education requirements.”In conducting the data analysis, we used SSPS and Excel packages to compute descriptive statistics forgroup membership (tables of frequencies and percentages) as well as the responses relating to the 19competencies (both percentages within each category and overall means, standard deviations, variancesand ranges). Moreover, the correlations among the 19 items were also computed. The main set of analysesthat were followed consist of a series of one-way Analyses of Variances (ANOVAs) comparing the viewsof FA’s, academics, lawyers/anti-graft agencies personnel in terms of their ratings of the importance of allthe competencies. Specifically, the one-way ANOVA was used for testing hypothesis one, T-test fortesting hypothesis two and chi-square (x 2 ) for testing hypothesis three.DATA ANALYSIS, FINDINGS AND RESULTSA total of 65 respondents fully-completed the survey instrument, of them 20 (31%) wereprofessional/forensic accountants, 20 (31%) accounting academics, and 25 (38%) were users of forensicaccounting services. The overall response rate was 54 percent, which is little above the average score. Thedemographic profile of the sample is as follows: approximately 70 percent of the sample comprised ofmen, 62 percent were over the age of 40 years, 93 percent were having undergraduate/masters’ education,77 percent were having experience with business forensics, 88 percent had experience with accounting,and 92 percent had experience with auditing, respectively.As stated earlier, our survey instrument (i.e., questionnaire) was divided into three Sections. In Section A,the list of choices provided to the participants was developed through an extensive review of the relevantacademic and professional literature, consultation with forensic accounting practitioners, and users offorensic services. Based on the outcome of the current study, descriptive statistics for the 19 areas of skillcompetency, including the overall means, standard deviations, variances, and ranges are shown in Table5. It should be noted here that the “skills with the high means and low standard deviations are the mostimportant skills required for FA’s, while the skills with low means but high standard deviations are theleast important skills required to be FA’s.” Based on the findings of the present study, we can conclude asfollows: “The skill competency items rated as the most important were effective written communication2013©Academy of Knowledge Process67

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com(M=15.5, SD=5.1), auditing skills and oral communication (M=14.75, SD= 6.7 & 5.2). Research skills(M=13.75, SD=6.8), tell the story, and investigative ability (M=13.5 & 13.25, SD=4.4 & 3.6) take thesecond position in terms of importance. The items rated as least important were: understanding the goal ofa case (M=6.5, SD=2.9), solve unstructured problems (M=10, SD= 3.6), and synthesize results ofdiscovery and analysis (M=10, SD=5.4), respectively.”Table 5: Descriptive Statistics for Skill Competency Required for Forensic Accountant’sStandardSkills Required for FA’sMean Deviation Variance Range1. Auditing Skills 14.75 6.7 44.9 152. Critical/strategic thinker 10.25 6.2 38.9 153. Effective oral communication 14.75 5.2 26.9 114. Effective written communication 15.5 5.1 25.7 115. Identify key issues 10.25 5.9 34.9 136. Investigative ability 13.25 3.6 12.9 87. Investigative intuitiveness 12 4.2 18.0 98. Organize an unstructured situation 12.25 6.6 43.6 149. Research Skills 13.75 6.8 45.6 1510. Legal skills 11.75 4.6 21.6 1011. Simply the information 12 4.2 18.0 912. Solve structured problems 11.25 4.3 18.3 913. Solve unstructured problems 10 3.6 12.7 814. Synthesize results of discovery and analysis 10 5.4 28.7 1115. Tell the story 13.5 4.4 19.0 916. Think like the wrongdoer 11.25 4.3 18.9 1017. Understand the goals of a case 6.5 2.9 8.3 718. Others: Psychology skills 10.5 3.1 9.7 719. Others: Sociology skills 8.75 3.8 14.3 9The correlations among the important ratings for the 19 skill-competencies are shown in Table 6. Thefollowing general observations can be made: “The highest correlations were between Critical thinking-Sociology-Understanding the goal of the case, Effective written communication-Psychology,Investigative ability-Simply the information, Organizing an unstructured situation-Solve structuredproblems-Solve unstructured problems, Simply the information-Tell the story, Solve structured problems-Solve unstructured problems-Psychology skills, and Understand the goals of a case-Sociology, all with 99percent (r = 0.99) and between Critical/strategic thinker- Solve unstructured problems, Effective writtencommunicating-Solve unstructured problems, Organizing an unstructured situation-Research Skills-Psychology skills, and Simply the information-Solve structured problems all with 98 percent (r = 98),whereas the lowest was Understand the goals of a case with 36 percent (r = 0.36). However, most of thecorrelations were above 50 percent (r = 0.50), thus, showing reasonable levels of statistical significance.”Table 6: Correlation AnalysisType ofSkill 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 191.00AuditingSkillsCritical/strategicthinkerEffectiveoral0.890.431.000.721.002013©Academy of Knowledge Process68

692013©Academy of Knowledge ProcessInternational Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comcommunicatorEffectivewrittencommunicator0.910.940.761.00Identifykey issues0.560.850.970.831.00Investigativeability0.870.780.660.940.671.00Investigativeintuitiveness0.770.680.670.880.640.981.00Organizing anunstructuredsituation0.980.940.600.970.710.910.821.00ResearchSkills0.930.970.741.000.830.920.840.981.00LegalSkills0.680.690.670.740.620.920.960.700.691.00Simplytheinformation0.890.870.730.980.760.990.950.950.970.851.00Solvestructuredproblems0.950.930.680.990.760.950.880.990.990.760.981.00Solveunstructuredproblems0.960.980.660.980.780.890.790.990.990.650.940.991.00Synthesize resultsofdiscoveryandanalysis0.960.910.370.840.550.710.570.930.870.440.770.870.931.00Tell thestory0.840.830.760.970.770.990.970.910.940.880.990.960.900.701.00Thinklike thewrongdoer0.680.780.900.920.880.910.920.800.880.800.930.870.820.540.961.00Understand thegoals of acase0.850.990.680.890.830.690.570.900.920.360.790.880.940.910.740.701.00Others:Psychology skills0.930.970.730.990.830.910.830.981.000.680.960.990.990.880.930.880.931.00Others:Sociologyskills0.900.990.650.920.800.740.620.940.950.430.830.910.970.940.780.720.990.951.00

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comTesting of Hypotheses: To fully achieve our primary objective, propositional statements are tested here:Hypothesis-1: “Core skills are not enough requirements for Forensic Accountants (FA’s) toinvestigate economic and financial crimes in India.”The p-value of 0.655 (as shown in Table 7.1) is greater than our 0.05 level of significance, the ‘null’hypothesis will be accepted, while the alternative rejected.Table 7: Testing Skills Required by Using a one-way ANOVAGroups Count Sum Average VarianceAuditing Skills 4 59 14.75 44.91666667Critical/strategic thinker 4 41 10.25 38.91666667Effective oral communicator 4 59 14.75 26.91666667Effective written communicator 4 62 15.5 25.66666667Identify key issues 4 41 10.25 34.91666667Investigative ability 4 53 13.25 12.91666667Investigative intuitiveness 4 48 12 18Organize an unstructuredsituation 4 49 12.25 43.58333333Research Skills 4 55 13.75 45.58333333Legal Skills 4 47 11.75 21.58333333Simply the information 4 48 12 18Solve structured problems 4 45 11.25 18.25Solve unstructured problems 4 40 10 12.66666667Synthesize results of discoveryand analysis 4 40 10 28.66666667Tell the story 4 54 13.5 19Think like the wrongdoer 4 45 11.25 18.91666667Understand the goals of a case 4 26 6.5 8.333333333Others: Psychology skills 4 42 10.5 9.666666667Others: Sociology skills 4 35 8.75 14.25Table 7.1: ANOVA(Summary)Source of Variation SS Df MS F P-value F critBetween Groups 363.789 18 20.211 0.833 0.655 1.787808841Within Groups 1382.25 57 24.25Total 1746.039474 75In Section B, most of the questions asked to the participants of this study have been suggested byDiGabrielle (2008) to be the important skills of forensic accountants (FA’s). The respondents wereexpected to answer them on a 5-point Likert-type scale, ranging from 4 (strongly agree), 3 (Agree), 2(Neutral), 1 (disagree) to 0 (strongly disagree).Here, nine questions were asked to practitioners, academics, and users of forensic accounting services thatpertain to soliciting their views on “what skills are deemed to be inherently important for forensicaccountants (FA’s).” The first question asked to the respondents was: “An important skill requirement ofa FA is ‘Deductive Analysis’—the ability to aim at financial contradictions that do not fit in the normalpattern of an assignment.” An expert witness must be able to discern fact from fiction to maintain‘credible’ testimony. Courses developed in this area should emphasize the ability to remove any non-2013©Academy of Knowledge Process70

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comcorroborated opinions from expert reports and testimony. This skill was rated as one of the moreimportant ones. Not surprisingly, 87.5% academics and practitioners agreed that this is an important skillof FA’s. In consideration of the barrage of recent financial reporting scandals across the globe, this skillappears to be necessary and essential for FA’s to meet the objective of uncovering a potential financialfraud. Thus, forensic accounting courses taking aim at financial misrepresentations should incorporatecourse objectives to meet this ability.The second question asked to the participants was: “An important skill requirement of a FA is ‘CriticalThinking’—the ability to decipher between opinion and fact.” The essence of being an expert witness is tobe able to perform the task of discerning fact from fiction in order to maintain a credible testimony.Critical thinking skills are essential to understanding, applying, and adapting concepts and principles in avariety of contexts and circumstances. The FA’s professional skepticism of questioning management’sresponses involves critical thinking that entails an attitude of examining and recognizing emotion-ladenand explicit or hidden assumptions behind each question. FA’s must master critical thinking skillsbecause business organizations continue to evolve in response to new IT and greater worldwidecompetition. Fundamentally, computer fraud is people fraud, and the required computer skills will varygreatly depending on the type of fraud being perpetrated. Frauds such as data diddling require only basicskills; on the other hand, theft of information in a secure database will require more advanced computerskills from the fraudster (Bawaneh, 2011). In addition to rendering of ‘traditional’ accounting services,FA’s are nowadays involved in fast evolving services, such as, attestation reviews, forensic accounting,and fraud examinations. Today’s FA’s must thus, possess the knowledge to remain updated and the skillsto critically analyze various problems. Courses developed in this area should emphasize to students theability to remove any non-corroborated opinions from expert reports and testimony. While criticalthinking is necessary for FA’s in today’s business world, cultivating students’ critical thinking skills in anaccounting classroom can be a challenge (Camp and Schnader, 2010). Table-8 illustrates this skill wasrated as one of the more important (100%) by all.The third question asked was: “An important skill requirement of a FA is ‘Unstructured ProblemSolving’—the ability to approach each situation (inherently unique) and be prepared to solve problemswith an unstructured approach.” Academics and practitioners agreed (70%) that problem-solving is animportant skill of a FA. Accounting education has been based around concentrating on compliance withrules and procedures. However, forensic accounting is different because problem-solving becomes moreof an ‘improvised’ approach rather than a ‘structured’ plan. This skill type is in direct opposition to thetraditional accounting skills. It can be argued that a shortcoming of auditors is “not seeing the proverbialforest beyond the trees.” The fourth question asked: “An important skill requirement of a FA is‘Investigative Flexibility’—the ability to move away from standardized audit procedures and thoroughlyexamined situations for a typical warning signs.” The results of this study indicate that practitioners andacademics agree (80%) on the importance of this skill, thus, further illustrating the need in accounting fora more ‘open-minded’ skill set. The results of the present study indicate that potential practitioners andacademics agreed on the importance of FA’s moving away from a ‘narrow’ approach and applying a more‘holistic’ technique. These findings further illustrate the need for a more open-minded skill set inaccounting. Considering the post-financial-fraud regulatory environment, researchers can infer that theability to solve a financial puzzle with an incomplete set of pieces is an extremely important characteristicfor FA’s. Practitioner and academics agree on the importance of this skill.The fifth question asked to participants was: “An important skill requirement of a FA is ‘AnalyticalProficiency’—the ability to examine for what should be provided rather than what is provided.” Analyticscan be of use to FA’s because they often reveal unusual relationships that need to be carefully examined.Consequently, the post-financial fraud regulatory environment, solving a financial puzzle with less than acomplete set of pieces appears to be the direction the current business environment is heading.Practitioners and academics agree (75%) on the importance of this skill. Question six asked: “An2013©Academy of Knowledge Process71

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comimportant skill requirement of a FA is ‘Oral Communication’—the ability to effectively communicate inspeech via expert testimony and general explanation; the bases of opinion.” Part of the job of the FA is togo into the field and speak to company personnel, who may or may not be involved with the suspectedfraud. In addition, they are often called to be expert ‘witnesses’ and testify during litigation, presentingoften complex evidence to the jury in an understandable manner (Sanchez and Trewin, 2004). Almost95% of all respondents strongly agree that oral communication is an important skill of a FA. The seventhquestion asked was: “An important skill requirement of a FA is ‘Written Communication’—the ability toeffectively communicate in writing via reports, charts, graphs, and schedules; the bases of opinion.”Indeed, a FA needs to document their work. A well-written report by a FA can be a vital tool in litigation,and may help to impress the judge/jury (Crumbley et al., 2007). All groups ‘agreed’ (100%) on theimportance of this skill, with 60% of all respondents ‘strongly agreeing’. Almost 95% of all respondentsstrongly agreed that oral communication is an important skill for FA’s, as shown above in Table 6. Thisskill is particularly important in expert testimony when a FA explains findings to a judge and panel ofjudges. Each group agreed on the importance of FA possesses the ability to effectively communicate inwriting, and 100% of all respondents agreed strongly. Expert reports are routinely scrutinized and theneed to convey findings properly is of paramount importance. The ability to communicate effectively, inboth oral and written forms, is essential for today’s practitioners.In the eighth question participants/respondents were asked: “An important skill requirement of a FA is‘Specific Legal Knowledge’—the ability to understand basic legal processes and legal issues includingthe rules of evidence.” Academics and practitioners agreed and strongly agreed (97.5%) that this is animportant skill of FA’s. One of the interesting results of this study is the fact that ‘users’ of forensicaccounting services did not view this as an important skill. The reason for this can only be speculated.Since the users were attorneys, they may have read too far into the question possibly thinking FA’s maypractice law without proper licensing. However, the main point of the question was to emphasize the needfor FA’s to understand certain legal issues. Academics and potential practitioners agreed that FA’s shouldhave a working knowledge of the legal process and the rules of evidence. As pointed out by DeZoort,Harrison and Schnee (2012), “Despite a traditional advocacy role, tax professionals face growing pressureto help manage the tax-fraud problem.”Finally, the last (ninth) question asked the participants: “An important skill requirement of a FA is‘Composure’—the ability to maintain a calm attitude in pressured situations.” The groups did not differin opinion of this skill. All groups ‘agreed’ (100%) on the importance of this skill, with 75% of allrespondents ‘strongly agreeing’. The most prevalent area where this is necessary is expert testimony ineither deposition or court. The composure of an expert can be an integral component in the ultimate caseoutcome. From our test of hypothesis, it has been discovered that accountants require special skills towork as FA’s and fraud investigators. Perhaps, this is so in view of the prevalent nature of corruption andscandals in the country. The tenth question asked the participants to identify themselves as a practitioner,academics, or a user of forensic accounting services. All the respondents agreed that maintainingcomposure is an important skill for FA’sDescriptive statistics for the nine areas of competencies are shown in Table-8. The items rated as “the‘most’ important were critical thinking, written communication and composure (100% each), followed byspecific legal knowledge (97.5%), oral communication (95%) and deductive analysis (87.5%).” However,the items rated as ‘least’ important were “investigative flexibility (80%), analytical proficiency (75%) andunstructured problem solving (70%).” The findings of our study are, more or less, similar to a surveyconducted by McMullen and Sanchez (2010), which concluded, “The skill ranked ‘highest’ in terms ofimportance is analytical skills, followed closely by basic accounting skills, problem-solving skills, anddata analysis skills. The ‘characteristic’ ranked ‘highest’ in terms of importance are persistence andskepticism, followed closely by puzzles and people skills.” Thus, the identification of relevant skills ofFA’s illustrated in the results of this study would contribute to progress the literature in forensic2013©Academy of Knowledge Process72

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comaccounting education by identifying the necessary proficiencies to be merged with the accounting coursecontents.ItemTable 8: Percentage of Respondents Choosing Each Competency Skill ItemStronglyStronglyDisagree Disagree Neutral Total Agree AgreeTotal(0) (1) (2) (0, 1, 2) (3) (4) (3, 4)Deductive Analysis 0.0 5.0 7.5 12.5 30.0 57.5 87.5Critical Thinking 0.0 0.0 0.0 0 25.0 75.0 100Unstructured Problem 8.3 8.3 13.4 30 22.5 47.5 70SolvingInvestigative Flexibility 0.0 0.0 20.0 20 16.6 63.4 80Analytical Proficiency 0.0 16.7 8.3 25 16.7 58.3 75Oral Communication 0.0 8.3 8.3 5 41.7 41.7 95Written Communication 0.0 0.0 0.0 0 41.7 58.3 100Specific Legal 0.0 0.0 8.3 2.5 50.0 41.7 97.5KnowledgeComposure 0.0 0.0 0.0 0 25.0 75.0 100(Source: Survey Results compiled by the author)The correlation analysis, which was subsequently validated by t-test, became a prerequisite for eitheraccepting our null hypothesis that says, “Special skills are not required for forensic accountinginvestigations,” or rejecting it and accepting the alternative hypotheses that says in the affirmativedirection.The general set up for the testing of this hypothesis, using the correlation coefficient, is as follows: NullHypothesis (Ho); Alternative Hypothesis (H1); and the Statistical Test:r xy = (∑X 2 +∑Y 2 - ∑Di 2 )/ {2√ ((∑X 2 x (∑Y 2 )};while t = r xy √ (n- 2)/ √ {1 - (rxy) 2}R xy = 0.5385 and t = 1.6908Decision Rule at 0.10 (α) significance level or 90% confidence level is given thus:Reject H 0 : if / t / - calculated ≥ t-tabulated (), and /t/ = 1.6908. While t() at (n-2)df = 1.415, where n=9.But 1.6908 > 1.415, that means, t-test calculated is greater than t-test tabulated. Therefore, our H0 isrejected while the alternative hypothesis (H1), which says, “Special skills are required for forensicaccounting investigations” is upheld.Again, our test of statistics for the second hypothesis shows that “there are significant differences in therelevant skills of FA’s, as given by previous researchers with the current research.” This is a confirmationto the result obtained from testing the ‘first’ hypothesis which shows that core skills are not enoughrequirements for forensic accounting practice. Most of the early researchers, such as DiGabrille (2008),who has researched in this area focused on the ‘core’ skills of FA’s. Finally, our test of hypothesis clearlystates that necessary skills of FA’s, as identified by both academics and professionals, will hopefully meetemployers’ expectations too. Employers, who include lawyers and anti-graft agencies personnel, are theultimate users of forensic accounting services, and if they concur with what accounting academics andprofessionals say should be the skill requirement of FA’s, then academic and professional institutionsshould not hesitate to incorporate these skills in their curricula.2013©Academy of Knowledge Process73

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comHypothesis TestingHypothesis-2: “There are no significant differences in the relevant skills of FA’s as given byprevious researchers with the current research.”Table 9: Testing Using T–test Statistics (Two-Sample Assuming Unequal Variances)PreviousCurrentMean 53.64285714 46.78947368Variance 92.09340659 80.84210526Observations 14 19Hypothesized Mean Difference 0Df 27t-Stat 2.082244389P(T

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comTable11.1: Chi-Square TestsValueDfAsymp. Sig.(2-sided)Pearson Chi-Square 57.469 a 12 0.000Likelihood Ratio 74.881 12 0.000Linear-by-Linear Association 42.829 1 0.000No. of Valid Cases 65a. 16 cells (80.0%) have expected count less than 5. The minimum expected count is 0.15.If the p-value is greater than the level of significance, accept H 0 and reject H 1 , otherwise reject H 0 andaccept H 1 . In this case, the p-value = 0.000 and the level of significance is 0.050, therefore, we accept H 1which says “the necessary skills of Forensic Accountants as identified by both academics andprofessionals will meet employers’ expectations” and reject H 0 .Finally, in Section C of our questionnaire, we asked the respondents to answer some questions regarding“education for and typical career-paths of FA’s.” First, we asked them, “Other than accounting, whatundergraduate degree major do you think is most appropriate for a forensic accountant (FA)?” Sixtypercent of the respondents answered “computer information systems” and twenty-seven percent answered“legal studies.” Table 11 presents the results for this question. We also asked, “What is the highest-levelof education that you think is needed to be a successful FA?” Fifty-nine percent of the participantsindicated that an undergraduate degree is the highest-degree necessary, while thirty-nine percent felt thata master’s degree is necessary. Finally, participants were asked, “What is the typical career-path for a FAin your firm?” Forty-three percent indicated that the typical career path is to graduate with a degree inaccounting and start in the audit department of the firm.Table 11: EducationUndergraduate degree major most appropriatePercentComputer Information Systems 60.4Economics 3.2Legal Studies 27.0Other 9.4Total 100.00Highest Level of Education Needed to be SuccessfulUndergraduate degree 58.5Master’s Degree 39.0Other Degree 2.5Total 100.00Typical Career PathStart as intern 13.2Graduate with degree in forensic accounting and join firm 7.5Graduate with degree in accounting and start in audit department of firm 42.8Work in legal profession before joining firm 0.6Work in law enforcement before joining firm 3.8Other 32.1Total 100.002013©Academy of Knowledge Process75

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comSecondly, we asked the respondents some questions about “the demand for FA’s in the future— next five,ten and twenty years.” As can be seen from Table 12, the majority of respondents felt that the demand forFA’s will increase well into the foreseeable future. In fact, ninety-four percent felt that the demand forFA’s would increase in the next 10 years. Respondents were also asked if they felt that there will beenough FA’s available to meet the demand in the next five, or ten years, and beyond the next 10 years. Ascan be seen in Table 13, many participants were unsure if the supply of FA’s would be enough to meetthe demand in the future.Table12: Demand for Forensic AccountantsQuestion Mean StandardDeviationThe demand for forensic accountants in the next 5 years will: 4.46 (0.646)The demand for forensic accountants in the next 10 years will: 4.34 (0.651)The demand for forensic accountants in the next 20 years will: 4.20 (0.728)Table 13: Availability of Forensic AccountantsQuestionPercentWill there be enough forensic accountants available to meet the demand in the next 5 years:Yes 13.5No 61.5Not Sure 25.0Total 100.0Will there be enough forensic accountants available to meet the demand in the next 10 years:Yes 25.3No 29.2Not Sure 45.5Total 100.0Will there be enough forensic accountants available to meet the demand beyond the next 10 years:Yes 31.8No 16.2Not Sure 51.9Total 100.0Finally, the respondents were asked, “In general, do FA’s needs to know computer-based forensictechniques?” Eighty-four percent of the respondents answered in “yes” to this question. Moreover, weasked the respondents “how important four different software tools are for FA’s: ACL, IDEA, DataMining, and Digital Evidence Recovery.” The scales were anchored at each end with the descriptors“extremely unimportant” and “extremely important,” respectively. For the purpose of analysis, thedescriptor “extremely unimportant” was given a weight of 1, while the descriptor “extremely important”was given a weight of 7. The mid-point of the scale “neither” was given a weight of 4. Table 14 showsthe results. The respondents rated each of these four tools as important, with data mining being rated asthe most important with a mean score of 5.83.Table 14: Ratings of the Importance of the Software Tools for a Forensic AccountantTool Mean StandardDeviationACL 5.45 (1.297)IDEA 5.24 (1.232)Data Mining 5.83 (1.240)Digital Evidence Recovery 5.82 (1.224)2013©Academy of Knowledge Process76

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comCONCLUSIONWhen speaking about the ‘fight on terrorism’, Chancellor of the Exchequer Mr. Gordon Brown, formerPrime Minister of the United Kingdom stated, “What the use of fingerprints was to the 19 th century, andDNA analysis was to the 20 th century, so financial information and forensic accounting has come to beone of today’s most powerful investigative and intelligence tools available,” (Muehlmann, Burnaby andHowe, 2012). There is no doubt that a “qualified, trained and mature accounting professionals, possessingforensic skills, can prove to be a valuable asset to the corporate-sector, and gradually help to improvetheir CG system.” Forensic accounting in India, of late, has come “to limelight due to the rapid increase in‘white-collar’ crimes and the belief that our law-enforcement agencies do not have the ‘expertise’ neededor time to uncover frauds.” Forensic accounting, in fact, integrates accounting, auditing, and investigativeskills to conduct an examination into a company’s financial statements. Broad-based knowledge is crucialto the success of entry-level FA’s. In 2011, the AICPA conducted a survey to evaluate trends within the‘Forensic and Valuation Services’ practice area. The vast majority of participating forensic accountingprofessionals reported “significantly increasing demand for their services in recent years. They alsoforecast greater demand in the next two to five years accompanied by an uptick in litigation andregulatory enforcement during the same period.” Moreover, DeLoach (2012) characterized forensicaccounting as “somewhat of a ‘niche’ because it requires multi-disciplinary expertise that crosses therealms of accounting, criminal investigation, regulatory legislation and judicial litigation.” We have seengrowth in all areas of forensics, especially in computer forensics, which is being driven by the increasinguse of technology and concerns about cyber-security. The FBI and Justice Departments are looking forFA’s because the reach of the profession has spread to areas such as money laundering and even terrorismcases (Brooks et al., 2005). KPMG, a large accounting firm, believe the market is sufficiently large tosupport an independent unit devoted strictly to ‘forensic’ accounting. All of the larger accounting firms,as well as, many medium-sized and boutique firms have recently created forensic accountingdepartments.The recent wave of corporate fraudulent financial reporting has prompted global actions for reforms inCG and financial reporting, by governments and accounting and auditing standard-setting bodies in theU.S. and internationally. The enactment of Sarbanes-Oxley Act (SOX) of 2002 was the U.S.government’s response to the wave of fraudulent corporate financial reporting experienced during the1980s and early 2000s, and represented a significant step in regaining investors’ confidence in the globalfinancial reporting process. The Act created new and stricter statutes to avoid a repeat of previouscorporate financial disasters. The arrival of the SOX, the subsequent formation of the Public CompanyAccounting Oversight Board (PCAOB), and the implementation of the Statement on Auditing StandardsNo. 99 (SAS 99) has presented the current auditing environment with a new paradigm that makes findingfraud a priority. According to Wells (2011), “SAS 99 is unique because it claims that there is a risk offraud in every business. The new standard describes specific steps that the auditors must follow during anaudit engagement. These steps include pre-audit brainstorming, increased professional skepticism,additional inquiries, consideration of risk factors, a determination of the response to the risk factors, andextensive documentation.” SAS 99 also requires that the audit staff be evaluated to determine if they haveenough fraud expertise.In modern technology-based era, most of the criminals behind fraud use sophisticated technology andaccounting tricks to commit complex frauds. This means that a FA needs the state-of-the-art facilities touncover fraud (Ozkul and Pamukcu, 2012). Computers are common tools used by the culprits behind“white-collar” crimes. In order to find “the smoking gun,” the FA will need to be able to dig-deep into thecompany’s computer system. To facilitate the preservation, collection, analysis and documentation ofevidence, FA’s can use specialized software and computer hardware. For instance, Deloitte & Touche hasset up a world-wide network of computer forensic labs for their FA and technicians. There are many newtechnologies that allow the investigators to recover deleted files, crack encryptions or codes, and extract2013©Academy of Knowledge Process77

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comand sort data. No doubt, the accounting profession is witnessing major changes due to changes intechnology. As it pertains to investigative accounting, “the modern digital environment offers newopportunities for both perpetrators and investigators of fraud. The increasing rate of computer-basedfinancial crime has created a huge demand for the skills and services provided by FA’s.” Furthermore, wefully support the view point of Debreceny and Farewell (2010) that “the eXtensible Business ReportingLanguage (XBRL) be integrated across the accounting curriculum, in a manner relevant to the temporalstage and content of particular courses within the curriculum.” Several countries have adopted XBRL in avariety of information value chains, notably in the USA context the Securities and ExchangeCommission’s interactive data program and in Indian context, “Corporate Filing and DisseminationSystem (CFDS)” used by SEBI from 2010. Thus, XBRL/CFDS has implications for the totality of theaccounting curriculum and pedagogy. A program for the integration of them across a typical accountingcurriculum should be developed soon (Efiong, 2012).The degree of professional skepticism auditors currently employ differs from the level used by FA’s. Thisis primarily why the AICPA and education leaders have called for “more forensic accounting educationfor auditors” (Arens and Elder, 2006). In addition, the PCAOB has emphasized that the detection of fraudshould be an important objective of an audit (Carpenter, 2007). Despite the depth and breadth ofauthoritative standards available to guide accountant and auditor conduct, numerous stories in the press,as well as, academic research indicate that these standards have not been completely successful ineliminating ethical violations by accountants. Because of these continued breaches, confidential reportingmechanisms have received significant attention in recent years.From the results of our analysis, we discovered that the different types of financial and economic crimesprevailing in the Indian economy include the corporate accounting frauds, security market scams, bankfrauds (like ATM/credit card frauds, checks frauds, fraudulent fund transfers, withdrawals, presentation ofstolen dividend warrants, and improper granting of credit facilities, inflated contract prices, embezzlementetc. The increasing demands in the current regulatory, legal, and business environments should stimulateaccounting programs to emphasize and embrace forensic accounting. This research surveyed in 2011-12120 potential practitioners, academics, and prospective users of forensic accounting services from NCRregion (viz., Delhi, Gurgaon and Ghaziabad from India) as representative of the entire country todetermine whether there are differences in views of the relevant skills suggested in the literature. Thenecessary skills required by FA’s in India have been empirically examined and we have realized thatfinancial and economic crimes have reached a level that special skills (such as those derivable fromforensic accounting skills) set are required.This study is a ‘preliminary’ investigation of the necessary skills, education requirements, and trainingrequirements for FA’s. We surveyed academics, practicing fraud and forensic professionals in orderdetermine the perceptions of the professional community. Since little research exists in this area, presentresearch is ‘exploratory’ in nature. The results indicate that “potential practitioners and academic agreethat critical thinking, unstructured problem-solving, investigative flexibility, analytical proficiency, andlegal knowledge are more important skills of FA’s. Potential practitioners of forensic accounting servicesrated analysis the more important than did academic staff. However, both groups agreed with prospectiveusers, who viewed deductive analysis as very important. The groups did not differ on oralcommunication, written communication, or composure rankings.” These results show that “some skillsare relevant and important to the outcome of forensic accounting education. Educators can use these skillsas a guide to direct academic curriculum with the proper learning outcome objectives.” Also, discoveredare “the most important skills required by FA’s to include effective written communication, auditingskills and oral communication. The least important skills include understanding the goal of a case, solveunstructured problems, and synthesize results of discovery and analysis.” In correlating the importantskills as identified by our respondents, it was found that critical thinking, sociology and understanding thegoal of the case highly correlated to each other, likewise effective written communication, psychology,2013©Academy of Knowledge Process78

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.cominvestigative ability and simplify the information. Others are effective written communication, solveunstructured problems, organizing an unstructured situation, research skills, psychology skills, simply theinformation and solve structured problems, amongst others. Most of the important skills have“correlations within and above 50 percent, showing that most of them have significant association withone another for FA’s to function effectively.”From the test of our ‘hypotheses’, the results show that “core skills are not enough requirements for FA’sto investigate economic and financial crimes in India.” It means that some necessary skills from otherdisciplines, for instance behavioral sciences and law should also be embedded in the curriculum fortraining FA’s. This result concurred with the results of Zysman, (2008) and Boleigha (2011). The resultsof Davis, Farrell and Ogilby (2010) and Ekeigwe (2011) revealed that “the skill-sets of a FA’s areeclectic, these include general civilization, communication, accounting, business, auditing, technology,psychology, criminology, courtroom behavior, and meta-thinking skills, which are all critical to theeffectiveness of FA’s.” Again, our statistical testing of the ‘second’ hypothesis shows that “there aresignificant differences in the relevant skills of FA’s as given by previous researchers with the currentresearch.” This is a confirmation to the result obtained from testing the ‘first’ hypothesis, which showsthat “core skills are not enough requirements for forensic accounting practice.” Most of the earlyresearchers, who have researched in this area focused on ‘core’ skills of FA’s. Finally, our test ofhypothesis ‘three’ clearly states that “necessary skills of FA’s, as identified by both academics andprofessionals, will meet employers’ expectations.” Employers, who include lawyers and anti-graftagencies personnel, are the users of forensic accounting services and if they concur with what accountingacademics and professionals say should be the skills requirement of FA’s, then academic and professionalinstitutions should not hesitate to incorporate these skills in their curricula. Moreover, we found that all ofthe skills investigated in this study are ‘potentially’ important for FA’s. The majority of the surveyrespondents indicated that “bachelor degree is the highest level of education necessary to be successfulFA’s.” This may have implications for Universities when designing their curriculum. In addition, therespondents indicated that “they feel the demand for FA’s will continue to be high.” Universities shouldconsider this when designing curricula and students will also find this information valuable whendeciding on a major and considering career paths. Undoubtedly, much more research in this area is stillneeded. Universities should evaluate their course offerings and implement programs for assessment oftheir courses. Firm training programs should similarly evaluate course contents.Accounting students need to be familiar with the role played by the information technology (IT) in thedigital environment. In this context, Pearson and Singleton (2008) have rightly pointed out “Knowledgeand application of technology is increasingly essential in effective forensic accounting, anti-fraudprograms, and fraud investigations. Accounting students need to be aware of IT-based schemes and havean appreciation for the need to use specialists to support the work of the accountant in auditing orinvestigating computer-based fraud and forensic accounting issues.” Many higher education accountingprograms are considering incorporating fraud examination and forensic accounting content in theircurricula. Further research in this area could “progress to classifying skills to identified courses.” Theauditing environment after the passage of SOA demands students with greater understanding of riskassessment (including business and fraud risks), forensic accounting skills, the ability to understand anddocument controls and link controls to assertions and audit evidence, and the competence to deal with CGand other PCAOB requirements. Acquiring these skills will require changes in the basic auditing courseand one/more advanced auditing courses, as well as changes in the core business and accountingcurriculum.Prior to Satyam, most companies perceived fraud as largely an internal event, primarily pinching thebottom line. They now understand that fraud can have an impact not only on the reputation and businessprospects but also on the survival of the firm. This concern has led to higher demand for FA’s in countrieslike India and China” (Swati Prasad, 2011). The Ministry of Corporate Affairs in India has also2013©Academy of Knowledge Process79

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comestablished the Serious Fraud Investigation Office, which seeks the help of FA’s. The governmentrecently proposed to give more teeth to the SFIO under the new Companies Bill by providing it statutoryrecognition and empowering it with more powers. Particularly in this age of SOX, we require professionalaccountants to have curiosity and a healthy skepticism of the financial systems around them. They mustbe able to identify relevant facts, evaluate judgment and interpret intent; follow a clear, ethical and logicalpath when performing their work; and communicate their thoughts to peers and clients. No doubt, onemust be competent in critical thinking to be effective in life, especially in a competitive businessenvironment. Indeed, while critical thinking is necessary for accountants in today’s business world,cultivating students’ critical thinking skills in an accounting classroom can be a challenge. The FA’sbeing professional members of the CG and Audit Committees, can play a far greater role in coordinatingcompany efforts to achieve a cohesive policy of ethical behavior within an organization (Bhasin andShaikh, 2012). By helping companies to detect and prevent fraud, create a ‘positive’ work environment,establish ‘effective’ lines of communication, and be vigilant as a corporate ‘watchdog’, the FA’s role cangradually evolve into a key component in the CG system. Let us hope that FA’s, through their specializedknowledge, training and skills, will be able to improve CG scenario, still a work-in-progress, across theglobe.Annexture-1: Research QuestionnaireSECTION A:1. What is your Primary Profession? Please tick (√) only one.o Certified Forensic Accountant or ACA/CNAo User of forensic accounting (Lawyer)o Accounting Academico Prosecuting Officer (Staff of Anti-graft Agency)o Other (Please Specify)2. What is your gender?o Femaleo Male3. What is your level of education? Please tick (√) all that apply or specify appropriately.o Bachelor Degree (B.Sc or its equivalent)o Master Degree (M.Sc or MBA or its equivalent)o Doctorate Degree (PhD)o Other (Please Specify)4. How many years have you been practicing your profession?o 0-5 yearso 6-10 yearso 11-15 yearso More than 155. What licenses or professional qualifications do you possess? Please tick (√) all that apply.o ACA or CNAo CFAo CFEo Attorney at Lawo Other (please specify)………………………………………………………….2013©Academy of Knowledge Process80

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com6. What is your involvement with forensic accounting services? Please tick (√) all that apply.o I undertake services of forensic accountantso I consider myself a forensic accountanto I employ forensic accountants in my firm/chamberso I have no involvement7. Please identify from the under mentioned 19 skills, at least five core skills, that a forensicaccountant needs to possess , and rank them on a 5-point Likert-type scale, ranging from 4 (stronglyagree), 3 (Agree), 2 (Neutral), 1 (disagree) to 0 (strongly disagree)Use Rating Scaleo Auditing skills (4, 3, 2, 1, 0)o Critical/strategic thinker (4, 3, 2, 1, 0)o Effective oral communicator (4, 3, 2, 1, 0)o Effective written communicator (4, 3, 2, 1, 0)o Identify key issues (4, 3, 2, 1, 0)o Investigative ability (4, 3, 2, 1, 0)o Investigative intuitiveness (4, 3, 2, 1, 0)o Organize an unstructured situation (4, 3, 2, 1, 0)o Research skills (4, 3, 2, 1, 0)o Legal skills (4, 3, 2, 1, 0)o Simplify the information (4, 3, 2, 1, 0)o Solve structured problems (4, 3, 2, 1, 0)o Solve unstructured problems (4, 3, 2, 1, 0)o Synthesize results of discovery and analysis (4, 3, 2, 1, 0)o Tell the story (4, 3, 2, 1, 0)o Think like the wrongdoer (4, 3, 2, 1, 0)o Understand the goals of a case (4, 3, 2, 1, 0)o Psychology Skills (4, 3, 2, 1, 0)o Sociology Skills (4, 3, 2, 1, 0)SECTION B:Most of the questions in this section have been suggested by DiGabrielle (2008) to be the important skillsof a Forensic Accountant. You are expected to answer them on a 5-point Likert-type scale, rangingfrom 4 (strongly agree), 3 (Agree), 2 (Neutral), 1 (disagree) to 0 (strongly disagree).i. An important skill requirement of a forensic accountant is “deductive analysis”: the ability to take aimat financial contradictions that do not fit in the normal pattern of an assignment.(4, 3, 2, 1, 0)ii. An important skill requirement of a forensic accountant is “critical thinking”: the ability to decipherbetween opinion and fact. (4, 3, 2, 1, 0)iii. An important skill requirement of a forensic accountant is “unstructured problem solving”: the abilityto approach each situation (inherently unique) and be prepared to solve problems with an unstructuredapproach.(4, 3, 2, 1, 0)iv. An important skill requirement of a forensic accountant is “investigative flexibility”: the ability tomove away from standardized audit procedures and thoroughly examine situations for a typical warningsigns. ( 4, 3, 2, 1, 0 )2013©Academy of Knowledge Process81

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comv. An important skill requirement of a forensic accountant is “analytical proficiency”: the ability toexamine for what should be provided rather than what is provided.(4, 3, 2, 1, 0)vi. An important skill requirement of a forensic accountant is “oral communication”: the ability toeffectively communicate in speech via expert testimony and general explanation; the bases of opinion.( 4, 3, 2, 1, 0 )vii. An important skill requirement of a forensic accountant is “written communication”: the ability toeffectively communicate in writing via reports, charts, graphs, and schedules; the bases of opinion.( 4, 3, 2, 1, 0 )viii. An important skill requirement of a forensic accountant is “specific legal knowledge”: the ability tounderstand basic legal processes and legal issues including the rules of evidence.(4, 3, 2, 1, 0 )ix. An important skill requirement of a forensic accountant is “composure”: the ability to maintain a calmattitude in pressured situations.( 4, 3, 2, 1, 0)SECTION CHere, we asked the respondents to answer some questions regarding education for and typical careerpathsof FA’s, demand for FA’s in the future— next five, ten and twenty years, and knowledge requiredabout computer-based forensic techniques and software.i. Other than Accounting, what under-graduate degree major do you think is most appropriate for aforensic accountant (FA)?o Computer Information Systemso Economicso Legal Studieso Otherii. What is the highest level of education that you think is needed to be a successful FA?o Undergraduate degreeo Masters degreeo Other degreeiii. What is the typical career path for a FA in your firm?”o Start as interno Graduate with degree in forensic accounting and join firmo Graduate with degree in accounting and start in audit department of firmo Work in legal profession before joining firmo Work in law enforcement before joining firmo Otheriv. What will be the demand for forensic accountants in the next 5 years?o Increaseo Decreaseo No changeWhat will be the demand for forensic accountants in the next 10 years?2013©Academy of Knowledge Process82

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.como Increaseo Decreaseo No changeWhat will be the demand for forensic accountants in the next 20 years?o Increaseo Decreaseo No changev. Will there be enough forensic accountants available to meet the demand in the next 5 years?o Yeso Noo Not sureWill there be enough forensic accountants available to meet the demand in the next 10 years?o Yeso Noo Not sureWill there be enough forensic accountants available to meet the demand beyond the next 10 years:o Yeso Noo Not surevi. In general, do FA’s need to know computer-based use of forensic techniques?”o Yeso Noo Not sureHow important four different software tools are for FA’s: ACL, IDEA, Data Mining, and DigitalEvidence Recovery?o extremely unimportanto extremely importantREFERENCESThank You !American Institute of Certified Public Accountants (2011), “The 2011 Forensic and Valuation ServicesTrend Survey,” AICPA, available at www.aicpa.org.Aderibigbe, P. (2000), “The Role of the Forensic Chartered Accountant,” The Nigeria Accountant, July,pp. 15-20.Ahadiat, N. (2010), “Skills Necessary for a Successful Career in Accounting,” Journal of the Departmentof Accounting, College of Business Administration, California State Polytechnic University,USA.Akers, M.D. and Porter, G.L. (2003). “Your EQ Skills: Got What It Takes?” Journal of Accountancy,Vol.195, no. 3, pp. 65-69.Arens, A.A. and Elder, R.J. (2006), “Perspectives on Auditing Education after Sarbanes-Oxley”, Issues inAccounting Education, Vol. 21 No. 4, November, pp. 345-362.Association of Certified Fraud Examiners (2010, 2012), “Report to the Nations on Occupational Fraudand Abuse,” ACFE. Available at www.acfe.com.Barra, R.N. (2010), “The Impact of Internal Controls and Penalties on Fraud,” Journal of informationSystems, vol. 24, no. 1, pp. 1-21.Bawaneh, S.S. (2011), “Forensic Accountants in the Digital Age,” Interdisciplinary Journal ofContemporary Research in Business, Vol. 3, no. 3, July, pp. 75-86.2013©Academy of Knowledge Process83

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comBhasin, M.L. (2007), “Forensic Accounting: A New Paradigm for Niche Consulting,” The CharteredAccountant, January, published by the ICAI, New Delhi, pp. 1000-1010.Bhasin, M.L. and Shaikh, J.M. (2012), “Corporate Governance Through an Audit Committee: AnEmpirical Study, International Journal of Managerial & Financial Accounting, Vol. 4, No. 4, pp.339-365.Bhasin, M.L. (2012), “Corporate Accounting Frauds: A Case Study of Satyam Computers Limited,”International Journal of Contemporary Business Studies, Vol. 3, No. 10, pp. 16-42.Bhasin, M.L. and Shaikh, J.M., (2013), “Voluntary Corporate Governance Disclosures in the AnnualReports: An Empirical Study,” International Journal of Managerial & Financial Accounting,Vol. 5, No. 1, pp. 79-105.Bologna, G.J. and Lindquist (1995), “Fraud Auditing and Forensic Accounting: New Tools andTechniques,” John Wiley & Sons, UK.Boleigha, P. (2011), “Meaning of Forensic Accounting”, A Paper Presented at the ICAN Forensic Accounting CertificationProgramme, March 22, Abuja.Black, W. K. 2010. “Epidemics of Control Fraud lead to Recurrent, Intensifying Bubbles and Crises,”Working Paper, University of Missouri-Kansas City, SSRN-id 1590447.Brazel, J.F., Carpenter, T.D. and Jenkins, J.G. (2010), “Auditors’ Use of Brainstorming in theConsideration of Fraud: Reports from the Field,” The Accounting Review, Vol. 85, no. 4, pp.1273-1301.Brooks, R.C., Riley, R.A. and Thomas, J. (2005), “Detecting and Preventing the Financing of TerroristActivities: A Role for Government Accountants,” The Journal of Government FinancialManagement, Vol. 54, issue 1, pp. 12-18.Camp, J.M. and Schnader, A.L. (2010), “Using Debate to Enhance Critical Thinking in the AccountingClassroom: the Sarbanes-Oxley Act and the US Tax Policy,” Issues in accounting education, Vol.25, no. 4, pp. 655-675.Carpenter, T.D. (2007), “Audit Team Brainstorming, Fraud Risk Identification, and Fraud RiskAssessment: Implication of SAS No. 99,” Accounting Review, Vol. 82, No. 5, pp. 1119-40.Carpenter, T.D., Durtschi, C. and Gaynor, L.M. (2011), “The Incremental Benefits of a ForensicAccounting Course on Skepticism and Fraud-related Judgments,” Issues in AccountingEducation, American accounting association, Vol. 26, no. 1, pp. 1-21.Chariri, A. (2009), “The Relevance of Forensic Accounting in Detecting Financial Frauds,” JurnalOrganisasi dan Manajemen, vol. 3 no. 2, pp. 81-88.Christensen, J.A., Byington, J.R. and Blalock, T.J. (2005), “Sarbanes-Oxley: Will You Need a ForensicAccountant?”, The Journal of Corporate Accounting & Finance, March/April.Chukwunedu, O.S. and Okoye, E.I. (2011), “Forensic Accounting and Audit Expectation Gap: thePerception of Accounting Academics,” available at SSRN: http://ssrn.com/abstract=1920865 orhttp://dx.doi.org/10.2139/ssrn.1920865.Crumbley, D.L., Heitger, L.E., and Smith, G.S. (2007), “Forensic and Investigative Accounting,”Chicago: Commerce Clearing House Incorporated.COSO (2010), “Fraudulent Financial Reporting: 1987-2007,” Committee of Sponsoring Organizations ofthe Treadway Commission, available at www.http://www.coso.org.Davis, C., Farrell, R. and Ogilby, S. (2010), “Characteristics and Skills of the Forensic Accountant,”AICPA Publications.Debreceny, R. and Farewell, S. (2010), “XBRL in the Accounting Curriculum,” Issues in AccountingEducation, Vol. 25, no. 3, pp. 379-403.DeLoach (2012), “Forensic Accounting a Growing Niche Field,” Atlanta Business Chronicle, available atwww.bizjournals.com/atlanta.DeZoort, F.T., Harrison, P.D. and Schnee, E.J. (2012), “Tax Professionals Responsibility for FraudDetection: the Effects of Engagement-Type and Audit Status,” Accounting Horizons, Vol. 26, no.2, pp. 289-306.2013©Academy of Knowledge Process84

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comDeloitte Forensic Center (2011), “Fraud, Bribery and Corruption Practices Survey,” available athttp://www.deloitte.com.DiGabriele, J.A. (2008), ‘An Empirical Investigation of the Relevant Skills of Forensic Accountants,’Journal of Education for Business, pp. 331-338.DiGabriele, J.A. (2009), “Implications of Regulatory Prescriptions and Audit Standards on the Evolutionof Forensic Accounting in the Audit Process”, Journal of Applied Accounting Research, Vol. 10,Issue: 2, pp. 109 – 121.Ekeigwe, C. (2011), “Fraud Risk Management,” a paper presented at the Institute of CharteredAccountants on Nigeria Forensic Certification Training Program held on August 11-12, 2010 atSharon Ultimate, Abuja.Ernst & Young, (2009), “Detecting Financial Statement Fraud: What Every Manager Needs to Know,”E&Y LLP, pp.1-8. Available at www.ey.com.Efiong, E.J. (2012), “Forensic Accounting Education: An Exploration of Level of Awareness inDeveloping Economies,” International Journal of business and management, Vol. 7, No. 4, pp.26-34.Fortin, A. and Legault, M. (2010), “Development of Generic Competencies: Impact of a Mixed TeachingApproach on Students’ Perceptions,” Accounting Education: an international journal, Vol. 19,nos. 1-2, pp. 93-122.Grippo, F.J. and Ibex, T. (2003), “Introduction to Forensic Accounting,” The National Public Accountant,Vol. 4, June 4-8.Groomer, S. M., and Heintz, J. (1994), “A survey of advanced auditing courses in the United States andCanada,” Issues in Accounting Education, Volume 9, no.1 (Spring), pp. 96–108.Transparency International (2011), “Global Corruption Report,” published by Earth Scan Limited,London. Available at www.transparency.ch.Golden, Thomas W., Skalak, Steven L., and Clayton, Mona M., (2011) “A Guide to Forensic AccountingInvestigation,” 2 nd edition, John Wiley & Sons, New Jersey. 2011.Harris, C.K. and Brown, A.M. (2000), “The Qualities of a Forensic Accountant,” Pennsylvania CPAJournal, Vol. 71, issue 1, pp. 2-3.Hassall, T. J., Joyce, J. L., Montano, A. and Anes, J. A. D. (2005), “The Vocational Skills Gap forManagement Accountants: the Stakeholders’ Perspectives,” Innovations in Education andTeaching International, Vol. 40, no. 1, pp.78-88.Hogan, C.E. Rezaee, Z., Riley, R.A. and Velury, U.K. (2008), “Financial Statement Fraud: Insights fromthe Academic Literature,” Auditing: a journal of practice and theory, Vol. 27, no. 2, pp. 231-252.Jones, M. (2011), ‘Creative Accounting, Fraud and International Accounting Standards,’ John Wiley &Sons, London.KPMG (2009), “The US Fraud Survey 2009”. New York, KPMG Peat Marwick Available atwww.kpmginstiutes.com.KPMG (2012), “KPMG India Fraud Survey 2012,” available at www.kpmginstitutes.com.Lee, D., and C. Blaszczynski (1999), “Perspectives of Fortune-500 Executives on the CompetencyRequirements of Accounting Graduates,” Journal of Education for Business, Vol. 75, no. 2, pp.104-107.McMullen, D.A. and Sanchez, M.H. (2010), “A Preliminary Investigation of the Necessary Skills,Education Requirements, and Training Requirements for Forensic Accountants,” Journal ofForensic & Investigative Accounting, Vol. 2, Issue 2, pp. 30-48.Messmer, M. (2004) “Exploring Options in Forensic Accounting,” National Public Accountant, vol. 5(3),Dec/Jan, pp. 19-20.Murphy, P.R. and Dacin, M.T. (2011), “Psychological Pathways to Fraud: Understanding and PreventingFraud in Organizations,” Journal of business ethics, Vol. 101, issue 4, pp. 601-618.Muehlmann, B.W., Burnaby, P. and Howe, M. (2012), “The Use of Forensic Accounting Experts in TaxCases as Identified in Court Opinions,” Journal of Forensic& Investigative Accounting, Vol. 4,Issue 2, pp. 1-33.2013©Academy of Knowledge Process85

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comMampatta, S.P. and Shrivastava, N. (2010), “Companies shied away from creative accounting afterSatyamgate,” January 6, Money-DNA, Mumbai. Available at www.dnaindia.co.National Fraud Authority (2012), “Annual Fraud Indicator,” March. Available atwww.homeoffice.gov.uk.National Crime Records Bureau (2012), “Crime in India” June.Norton’s (2011), “Cybercrime Report 2011,” available at www. symantec.com.O’Connell, B., Webb, L, and Schwarzbach, H.R. (2005), “Batten the Hatches! US Accounting Scandalsand Lessons for Australia,” Australian Accounting Review, Vol. 15, no. 2, pp. 52-67.Orumwense, J. (2013), “Implementing the Use of Auditing Skills to Identify and Avert Situations WhichCould Lead to Frauds Being Perpetrated,” International Journal of Finance and Accounting, Vol.2, no. 1, pp. 19-23.Ozkul, F.U. and Pamukcu, A. (2012), “Fraud Detection and Forensic Accounting,” Emerging Fraud,Springer-Verlag Berlin Heidelberg, Vol. 35, pp. 19-41.Pearson, T.A. and Singleton, T.W. (2008), “Fraud and Forensic Accounting in the Digital Environment,”Issues in Accounting Education, Vol. 23, no. 4, November, pp. 545-559.PwC (2007), The 4 th Biennial Global Economic Crime Survey: India”, PricewaterhouseCoopers Limited.Available at www.pwc.com.Public Company Accounting Oversight Board, 2003. Available at http://www.pcaobus.org.Raj, R. (2010), “BSE’s Top 50 may be worst at Accounting,” Business Today, January 21, available atwww.businesstoday.intoday.in.Ramaswamy, V. (2005), “Corporate Governance and the Forensic Accountant,” The CPA Journal, vol.75, no. 3, pp. 68-70.Robinson, S.N. and Robertson, J.C. (2012), “The Effects of Contextual and Wrongdoing Attributes onOrganizational Employees’ Whistle-blowing Intentions Following Fraud,” Journal of businessethics, vol. 106, issue 2, March, pp. 213-227.Razaee, Z. (2002) “Forensic Accounting Practices, Education and Certification,” Journal of ForensicAccounting, Vol. 3, no. 2, pp. 207-223.Razaee, Z., Crumbley, D.L. and Elmore, R.C. (2004), “Forensic Accounting Education: a Survey ofAcademicians and Practitioners,” Advances in Accounting Education Teaching and CurriculumInnovations, Vol. 6, No 2, pp. 193-231.Rezaee, Z, Crumbley, I.D. and Elmore R.C. (2006), “Forensic Accounting Education; A survey ofAcademicians and Practitioners,” Journal of Forensic Accounting, Vol.10, No.3, pp, 48 – 59.Rezaee, Z. and Kedia, B.L. (2012), “Role of Corporate Governance Participants in Preventing andDetecting Financial Statement Fraud,” Journal of Forensic & Investigative Accounting, Vol. 4,no. 2, pp. 176-205.Sanchez and Trewin (2004), “A Forensic Accountant as an Expert Witness in a Criminal Prosecution,”Journal of Forensic Accounting, Vol. 5, Issue 1, pp. 231-235.Statement on Auditing Standards No. 99 (2002), “Consideration of Fraud in a Financial Statement Audit,”Auditing Standards Board of the AICPA, October.Singleton, T.W. and Singleton, A.J. (2010), “Fraud Auditing and Forensic Accounting,” 4 th edition, JohnWiley & Sons Inc., New Jersey.Sugahara, S., and Coman, R. (2010), “Perceived Importance of CPA’s General Skills: a Japanese Study,”Asian Journal of Finance & Accounting, Vol. 2, no. 1, pp. 1-24.Wells, J.T. (2011), “Principles of Fraud Examination,” 3 rd edition, John Wiley & Sons Ltd. USA.World Trademark Review (2012), “Fighting the Crime of the 21 st century,” 2012, April/May, pp. 82-83.Available at www.WorldTrademarkReview.com.Zysman, A. (2008), “Forensic Accounting Demystified, World investigators network Standard Practice forinvestigative and forensic accounting engagement?”, Canadian Institute of CharteredAccountants, Journal of Forensic Accounting. Available at ifa.alliance@cica.ca.2013©Academy of Knowledge Process86

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comNational Culture as a Moderator betweenInternational Diversification Strategy andPerformanceFarooq Ahmed JamPhD(Scholar) in Management, International Islamic University, IslamabadImran SaeedPhD(Scholar) in Management, International Islamic University, IslamabadAtif UllahPhD (Scholar) in Management, Qurutaba University, PeshawarMuhammad ArifLecturer in IBMS, UOA, PeshawarHina GulLecturer in IBMS, UOA, PeshawarPakistanABSTRACTLiterature on International diversification strategy (IDS) and performance has beenreviewed to support their established link .Also literature on national culture dimensionsand its impact on international diversification performance has be reviewed to find astrong support for placement national culture dimension(NCD) as a moderator betweenIDS and firm performance. We gave our propositions placing NCD as moderator andgiven a hypothetical model of international diversification that divides the world intothree diversification zones .Model talks about the similar cultural characteristics for allcountries within the zone and different cultural characteristics countries between zones.This cultural fit in a same diversification zone tend to decrease integration cost and henceenhance the firm performance in case of international diversification. Our model supportsthe moderation effect of national culture in IDS and performance. Future researchimplications are given.INTRODUCTIONLarge renowned scholars in the field of internationalization claim that by neglecting the costs ofinternationalizations inquires would explain vague results. (Gomes and Ramaswamy 1999; Hitt,Hoskisson and Kim, 1997).The studies conducted in 1980’s start discussing the benefits as well as costsof international strategies. Which include international diversification, merger and acquisition decisions.In early 1990’s both benefits costs and mutual affect was discussed by the researchers. Costs ofdiversification include the costs associated post diversification integration which determines the successor failure of the diversification decision and performance of firm is directly linked with that integrationcosts.That cost increases as there is a cultural mismatch between the firms diversifying. When national cultureof a parent and subsidiary company is different that will increase the integration costs for firms due tocultural shock and resistance to adaptability with the firms of different national culture. Same like thatwhen there is a cultural fit in a sense that both parent and subsidiary firms have same national culture thatwill tend to decrease the costs associated with integration and hence is the cause for enhanced firmperformance in case of international diversification. This idea motivated us to study the internationaldiversification strategy literature, placing performance as dependant variable in the study. We2013©Academy of Knowledge Process87

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comhypothesized national culture dimension as a moderator between international diversification strategy andperformance .One basis of this notion a model is developed to divide world into diversification region.International diversification strategyInternational Diversification strategy has negative relations with financial performance has been proved inMeta analysis. (Capon, Farley and Hoenig, 1990) While discussing several advantages whichInternational diversification offers to firms? Buhner (1987) argue that international diversificationprovides future market opportunities, which gives firms the chance for greater expansion. The mostacknowledged argument for international diversification has been stranded on the hypothetical statementthat firms utilize the benefits of internalization in international markets (Hymer, 1976; Rugman, 1981;Caves, 1982).The benefits of economies of scale, economies of scope and learning can be achieved via internationaldiversification strategy and from international markets.(Kogut, 1985; Ghoshal, 1987; Kim et al., 1989,1993), and also allocation of core competencies between diverse business segments and geographicmarkets (Hamel, 1991).The complexity of firm’s operations is based on the experience of firm ininternational diversification (Zeithaml et al., 1985; Patterson and Cicic, 1995). Rugman (1981) found thatfirms with more international diversification experience have less diversification costs than firms withless diversification experience. Also targeting the national culture firms should mould the managementsystems in response to the local environment (Ghoshal, 1987).Performance“Business firms are compared in terms of profits, sales, market share, productivity, debt ratios, and stockprices. Hospitals use cost recovery, mortality and morbidity rates, board certification of physicians, andoccupancy rates. Universities use research productivity and prestige of faculties, test scores of students,rankings by popular magazines, and win/loss records of football teams.”(March and Sutton, 1997.p. 698)International Diversification strategy has negative relations with financial performance has been proved inMeta analysis. (Capon, Farley and Hoeing, 1990)Pothukuchi et al. (2002, p. 258) originate that the accepted negative effect from partner difference on IJVperformance originates more from differences in organizational culture than from differences in nationalculture While in some cases increased national differences can lead to higher performance of internationalalliance partners. (Morosini et al., 1998). Another area of research has discussed a nonlinear relationshipbetween multinationality and performance, and has argued for a hypothetical foundation for justificationof their position (Tallman and Li, 1996; Hitt et al., 1997; Gomes and Ramaswamy, 1999; Kotabe et al.,2002).Criticizing this concept, Dess et al. (1995) argue that geographic scope is not relevant to performance;rather, it is the ownership of proprietary assets—which is the momentum to foreign direct investment andthat is the final source of higher firm performance. Montgomery (1985) and Christensen and Montgomery(1981) establish confirmation that performance differences between diversified firms were attributable inpart to differences in market structure between the industries in which the firm competed.International Diversification Strategy and PerformanceThe relationship between international diversification and firm performance has been an important topicfor researchers in strategic management and international business (Buhner, 1987; Grant, 1987; Danielsand Bracker, 1989; Geringer et al., 1989; Haar, 1989; Tallman and Li, 1996; Hitt et al., 1997; Delios andBeamish, 1999; Gomes and Ramaswamy, 1999; Geringer et al., 2000; Kotabe et al., 2002). Thisimportance of international diversification is due to representation of a growth strategy (Chandler, 1962;Ansoff, 1965) that has most important prospective impact on firm performance.2013©Academy of Knowledge Process88

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comKeeping in mind the transaction cost and the resource base view, Tallman and Li (1996) reported thatperformance will vary if international diversification is in non-linear shape. Multinational companiesoperating in a hostile environment there exist a positive relationship between experience diversity andperformance of the organization( Luo & Peng).Multinationals incur costs of internationalization as well asreap the benefits. Diversification strategy has negative relations with financial performance has beenproved in meta analysis. (Capon, Farley and Hoenig, 1990)Ruigrokand Wagner (2003) reported internationalization as not a sufficient condition for superiorperformance and argue that it is an over simplistic approach to theory building. Whereas researchers ininternational business and IOE normally give emphasis to economies of scale and scope (Buckley andCasson 1976; Caves, 1971), researchers in financial economics focused on portfolio diversification and itseffect on companies’ risk-return performance ( Lessard 1976, Levy and Sarnat,1970).Anju (1998), reported that diversification is a common occurrence in Asia, quoting examples of theconglomerates of India (Tata Group) and South Korean (Hyundai).Recent work such as (Denis et al.,2002; Palich et al., 2000) has studied the value of international diversification as a corporate strategy,and its impact on corporate performance.A theoretical literature support can be found that unrelateddiversification of a firm leads to affect the performance negatively (Rumelt, 1974; Bettis, 1981;Christensen and Montgomery, 1981; Bettis and Mahajan, 1985).Current research shows thatdiversification in product inversely impact the performance of firm (Berger and Ofek, 1995; Denis et al.,1997).Porter (1990) positively identified issue between different nations which decide the competitiveness of anation-state, same as a view uphold by Grant (1991). A firm with global diversification economies ofscale, by placing each chain of its value-added chain in the equivalent least-cost country (Kogut, 1985).Internationally diversified firms also enjoy the following benefits (Kim et al., 1993):1. Wide range of presence in different markets can save firm from aggressive expansion bycompetition.(Hill& Jones , 1998)2. Firms with wide international diversification has reach in different economies.3. A Firm with international diversification is secure from market thrusts of demand and supply.Quantitative research on international diversification and performance has found mixed results. Hitt et al.(1997) studied the U.S firms and taking product diversification as a moderator found U-shapedrelationship between international diversification and performance Geringer et al. (2000) studied theJapanese firms and concluded that IDS does not increase profit of firms but it positively impacts thegrowth of the firm. Lee et al. (2003) studied the Korean firms and showed a positive relationship of IDSand performance.Pitts and Hopkins (1982) conducted an outstanding review of the theoretical and practical issues involvedin measurements. Some early addition of Rumelt's work simply circumvented the measurement problemby using the same firms and classifications (Bettis, 1981; Bettis & Hall, 1982). Scholars interested inexamination of link among diversification and performance has tried to come up with a new scale thatcombine the conceptuality of Rumlet’s scheme and accessibility of data based on SIC code.(Palepu,1985).Firms try to expand from their original businesses in new markets and Diversification is a means toachieve those expansion objectives. (Aaker 1980, Andrews 1980, Berry 1975, Chandler 1962, Gluck1985). Research reveals top management to be aggressively engaged in diversification activities. Rumelt(1986)studied fortune 500 companies found that till 1974 only 14 percent firms operated as singlebusinesses and 86 percent operated as diversified businesses.2013©Academy of Knowledge Process89

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comDiversification is increasing with every passing day, noted by many researchers (Datta, Rajagopalan andRasheed 1991, Hoskisson and Hitt 1990). Also it is favored and widely practiced by the Europeancorporate managers according to a survey (Kerin, Mahajan and Varadarajan 1990).Diversification helpfirms in shape of improved debt capacity and also it reduces the chances of bankruptcy by going into newmarkets. (Higgins and Schall 1975, Lewellen 1971), and improve asset deployment and profitability(Teece 1982, Williamson 1975). A diversified firm can transfer funds from a cash surplus unit to a cashdeficit unit without taxes or transaction costs (Bhide 1993).Diversification, firm size, and executive compensations suggest that it provide benefits specific tomanagers than investors (Hoskisson and Hitt 1990), creating agency problem (Fama, 1980) andmanager’s position to lose if they become unemployed, either through poor firm performance orbankruptcy (Bhide 1993, Dutta, Rajagopalan and Rasheed 1991, Hoskisson and Hitt 1990).It is top management which decides about the right quantity of diversification (Bhide, 1993) it can becostly (Jones and Hill 1988, Porter 1985) and put significant pressure on top management (McDougalland Round 1984).Current research on service industry regarding diversification suggest that service oriented firms shouldnot go for diversification (Normann 1984).Whereas, Nayyar (1993), stated that diversification based oninformation asymmetry has a direct positive relation with performance and negative when based oneconomies of scope in case of a service oriented firm.The Relationship of diversification andperformance is not clear in research. In recent reviews the scholars (Datta, Rajagopalan and Rasheed1991, Hoskisson and Hitt 1990, Kerin, Mahajan and Varadarajan 1990)analyzed that : (a) the empiricalevidence is unpredictable (b) Different disciplinary perspectives are chosen by different researchers.(C)The relationship is ambiguous and indicate influence of some other moderating /mediating variables. Thissituation is the basis for our study to place national culture as a moderator between internationaldiversification and performance relationship .Our notion is supported by social learning theory, nationalidentity theory in cross cultural research.National Culture as a ModeratorHofstede (1991) found that national culture elucidate 50% of the differences in managers' approach,thinking, and ideals. National differences are clearly seen in economic and political systems (Albert,1991; Thurow, 1993), educational systems (Calori et al., 1997), and other institutions (DiMaggio andPowell, 1983; Hall, 1986; Clegg and Redding, 1990; Sorge and Maurice, 1990).Thus, national culture differences among the parent and subsidiary company can be the major cause thatcan affect the relationship performance of both. While discussing the national culture dimension as amoderator between related resources and effectiveness of alliance performance, directly supported ouridea of placing national culture as moderator between international diversification strategy andperformance.(Barkema and Vermeulen ,1997). Previous research’s conclusion on national culturedifferences that it can upset the combination and learning among parent and subsidiary company.(Laneand Beamish, 1990; Parkhe, 1991; Lyles and Salk, 1996; Hennart and Zeng, 2002).Brock, et al (2000) studied how cultural differences in host and home country undernine or enhance theperformance of multinational acquisition and diversification. His study provided the basis to considernational culture as moderator between international diversification strategy and performance ofmultinational firm.Most of the researchers are of the view that national culture influences performance out of the country,but studies of the relationship between cultural differences and acquisition / diversification performancehas provided contradictory results (Weber, Shenkar, & Raveh, 1996). Child, Chung, and Davies (2003)2013©Academy of Knowledge Process90

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comobserved that more favorable the environment in which cross border affiliate is operating the better willbe its performance.Performance of multinational organizations is the MNE performance has been aleading research subject, and many studies has considered cultural distance is an important forecaster ofperformance (Luo and Peng, 1999; Palich and Gomez-Mejia, 1999). For performance improvement ininternational diversification multinationals must reduce the production cost, increase sales and shareoverall risk of business. Some scholars found that higher diversity in cultures tend to decreaseperformance of multinationals. (e.g., Li and Guisinger, 1992; Chang, 1995).Luo and Peng (1999) argue that differences in national culture tend to lower performance when MNEsenter new markets. Cultural assumptions create environment and the nature of impacts within theorganization outcomes in control and strategy formulation. Scholars are in agreement about influence ofnational culture on performance in international diversification. But studies regarding cultural differencesand acquisition performance found disagreement in their findings (Weber, Shenkar, & Raveh, 1996). )Foreign entry road maps of alternatives by MNEs are explainable by cultural distance. (Harzing, 2003).culture distance between countries can be classified in accordance with their national culture.(Søndergaard,1994),.A way of thinking in between cultures the similar most important the matching ofscores among cultural dimensions. (Schwartz, 1994).More cultural differences are linked with more diversity in decision making (Jemison & Sitkin, 1986).We can conclude from these findings that higher costs due difference in culture in integration phase is thereason for low performance of firms. This conclusion provides strong support for placement of nationalculture dimension as a moderator in our model of this study. Morosini, Shane, and Singh (1998) found asignificant positive relationship between cultural distance and performance.Harrison, McKinnon,Panchapakesan, and Leung (1995) propose that nations with similar cultural characteristics should begrouped together and compared with other bunch not similar in characteristics. Calori et al. (1994) andHarrison et al. (1995) all express culture to have a computable impact on a variety of facet of theorganization (including structure, creativity, and entrepreneurship). Mayrhofer (2004) explains theinfluence of cultural on merger-acquisition choices is noteworthy even among adjacent France andGermany.MODEL OF THE STUDYIndependent Variable Moderator Dependant VariableIDS=International Diversification strategyNCD=National Culture DimensionNCDI DSPerformanceUncertainty Avoidance has defined as the “extent to which members of an organization or society striveto avoid uncertainty by reliance on social norms, rituals, and bureaucratic practices to alleviate theunpredictability of future events.” (James.B.Hunt,2000) Extending Hofstede's (1980) arguments, Shane(1992, 1993) found that nations with , weak uncertainty avoidance, had higher rates of innovation.2013©Academy of Knowledge Process91

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comIt was Found that partner differences in two of the dimensions (uncertainty avoidance ) had a strongnegative relationship with the survival of the collaboration over several different periods . Differencesin uncertainty avoidance and long-term orientation could represent differences in how partners perceiveand adapt to opportunities and threats in their environment (Schneider, 1991; Schneider and De Meyer,1991). Uncertainty avoiding societies have very low degree to adapt to social and environmental demandsand practices, low innovative are likely to risk averse societies (Shane, 1993; 1995). Uncertaintyavoidance and control reassertion is a outcome of strategic responsiveness.(Dutton and Jackson ,1987).The level of power examines and analyzes that French who have the great necessity of uncertaintyavoidance; the British are risk averse Laurent (1983) and Horovitz (1978).Luo and Peng (1999) argue that differences in national culture tend to lower performance when MNEsenter new markets. Cultural clash can happen in case of different national cultural of parent andsubsidiary company (Brock, Barry, & Thomas, 2000). Very, Lubatkin, and Calori (1996) observed theinfluence of national culture in merger and post acquisition performance of cross national firms. NorthAmerican and Anglo cultures are risk averse or pessimistic more careful in taking quick action, expandactivities and dogmatic vision (Frenkel- Brunswick, 1949). so on basis of this literary support we canpropose the following propositions.Proposition 1:National culture dimension of (uncertainty avoidance) moderates the relationship between internationaldiversification and performance.1 (a) If the national culture of the parent and subsidiary company is low in uncertainty avoidance, it willenhance the performance in case of international diversification.1(b) If the national culture of the parent and subsidiary company is high in uncertainty avoidance, it willnegatively affect the performance of the firm.Power Distance is defined as the level to which members of an organization or society perceive and be inagreement on unequal distribution of power. In a high power distance culture, the ideal leader is a kindtyrant, but in a low power distance culture, the ideal leader would be imaginative democrat (Hofstede andBond, 1988). Extending Hofstede's (1980) arguments, Shane (1992, 1993) found that nations with lowpower distance had higher rates of innovation.Additionally, Kedia et al. (1992) found that R&Dlaboratory productivity was positively associated with low power distance in both academic and industrialresearch settings. Luo and Peng (1999) argue that differences in national culture tend to lowerperformance when MNEs enter new markets. Cultural clash can happen in case of different nationalcultural of parent and subsidiary company(Brock, Barry, & Thomas, 2000). Very, Lubatkin, and Calori(1996) observed the influence of national culture in merger and post acquisition performance of crossnational firms.Pothukuchi et al.'s (2002) suggested that associates’ cultural differences may have more influence oninternational alliance performance as those differences become more directly related to the alliance'sprimary value-creating activities.There found more integration related problems when both parent andsubsidery mismatch in their culture scores on power distance ,as compared to the companies which havesame national culture scores on power distance, same is with resource sharing.( Barkema and Vermeulen,1997) Low power distance should have a positive impact on the social and environmental risks. A highpower-distance culture is question mark as code of conduct.(Cohen,Pant and Sharp,1996).Now we canpropose the following proposition by this literary support.PROPOSITION: 2National culture dimension of Power distance moderates the relationship between internationaldiversification strategy and performance.2013©Academy of Knowledge Process92

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com2 (a) If the national culture of the parent and subsidiary company matches by power distance it willenhance the performance in case of international diversification.2 (b) If the national culture of the parent and subsidiary company do not matches by powerdistance, it will affect the performance negatively in case of international diversification.It states the level to which organizational and societal institutional practices support and reward collectiveallocation of resources and collective action.((Choi & Han, 1998; Choi & Park, 1990; Han, 2000; J. E.Kim, 1987) Extending Hofstede's (1980) arguments, Shane (1992, 1993) found that nations with highindividualism had higher rates of innovation.“On average, individuals from individualistic cultures will resist teams more than individuals fromcollectivistic cultures (Kirkman and Shapiro 1997)” cite in (Hale, Fields and League, 2007). Very,Lubatkin, and Calori (1996) observed the influence of national culture in merger and post acquisitionperformance of cross national firms.Pothukuchi et al.'s (2002) suggested that associates’ culturaldifferences may have more influence on international alliance performance as those differences becomemore directly related to the alliance's primary value-creating activities. Luo and Peng (1999) argue thatdifferences in national culture tend to lower performance when MNEs enter new markets. Cultural clashcan happen in case of different national cultural of parent and subsidery company(Brock, Barry, &Thomas, 2000). There found more post –diversification integration problems in case of mismatch onIndividualism/collectivism as compared to match in parent and subsidery in national culture, same is withresource sharing( Barkema and Vermeulen ,1997).From the above review now we can Propose thefollowing :PROPOSITION:3National culture dimension of individualism/collectivism moderates the relationship betweeninternational diversification strategy and performance.3(a) If the national culture of the parent and subsidiary company matches by individualism andcollectivism the performance will be increased in case of international diversification.3(b) If the national culture of the parent and subsidiary company do not matches by individualismand collectivism, it will affect the performance of the firm negatively in case of internationaldiversification.Gender Egalitarianism is the level to which an organization or a society curtails gender functiondifferences and gender bias. Korean culture is considered as egalitarian but Korean institutions andorganizational leaders are adapting U.S and western approaches like Korean social norms are socialharmony, empathy, and chain of command (Choi & Han, 1998; Choi & Park, 1990; Han, 2000; J. E. Kim,1987) .But U.S culture is consider to be non egalitarian (Hofstede, 1980) High Degree of masculinity hasadverse relationship with corporate social and environment reaction (Tice and Baumeister, 2004).High Degree of masculinity relation with low value on caring others, the fact being included support byone person or a group of people due to aims, share feelings, opinions etc Career enhancement, successand competition are important, people struggle for better quality of life, hold associations, and care forsubordinates and colleagues more in highly feminine cultures as compared to highly masculine cultures.(Gibson 1995). Luo and Peng (1999) argue that differences in national culture tend to lower performancewhen MNEs enter new markets. Cultural clash can happen in case of different national cultural of parentand Subsidery Company (Brock, Barry, & Thomas, 2000). Very, Lubatkin, and Calori (1996) observedthe influence of national culture in merger and post acquisition performance of cross nationalfirms.Pothukuchi et al.'s (2002) suggested that associates’ cultural differences may have more influenceon international alliance performance as those differences become more directly related to the alliance'sprimary value-creating activities. Concluding these statements we came up with following propositionabout gender egalitarian.2013©Academy of Knowledge Process93

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comPROPOSITION:4:National culture dimension of gender egalitarianism moderates the relationship betweeninternational diversification strategy and performance.4(a) If the culture of parent and subsidiary company matches by gender egalitarianism, it willenhance the performance in case of international diversification.4(b) If the culture of the parent and subsidiary company do not matches by gender egalitarianism, itwill affect the performance negatively in case of international diversification.Future Orientation is the level to which individuals in organizations or societies engage in future-orientedbehaviors such as planning, investing in future, and delaying gratification. This concept has evolved from(Kluckhohn & Strodtbeck’s, 1961) future oriented culture are more likely to give emphasis to associationwith others on the place of work, and to use those relationships as the basis of their influence tactics,consequently leaders in such societies are less likely to use pressure or other assertive strategies, thatmight hurt future relationships ( House et al ,1999). Differences in long-term orientation could representdifferences in how partners perceive and adapt to opportunities and threats in their environment(Schneider, 1991; Schneider and De Meyer, 1991). Cultural clash can happen in case of different nationalcultural of parent and Subsidery Company (Brock, Barry, & Thomas, 2000). Very, Lubatkin, and Calori(1996) observed the influence of national culture in merger and post acquisition performance of crossnational firms.Pothukuchi et al.'s (2002) suggested that associates’ cultural differences may have more influence oninternational alliance performance as those differences become more directly related to the alliance'sprimary value-creating activities. Luo and Peng (1999) argue that differences in national culture tend tolower performance when MNEs enter new markets.Now we can propose the following:ROPOSITION: 5 National culture dimension of future/long term orientation moderates therelationship between international diversification strategy and performance.5(a)If the national culture of a parent company and subsidiary company is same in future orientationthat will enhance the performance of the firm going for international diversification.5(b) If the national culture of a parent company and subsidiary company is different in futureorientation that will negatively affect the performance of the firm going for internationaldiversification.Performance Orientation refers to the degree to which an organization or culture cheers and rewardsgroup members for performance development and distinction. This element includes the future orientedcomponent of the dimension called Confucian Dynamism by (Hofstede and Bond, 1988). PerformanceOrientation was derived from (McClelland’s, 1975) work on need for achievement. Luo and Peng (1999)argue that differences in national culture tend to lower performance when MNEs enter new markets.Cultural clash can happen in case of different national cultural of parent and Subsidery Company (Brock,Barry, & Thomas, 2000). Very, Lubatkin, and Calori (1996) observed the influence of national culture inmerger and post acquisition performance of cross national firms.Pothukuchi et al.'s (2002) suggested that associates’ cultural differences may have more influence oninternational alliance performance as those differences become more directly related to the alliance'sprimary value-creating activities. One having this literary support we are in a position to propose thefollowing proposition about performance orientation.PROPOSITION:6:National culture dimension of performance orientation moderates the relationship betweeninternational diversification strategy and performance.2013©Academy of Knowledge Process94

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.com6(a) If the national culture of a parent company and subsidiary company is same in performanceorientation that will enhance the performance of the firm going for international diversification.6(b) If the national culture of a parent company and subsidiary company is different in performanceorientation that will negatively affect the performance of the firm going for internationaldiversification.Luo and Peng (1999) argue that differences in national culture tend to lower performance when MNEsenter new markets. Cultural clash can happen in case of different national cultural of parent andsubsidiary company (Brock, Barry, & Thomas, 2000). Very, Lubatkin, and Calori (1996) observed theinfluence of national culture in merger and post acquisition performance of cross national firms. Wedidn’t succeed to find a very good support for human orientation because it’s a new dimension identifiedin GLOBE study and not much work has been done on this dimension of culture. We now propose thefollowing proposition regarding human orientation dimension on the basis of our hypothetical frame workused in this study.PROPOSITION:7National culture dimension of human orientation moderates the relationship between internationaldiversification strategy and performance.7(a) If the national culture of parent company matches the human orientation of subsidiary companythat will enhance the performance in case of international diversification.7(b)If there is a difference in human orientation of parent and subsidiary organization ,theperformance will be affected negatively in case of international diversification.DISCUSSIONFrom the above review and proposition we came on the main point that firms should first identify theirdiversification zone as per culture of its own country and than go to the relevant zone countries fordiversification. That will lead towards cultural support in post integration period and hence will improvethe chances for successful integration that is mandatory for excellent firm performance. Countries thatmismatch in national culture dimension can face problems in post diversification integration and that willnegatively affect firm performance.The strategy literature showed a little support of this notion as Harrison, McKinnon, Panchapakesan, andLeung (1995) suggest that nations with same l cultural background should collected together and shouldbe compared with other groups not having similar cultural background. In view of hofsted national culturedimensions, New Zealand (NZ) and Australia are in same group by score. And examples of mismatch arelike a parent company is from Japan with low individualism and subsidiary is from Australia with highindividualism. Organizations from different cultural settings may face resource sharing problem whileinvolved in diversification or merger acquisition. We have divided the hofsted’s score into threecategories and identified three different diversification zones. Firm should first identify that in which zoneit is grouped as per hofsted’s score and than top management must look to diversify the firm in a samezone .The cultural fit between the two companies while operating in same national culture will supportpost diversification integration and would be the cause for enhanced performance in case of internationaldiversification. In case of our propositions the firms operating in different diversification zone will notperform better due to problems encounter of cultural clash and problems in post diversificationintegration. We divided hofsted score into three ranges lower range, medium range and higher range andidentified three diversification zones.2013©Academy of Knowledge Process95

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comModel of International DiversificationHofsted’sRanking1980NCDSCOREAbove 37NCDSCOREBetween19 to 36NCDSCORE1 to 18Diversification Zone 3Diversification Zone 2Diversification Zone 1International Diversification successCONCLUSIONThe controversy in diversification performance relationship is due to a hidden moderator in thisrelationship. That hidden moderator is national culture dimension, if its impact is included thiscontroversy will be resolved and we will find a clear diversification –performance relationship. Forplacing national culture as moderator between international diversification and performance we foundsupport of national identity theory, Social learning theory, international relation theory and socialexchange theory.On the basis of our propositions regarding national culture’s moderation effect we proposed ahypothetical model which talks about the cultural fit between the parent and subsidiary company. Ithighlights three diversification zones in which firms as per their national country has some hofsted score,Countries lying in same range of score are grouped in same zone and are favorable for diversificationwith each other. Our hypothetical model is dividing the world into cultural regions and now MNE’sshould look first that what is their cultural zone and which countries have the same cultural zone. With inthe zone diversification performance relationship will be positive and firms performance will be high andbetween the zones if firm diversify than diversification performance link will be negative and culturalshock will increase the post diversification integration cost of firm. Hence this cost will decrease theperformance of firm in international diversification. This hypothetical framework supports our notion ofplacing national culture dimension as a moderator between diversification and performance.2013©Academy of Knowledge Process96

International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comFUTURE RESEARCH IMPLICATIONSFor future researchers there is a wide area to study the international diversification and validate ourhypothetical model. Studying company’s diversification regions and their success failure ratio would be agood study to test our model.A longitudinal study can also be conducted to test our propositions by identifying firms with highinternational diversification exposure. Due to intensive criticism on hofsted’s national culture dimensionsa new study is required which can account the dimensions of GLOBE study and come up with newnational scores and that study will be landmark in validation of our hypothetical model.Our study has practical implications for top management of multinational companies involved ininternational diversification and it mitigates the risk of diversification failure in case of diversifying in asame zone identified by us.LIMITATIONS OF THE STUDY• Performance has been used as a measure of different outcomes; we included all those in ourumbrella of performance as a dependant variable that may affect the causality of our propositions.• We focused and limited the performance with the post diversification integration.• Its very difficult to comprehend and explain the all dimensions of culture and conclude as a wholethat national culture dimension moderated the relationship• We used hofsted score to support our hypothetical model which is widely criticized in literature.We don’t have any other score for reference so we proposed in our future research that a newvalid study is required which encounter the flaws in hofsted’s study and come up with newnational culture scores of the world.REFERENCESAdner, R. and Levinthal, D. (2001) 'Demand heterogeneity and technology evolution: implications forproduct and process innovation', Management Science 47: 611-628.Ansoff, I.H. (1965) Corporate Strategy: An Analytic Approach to Business Policy for Growth andExpansion, McGraw-Hill: New York.Aaker, D., ‘(1980).Marketing Research: Private and Public Sector Decisions, New York: Wiley,Andrews, K.R., (1980)The Concept of Corporate Strategy, Homewood, IL: Richard D. Irwin,.Berry, Charles H., Corporate Growth and Diversification, Princeton, NJ: Princeton University Press,1975.Buhner, R. (1987) 'Assessing international diversification of West German corporations', StrategicManagement Journal 8(1): 25-37.Barkema, H.G. and Vermeulen, F. (1997) 'What differences in the cultural backgrounds of partners aredetrimental for international joint ventures?', Journal of International Business Studies 28(4):845-864.Bartlett, C. A. (1986). Building and managing the transnational: The new organizational challenge. In M.E.Brock, D. M., Barry, D., & Thomas, D. C. (2000). Your forward is our reverse, your right, our wrong:Rethinking multinational planning processes in light of national culture. International BusinessReview, 9(6), 687–701.Bhide Amar, “Reversing Corporate Diversification,” in Donald H. Chew, Jr. (ed.), The New CorporateFinance: Where Theory Meets Practice, New York, NY: McGraw-Hill, Inc., 1993, pp. 526-537.Berger, P.L. and Luckmann, T. (1967) The Social Construction of Reality: A Treatise in the Sociology ofKnowledge, London: The Penguin Press.Bowman, E. H. (1982). ‘Risk seeking by troubled firms’, Sloan Management Review, 23, pp. 33–42.2013©Academy of Knowledge Process97

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International Journal of Contemporary Business StudiesVol: 4, No: 2. February, 2013 ISSN 2156-7506Available online at http://www.akpinsight.webs.comEnrich the Knowledge throughQuality ResearchAn International Journal Published byAcademy of Knowledge Processwww.akpinsight.webs.comCopyright © 2013 IJCBS 2013©Academy of Knowledge Process104