1. Decision Bias in Newsvendor Problem under Ambiguity: An Experimental Investigation
Abhishek Shinde, Doctoral Student, Indian Institute of Management Calcutta; Professor Peeyush Mehta, Indian Institute of Management Calcutta; Professor R K Amit, Indian Institute of Technology Madras
Abstract
The increasing ability to analyze real-life decisions, and data availability has created a new field in Operations known as Behavioural Operations Management (BOM). This provides an opportunity to resolve an open research problem of determining the biases in decision making of operations managers and their deviation from the prescriptive, normative OM models. We examine the decision making process of the classical newsvendor problem under ambiguity. The scant results on the biases in decision making in a newsvendor setting assume complete knowledge of the demand distribution, which is difficult to hold in today’s environment of managing product variety with short life cycles. We conduct an experimental analysis to examine the ordering decisions in a newsvendor setting under ambiguity. We contrast the decisions with the normative model and analyze the bias in decision making under conditions of risk and ambiguity. We report interesting findings on the attitude of decision makers from the perspective of rationality, ambiguity aversion and willingness to seek more information.
2. Revisiting Momentum Strategy Using Endogenous Conditioning of Black- Litterman Portfolio Model
Sayantan Kundu, Doctoral Student, Indian Institute of Management Calcutta; Professor Ashok Banerjee, Indian Institute of Management Calcutta
Abstract
Black-Litterman portfolio model, contrary to classical Markowitz portfolio model, is a mixed estimation Bayesian model that considers views and by virtue of informed priors can generate more stable and usable portfolio weights. This paper, novel in its application of endogenous conditioning of Black-Litterman model for Indian stock markets, applies views to implement Momentum strategy. The resultant portfolios outperform the broad based market index in outsample and exhibit market timing ability. Net of transaction costs, the Black-Litterman portfolios perform better than market index as well as rupee neutral conventional rank based Momentum portfolio out of the same set of stocks.
3. Role of Earnings Management and Capital Structure in Signalling Early Stage of Financial Distress: A Firm Life Cycle Perspective
Palka Chillar, Doctoral Student, Indian Institute of Management Indore; Professor L V Ramana, Indian Institute of Management Indore
Abstract
The research paper investigates the role of earnings management and capital structure in signaling the early stage of financial distress during firm life cycle in the Indian listed companies. We predict that earnings management as measured by discretionary accruals is affected by life cycle stages such as growth, maturity and decline and the presence of debt in the capital structure. Using a sample of the Indian firms listed on the Bombay Stock Exchange, we establish that firms in the decline phase have significantly higher and negative accruals than mature firms. The study provides evidence that firms with higher debt have a lower tendency to manipulate the accounting numbers and the accounting choices of managers in a firm and the capital structure together can signal the distressed financial health of the firm.
4.Conflict between Identity and Image of an Organization: Exploring Responses in New Entrepreneurial Ventures
Supriya Sharma, Doctoral Student, Indian Institute of Management Ahmedabad
Abstract
Conflicts among identities are common to organizational identity (OI) formation and change. However, given concurrent influence of internal and external factors on an organization, conflicts between internal (i.e. OI) and external (construed external image or CEI) views about an organization deserve keen attention. Existing evidence on OI-CEI conflicts is limited to crises, arising out of negative or undesirable CEI, but organizations may not encounter such crises every day. This study focuses on such commonly occurring OI-CEI conflicts. Through case study method, this study aims to explore how new commercial and social entrepreneurial ventures, that often struggle with competing internal and external expectations, respond to OI-CEI conflicts. This study is expected to contribute to understanding of OI and early stage entrepreneurial ventures.
5.Reference Dependent Preferences on Time of Coverage: An Alternative Explanation for Why We Observe Minimal Warranties?
Aruna Divya T, Doctoral Student , Indian Institute of Management Bangalore; Professor Srinivas Prakhya, Indian Institute of Management Bangalore; Professor Kanchan Mukherjee , Indian Institute of Management Bangalore
Abstract
We provide an alternative approach to understand individuals’ decision to buy extended warranties (EWs) and choose from a menu of options. While risk preference, loss-aversion over repair costs, and probability-weighting explain individuals’ purchase likelihood and willingness-to-pay (WTP) very high premium for EWs, they do not explain how individuals choose from a menu of EWs that vary on time of coverage. We use stated-preference data from an experiment to assess individuals’ utility and risk preferences over time. Our results indicate that individuals have reference-dependent risk preferences over time of coverage for their durables. We propose that in a market setting with no active secondary insurance market and no consumer moral hazard these results could provide an alternative explanation for why we still observe minimal warranties.
6.Analyzing the Impact of Participation in Decision Making on Quality of Work Life and Multiple Commitments
Shilpi Saha, Doctoral Student, National Institute of Technology Karnataka, Surathkal; Professor S Pavan Kumar, National Institute of Technology Karnataka, Surathkal
Abstract
This study assesses the impact of participation in decision making on quality of work life, organizational commitment and group commitment. Data were collected from 201 employees working in different public sector undertakings (PSUs) across India. Structural equation modeling was used as statistical tool to verify the proposed relationships. The findings of this study indicated that participation in decision making had direct relationship with quality of work life and organizational commitment but, not with group commitment. Quality of work life was positively related to organizational commitment and group commitment. These results suggest that participation in decision making process is highly desirable as it boosts employees’ identification with their respective organization. The implications of these findings for people in charge of responsible positions are discussed.
7.Benefits of Flocking Together | Perceived Value of Consumption Community Membership – Results of a Qualitative Study
Giridhar Ramachandran, Doctoral Student, Indian Institute of Technology Madras Professor Richa Agrawal, Indian Institute of Technology Madras
Abstract
Consumption based communities often revolve around shared interests in a consumption activity, product or brand. Examples of such communities include runners’ communities and biking/riding communities. While there have been different attempts to understand engagement in consumption communities, few have actually looked at value as a driver. The present study attempts to identify the various dimensions of perceived value (including benefits and costs) that members derive from participating in such consumption communities through a combination of depth interviews, online forum observation and participation in community events. Eight benefits and three costs of consumption community membership were identified through the present study.
8.Dimensions of e-tailer’s Operations and Their Linkages with Customer Shopping Satisfaction and Repurchase Intention
Nikunj Kumar Jain, Doctoral Student, Indian Institute of Management Indore; Professor Hasmukh Gajjar, Indian Institute of Management Indore
Abstract
This study addresses shopping experience and returning experience of customers in an online B2C commerce. We draw upon extant literature on e-fulfilment, electronic business quality (website ease), product quality, billing accuracy, electronic physical distribution service quality, reverse logistics and customer satisfaction/ repurchase intention to develop a model and set of hypotheses relating nine variables in B2C internet retail environment. The study will help e-tail managers to make choices regarding investments in service quality improvements and potential means of generating profitability. In addition, this paper may contribute to academic literature by linking operations and marketing interfaces in e-fulfilment in the context of end consumers.
9.Tax Policy and Food Security
Anuradha Saha, Doctoral Student, Indian Statistical Institute Delhi, New Delhi; Pawan Gopalakrishnan, Indian Statistical Institute, New Delhi
Abstract
We build a two sector (agriculture and manufacturing) heterogeneous agent model to analyze the effects of a food subsidy program on output and employment. The government may finance this subsidy by levying a distortionary income tax or a tax on manufacturing consumption. We find that in the long run the program increases the output of the food sector but lowers the manufacturing output, independent of the method of its financing. While the price of food crop relative to the price of manufacturing good falls under an income tax regime, it increases under the consumption tax regime. We also determine the welfare effects on the farmer and the entrepreneur under both tax regimes. The program may have long-run welfare gains for both agents only for a certain range of subsidies. However, we find that financing this program using an indirect consumption tax regime is Pareto superior to a direct income tax regime.
10.Corruption in Multidimensional Procurement Auctions under Asymmetry
Shivangi Chandel, Doctoral Student, Indira Gandhi Institute of Development Research (IGIDR), Mumbai; Professor Shubhro Sarkar, Indira Gandhi Institute of Development Research, Mumbai
Abstract
We examine corruption under two kinds of scoring auctions, first-score and second-score when the bidders are heterogeneous in their cost of production. If the procurement agent is also in charge of the verification of the quality, she can allow the supplier to produce the good at a cheaper quality in exchange for a bribe. We find that in our two-bidder setup, the agent will always ask the stronger firm to bribe under the second-score auction mechanism. However, in the first-score auction mechanism, our numerical simulations suggest that the agent will choose to approach the weaker firm.
11.The Impact of Public Debt on Macroeconomic Performance in India
Debi Prasad Bal, Research Student, Indian Institute of Technology Hyderabad; Professor Badri Narayan Rath, Indian Institute of Technology Hyderabad
Abstract
This paper examines the impact of public debt on economic growth through key macroeconomic channels in India covering the period of 1970 to 2012. Using Seemingly Unrelated Regression Model (SURE), the result shows that public debt significantly affects economic growth, capital formation, inflation, exchange rate and total factor productivity. The results find a non-linear impact of public debt on economic growth with a debt turning point of 45 to 55 percentage of GDP. The findings of the study broadly support the views of ‘monetarists’, and partially that of the Keynesian economists.
12.Moderating Effect of Formal Institutions on Individual Resource Commitment to Social Enterprise Entry
Sreevas Sahasranamam, Doctoral Student, Indian Institute of Management Kozhikode; Professor M K Nandakumar, Indian Institute of Management Kozhikode
Abstract
Our study examines the relationship between people’s access to resources and the likelihood of their starting a social enterprise and contingent effect of formal institutions namely financial, educational and political systems on this relationship. We hypothesize that individual level resources might be more influential for starting a social enterprise in those countries where the financial and educational systems are more entrepreneurially oriented even though the political system is not very supportive. The hypotheses are tested using a multilevel probit regression analysis on a cross-sectional multi-source dataset for the year 2009. Our study implications are relevant for social entrepreneurs and policy makers.
13.Collaboration in outcome-based contract for IT services
Prakash Awasthy, Doctoral Student, Indian Institute of Management Bangalore; Professor Jishnu Hazra, Indian Institute of Management Bangalore
Abstract
In this paper, we analyze a collaboration between a service provider and a client for IT service delivery. The client engages in the marketing while the service provider contributes towards service quality. However, there is an uncertainty in the quality capability of the service provider. The client decides the price and marketing effort while the service provider decides quality improvement efforts and process improvement efforts. Total revenue earned depends on the efforts by the collaborators, which is shared in a fixed, predefined proportion. We derive conditions that incentivize collaborators to free ride and find expressions for optimal decisions. We also analyze the impact of revenue share proportion and the service provider’s quality capability on the decisions of collaborators.