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Working Papers | 2009

Integrating Resource-Based and Rational Contingency Views:Understanding Design of Dynamic Capabilities of Organisations

Kaushik Roy and Pradyumana Khokle

Resource-based view of organisation emphasises that no organisation can be self sufficient and it will always be dependent on the environment for the fulfillment of resource needs. Further, this interaction with the environment can take various forms including manipulation, which is manifested through mergers, acquisitions and other inter-organisational relationships. The rational contingency view of organisations emphasises the goals that an organisation has, which are not clearly brought out in the resource dependence view. It is attempted here to integrate perspectives from the resource-based and rational contingency views of organisations to assess how the dominant coalition would view its role in an organisation with respect to building dynamic capabilities after analysing an array of goal-resource linkage possibilities.

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Working Papers | 2009

Determinants of Small-Scale Farmer inclusion in Emerging Modern Agrifood Markets: A Study of the Dairy Industry in India

Vijay Paul Sharma, Kalpesh Kumar, and Raj Vir Singh

In response to structural transformations taking place in the Indian dairy sector mainly in processing segment this paper examines determinants of market channel choices of milk producers based on a survey of 390 farm households in 2007. It also attempts to investigate what impacts these market channel choices may have on farmers income and technology adoption. A two-stage multinomial logit model is employed to investigate determinants and effects of market channel choices of milk producers. While modern marketing channels have emerged in the Indian dairy sector, the traditional sector is still dominant. Farmers sell nearly 85 per cent of milk to traditional channels. The share of the modern organized sector is growing but at a slow pace. The dominance of the traditional channel is an indication of a very competitive and cost-effective traditional market in linking producers and consumers. It is possible that high transaction costs also act as a barrier. However, issues of hygiene and quality of milk being sold through traditional channels require attention. Results indicate that small dairy farmers and the poor are mostly excluded from modern private sector channels. Households socio-economic variables (farm size, age and education) are important determinants of marketing channel choice in the case of the modern private sector. Large farmers have better opportunity to participate in modern private channels. Market infrastructure such as road, provision of veterinary services, distance from milk collection centre, markets, milk collection centres, price risks, etc. have significant effect on farmers marketing choices. The second stage results of the Heckman model show that education, membership of producers association/cooperatives, provision of veterinary services, and farm size have significant impact on cooperative marketing channel farmers income while in the case of modern private sector, education and price risk have significant impact on income.

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Working Papers | 2009

Player Pricing and Valuation of Cricketing Attributes: Exploring the IPL Twenty-Twenty Vision

Siddhartha K Rastogi and Satish Y. Deodhar

In April 2008, BCCI initiated Indian Premier League, a cricket tournament of Twenty-Twenty overs to be played among eight domestic teams. Team owners bid for the services of cricketers for a total of US$ 42 million. Not much is known about how the valuation of cricketers might have occurred. Given the data on final bid prices, cricketing attributes of players, and other relevant information, we try to understand which attributes seem to be important and what could be their relative valuations. We employ the bid and offer curve concept of hedonic price analysis and econometrically establish a relation between the IPL-2008 final bid prices and the player attributes. Number of half centuries, number of wickets taken, and number of stumpings in all four forms of the game, batting average in the twenty-twenty form of the game, batting strike rate in one-day international (ODI), age, nationality, iconic status, and non-cricketing fame seem to be the critical attributes in the valuation of players. With the auction of incumbent and new players for the IPL-2009 underway till February 2009, we hope that the analysis of this kind would facilitate better understanding of player price formation and underscore the predictive value of such data driven analysis.

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Working Papers | 2009

A Preliminary Estimate of Immediate Cost of Chikungunya and Dengue to Gujarat, India

Dileep Mavalankar, Tapasvi Puwar, Dipti Govil, Tiina M Murtola, and S S Vasan

Background In this working paper, a preliminary estimate of the immediate cost of chikungunya and dengue to the Indian state of Gujarat has been estimated by combining nine earlier studies on major cost factors such as costs of illness and control, and thus building a more comprehensive picture of the immediate cost of these Aedes mosquito-borne diseases to Gujarat. Methods Costs of illness and vector control comprise the immediate cost of chikungunya and dengue. In this working paper, cost of illness has been calculated using the RUHA matrix approach. Using the shares of reported (R) and unreported (U) hospitalised (H) and ambulatory (A) cases of chikungunya and dengue, a RUHA matrix has been constructed for the state of Gujarat. Cost of illness has been estimated by combining this matrix with ambulatory and hospitalisation costs per case and the number of reported cases. For this study, chikungunya and dengue were assumed to be identical from the point of view of disease control and management. Vector control cost includes state and municipal expenditure to prevent/control these diseases, a conservative fraction of the household insecticides market, and private sector cost. Comparisons with Asian countries have been used to estimate a parameter if direct data is unavailable. Monte-Carlo sensitivity analysis was carried out to find out how uncertainties in each cost parameter affected the total cost of chikungunya and dengue. Findings Using Monte-Carlo sensitivity analysis, the immediate cost of chikungunya and dengue to Gujarat has been estimated to be 3.7 (range 1.6-9.0) billion rupees per annum. This is a preliminary estimate; research is in progress to refine key parameters from the Monte-Carlo analysis such as ambulatory cost per case and reporting rate. The emotional and long-term burden of illness and deaths due to these diseases including impact on tourism, education, economic growth, per capita income, FDI, etc. are beyond the scope of this study. Extrapolating from Gujarat to the whole of India (after adjusting for the relative number of cases in each state and differences in state GSDP per capita), the immediate cost of chikungunya and dengue to the whole of India is approximately INR 61 billion (range INR 26-148 billion). Interpretation The annual cost of INR 3.7 billion (range INR 1.6-9.0 billion) translates to approximately INR 66 per capita (range INR 29-159), or US$ 1.6 (range US$ 0.7-3.8) per capita using an exchange rate 42 INR/US$. Comparable cost of dengue is US$ 5.3 in Malaysia and US$ 6.2 in Panama, while Brazil spends US$ 4.3 per capita on dengue prevention alone. The differences in these costs can be partially be explained by roughly five times higher GDP per capita in Malaysia, Panama and Brazil than in Gujarat. However, higher incidence of chikungunya increases the relative cost in Gujarat. As policy makers weigh investments in new technologies and expanded use of existing interventions to control neglected tropical diseases, the economic cost of illness is a major input into decision making. It is hoped that this preliminary estimate will trigger more refined studies on cost of illness as well as cost-effectiveness of vaccines and other interventions to combat these neglected tropical diseases

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Working Papers | 2008

Managing M&A-From Strategic Intent to Integration: IOCs Acquisition of IBP and After

N. Venkiteswaran

This paper, in the nature of a case study, discusses the entire range of managerial issues addressed by Indian Oil Corporation Limited (IOC) in the acquisition, subsequent merger and post-merger integration of IBP Co. Limited (IBP) following IBPs disinvestment by the Government of India. The three stages of IBP transactions spanned a 5-6 year period from 2002 to 2007. The paper discusses from IOCs perspective, the strategic case for the IBP acquisition, rationale for what turned out to be an extremely aggressive bid price for IBP, the raison for subsequent merger, and the critical choices made by IOC management in post-merger integration of IBP. The paper also examines the controversies the IBP transactions generated in their wake and the corporate governance issues involved. We conclude that IOC appears to have handled the entire value chain of activities in the IBP transactions from acquisition planning and strategic evaluation through deal execution, post-acquisition merger, and to post-merger integration with a high level of professionalism, a balanced sense of priorities and a high degree of sensitivity, rarely seen in the Indian public sector milieu. We also believe that as Indian companies, particularly the larger state-owned enterprises, find themselves in the inevitable need to pursue M&A-based growth strategies, IOCs IBP experience should provide useful guidance in their endeavours.

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Working Papers | 2008

Grading Initial Public Offerings (IPOs) in Indias Capital Markets A Globally Unique Concept

Sanjay Poudyal

IPO grading assesses the fundamentals of the Initial Public Offerings (IPOs) and is reflected on a five-point point scale (1-5) with a higher score indicating stronger fundamentals of the IPO issuing firm. SEBI (India capital market regulator) introduced the IPO grading as a mandatory requirement for all IPOs, and the requirement seems to have been borne by the fact that, in India, where institutions are less developed and retail participation in IPOs is significant, quality signal represented by an IPO grade yields discernible benefits to the market. We note that while SEBI and the rating agencies advocate the benefit of the IPO grade, not everyone in the industry and academia is convinced of the grades merits. To analyze the efficacy of IPO grading, we conducted regression analysis study of a total of 63 IPOs that have been graded. Through this study, we find that securities with higher IPO grades tend to exhibit under-pricing to a lesser extent. We also find that, with higher IPO grades, the subscription rate of the IPOs improves across all class of investors, including retail investors. We also find that IPO grades are inversely related to the short-term liquidity of the IPOs, i.e. at least in the short term, higher graded IPOs dont exhibit high turnover ratio. We further find that the IPO grade fails to explain with any significance the subsequent market performance of the issues in terms of capital gains.

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Working Papers | 2008

Toilets and Trains

G. Raghuram

Indian Railways (IR) is a large transport organization running 8700 trains, reaching 7000 stations and handling about 1.6 crore passengers per day. IR runs several long distant trains, some of which involve journeys upto three nights. The number of non suburban passengers traveling on IR is about 0.6 crore per day. There are three sources of fecal matter generation in IR (i) Toilets in trains, (ii) Railway stations; and (iii) Use of railway tracks for open defecation. The existing toilet system in the coaches discharges excreta directly to the ground and the railway tracks. The consequences include unacceptable hygienic conditions, particularly in the railway stations, and damage to rails. IR is making efforts to introduce environment friendly toilet discharge system, for which three options are being considered; modular, vacuum and chemical. Toilets at stations are a part of amenities being provided, linked to the category of the station. There is an attempt to modernize toilets at important stations. A related socio economic problem is that of people residing near the railway stations, without access to toilet facilities, using tracks for open defecation. The issue of dealing with fecal matter should be viewed in the larger context of waste management. With effective waste management, fecal matter can be recycled and used as liquid fertilizers and quality organic manures. This paper attempts to understand the issues related to fecal matter management on the IR, and provide a framework for solutions.

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Working Papers | 2008

An Optimization-Based Decision Support System for Strategic Planning in a Process Industry: The Case of an Aluminum Company in India

Goutam Dutta, Narain Gupta, and Robert Fourer

We describe how a generic multi-period optimization-based decision support system (DSS) can be used for strategic planning in process industries. The DSS is built on five fundamental elements . materials, facilities, activities, storage areas and time periods. It requires little direct knowledge of optimization techniques to be used effectively. Results based on real data from an aluminum company in India demonstrate significant potential for improvement in profits.

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Working Papers | 2008

Development of Utility Function for Life Insurance Buyers in the Indian Market

Goutam Dutta, Sankarshan Basu, and Jose John

Insurance as a financial instrument has been used for a long time. The dramatic increase in competition within the insurance sector (in terms of providers coupled with awareness for the need for insurance) has concomitantly resulted in more policy options being available in the market. The insurance seller needs to know the buyers preference for an insurance product accurately. Based on such multi-criterion decision-making, we use a logarithmic goal programming method to develop a linear utility model. The model is then used to develop a ready reckoner for policies that will aid investors in comparing them across various attributes

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Working Papers | 2008

Price and Volatility Spillovers across North American, European and Asian Stock Markets: With Special Focus on Indian Stock Market

Priyanka Singh, Brajesh Kumar, and Ajay Pandey

This paper investigates interdependence of fifteen world indices including an Indian market index in terms of return and volatility spillover effect. Interdependence of Indian stock market with other fourteen world markets in terms of long run integration, short run dependence (return spillover) and volatility spillover are investigated. These markets are that of are Canada, China, France, Germany, Hong-Kong, Indonesia, Japan, Korea, Malaysia, Pakistan, Singapore, Taiwan, United Kingdom and United States. Long run and short run integration is examined through Johansen cointegration techniques and Granger causality test respectively. Vector autoregressive model (VAR 15) is used to estimate the conditional return spillover among these indices in which all fifteen indices are considered together. The effect of same day return in explaining the return spillover is also modeled using univariate models. Volatility spillover is estimated through AR-GARCH in which residuals from the index return is used as explanatory variable in GARCH equation. Return and volatility spillover between Indian and other markets are modeled through bivariate VAR and multivariate GARCH (BEKK) model respectively. It is found that there is greater regional influence among Asian markets in return and volatility than with European and US. Japanese market, which is first to open, is affected by US and European markets only and affects most of the Asian Markets. Also, high degree of correlation among European indices namely FTSE, CAC and DAX is observed. US market is influenced by both Asian and European markets. Specific to Indian context, it is found that Indian market is not cointegrated with rest of the world except Indonesia. This may provide diversification benefits for potential investors. However, strong short run interdependence is found between Indian markets and most of the other markets. Indian and other markets like US, Japan, Korea, and Canada positively affect each others conditional returns significantly. Indian market also has significant effect on Malaysia, Pakistan, and Singapore return. This study found that there is significant positive volatility spillover from other markets to Indian market, mainly from Hong Kong, Korea, Japan, and Singapore and US market. Indian market affects negatively the volatility of US and Pakistan. It is interesting to note that Chinese and Pakistan markets are less integrated with other Asian, European and US markets.

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