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Working Papers | 2015

Breaking Free From the Bell Curve: An Alternate Proposition for Performance Management

Shrihari S. Sohani and Biju Varkkey

Performance management processes that follow a Gaussian distribution (bell curve) and focus on past performance rather than a future promise have come under critical focus. Such systems have been found to foster short-term focus among the employees that does not augur well for the competitiveness of the firm. Also, utilising the same rating for determination of rewards as well as finding suitability for the role and vertical mobility has been found to be myopic. Off late, many organisations have done away with the bell curve but the move has raised questions about the alternatives. In this manuscript, we have suggested alternate mechanisms of appraisal that handles reward determination and suitability for promotion through two distinct levers. We also present a case study that enumerates a novel approach to performance management that allows accrual of value for the firm along with incrementing employee motivation and engagement.

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Working Papers | 2015

Effect of Legal Issues in Infrastructure Development: The Case of Container Terminal Bids in Jawaharlal Nehru Port Trust

G. Raghuram, Prashanth D. Udayakumar, and Richa Prajapati

The Jawaharlal Nehru Port Trust (JNPT) is the largest container port in India, handling about 40% of India's container traffic in 2014-15. JNPT has five container terminals (CT) out of which three have already been operationalised, a standalone CT of 330 metres (m) is partially operationalised and a fourth CT is under construction. While the first CT, Jawaharlal Nehru Port Container Terminal, is operated by JNPT, the other four CTs have been licensed to private operators under public-private partnership mode. The development of the CTs is a case study to understand how various conflicts have been addressed or accentuated by policy makers, legal and regulatory authorities, and the mechanisms used to resolve them. Following a case-based analytical approach, case studies, court judgements, published and unpublished papers, media reports, primary data from discussions, and secondary data have been examined to construct a chronological story of the bids for the five CTs during the twenty five years since the commissioning of the port in 1989. The concessioning of each CT to a private stakeholder involved contentious issues which prompted the authorities to revise policy guidelines periodically to address them. Consequent and prolonged litigation resulted in time and cost overruns. Various issues, like policy formulation, contractual rights versus policy guidelines, strategic risks, monopoly prevention versus scale economies, market risks, effect of elections, leadership changes, security clearances, mutuality and clarity in documentation, that emerged during the bidding processes, have been crystallised as lessons learnt.

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Working Papers | 2015

Design Thinking a Fad or Reality

Ashis Jalote-Parmar

Identity crisis faced by design as a discipline is not new. Richardson's essay The death of the designer states that design is in the midst of a crisis of identity, purpose, responsibility and meaning, and 'The viability of the profession as it is currently practiced needs to be seriously considered, its boundaries examined, and its values reconsidered'. Bremer and Rodgers in their recent article state that design crisis comes from a number of different perspectives, including professional, cultural, technological, and economic forces. The crisis raises several challenges for design education. Empirical evidence is needed to demonstrate design's contribution to the viability of business and national economic development. In an attempt to resolve the design crisis, and take the discipline seriously, this paper defines the construct of design and design thinking. The paper describes new roles for design in addressing emerging global challenges. The paper discusses the lacunas in existing design education systems and the need for change, especially in relation to the requirements of multidisciplinary education.

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Working Papers | 2015

E-Retailing and the Consumer Protection Bill, 2015:
Drawing from the European Union Consumer Directives

Akhileshwar Pathak

E-retailing has exponentially grown in the past decade. Alongside, consumer grievances have also started surfacing. The Consumer Protection Bill, 2015 addresses this by giving the right to the consumer to cancel a consumer contract within 30 days. This is called 'cooling-off'. The provision applies to a sale contract as well as a contract of service. The provision, in its current form, is skeletal, only declaring the right. The right needs to be detailed for it to be functional and effective. The European countries have had laws for more than a decade on 'cooling-off', putting into force the European Union directives on consumer rights. Exploring the European Union directives, the paper explores the basis and principles for 'cooling-off' and develops a draft chapter on 'Distance Contract' for inclusion in the bill. The directives also require the seller to give certain kinds of information and take the responsibility for the safe delivery of the goods to the consumer. The draft chapter develops provisions on these additional themes.

The draft chapter 'Distance Contracts' is in Annexure to the paper.

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Working Papers | 2015

When Culture Governs Business Practice….
A Look at Indian Diamond Cutting and Polishing Industry

Rao Indu

In absence of the well-defined strategy, structure and processes in informal firms in emerging markets, it is the intangible aspect of organizing, specifically, the organizational culture that governs business practices. This paper investigates organizational culture of one such firm of the Indian diamond industry to contribute to this emerging area of scholarship. Today, global value chains are comprised of both formal and informal firms but we know little about the informal firm. Since managers of the formal firms need to interact, negotiate and deal with informal firms to transact global business, they also need to understand the organizational aspects of the informal firm. I make an attempt in this direction to inform scholars and practitioners about the organizational aspects of such firms by investigating organizational culture in the Indian Diamond Industry.

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Working Papers | 2015

The Consumer Protection Bill, 2015: (Lack of) Rights of the Consumer to Terminate Sale Contract

Akhileshwar Pathak

Consumer protection law rests on the foundations of contract law and the law of sale of goods. A consumer law has to conceptually express this foundation and the modifications it is bringing about in these laws. Without this, the law would become unclear, conflicting and confusing. The Consumer Protection Bill, 2015 is not secured in its foundation and needs revision. The paper reviews the rights of the consumer to terminate the contract and makes suggestions for revision. The suggestions, with brief comments are as follows:

1. Unfair Contract Term

The bill declares an unfair contract term to be void. The sale of Goods Act, 1930 gives the right to a buyer to terminate a contract if the supplied goods do not meet the description, are not of merchantable quality or are not fit for the agreed purpose. Ousting of these by contract terms is a deprivation of a right created by the law. This is an unfair contract term and taken to be so in other jurisdictions. The bill should give effect to this by making the following addition:

Ousting of implied conditions and warranties void: The implied conditions and warranties created for the buyer in the Sale of Goods Act, 1930 cannot be limited or excluded by contract terms. A contract term ousting the implied conditions and warranties is void.

2. Rights of the buyer to terminate a sale contract

The rational and logical way of organising the law is to mention the rights of the consumer. A consumer could approach a consumer council for the redressal of the rights. The bill does not mention the rights of a consumer. Under the Sale of Goods Act, 1930, the buyer has certain rights to terminate the contract. The followings could be introduced on the rights of the buyer to terminate a contract:

Termination of contract for breach of quality of goods. A consumer has the right to terminate the contract on the grounds of quality of goods in the following situations:

(1) The seller delivers goods which do not meet any of the express conditions in the contract or implied conditions arising from the contract. The consumer can terminate the contract within 30 days of delivery. If the contract provides a longer period for terminating the contract, the consumer can terminate the contracted during the period mentioned in the contract.

(2) The seller delivers goods which do not meet any of the implied conditions created for the buyer in the Sale of Goods Act, 1930. The consumer can terminate the contract within 30 days of delivery.

(3) The buyer has a right to terminate the contract on the ground of the seller delivering goods which are in breach of express or implied condition but elects to get the goods repaired or replaced. Following this, the seller repairs or replaces the goods. The repaired or replaced goods continue to be in breach of an express or implied condition or need further repair and replacement. The consumer can terminate the contract within 10 days of the seller delivering the repaired goods or goods in replacement.

(4) The buyer does not have a right to terminate the contract but a right to repair or replacement. Following this, the seller repairs or replaces the goods. The supplied goods continue to need a repair or replacement.

Termination for delay in delivery: A consumer has the right to terminate the contract for a delay in delivery in the following situations:

(1) The contract provides for a delivery schedule. The delivery of goods on schedule is of essence to the contract and the seller fails to deliver the goods on schedule.

(2) The contract provides for a delivery schedule. The delivery of goods on schedule is not of essence to the contract and the seller fails to deliver the goods within a reasonable period of the schedule.

(3) The contract does not provide a delivery schedule. The seller fails to deliver the goods within a reasonable period after formation of the contract.

(4) The contract provides for a delivery schedule but the consumer agrees to an extension of the schedule. The seller fails to deliver within the extension period.

3. Powers of Consumer Council

A consumer can approach a Consumer Council for the enforcement of the rights. A Consumer Council should be generally vested with the powers to issue orders and directions to enforce the rights. The specific powers should include powers corresponding with the rights of the consumer. The following could be the powers of the Consumer Council on the rights of the consumer to terminate a contract.

Powers of Consumer Council: The Consumer Council can issue orders to the consumer, trader or an opposite party for the enforcement of the rights of the consumer. The orders can include one or a combination of the followings:

1. Order the parties that the contract is terminated.

2. Order the trader to return any money paid by the consumer with or without interest.

3. Order the consumer to return the goods to the trader.

4. Order the trader to restore any benefit or money equivalent of the benefit drawn from the consumer.

5. Order the consumer to restore any benefit or money equivalent of the benefit drawn from the trader.

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Working Papers | 2015

Dispersion in macroeconomic volatility between the core and periphery of the international trade network

Anindya S. Chakrabarti

At the country level, macroeconomic volatility tends to correlate with trade openness although the direction of correlation is not stable across samples. Here I consider trade networks as sum of all pairwise trade linkages to emphasize that different linkages contribute differently to the transmission or mitigation of shocks, and show that across the network volatility is inversely related to centrality, a summary measure of strength of the linkages specific to a country. I study a multi-country, multi-sector trade model
subject to idiosyncratic productivity and liquidity shocks, and characterize volatility as an explicit function of centrality, diversification and the Herfindahl of the trade network in equilibrium. With sufficient skewness in trade linkages across countries, similar shocks generate different levels of repercussions across the network. The conventional effect of diversification holds true that countries with better diversified portfolio fluctuate less compared. Centrality directly contributes to better aggregation of shocks. Combined effect of these two channels dominates the opposite effect that a more central country is also more exposed to shocks. The model calibrated to the E.U. generates and closely replicates the negative relationship between centrality and volatility. The
theoretical model is then extended to capture stochasticity and sparsity in the trade networks.

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Working Papers | 2015

Economic incentives versus institutional frictions: migration dynamics within Europe

Anindya S. Chakrabarti and Aparna Dutta

The immobility puzzle in European Union takes the form that the observed level of migration
within Europe is substantially less than is expected in an union which allows free labor mobility, indicating that there are possibly institutional barriers inhibiting migration. In order to pin down the missing mass of migrants, we propose a theory of cross-region migration in a multi-region setting with heterogeneity in sectoral compositions, productivity and endowments of productive inputs. Migration arises as the result of adjustment process of workers in response to uneven region and sector-specific shocks in factor productivity. When tested on U.S. which we consider to be a benchmark for institutional homogeneity, this model explains substantial part of variability in both the nominal and the relative levels of state-to-state migration. However, for Europe, the model explains the relative
ow network well but predicts a higher nominal
ow than is seen in the data illustrating the puzzle. Following the hypothesis that heterogeneity across European countries in institutional factors induce a friction on such labor reallocation process driven by economic incentives, we use dyadic regression to analyze the effects of pair-wise institutional distances which broadly captures various types of socio-cultural and political differences between countries, on the missing mass of migrants. Linguistic differences appear to be an important factor explaining the gap.

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Working Papers | 2015

Inflationary effects of monetary policies in newly industrialized economies with cross-sectoral labor and capital immobility

Anindya S. Chakrabarti

This paper studies the effects of monetary policies in newly industrialized economies characterized by extremely low level of labor and capital mobility between urban and rural sectors. Policies are executed in the urban sector
which sends waves of adjustments in the rest of the economy. I show that with liquidity constraints and immobility in labor and capital, the sector-
specific effects are markedly different from those in a one-sector economy. In particular, they are asymmetric and the rural sector lags behind the urban sector during the adjustment process. This explains temporary phases of significantly high inflaction with uneven sectoral effects which often accompany major reforms in the banking and monetary institutions of such economies,
e.g. in case of India. Finally, as the consumption patterns alter in such an economy undergoing structural changes, the sectoral distribution of liquidity is affected inducing dissimilar responses to shocks, both within and between sectors.

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Working Papers | 2015

Stochastic Lotka-Volterra equations: A model of lagged diffusion of technology in an interconnected world

Anindya S. Chakrabarti

We present a model of technological evolution due to interaction between multiple countries and the resultant effects on the corresponding
macro variables. The world consists of a set of economies where some countries are leaders and some are followers in the technology ladder. All of them potentially gains from technological breakthroughs. Applying the famous Lotka-Volterra equations to model the evolution of technology frontier, we show that the way technology diffuses creates
repercussions in the partner economies. This process captures the spill-over effects on major macro variables seen in the current highly globalized world due to trickle-down effects of technology.

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