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The International Journal of
Business and Management Research
A refereed journal published by the International Journal of Business and Management
Research
2016 Issue
The International Journal of Business and Management Research (IJBMR) is published annually
on December of every year via digital media and available for viewing and/or download from
the journal’s web site at
www.ijbmr.org
ISSN: 1938-0429
The International Journal of Business and Management Research (IJBMR) is a peer reviewed
publication. All Rights Reserved
www.ijbmr.org
Volume 9, Number 1
2
Editorial Board
Dr. C. Abid Dr. F. Albayati
Dr. H. Badkoobehi Dr. A. Ben Brik
Dr. A. Caplanova Dr. I-Shuo Chen
Dr. Firend Al R. Dr. F. Castillo
Dr. J. Fanning Dr. K. Harikrishnan
Dr. Anthea Washington Dr. Ahmad Jaffar
Dr. M Al Kubaisy Dr. M. Khader
Dr. M. Lakehal-Ayat Dr. B. Makkawi
Dr. Mona Mustafa Dr. P. Moor
Dr. P. Malyadri Dr. R. Pech
Dr. N. Maruti Rao Dr. J. Ryan
Dr. K. Rekab Dr. I. Rejab
Dr. M. Shaki Dr. P. Moore
Dr. R. Singh Dr. M. Shaki
Dr. B. Swittay Dr. R. Wilhelms
Dr. Jui-Kuei Chen Dr. R. Sergio
Dr. R. Tahir Dr. D. Wattanakul
3 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Table of Content
The standard recovery period of significant domestic and foreign induced stock market fluctuations: The case of the
Dow Jones Industrial Average
John P. Christie, Ph.D. 6
Marketing e-solution services and cultural readiness in the KRG
Haval Sdeek Mzory, Firend Al R., Ph.D. 18
Technical analysis in practice: Exploring Lebanese stock market
Ale J. Hejase, Jihad S. El-Hokayem, Hussin J. Hejase 28
Telstra, Market-Based Management and Knowledge
Peter J.C.K. Gisbey 44
Locus of control of young Emirati professionals: The socialization process
Antiado, D. F., Castillo, F. G., Tawdrous, M. I. 50
Digital financial services-mobile money
Rajni, Arshi Zareen, Priyanka Chaddha 58
Cyberloafing and innovative work behaviour among banking sector employees
Ayşe Esmeray YOGUN 71
Study on the significance of economic planning for retirement community
M. Baskaran & R. Chandrasekaran 80
4 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
2016 Issue
The International Journal of Business and Management Research (IJBMR) is published annually
on December of every year via digital media and available for viewing and/or download from
the journal’s web site at
www.ijbmr.org
The International Journal of Business and Management Research (IJBMR) is a peer reviewed
publication. All Rights Reserved
ISSN: 1938-0429
www.ijbmr.org
Volume 9, Number 1
5 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
6 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
The standard recovery period of significant domestic and foreign
induced stock market fluctuations: The case of the Dow Jones
Industrial Average
John P. Christie, Ph.D.a1
aAssistant Professor of International Business
Department of Global Business Management & Communication
Regis College, Weston MA, USA
Abstract
This paper is an exploratory research design of over sixteen years of daily stock market activity (N = 4,152) in order to assess the
average recovery period from a significant trading day loss. This is viewed in two ways, pre and post-financial crisis generally as
well as location based in terms of the catalyst of the market selloff being foreign or domestic. The findings show that, when
accounting for outliers and the financial crisis period especially, the recovery period for significant loss trading days is shorter
post-crisis (8.77 days) than it was pre-crisis (11.31). Additionally, the recovery period for significant loss trading days is shorter
for domestic catalyst events (8.25 days) than it was for foreign catalyst events (14.17 days),
© 2016 John P. Christie
Keywords: Financial markets; stock market; market volatility; financial crisis; US economy
1. Introduction
News headlines pertaining to the daily performance of US financial markets are often alarming in nature.
“Collapse, plummet, crash, etc.”, are headlines that seem to arise more frequently when a market indicator shifts
more than a couple of hundred points. This paper is an exploratory attempt to assess if these claims are warranted or
exaggerated attempts to attract readership. This study will examine a major US financial market indicator to see how
often statistically significant market movements actually occur and further assess those movements impact over time.
As indicated in the title an intended finding is to determine a ‘standard recovery period’ in that if a significant
movement in the market does occur and recovers rather quickly then perhaps an initial legitimate news story could
be deemed not as indicative of a crisis. The data will be parsed in two ways. First is in order to determine the average
recovery period pre-crisis of 2008 versus post-crisis (the “new normal”), this is to assess if there is a difference
between the two time periods. The second way the data will be assessed is in terms of the triggering event of a
significant loss being from a domestic or foreign source, again to determine if there is a difference of impact
dependent on event location.
2. Methodology
First a theoretical statement must be made to approach the exploratory problems. There are two main ideas to be
tested in this paper. The first is the recovery period pre and post 2008 financial crisis. The general theory here is that
* Corresponding author. E-mail address: [email protected]
7 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
prior to the financial crisis the recovery period will be shorter as significant loss days would be seen as short term or
one-off events and not systematic in nature. Therefore, on significant loss days post crisis, the recovery period
would take longer as the market tries to determine if the event is short term or one-off action versus the start of a
longer term issue reminiscent of the initial events leading to the crisis of 2008. To test this theory the following
hypothesis statement has been created.
Hypothesis 1:
H0: Of trading days that are determined to have experienced a statistically significant loss; trading days that
occur prior to the US financial crisis of 2008 will be shorter on average than those occurring post-crisis.
Null-hypothesis 1:
Ha: Of trading days that are determined to have experienced a statistically significant loss; trading days that
occur prior to the US financial crisis of 2008 will not be shorter on average than those occurring post-
crisis.
The second theory to be tested is related to location of catalyst events that cause a significant loss for the
trading day. This theory is based on events physically closer to the financial market, specifically within that market
(i.e. the United States), being more relevant to the companies listed in that market and therefore would have a more
significant impact on the market which will be measured in recovery period of domestic versus foreign events while
accounting for the exception of the financial crisis. Based on this theory the following hypothesis statement to be
tested has been created.
Hypothesis 2:
H0: Of trading days that are determined to have experienced a statistically significant loss; foreign catalyst
events will have a shorter recovery period on average than do domestic catalyst events.
Null-hypothesis 2:
Ha: Of trading days that are determined to have experienced a statistically significant loss; foreign catalyst
events will not have a shorter recovery period on average than do domestic catalyst events.
8 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
3. Results & Discussion
For this study the data set used is the US stock market indicator of the Dow Jones Industrial Average
(DJIA). In order to get a roughly comparable sample set on either side of the 2008 financial crisis, the time period
used is from the first trading day of the century, January 3, 2000 up through July 5, 2016 which is shortly after the
‘Brexit’ vote in the UK which had a statistically significant impact on the US market on June 24, 2016. By
collecting each trading day’s data within that time period, all 4,152 trading days were used as the sample.
In order to first determine what constitutes a statistically significant loss trading day the following
statistical table was created to determine the percentage change that is greater than two standard deviations from the
mean. The mean is the average daily movement (absolute value) of the DJIA. The first and second standard
deviations are calculated by adding µ and . By limiting the trading days to those with losses of more than two
standard deviations, the change of value of the DJIA for that day needs to be beyond the 95% of ‘normal’ volatility
for that indicator.
Statistic %
µ 0.79
0.86
1 1.65
2 2.51
Table 1: Summary Statistics
By reviewing the summary table above it can be noted that in order to qualify as a significant loss day for
the market, the value of the DJIA must drop by 2.51% or more for that day at the close of the trading day. By going
through each change of the DJIA, day over day, the following table has been created to list each qualifying trading
date, as well as other relevant information needed to conduct the analysis. Other items included are the percentage
loss for the day, how many days it took to recover from that loss, the cause of the selloff, the location source
(foreign or domestic), and the reference of the description of the catalyst.
Trading
Date
%
Loss
Days to
Recover Catalyst
Foreign or
Domestic Source
1/4/2000 3.20 3 FED rate increase speculation Domestic Bebar (2000a)
1/28/2000 2.66 2 FED rate increase speculation Domestic Ulick (2000a)
2/18/2000 2.89 18 FED rate increase speculation Domestic Bebar (2000b)
3/7/2000 4.1 7 Dow component (P&G) report Domestic Isidore & Slud (2000)
4/14/2000 5.99 6 FED rate increase speculation & tech stock
concerns
Domestic &
Domestic Tymkiw (2000a) &
Perkins (2000)
6/16/2000 2.57 16 Dow component reports Domestic Tymkiw (2000b)
10/12/2000 3.88 8 Oil price increase Foreign Ulick (2000b)
12/20/2000 2.54 2 Tech stock concerns & FED rate increase Domestic Tymkiw (2000c)
3/12/2001 4.21 26 Tech stock concerns Domestic Futia (2009)
3/14/2001 3.07 24 Tech stock concerns Domestic Futia (2009)
9 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
4/3/2001 3.05 2 Profit warnings & tech job cuts Domestic CNN Money (2001a)
9/17/2001 7.39 29 9/11 Domestic Ulick (2001)
9/20/2001 4.45 6 11-Sep Domestic CNN Money (2001b)
10/29/2001 2.95 6 GDP data concerns Domestic Twin (2001)
1/29/2002 2.57 2 TYCO accounting concerns Domestic Ulick (2002)
7/10/2002 3.23 231 Broad sell off, accounting scandals Domestic Twin (2002a)
7/19/2002 4.82 6 Johnson & Johnson / WorldCom concern Domestic CNN Money (2002)
7/22/2002 2.96 2 Citigroup Enron connection concern Domestic Twin (2002b)
8/1/2002 2.66 6 Exxon and poor economic reports Domestic Twin (2002c)
8/5/2002 3.35 1 Poor economic reports Domestic Bhatnagar (2002a)
9/3/2002 4.23 6 Poor economic reports Domestic Bhatnagar (2002b)
9/19/2002 2.87 18 Electronic Data Systems warning Domestic Bhatnagar (2002c)
9/27/2002 3.82 12 Philip Morris, GE, and SBC concerns Domestic Twin (2002d)
10/4/2002 2.54 5 Corporate profit warnings Domestic Bhatnagar (2002d)
10/9/2002 2.93 1 GE, Automakers, & HP concerns Domestic Twin (2002e)
1/24/2003 2.91 38 US war potential with Iraq Foreign Twin (2003a)
3/24/2003 3.65 10 US war with Iraq Foreign Twin (2003b)
2/27/2007 3.38 33 China economic reports Foreign Twin (2007a)
8/9/2007 2.88 27 Credit fears Domestic Ellis & Twin (2007)
10/19/2007 2.71 6 Credit and Housing sector fears Domestic Twin (2007b)
11/1/2007 2.63 1262 Credit market fears Domestic Ellis (2007)
11/7/2007 2.61 21 Weak dollar, GM concerns Domestic The Economist (2007)
1/17/2008 2.53 5 Manufacturing report & Merrill Lynch
losses Domestic
Planes (2013)
2/5/2008 2.99 14 FED and Economic reports Domestic Twin (2008)
2/29/2008 2.55 15 AIG losses Domestic Planes (2013)
6/6/2008 3.22 723 Unemployment report Domestic Planes (2013)
6/26/2008 3.1 31 DOW component downgrades & oil prices Domestic & Foreign Clifford (2008)
9/4/2008 3.08 2 Various events "The financial crisis" Domestic Planes (2013)
9/9/2008 2.53 568 Various events "The financial crisis" Domestic Planes (2013)
9/15/2008 4.57 4 Various events "The financial crisis" Domestic Planes (2013)
9/17/2008 4.21 1 Various events "The financial crisis" Domestic Planes (2013)
9/22/2008 3.44 535 Various events "The financial crisis" Domestic Planes (2013)
9/29/2008 7.47 388 Various events "The financial crisis" Domestic Planes (2013)
10/2/2008 3.27 369 Various events "The financial crisis" Domestic Planes (2013)
10/6/2008 3.69 278 Various events "The financial crisis" Domestic Planes (2013)
10/7/2008 5.38 257 Various events "The financial crisis" Domestic Planes (2013)
10/9/2008 7.96 2 Various events "The financial crisis" Domestic Planes (2013)
10/15/2008 8.44 10 Various events "The financial crisis" Domestic Planes (2013)
10 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
10/21/2008 2.54 6 Various events "The financial crisis" Domestic Planes (2013)
10/22/2008 5.97 4 Various events "The financial crisis" Domestic Planes (2013)
10/24/2008 3.63 2 Various events "The financial crisis" Domestic Planes (2013)
11/5/2008 5.22 201 Various events "The financial crisis" Domestic Planes (2013)
11/6/2008 5.04 2 Various events "The financial crisis" Domestic Planes (2013)
11/12/2008 4.85 1 Various events "The financial crisis" Domestic Planes (2013)
11/14/2008 3.82 9 Various events "The financial crisis" Domestic Planes (2013)
11/17/2008 2.67 2 Various events "The financial crisis" Domestic Planes (2013)
11/19/2008 5.29 3 Various events "The financial crisis" Domestic Planes (2013)
11/20/2008 5.87 1 Various events "The financial crisis" Domestic Planes (2013)
12/1/2008 8.32 5 Various events "The financial crisis" Domestic Planes (2013)
12/4/2008 2.52 1 Various events "The financial crisis" Domestic Planes (2013)
12/9/2008 2.79 5 Various events "The financial crisis" Domestic Planes (2013)
12/18/2008 2.54 8 Various events "The financial crisis" Domestic Planes (2013)
1/7/2009 2.59 136 Weak job reports, corporate profit warnings Domestic Twin (2009a)
1/14/2009 3 76 Weak retail sales, dismal banking news Domestic Twin (2009b)
1/20/2009 4.16 6 Poor corporate earnings Domestic Twin (2009c)
1/29/2009 2.75 65 Poor economic reports Domestic Twin (2009d)
2/10/2009 4.82 55 TARP announcement Domestic Twin (2009e)
2/17/2009 3.88 26 Obama signs stimulus bill Domestic Twin (2009f)
2/23/2009 3.53 1 Continued stimulus concerns Domestic Twin (2009g)
3/2/2009 4.34 8 Government bailout of AIG Domestic Wenning (2009)
3/5/2009 4.24 3 GM and Citigroup reports Domestic Twin (2009h)
3/30/2009 3.34 2 Auto and bank concerns Domestic Twin (2009i)
4/20/2009 3.66 7 Bank earnings concerns Domestic Twin (2009j)
7/2/2009 2.68 8 Employment reports Domestic Twin (2009k)
10/30/2009 2.56 4 Broad sell off Domestic Twin (2009l)
2/4/2010 2.71 7 European debt concerns Foreign Twin (2010a)
5/6/2010 3.25 3 Trading error Domestic Bleeker et al. (2010)
5/20/2010 3.7 19 European debt concerns Foreign Twin (2010b)
6/4/2010 3.2 6 Weak jobs report & Euro value drop Domestic & Foreign Twin (2010c)
6/29/2010 2.69 6 Consumer confidence concerns Domestic Twin (2010d)
7/16/2010 2.56 4 Corporate profit & consumer concerns Domestic Twin (2010e)
8/4/2011 4.48 56 Japan & EU concerns Foreign Censky (2011)
8/8/2011 5.77 5 U.S. credit rating downgraded Domestic Sweet (2011)
8/10/2011 4.74 1 Europe debt concerns (France) Foreign Yousef & Sweet
(2011)
8/18/2011 3.78 5 U.S. credit rating downgraded Domestic Housel (2011)
9/9/2011 2.75 3 EU Concerns (Greece) Foreign Hauser (2011)
11 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
9/21/2011 2.55 13 global economic reports Foreign CNN Money (2011)
9/22/2011 3.62 3 FED concerns Domestic Duprey (2011)
11/1/2011 2.52 2 EU Concerns (Greece) Foreign Granitsas et al. (2011)
11/9/2011 3.27 2 EU Concerns (Greece) Foreign Williamson (2011)
8/21/2015 3.23 33 China economic reports Foreign Eavis (2015)
8/24/2015 3.71 3 China economic reports Foreign Ro & Udland (2015)
9/1/2015 2.92 2 China economic reports Foreign Allen (2015)
6/24/2016 3.14 5 Brexit Foreign Bray (2016)
Table 2: Summary Table - Statistically Significant Trading Dates
After creating the summary event table, the first observation is the number of significant loss trading days.
There were 94 loss days of the total 4,152 trading days. This provides an initial finding that significant trading loss
days occurred 2.26% of the time for this period, in other words very infrequently since nearly 98% of the time over
more than 16 years the market movements were within the normal range.
The second observation of note is that of the 16 full year periods in the set, on a yearly basis only 5.8 days
on average are significant loss days, and with more than a third of the years having no significant loss trading days
at all.
Full Year # of Significant Days
2000 8
2001 6
2002 11
2003 2
2004 0
2005 0
2006 0
2007 5
2008 30
2009 13
2010 6
2011 9
2012 0
2013 0
2014 0
2015 3
12 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Table 3: Yearly Summary
To focus in on the hypothesis testing, the tabulation of average recovery period is conducted on the days leading
up to November 1, 2007 which is assumed to be an initial trading day of the overall financial crisis as indicated by
its prolonged recovery period that extends beyond the entire time period constituting the crisis itself. For the pre-
crisis trading dates there are 30 in total with an average recovery period of 18.63 days (559/30). If the outlier date of
July 10, 2002 is removed as an anomaly then the average recovery period pre-crisis adjusts to 11.31 (328/29). The
prolonged crisis lasted through all of 2008 and for purposes of this study it will be considered ended upon the
announcement of the Toxic Asset Relief Plan (TARP) which occurred on February, 10, 2009. Following the TARP
announcement there were 27 significant trading loss dates. By factoring out the outlier in the pre-crisis set of dates
this puts the number of significant loss day’s pre and post crisis at very similar standing of 29 to 27. For the post-
crisis trading dates there is an average recovery period of 8.77 (237/27). As a result, hypothesis 1 is not supported.
To test the second hypothesis the data is looked at in terms of location of the catalyst event that caused the selloff
for the day. For all event dates that involved an event from outside the United States, excluding dates within the
crisis window, there was an average recovery period of 14.17 days (241/17). For all event dates that involved an
event from within the United States, excluding dates within the crisis window and the pre-crisis outlier, there was an
average recovery period of 8.25 days (330/40). As a result, hypothesis 2 is not supported.
4. Conclusion
The finding of the very low average number of significant loss trading days of 5.8 days a year on average
with many years having no such trading days, as well as the overall statistic of significant days only occurring
2.26% of the time would indicate that these types of trading days are very rare occurrences. It would appear that
alarmist headlines that occur often are perhaps not quite warranted, especially if the percentage moved in a day is
less than 2.51%.
To conclude, the hypothesis findings were not as expected in either case. The theories presented did not end
up having supporting evidence as a result of this study. The findings above show that, when accounting for outliers
and the financial crisis period especially, the recovery period for significant loss trading days is shorter post-crisis
(8.77 days) than it was pre-crisis (11.31). This result is contrary to the theory presented that the market may take
longer in a post-crisis trading environment to adjust for significant loss days out of over caution. Additionally, the
second hypothesis pertaining to location was also not supported as a result of this study. The data presented showed
that, when accounting for outliers and the financial crisis period especially, the recovery period for significant loss
trading days is shorter for domestic catalyst events (8.25 days) than it was for foreign catalyst events (14.17 days),
this is contrary to the theory presented that domestic events would be more impactful and therefore have a longer
lasting effect.
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16 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
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18 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Marketing e-solution services and cultural readiness in the KRG
Haval Sdeek Mzory, Firend Al. R., PhD
Haval, Mzory; DBA Candidate, HELP University
Firend Al. R., PhD; Bournemouth University
Abstract
This research examines factors influenced the adoption e-government by Kurdistan Regional Government (KRG) of Iraq’s Ministries of Transportation and Communication, on how technological, organizational, and cultural factors influence the
ministry’s e-system implementation and services efficiency. Research methodology consisted of quantitative and qualitative
analyses. The sampled population consisted of government employees working at the Ministry of Transportation and
Communication and common citizens as users of government services. Research findings are as following; the implementation of e-government services should be treated as a long-term process of reform and restructuring, and not simply the computerization
of government operations. It is also the finding of this study that interactions among technological, organizational, and cultural
factors must be determined prior to any e-government system implementation. Employees at the Ministry of Transportation and
Communications were found dissatisfied towards each other because of the varying degrees in knowledge, information sharing, attitude towards work, knowledge decimation, willingness to use new e-government system and willingness in general to help the
public (citizens) during work hours. Such findings are highly related to educational level, training, but a lso representative of
government employees’ general attitude towards the workplace. Such outlook towards one’s job highly impacts the quality of
services provided and the level of e-government initiatives success. This study also concludes that the intent to deploy e-government systems in developing countries has increased the adoption and use of technology, as well as cultural challenges
being faced. It is the finding of this research that the interaction between organizational and technological challenges is
intertwined and is sociocultural in nature. This is to say that social and cultural factors impact the level of readiness, ut ilization,
and acceptance of e-governmental systems implementation, and technology acceptances can be highly influenced by socio-
cultural, inter-organizational and technological challenges.
Keywords: E-government, systems, implementation, culture, acceptance, KRG,
5. Introduction & literature
This paper is a partial effort of lengthier research conducted by the principle researcher in the fulfilment of
a DBA dissertation. While the entire research consisted of both qualitative and quantitative approach to data
collection, this paper deals with the qualitative aspects of the research because of the comprehensive nature of the
entire research undertaking. During the last decade, the public sector has experienced a number of reforms leading to
increased implementation of e-government practices (Asogwa, 2013). The major reason behind this change is
attributed to governments’ desire to improve services provided to citizens. An example of such implementation is
provided by Shareef et. al. (2010), which asserts that majority of the governments, will provide and support
electronic delivery of public services to the extent allowed by the technological capability of their existing system.
Market competition and the ever changing business environment have prompted various organizations to
adopt technologies that better perform their business operations (Sultan, 2010). Global competition is driving
organizations to reduce costs and increase productivity to enhance profitability (Schwab, 2016; Misra & Mondal,
2011). For example, numerous information technology (IT) organizations are transcending geographic boundaries
19 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
and are offering services across the globe (Luthria & Rabhi, 2009). As a result, organisations using IT are rapidly
forced to adopt emerging technologies to reduce costs, whilst ensuring that the organisation is still competitive
(Saha, 2012).
Information and communication technology (ICT) is a vital enabler of progress to any culture (Al-Raisi &
Firend 2012). As more countries today embrace the Internet, more national and local authorities consider using it to
improve their service delivery to citizens (Firend, 2007). Some service providers improve their service delivery
methods and effectiveness by communicating and connecting with their consumers, and by deploying their
technology assets in a value-enhanced method that generates saving.
Motivated by KRG’s Ministry of Transportation urgent need to examine and implement the most cost
efficient and effective e-government solution, this study came about to identify several distinct variables that
influence the implementation and utilization of e-government services such as: availability; trustworthiness;
security; electronic divide; public understanding; mainstreaming; level of education; public acceptance; legal
framework; politics; culture; attitude; and privacy. The initiative of the Kurdistan Regional Government (KRG) is
discussed in this Chapter. Iraqi Kurdistan has been surviving through a tumultuous period of war driven by political,
social and economic challenges. This segment of the chapter discusses the philosophical foundation for the
implementation and creation of workable e-solutions for the Iraqi region of Kurdistan. The link between government
services providers and citizens was investigated by observing variables suspected of causing failure of e-government
systems implementation in the KRG. This study also examined the effectiveness of plans in the promotion of
citizens’ involvement in the advancement of e-government systems (Shafi and Vishant, 2010).
E-government initiatives ideally promote the connection between authorities and stakeholders (Fang, 2002)
through the use of financial resources for the successful delivery of services. The worldwide development of e-
governments has been an inspiration for many individuals to study this Internet based phenomenon. Traditional
means of communication, such as: telephony; mail; and face-to-face interactions, may become less relied upon, or
obsolete because of the emergence of web-based services. Nevertheless, the traditional communication channels
continue to exist, and their processes are unhindered by the Internet. The use of web-based services complements
other communication media (Shareef et al., 2010a; Pieterson & Dijk, 2007).
6. Problem statement
The transformation in the way governments in the Middle-East interact with citizens and businesses brings
numerous benefits such as efficiency gains and effectiveness in service delivery (Gil-Garcia, 2012). However, the
development or adoption of an electronic solution through which government interacts with citizens and business
entities does have its challenges. One of the main challenges is the concept of the digital divide (Dokhtesmati,
Saberi & Moradi, 2011). This gap between those citizens in the Middle East who know how to use the Internet and
other technology platforms, and those who do not is wide. This has far-reaching implications in that governments
are not able to reach all its citizens through information and communication technology platforms alone. From this
perspective, the implementation of e-government in the Middle East as a culturally coherent entity may create
inequality in citizens’ ability to access government services (Abazajian et. al., 2004; Andersson & Djeflat, 2012).
7. Research questions
1) What are the technological, organizational, cultural challenges faced by the KRG’s ministry of
transportation and communication when implementing e-government service?
2) What are the interactions between technological, organizational, and cultural challenges?
8. Significance of the study
Since offering governmental services electronically can enrich government functions and lessen the physical
burdens on citizens, the significance of this study rests in the ability to examine and identify the influencing factors
and determining the adequate level needed for cost-effective adoption of e-government solutions at ministerial level
20 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
at the KRG, whilst fostering an effective and direct connection between the government and its citizens.
Determining the diversity of citizens’ capabilities and their need is considered crucial elements for increasing the
viability of this study and the significance of its contribution to both, Ministry of Transportation and communication
at KRG and to available relevant literature.
4. Research methodology
The research method of this study is mixed-model, consisting of quantitative and qualitative approach in
gathering the information. This paper will focus on the qualitative findings, while quantitative findings will be
published in a subsequent and separate paper. A survey questionnaire was developed and distributed to the public
randomly in Arbil region of the KRG, Iraq to gauge their attitude and readiness towards e-government services. Additional survey questionnaire was distributed to the employees of public sector companies in Kurdistan to gather
qualitative data. It should be mentioned that, the quantitative method is to find answers to the research questions.
This study comprehensively reviewed related literature whilst simultaneously identified the strengths and
weaknesses of prior studies. The literature review covered five primary areas. Here, the current situation in the Iraqi
region of Kurdistan, as illustrated in terms of: demographics; computerization; access to the Internet; availability of
online services; ICT infrastructure; and e-readiness. Literature review also investigated the advantages and primary
drawbacks of the present systems used by the KRG, and analyzed the social, technological, economic, and political
challenges that affected the implementation of e-government systems. Open coding system was used as effective
method of classifying respondents’ findings into themes. All participants were fluent in English language and had no
problem understanding or comprehending the questions of the survey. All Survey were in English language, citizens
were chosen randomly at public areas and were ask for their fluency in English language prior to participation. 150
survey filled by citizens were useful and fully answered, and were used in the qualitative analysis.
4.1. Measurement
Measurements are utilized to help interpret and conclude the quantitative data collected. There are four
basic scales including ratio, interval, ordinal, and nominal. This study utilized the interval and nominal scales in the
quantitative analysis of collected data. A classification method of qualitative answers was applied to classify the
varying answers in the qualitative data collected to help interpret and conclude information obtained. Yellow
stickers in part of the open coded system was used to classify each finding provided by participants. The
classification system helped in narrowing down opinions and emerging themes. Thus, the varying attitudes towards
government services and e-government solution are easily measured and understood. The classification method of
qualitative data was recommended as an effective approach by Cresswell & Clark (2007). This approach helped the
research tremendously in achieving its objectives by comparing users (ordinary citizens) opinions with that of
service providers (government employees).
4.2. Nominal scale
The nominal scale is the most elementary type of scale that is used to measure variables when the
respondents of a survey are classified as being mutually exclusive and exhaustive. The nominal scale is utilized in
this research to calculate variables including gender, educational levels, and race.
21 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
9. Analysis and findings
The first independent variable analyzed was the multi-dimensional constructs factor. A primary part
evaluation technique with varimax rotation, as developed by Hair et al. (2010), was used to ascertain the
fundamental aspects of every concept. A consequence of factor analysis is the creation of an advice matrix, which
empowers the identification of significant constructs (Covin, Dess & Lumpkin, 1997). Likewise, Hair et al. (2010)
found that such a strategy could enable good separation of variables. However, the principle component evaluation
method still remains the most common factor extraction procedure use (Cooper & Schindler, 2003).
The dependability of the variables was also analysed. Cooper & Schindler (2003) state that reliability
signifies the internal consistency of a variable, and reveals homogeneity with the scale used to compute the latent
variable. Dependability analyses determine how much the variables can be trusted to quantify the abstraction style
(Hair et al., 2010). Cronbach's Alpha is widely used as a measure for the reliability coefficient (Coakes & Steed,
2003; Sekaran & Bougie, 2010). A reliability evaluation of the variables was done to assess the applicability of the
instrument. A Cronbach’s Alpha value of 0.7 is considered acceptable (Nunnally, 1978).
9.1. Illustrative Evaluation
Illustrative statistics are able to provide a synopsis to enable comparisons between components (Trochim &
Donnelly, 2008). This study used illustrative statistics to analyse demographic data such as age, sex, academic
background, tenure, and other significant background information. This study did not ask for religious affiliations.
9.2. Frequency Distribution
Descriptive statistics were used to examine the frequency distribution of the demographical dimensions of
the respondents specifically factors involving gender, age and educational levels. Demographical factors are
important examining the factors of perceived usefulness, perceived ease of use, organizational readiness, top
management, firm size, perceived capabilities, relative advantages, cultural influences, government support and the
adoption of e-government.
9.3. Bivariate Correlation Coefficient and Multiple Regressions
Sekaran & Bougie (2010) explain that the correlation coefficient investigation output signal illustrates the
direction, relevance, and potency of the association of the variables. Hence, bivariate correlation coefficients were
calculated in this study to find out more about the association among the variables. A multiple regression analysis
was also conducted for this study. Based on the work by Sekaran &Bougie (2010) several regression evaluations
were conducted to show the variance present in the dependent variable relative to the hypothesised variance. In
addition, multiple regressions allowed the connection between both variants to be better understood so that the top
predictor could be identified (Sounderpandian & Aczel, 2006).
9.4. Hierarchical Multiple Regression
Hierarchical multiple regression analysis was used to examine whether there was a relationship between the
adoption of e-government and its perceived usefulness. Baron & Kenny (1986) state that multiple regressions are the
most acceptable evaluation method. Meanwhile, Hair et al. (2010) state that the moderating effect can be determined
based on the probability value suggested in the model summary, along with the p-value as shown in the coefficient
table, A values < 0.05 is considered significant.
9.5. Scale reliability
Reliability is regarded as an important component of conducting a perfect research. In addition to having an
acceptable research strategy, measuring the scale’s reliability can help in managing the research and in verifying that
the results are consistent, perfect, and compatible. Gay and Airasian (2000) proposed that reliability is the level of an
instrument’s capability to calculate what is intended to be measured to measure at a constant level. A higher
reliability level gives confidence to the researcher that the findings gained in the research is constantly similar if the
22 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
respondents were to re-do the questionnaires. In the field of empirical research, different reliability coefficients can
be utilized. The analysis sets out the how all the constructs in the instrument measure similar constructs (Sweet &
Grace-Martin, 2003). The reliability test is presented numerically utilizing the SPSS software and the coefficients
differ from 0 to 1. An alpha or result that is closer to 1 shows a higher reliability level based on George and Mallery,
(2003). Thus, the reliability test in this study will utilize the Cronbach’s Alpha. The findings are demonstrated in the
table below for all the different variables. After carrying out the pilot test for the questionnaire, the ambiguous
questions from the questionnaires will be revised and designed according to the test prior to the distribution of the
final questionnaire.
Table 1: the entire Variables’ Alpha Value
Cronbach's Alpha Cronbach's Alpha According to the
Standardized Items No. of Items
0.73 5x10=50
Among 150 usable questionnaires, many relevant issues to culture, organization and technology have been
obtained. Because of the fact that number of questionnaires and the answers were too much, so presenting all of the
questions in this paper is not possible. Thus, through content analyses, numerous results have been achieved that will be discussed in details in a separate research paper. Some of the respondents directly pointed out to the existed
issues while on the other side other ones indirectly mentioned such issues. In addition, the extremity of mentioned
issues was different in all of the obtained responds that have been rated as high, medium and low existed issues. The
first factor that will be discussed is the related challenges to technological context:
9.6. Technological Contexts
One of the important factors that were bolded in this study is the accessibility. In order to use relevant
services to e-government, they should be accessible so that users can easily employ them. As a simple example we
can name accessible ATM machines for paying the bills. It is clear that number of ATM machines will be increased
according to the population in different regions. Among 150 respondents, 122 of them mentioned this issue and the
results are presented in Table below:
Table 2: Accessibility issues
Frequency Problem
26 High
59 middle
37 Low
Total 122
Another explored problem through this study refers to system quality. This problem has been obtained from
21 of the respondents. Since usually the high quality products are being used in order to implement electronic
services so it can be concluded that this subject is initiated from culture. In fact, complaining about quality of the
products is one the usual issues in Middle East countries. Table 3 demonstrates frequency of answers according to
three main intensities:
Table 3: System Quality issues
Frequency Problem
2 High
23 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
9 middle
10 Low
Total 21
Another existed challenge that can be related to organizational and cultural context is ease of use. Overall,
131 respondents emphasized on ease of use. Using the electronic systems and online services although seems easy
for young generation but for most of the population is complicated. This issue also can be assumed as to be related
to culture of people to accept new and modern technologies. However, organizational context is equally important because organizational readiness significantly facilitates the utilization of such services. Table 4 presents
frequencies of obtained responds:
Table 4: Ease of Use’s frequency
Frequency Problem
53 High
40 middle
38 Low
Total 131
Service quality was the last identified challenge technically that has been highlighted by this study. Such
technological issue can be related to organization too because organizations should utilize appropriate technologies
in order to offer improved services. Moreover, service quality can be related to cultural context. As it was mentioned
earlier, being dissatisfied of current situation can be related to cultural context. 88 individuals mentioned service
quality either directly or indirectly. In addition, they believed that still electronic services cannot cover all of the
relevant sections. On the other hand, for some of the services they apply online but for proceed the online and
electronic services are not effective enough. Table 5, Shows the frequency of service quality problem:
Table 5: Service Quality’s frequency
Frequency Problem
18 High
32 middle
38 Low
Total 88
9.7. Organizational Demand
In case of using the online and electronic services, users will face many issues. On the other hand,
organization was not able to clarify this matter. Therefore, sometimes the request is not in line with the received
service. Moreover, organizations offer different services that it seems some of them require long time to respond
effectively. On the other hand, the structure of an organization should be developed in such a way that those sections
which have more demands to have more workforce as well. 112 respondents have pointed out to demand and the
frequency of their response is presented in Table 6.
Table 6: Demand’s frequency
Frequency Problem
34 High
24 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
27 middle
61 Low
Total 112
Employee readiness is another factor that was achieved from data analyses of 93 collected responses. The
fact that employees in any organization demonstrate an acceptable performance is very critical. In addition to IT, the
employee’s performance is important in order to improve organizational performance. Most of the users asserted
that still there are many errors taking place by employees in organizations. Their low ability results in lower service
quality. On the other hand, national culture could be related to organizational culture that finally impacts employee
performance.
Table 7: Employee readiness’s frequency
Frequency Problem
30 High
22 middle
41 Low
Total 93
The last issue in organizational context is documentation that has been highlighted by respondents. 62 of them emphasized on this problem that it can be related to employee’s experience and official process. On the other
hand, through training the employees and improving the official process such issue can be solved.
Table 8: Documentation frequency
Frequency Problem
20 High
22 Middle
21 Low
Total 62
9.8. Cultural Context
Social background demonstrates all of the issues which explain the basic national characteristics of a
country for example its history, demographic, politics and economies. In e-government, digital divide is known as
the most pressing challenge due to generally developing countries suffer from inappropriate public education levels
and large gaps between rural and urban areas. 43 respondents mentioned the issue that social background is one the
factors that resulted in some problems to implement e-government. Table 9, demonstrates the frequency of social
background.
Table 9: Social background’s frequency
Frequency Problem
9 High
10 middle
14 Low
Total 43
25 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Government support is another factor that both directly and indirectly was mentioned. 67 of total
respondents believed that government training is one of the critical factors in government support.
Table 10: Government Support’s frequency
Frequency Problem
17 High
27 middle
19 Low
Total 63
The findings above, suggests that there are several technological, cultural, and organizational challenges
faces e-government systems implementation in which can significantly impact the degree of success or failure of
such system implementation and usability. Moreover; the explored challenges answer both research questions of this
study. Technological challenges consist of ease of use, accessibility, service quality, and system quality. Existing
organizational challenges refer to demand, employee readiness: documentation while the main cultural challenges are originated from social background and government support. It is also the finding of this study that interactions
among technological, organizational, and cultural factors must be determined prior to any e-government system
implementation. Employees at the Ministry of Transportation and Communications for instance expressed their
dissatisfaction towards other employees in their ministry because of their lack of knowledge, information sharing,
attitude towards work, knowledge decimation, willingness to use new e-government system and willingness in
general to help the public (citizens) during work hours. Such findings are highly related to educational level, training,
but also representative of government employees’ general attitude towards the workplace. Such attitude or outlook
towards one’s job highly impacts the quality of service and the level of e-government initiative success.
Findings of surveyed government employees also showed that some employees are not trained or educated
enough to provide sufficient level of services to the general public. For instance, receiving emails and providing
basic online services (in customer services department) have shown that workers at the ministry are not adequately equipped to handle customer services and deal with online based services. Feedbacks from government employees
also showed that technology acceptance of online service and utilization of computer based systems is low. Findings
revealed that employees as service providers at the ministry prefer to use traditional and outdated methods such as
pen and paper to register information and share information via memorandums and verbal communications rather
than emails. This problem can be linked to lack of training, basic education which disqualify employees from being
placed in such positions and general low personal aptitude and capacity.
A consistent theme as part of the findings revealed that organizational issues such as (accessibility, service
quality, and system quality) are correlated to governmental support. It is a core conviction of employees that there is
lack of support in terms of strong commitment to actually train and support personal in the entirety of any e-
government system implementation initiative. Such conviction was found to affect moral and impact the utilization
of e-government services. Furthermore, there are several arguments raised by participants regarding the linkage
between government and organizational readiness. Employees strongly believe that any improvement in
organizational infrastructure is requires broad governmental support. Employees feel that government has not
adequately provided sufficient training or showed the will to seriously push for fundamental shift in service
providing. As such, employees are not keen on any initiative, and therefore, internal processes should have been
modified by better and broader planning by higher level administrators. Other respondents indicated that the
government should have imposed a new organizational culture prior to providing services to users. However; the
obtained results assume government support to enhance technological and organizational services provided to
citizens as part of general services improvement initiatives. Finally, it is our finding that the interaction between organizational and technological challenges is intertwined and are sociocultural in nature. This is to say that social
and cultural factors impact the level of readiness, utilization, and acceptance of e-government systems
26 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
implementation. In other words, technology acceptances can be highly influenced by socio-cultural, inter-
organizational and technological challenges.
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Technical analysis in practice: Exploring Lebanese stock market
Ale J. Hejase, School of Business, Islamic University of Lebanon, Beirut – Lebanon
Jihad S. El-Hokayem, School of Business, Lebanese American University, Beirut – Lebanon
*Hussin J. Hejase, Faculty of Business Administration, Al Maaref University, Beirut - Lebanon
* Correspondence author: [email protected]
Abstract
This research examines the ability of basic Technical Analysis (TA) tools to forecast security prices within the Lebanese stock
market. Moving Average and Relative Strength Index (RSI) variants are used to assess the capabilities of TA against the efficient
market hypothesis represented by a Buy/Hold strategy. The results demonstrate that long, medium and short term Moving
Averages have significant predictive ability to forecast Lebanese banking and real estate stock prices when compared with their Buy/Hold competitors. Likewise, the study suggests that the application of RSI TA variants on several Lebanese stocks have no
predictive ability to outperform the Buy/Hold approach.
Keywords: Technical Analysis, Moving Average, RSI, Lebanon, Stock Market
___________________________________________________________________________
1. Introduction
Technical Analysis (TA) is a forecasting tool for securities that use mathematical algorithms together with
traders’ sentiments (behavior) and the changes in traders’ sentiments (changes in behavior) in order to analyze
market actions and infer how these markets are going to change. In fact, TA professionals try to detect traders’
sentiments, such as optimism, pessimism, profit desire, and loss avoidance in order to deduce trading scenarios
(Kinsky, 2011). Moreover, Technical Analysis is the analysis of human mass psychology; that’s why it is also
referred to as behavioral finance (Credit Suisse, 2012).
Traders that rely on Technical Analysis to achieve their expectations have worked hard to assemble the
fewest possible words that would define TA. Ciana (2011) presents the following definitions:
• Analysis of past price changes in the hope of forecasting future price changes.
• Analysis based on market action through chart study, moving averages, volume, open interest, formations,
and other technical indicators.
• An approach to forecast commodity prices that examines patterns of price change, rates of change, and
changes in volume of trading an open interest, without regard to fundamental factors.
Likewise, other researchers proposed more definitions such as:
29 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
• TA is the study of any market that uses price and volume information only in order to forecast future price
movement and trends (Stevens, 2002).
• TA is the art of analyzing price data on charts (Person, 2004)
• TA is the art of identifying a trend reversal at an early stage and riding that trend until the weight of the evidence proves that it has been reversed (Pring, 1991).
From the aforementioned definitions it is clear that Technical Analysis is based on one major assumption:
Markets trend (Kirkpatrick II & Dahlquist, 2011). In fact, traders look forward to buying a stock somewhere at the
early stages of an uptrend movement, then riding the trend, and finally selling the stock at some point; a point where
the trend has attained a sufficiently high price that fulfills the traders’ profit expectations. For Technical Analysts,
the best source of information is the market itself with its publicly available data such as stock prices, market index
levels, number of securities traded and technical indicators (Vuković, Grubišić , & Jovanović , 2012).
Traditionally, the stock market includes two types of players, investors and traders. An investor is simply
an individual interested in finding and then buying shares of stock for long-term price appreciation, while protecting
one’s capital; whereas a trader is more interested in moving in and out of investments’ positions on short-term, with
an aim to achieve a large volume of smaller profits (Thomsett, 2013). Therefore, under the time horizon
consideration of both types, investors relay heavily on Fundamental Analysis (FA), i.e. published results of
operations, financial statements and annual reports; while traders rely on reading charts, spotting short-term trends
and market sentiments. Similarly, due to the time frame considered by each type, investors seeking long term profits
usually monitor their markets at a low frequency rate such as weekly or monthly in contrast to traders who monitor
their markets very carefully and on a continuous basis.
In his book “The Black Swan” (2010), author Nassim Taleb criticizes forecasting models, emphasizing the fact that at any time the impossible or merely the less probable may occur. In fact, the underlying message of “The
Black Swan” is an alert that a sudden change is probable at any moment as per Murphy’s Law (iMinds, 2014)
“Anything that can go wrong will go wrong”. Murphy’s Law justifies The Black Swan’s theory that on the long run
the inevitable will happen; however, considering the long run, when is the time of occurrence? Accordingly, the
challenge that Taleb, Murphy and many others want to bring forward presents itself. Their main concern is to
anticipate and improvise incidents rather than be an ideal risk averter who tries to avoid all sorts of acts and ventures
for fear of what might be the consequences. After all, none can today claim that profit and competitive advantage
may be won by sitting aside or by being on the margin watching other players. Success necessitates that one be in
the midst of the game; that’s how profit is achieved!
In brief, Technical Analysis is a tool that helps in decision making and relies on studying past and present
stock price movements in order to identify the next actions to be taken. Technical Analysis makes use of historical
price movements and volume variations to spot trends, recognize patterns, and see stereotype graphs that may imply
some future behavior. To those who expect black swans and admire Murphy’s curse, it is worth mentioning that, in
general, no prediction tool is 100% reliable, and, in particular, Technical Analysis is like a weather forecast where
there is always an inherent unpredictability in it; predictions are more often right than wrong. After all, it will be
extremely foolish to ignore the weather’s forecasts when the weather itself can seriously affect an action to be taken (Kinsky, 2011). Ignoring forecasts entails risk. However, a technical analyst as time goes by will acquire expertise
and self-propelled confidence that is apt to minimize the impacts of negative undesirable occurrences.
Technical Analysis is not popular within academic communities as is among stock market professionals
(Sulistiawan & Hartono, 2014); TA is more attractive to practitioners than academicians. As a matter of fact, many
practitioners see various key advantages of TA over FA. Three main advantages are specifically highlighted by
Yonatan Rom, the former CEO of a trading establishment -The Winning Edge - located in Johannesburg, South
Africa (FINWEEK, 2006). The first is that TA can be adapted to be used for any security that has trading history,
like commodities, foreign exchange, shares, unit trusts or others. The second key advantage is that TA may be
adjusted to deal with different investment horizons that may be monthly, weekly, daily or even minute-to-minute.
30 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Lastly, TA overwhelms FA in that investors can look at a wide gamut of markets instead of just focusing on a
narrow reach of investment opportunities as fundamental analysts do.
2. Beirut Stock Exchange
Beirut Stock Exchange (BSE) is the second oldest stock market in the region following the Egyptian Stock
Exchange, which is the oldest stock market established in the Middle East in 1883; it was established in 1920, by a decree of the French Commissioner (Beirut Stock Exchange, 2014). Initially, trading was restricted to gold and
foreign currencies. In the early 1930s, trading was expanded to encompass shares of private companies set up under
the French Mandate to operate and manage some public services and sectors (railways, communications, post…).
During the 1950s’ and 1960s, the Lebanese economy witnessed a significant activity as, various industrial, banking
and service companies listed their stocks on the BSE, putting it at the forefront of the regional markets with a total
of 50 listed bonds. By 1975, with the security deterioration in Lebanon, the trading activity in the BSE began to
retreat and was conclusively halted in 1983. This suspension extended until January 22, 1996, when the BSE re-
launched the trading activity in its hall, following a thirteen-year compulsory suspension. Today, ten companies are
listed in the Beirut Stock Exchange as seen in Table 1 (ibid). However, it is worth mentioning that the BSE is
basically not an economic indicator since two of the main columns of the Lebanese economy, namely, tourism and
services sectors, are not included in the bourse.
Table 1: List of companies listed on the Beirut Stock Exchange (Oct. 2014)
Issuer Code Type Class No. of listed shares
Solidere SOLA Common A 100,000,000
SOLB Common B 65,000,000
Bank Audi
AUDI Common 399,749,204
AUSR GDR 102,493,911
AUPRE Preferred E 1,250,000
AUPRF Preferred F 1,500,000
AUPRG Preferred G 1,500,000
BLC Bank
BLC Common 51,033,333
BLCPA Preferred A 400,000
BLCPB Preferred B 550,000
BLCPC Preferred C 350,000
Bank of Beirut
BOB Common 16,822,467
BOBPT Priority 4,762,000
BOBPE Preferred E 2,400,000
BOBPH Preferred H 5,400,000
BOBPI Preferred I 5,000,000
Byblos Bank
BYB Common 565,515,040
BYBDR GDR 1,309,078
BYB08 Preferred 08 2,000,000
BYB09 Preferred 09 2,000,000
Banque BEMO
BEMO Common 51,400,000
BMO13 Preferred 2013 350,000
BLOM Bank BLOM Common 215,000,000
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BLBD GDR 73,896,010
BLP11 Preferred 2011 20,000,000
Rasamny Younis Motor Co. RYM Common B 10,920,000
Holcim Liban HOLC Common 19,516,040
S. L. des Ciments Blancs
CBB Common Bearer 6,000,000
CBN Common Nominal 3,000,000
The lack of a “culture of investment” constitutes one of the reasons that have led to the low number of
listed companies in BSE; that is, the Lebanese culture does not consider the stock exchange as a serious investment
(Badri and Salim El Meouchi Law Firm, 2009). Moreover, more than 80% of the Lebanese companies are small and
medium family-owned enterprises which are run by their corresponding family members, thus lacking the
organizational structure and transparency in their management; two components which are important for a company
to possess to be listed at the equity exchange. In addition, many companies have found other alternative sources to
finance their growth and future projects such as bank loans, hence avoiding the task of issuing stocks in the stock
market and inevitably affecting negatively the activity of Beirut Stock Exchange.
Currently, the BSE operates from 9:30 am to 12:30 pm during the five working days of the week (Monday
through Friday). The BSE administration has established some trading policies of its own that are rarely seen
elsewhere. One of these policies that relate directly to the current research is the calculation of the closing prices at
the end of the day. Traditionally, in the world markets this price is the price of the last transaction executed on that
day. However, in Lebanon, where the stock market is characterized by low liquidity, the closing price is set to be the
weighted average of the last five operations with volume levels being used as weights. This means that the closing
price is somehow theoretical and does not really represent the price of some transaction. According to Mr. Youssef
Sadek, the deputy secretary general of BSE, this policy has been adopted so that traders are not be able to play with
the stock prices few minutes before the 12:30 closing time. During an informal interview, Mr. Sadek affirmed that in
an attempt to prevent closing price manipulations, they consider the last five transactions of the day in order to
calculate the closing price, but only after careful inspection and auditing to check that these transactions were not
performed by practically the same trader by creating a fictitious transaction between two of his/her clients with the
objective of raising the closing price. . Likewise, another policy that the BSE follows is related to the fact that
traders are not allowed to go in “Short”, meaning that the only allowed trading positions are trading “Long”.
3. Literature Review
In recent years, Technical Analysis has achieved a significant position in Wall Street. Actually, Technical
Analysis has been applied to a wide gamut of well-known stocks. In fact, Technical Analysis relies on the
imbalances of buying and selling pressures which may be identified through the patterns they create in prices. A
classical study that has tested Moving Averages and trading range break-outs on the Dow Jones Industrial Average
(DJIA) provided strong evidence in favor of the use of Technical Analysis approach (Brock, Lakonisshok, &
LeBaron, 1992). The researchers reported that “overall our results provide strong support for the technical strategies we explored”; furthermore, the researchers’ “Buy/Sell” simulated trades based on technical rules showed
that the outcome’s returns were higher than the outcome’s “normal” returns. The research’s results revealed a typical
difference in returns, over a 10-day period, between a “Bbuy” and a “Sell” signal of about 0.8 percent as compared
to a “normal’ upward drift of 0.17 percent.
Another study that applied the two aforementioned technical trading tools namely, Moving Averages and
trading range breakouts, was performed in England with application on the daily closing values of the Financial
Times-Institute of Actuaries 30 (FT30) index (Mills, 1997). As in the work of Brock et al. (1992), the results
32 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
showed that for most of the trading period, the technical rules do work in the sense of producing returns greater than
those produced by following a ”Buy/Hold” strategy.
A different research was performed where a systematic and automatic approach to technical pattern
recognition was applied to various U.S. stocks from 1962 to 1996 (Lo, Mamaysky, & Wang, 2000). The research
concluded that Technical Analysis can add value to the investment process. Moreover, Lo and his co-researchers
proposed that Technical Analysis might be the next application that could bypass human judgment, and which relies
on computational algorithms that perform fully automated pattern recognition tasks.
During the past few years, the works of Brock et al. (1992), Mills (1997), Lo et al. (2000) and many others
were considered, and different studies attempted to apply TA charting and strategies to various financial markets
around the globe. As such, TA was applied to the Chilean Stock Exchange Market (Umaña & Romo, 2007), where
the study used different TA indicators (Moving averages, momentum, %R of Williams, %K and RSI) and concluded
that the “R of Williams” indicator do deliver greater returns than any other indicator when considering the daily closing prices of the stocks from 22 companies that compose the IPSA index. Additionally, the returns of applying
“R of Williams” to the Chilean considered stocks provided greater returns as compared to those resulting from the
usage of a “Buy and Hold” strategy. Moreover, the same research reported that Moving Average techniques
overcome the passive “Buy and Hold” tactic in achieving higher stock returns. Furthermore, the study concluded
that better return results were achieved with short-term Moving Averages (5 days) as compared to long-term
Moving Averages (200 days).
In Hong Kong, Chong and Ng (2008), examined two TA oscillators – the Moving Average Convergence
Divergence (MACD) and the Relative Strength Index (RSI) – to inspect if their outcomes provide higher trading
profits when applied to the London FT30 stock market index. The results of the research conclusively concluded
that the trading rules based on the RSI oscillator provide buy annual returns (22.44%) that are significantly higher (at 5% level) than the 5.8% returns of the passive “Buy-Hold” strategy. Moreover, RSI sell rules generate annual
returns (-3.36%), which is significant (at 10% level) when compared to the 5.8% returns of the passive “Buy-Hold”
strategy. The MACD trading strategies also show signs of higher significant returns when compared to the passive
“Buy-Hold” tactic. The research concludes that the RSI oscillator generates a buy annual return of 42.9%, which is
significantly higher (at 5% level) than the 5.8% return of the passive strategy. The study concludes that the RSI and
MACD rules outperform the “Buy-and-Hold” strategy.
Along the same lines, TA was applied to the Indian Stock Market, where Mitra (2011) studied the
profitability of Moving Average based trading rules on four Indian stock indices for the period that extended from
January 1998 to March 2008. Again to measure the effectiveness of the forecasting power of the trading rules, the
researcher compared the returns of the Moving Average strategy with the returns of the passive static strategy: “Buy
and Hold”. The findings reveal that TA can be more profitable when the transaction costs are kept low. In fact, shorter-period Moving Averages showed better return results than longer periods; this result agrees with those of
other researchers; however, shorter Moving Average rules generate greater numbers of trades and thus increase
transaction costs, making the extra profitability irrelevant.
In another study, six Technical Analysis indicators were used to examine the profitability in the Danish
Stock Market (Chen, Metghalchi, & Garza-Gomez, 2011). The research used the daily closing level (between July 1,
1993 and June 30, 2010) of the OMXC20 stock index, which is a market value weighted index that includes the 20
most traded stocks in the Copenhagen Stock Exchange. The chosen technical tools were: Standard Moving Average,
Increasing Moving Average, RSI, Parabolic Stop and Reverse, Directional Moving System, and MACD. The
benchmark ceiling for comparison purposes was the “Buy-and-Hold” strategy to the investors who follow the
Efficient Market Hypothesis (EMH) (Fama, 1970), where EMH defines an efficient financial market as that market where prices fully reflect all available information. The strength of the EMH rests on the fact that most of its
33 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
corresponding statistical analyses show that its associated random walk theory stands well against alternative
specifications which suffer from weaknesses and continues to be hard to beat (Xie, 2011, p. 9).The empirical results
of this research concluded that under the trading rules that result from two or three TA indicators, the “Buy-and-
Hold” strategy is significantly overwhelmed. Once again this research proves that TA has a solid predictive power
when applied to the Danish Stock Market.
The engulfing power of TA over FA was demonstrated again in the Chinese Stock Market. In their study,
researchers Moosa and Li (2011) chose a random sample of 100 stocks from the full roll of companies listed on the
Shanghai Stock Exchange. The objective of the research was to compare technical to fundamental trading rules. The
researchers concluded that in the light of the fact that trading activities within the Chinese Stock Exchange Market
are dominated by individual traders and investors because government shares are not tradable, gives Technical
Analysts the upper hand over the fundamentalists, meaning that former’s trading strategies have more influence on
the stock prices. In fact, the data studied demonstrate that technical trading is more effective.
In an attempt to support TA strategies, Quintanilla Garcia et al. (2012) focused their research on the high-
low ask price spread rather than closing prices. Their aim was to capture more relevant information that did prove
the fact that price ranges have historical dependencies, thus affirming the TA chart observation. The proposed price-
range model was applied to the USD/CHF foreign exchange market; it concluded that “technical analysis in foreign
exchange trading can and should take a leading role for analyzing expected exchange movements”.
Going to the application of TA to the Spanish Stock Markets, Rosillo et al. (2013) examined the use of RSI,
MACD, momentum and stochastic rules on the said markets for securities from 1986 to 2009. While applying the
aforementioned Technical Analysis strategies to calculate profitability, this research took into consideration the two
usually forgotten factors of commissions and economic crises. In effect, commissions and fees charged by banks,
agencies and brokers cannot be ignored since they can change the final profitability outcome; in practice Rosillo and co-researchers considered a commission of 0.85% in their simulations. The other factor that was considered in this
research is the set of economic crises that occurred within the period of study, i.e. between February 14, 1986 and
February 27, 2009. As a matter of fact, the researchers had to isolate the data into disjoint periods that are separated
by the major events such as: the crash of the Black Monday of October 19, 1987, the Russian financial crisis of
August 17, 1998, the USA crash of October 2008, and the world financial crisis of September 14, 2008. With the TA
tools at one hand and the considered factors on the other, the researchers were able to create a software tool that
helps small traders and investors to make decisions in the stock exchange. This tool was tested on different
companies of the Spanish Continuous Market where profitability came up to be dependent on the type of stock
exchange company and the TA indicator used; in addition, the research’s results clearly show that higher
commissions reduce profitability, thus putting the technical indicator under a major strain.
In another part of the globe, the Taiwan Stock Market trading historical data was used by Chen et al. (2011) to investigate the validity and predictability of Technical Analysis. The research data included the Taiwan Stock
Exchange Capitalization Weighted Index (TAIEX) over the period of January 1975 till December 2006, and taking
into consideration that the crises of July 1985 and July 1998 do divide the data at hand into three meaningful sub-
periods. The research concluded that across the full sample and the three sub-periods, and without the consideration
of transaction costs, the mean returns generated by the rules of short-term buy signals are significantly superior to
the passive “Buy-and-Hold” strategy. Likewise, as in other studies, the inclusion of transaction costs reduces
profitability, putting the less profitable long-term predictions at the front. Indeed, the final comment of the
researchers was: “the Taiwan stock market stands for market efficiency, and economical profits cannot be rendered
from technical analysis in this market”. In a recent paper, Simple Moving Average (SMA) trading rules were
applied to the Indonesian Stock Exchange (IDX) during the period that extended from 2007 till 2012 (Sulistiawan &
Hartono, 2014). The objective of the study was to test whether TA signals can detect price reactions before and after
earning announcements’ dates at the Indonesian Stock Market. The results showed that SMA signals before earning
announcements can produce profits, contrary to signals after announcements.
34 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
In an attempt to verify how rewarding is technical analysis, Park and Irwin (2007) compared 95 modern
studies on the usefulness of TA and observed that 56 found positive results, 20 obtained negative results and 19
ended up with mixed results. In fact, the debate between TA and FA has another dimension where both TA and FA
stand united in front of the concept of an efficient market which is associated with the idea of a random walk, meaning that security price changes are simply random departures from previous prices, i.e. tomorrow’s security
price will reflect only tomorrow’s news and will not depend on the price changes of today, specifically suggesting
that TA does not have the ability to forecast a security price (Lento, 2008). The random walk theory continues to be
regarded as the testable implication of the efficient market hypothesis (Xie, 2011, p. 213), and denies the reliability
of any fundamental or technical analysis (Thomsett, 2013, p. 251). However, for many others, the problem with this
theory is that it ignores the easily observed trends and momentum factors that do directly affect the price movement
(ibid, p. 255). It is worth mentioning that up till these days, the debate continues with traders and speculators
whereby the idea that a financial market is governed by a “fair game” is negated (Ilinskaia & Ilinski, 1999). In fact,
no technical indicators provide the right signals 100% of the time. The financial markets have so many variables that
do affect the securities’ prices and lead any previously developed perfect system to be ineffective. Likewise, the
trader should be convinced that incredible back-test may fail when estimating the future, but this should not be used
as an excuse for not following a system. Thus, systems should be utilized in combination with any new market
information, and trades are won by simultaneously knowing oneself and the markets (Bedford, 2005).
The aforementioned paragraphs presented an overview of the application of TA around the globe, and
made it clearly evident that research of TA in the MENA region is absent. As a matter of fact, the authors of this
paper could not identify any published research that observes the application of TA trading rules to the regional
stock markets in general and to the Lebanese market in particular. This lack of literature enriches the objective of
this current study, making it a future valuable resource that may trigger many prospect works.
4. The Research Problem
The purpose of this research is to explore the predictive ability of some technical analysis tools when
applied to the main stocks listed on the Beirut Stock Exchange. As delineated, several academic studies have come
to conclude that Technical Analysis is an effective means to extract useful information from market prices (Lo,
Mamaysky, & Wang, 2000). Similarly, Technical Analysis has gained a wide reputation among traders who have
been using its tactics since the late 1800’s and who have enjoyed the Technical Analysis’s fruitful outcomes to
uncover the future patterns of the markets (Brock, Lakonisshok, & LeBaron, 1992). So, this research intends to
review some popular and accepted technical analysis algorithms that were reported to be efficient and effective, to
apply them to the major Lebanese stocks, then conclude to what extent can these algorithms produce the desired
trading signals that relatively maximize profitability.
4. 1. The Beirut Stock Exchange Data
The historical time-series data used in this research was obtained from the BSE archives. The data consists
of daily open, close, high and low prices for five Lebanese stocks: three for banks (Audi, Byblos and BLOM) and
two for real estate (Solidere A and Solidere B), all during the period that extends from July 8, 2003 till October 23,
2014.
Our research will make use of the closing price which, as was mentioned before, is a weighted average of the last
five transactions of the day. Similarly, any trading plan executed based on a closing price at a certain day will be practically traded on the following working day at the closing price of this next day. In addition, the following
assumptions are considered:
35 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
• The total period for the simulations will extend from July 2003, till October 23, 2014, meaning that the
total holding period for yield calculations is practically more than ten years.
• All simulations will start with USD10,000 in cash, which will be available at the start of the trading
operations.
• All “Buy” and “Sell” operations are based on long trading since BSE does not permit short trading.
• For all “Buy” trading operations, the whole available cash capital is invested; likewise, for all “Sell”
trading operations, the whole available securities shall be exchanged for cash.
• Any “Buy” trading operation cannot be followed by another “Buy” simply because all available cash is invested under long trading.
• Any “Sell” trading operation cannot be followed by another “Sell” simply because what is available after a
“Sell” is cash that is ready to be invested in buying securities.
• The benchmarks used for TA yield comparison purposes are based on the “Buy-and-Hold” strategy in
accordance with the Efficient Market Hypothesis (EMH) (Fama, 1970). Three Buy-and-Hold” strategies
are considered:
o Daily “Buy-and–Hold”, where the available securities are evaluated daily in accordance with each
day’s closing price. A total unique holding period return (HPR) is calculated over the whole
simulation period by considering the initial capital (USD 10,000) and the final simulation capital
on October 14, 2014.
o Yearly HPRs are calculated based on the closing prices at the start and end of each year for the
whole simulation period. Then a simple average of the yearly HPRs is computed.
o Yearly HPRs are calculated based on the closing prices at the start and end of each year for the
whole simulation period. Then the geometric mean of the yearly HPRs is computed.
• Two types of simulation will be carried; the first excludes trading commissions and the other will consider
a trading commission of 0.3%.
5. Methodology
This research is conducted by taking a long position along three main tracks with all trading transactions
taking place at the end of the day, and considering the BSE adjusted closing price of the security.
The first is a simple “Buy and Hold” track that emphasizes the Efficient Market Hypothesis (EMH)
combined with a stop-loss strategy. With “Buy and Hold”, a trader decides to buy a stock and hold it for a long time
(Thomsett, 2013, p. 54). Under this track, the position is taken at the first day of the study period and the proceeds
are reinvested every day until the end of the study period.
The second and third tracks make use of charts which in their different forms and appearances form the
main stream and the working tool of Technical Analysis (Edwards & Magee, 1997). The second track relies on the interaction between a price graph, mainly a line graph which represents the sequence of closing prices of a security
along time, and a Moving Average graph which smoothens the fluctuations in the security price time series. In fact,
the Moving Average is the average price of the security over a number of periods. This number depends on whether
the trader is looking for short, medium or long term trends in the stock-market (Khan, 2010). In our work, we will be
looking at a 15-day, 50-day, and 100-day Moving Averages to determine short-term, medium-term and long-term
trends respectively. Under this track, and a long position, the security is bought when the trading rule corresponding
to Moving Averages generates a “Buy” signal (golden cross), and is held until a “Sell” signal (dead cross) is
generated. In the paper titled “Monthly Moving Averages-An effective Investment Tool?” (James, 1968), the author
recommends that for a “Buy” signal the closing price will have to rise above the Moving Average by 2% or more.
Likewise, for the “Sell” signal the price will have to fall below the Moving Average by at least 2%. It is worth
mentioning here that Moving Averages are the right tool that eliminates the inevitable subjectivity that arises from
using direct visual methods (Kinsky, 2011, p. 97).
36 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
The third track makes use of the aforementioned closing price line graph in conjunction with the Relative
Strength Index oscillator signal. Actually, oscillators are technical analysis tools that act on market prices to
generate signals that may be compared to some predefined reference levels in order to highlight oversold or
overbought stock markets. Again, as indicated before, under a long position, a security is bought when the RSI
oscillator generates a “Buy” signal, and is held until another “Sell” signal is generated.
Again for tracks two and three, the resulting funds originating from “Sell” operations are held in cash until
the start of the next trading “Buy” operation; likewise, the resulting possessed stocks originating from buy
operations are held until the start of the next trading “Sell” operation.
Three main assumptions are considered in the research. The first is related to the BSE trading commissions
which range from 0.3% for big volume operations up to 0.4% for small and medium volume operations. Even
though other studies have considered a transaction cost of 0.7% for each pair of “Buy” and “Sell” (Rosillo, de la
Fuente, & Brugos, 2013), in our simulations, we shall consider the 0.3% that prevails in the BSE. The second is attached to the fact that any money kept in cash after a “Sell” operation will not get any interest. Likewise, the third
assumption is that at the time of any “Buy” or any “Sell” operation, where we will trade with all the available cash
resources at the time of buying or stocks at the time of selling.
The experimental simulation procedure is based on an investor who tries to buy the stocks with all the cash
at hand or sell the owned stocks and hold the cash until the next buy transaction. All simulations start with an initial
sum of USD 10,000. Furthermore, as per previous studies (Rosillo, De la Fuente, & Brugos, 2013), it should be clear
that if an indicator generates a purchase order, no other purchase orders are allowed until the aforementioned
purchase order is settled by a sales order. This same idea applies to sale orders, if an indicator generates a sale order,
no other sale order is allowed until the cash of the current sale undergoes a buy transaction order.
6. Results and Discussions
Three moving average strategies were considered and applied to six of the BSE stocks. The Moving
Average of order 100 was deemed to consider long-term forecasts, of order 50 took into account medium-range
forecasts, while the Moving Average of order 15 was regarded as a means to predict short-term prices. These three
aforementioned Moving Averages were put on one hand as the adopted strategies, and on the other hand two “Buy-
and-Hold” mechanisms were suggested as a benchmark in order to verify the effectiveness of TA. The first
suggested “Buy-and-Hold” mechanism was simply based on finding the arithmetic average of all the returns that
result from each investment year, assuming that during the said year the stocks fluctuate up and down according to the closing prices; i.e., the quantity of stocks purchased at the beginning of the year are evaluated daily as per the
closing price of that day. Similarly, the second considered “Buy-and-Hold” mechanism was based on the same lines
of the first but with a minor difference, where a geometric mean was considered instead of the arithmetic mean.
Thus, having these ideas in mind, simulations were run for six different BSE stocks (four banking stocks: Byblos,
Audi, Audi-GDR, Blom-GDR; and two real estates: Solidere-A and Solidere-B). The results of the corresponding
simulations are depicted in Table 2, where the period of simulation for the majority of the runs extended from July
2003 till October 2014.
Table 2: Summary of results for Moving Averages and Buy/Hold strategies without commissions
37 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Stock Description MA(100) MA(50) MA(15) StartDay EndDay
Yearly
Buy/Hold
(Average)
Yearly
Buy/Hold
(GM)MAHPR ##### ##### ######
DailyB/HHPR ##### -4.76% -5.88%
MAHPR ##### ##### ######
DailyB/HHPR ##### 5.26% ######
MAHPR ##### ##### ######
DailyB/HHPR ##### ##### ######
MAHPR ##### ##### ######
DailyB/HHPR ##### ##### ######
MAHPR ##### ##### ######
DailyB/HHPR ##### ##### ######
MAHPR ##### ##### ######
DailyB/HHPR ##### ##### ######
######
######
Byblos
Audi
BLOM-GDR
Audi-GDR
Solidere-A
Solidere-B
############
######
######
######
######
######
######
######
######
-0.44%-0.12%
11.29%17.20%
17.00%
4.26%
14.42%
14.31% 9.29%
9.41%
2.85%
13.60%
The columns under Moving Average of Table 2 portray the holding period returns (HPR) of both the TA
strategy and the “Buy-and-Hold” approach with daily evaluation during the whole simulation period of more than
ten years. It is clear from comparing the outcomes that the MA HPRs surpass those of the “Buy-and-Hold”. For
example, when considering the Byblos stock listed in the first row of the table, the resulting MA HPRs were 38.45%
(for a Moving Average of order 100), 64.80% (for a Moving Average of order 50), and 50.19% (for a Moving
Average of order 15) which surpass the MA HPRs “Buy-and-Hold” counterparts of -10.65%, -4.76%, and -5.88%
respectively. Likewise, for the Audi stock, the resulting MA HPRs came up to be -18.14% (for a Moving Average of
order 100), 129.66% (for a Moving Average of order 50), and 411.03% (for a Moving Average of order 15); results
which again beat their corresponding “Buy-and-Hold” of -33.33%, 5.26% and 224.325 respectively.
The second set of results is depicted in Table 3 which shows three RSI strategies applied to six of the BSE
stocks. Three different threshold levels are considered being the classical (70, 30), with two alterations namely (80,
20) and (60, 40). These three aforementioned RSI agents were put on one hand as the adopted strategies, and on the
other hand the two aforementioned “Buy-and-Hold” mechanisms were suggested as a benchmark in order to verify
the effectiveness of TA. According to the RSI oscillator signals, a security is considered overbought when the RSI
signal crosses above the upper threshold (for example 70), and oversold when it swings to below the lower (for
example 30). Furthermore, when the oscillator generates a “buy” signal, securities are kept until a “sell” signal is
generated; likewise, cash is kept after a “sell” event until a new “buy” pointer is generated.
Table 3: Summary of results for RSI oscillator and Buy/Hold strategies without commissions
38 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Stock Description RSI(70,30) RSI(80,20) RSI(60,40) Start Day End Day
Yearly
Buy/Hold
(Average)
Yearly
Buy/Hold
(GM)
RSI HPR -45.16% -14.83% -37.16%
Daily B/H HPR -3.03% -3.03% -3.03%
RSI HPR -44.44% -40.42% -54.28%
Daily B/H HPR 224.32% 224.32% 224.32%
RSI HPR -44.72% -26.43% -54.10%
Daily B/H HPR 108.09% 108.09% 108.09%
RSI HPR -35.55% -18.07% -9.75%
Daily B/H HPR 306.52% 306.52% 306.52%
RSI HPR -47.15% -10.10% -33.53%
Daily B/H HPR 135.99% 135.99% 135.99%
RSI HPR -48.61% -49.24% -44.29%
Daily B/H HPR 130.20% 130.20% 130.20%
Audi 28-Jul-03 23-Oct-14 17.20% 11.29%
Byblos 08-Jul-03 23-Oct-14 -0.12% -0.44%
BLOM-GDR 09-Jul-03 17-Oct-14 17.00% 13.60%
Audi-GDR 04-Jan-05 23-Oct-14 4.26% 2.85%
Solidere-B 09-Jul-03 23-Oct-14 14.31% 9.29%
Solidere-A 08-Jul-03 23-Oct-14 14.42% 9.41%
The columns under RSI of Table 3 portray the holding period returns (HPR) of both the RSI oscillator strategy and the “Buy-and-Hold” approach with daily evaluation during the whole simulation period of more than
ten years. It is clear from comparing the outcomes that the “Buy-and-Hold” HPRs surpass those of the RSI oscillator.
For example, when considering the Byblos stock listed in the first row of the table, the resulting RSI oscillator HPRs
were -45.16% for RSI(70,30), -14.38% for RSI(80,20), and 50.19% for RSI(60,40) which fall under the buy-and-
hold HPR of -3.03%. Likewise, for the Audi stock, the buy-and-hold HPR came up to be 224.32% which again beats
the corresponding RSI oscillator HPR’s of -44.44%, -40.42% and -54.32% for RSI(70,30), RSI(80,20), and
RSI(60,40) respectively.
Finally, the periodical end of year cash capitals achieved as a result of the moving “buy” and “sell” signals
of the Moving Averages trading rules are compared with the annual end of year cash capitals of the “Buy-and-Hold”
method (Vasiliou, Eriotis, & Papathanasiou, 2006). To compare the returns of these two tracks, a paired samples t-test is conducted. This t-test aims at accepting or rejecting the null hypothesis that the two tracks (“Buy-and-Hold”
on one side and TA trading rule on the other side) have no difference in their mean returns.
The mean scores for the returns are shown in Table 4 where as expected, with 5% level of significance,
most of the TA moving average strategies perform better than the “Buy-and-Hold” strategy (Burns & Burns, 2008).
Specifically, for the four banking stocks, the averages corresponding to the three strategies MA(100), MA(50) and
MA(15) outperform the “Buy-and-Hold” strategy at a 5% level of significance. As for the real estate stocks
corresponding to Solidere A and B, the paired comparisons show that both MA strategies and “Buy-and-Hold” have
no significant average differences except for the MA(15) strategy which demonstrated significant difference with
the “Buy-and-Hold” (p-values were 0.007986 and 0.002324 for Soldere-A and Solidere-B respectively).
Table 4: Paired sample average comparisons for MA strategies and Buy/Hold with significance levels
39 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Stock Description MA(100) vs B/H MA(50) vs B/H MA(15) vs B/H
Average MA Annual Cash $13,883.27 $14,137.42 $15,048.33
Average B/H Annual Cash $11,490.05 $10,193.45 $10,490.17
Paired Samples p-Value 0.043611 0.001003 0.000201
Average MA Annual Cash $9,778.86 $20,968.75 $41,683.82
Average B/H Annual Cash $7,625.40 $11,492.98 $31,240.73
Paired Samples p-Value 0.002714 0.005121 0.029443
Average MA Annual Cash $18,074.30 $25,826.60 $34,231.20
Average B/H Annual Cash $13,918.84 $15,903.24 $22,466.70
Paired Samples p-Value 0.009383 0.001993 0.004682
Average MA Annual Cash $39,323.55 $44,981.17 $36,012.42
Average B/H Annual Cash $27,771.31 $30,054.35 $30,549.67
Paired Samples p-Value 0.036533 0.002262 0.012961
Average MA Annual Cash $34,755.33 $30,135.92 $24,907.00
Average B/H Annual Cash $33,909.05 $34,159.14 $33,389.92
Paired Samples p-Value 0.786266 0.255623 0.007986
Average MA Annual Cash $32,388.64 $28,101.00 $19,486.08
Average B/H Annual Cash $32,470.82 $33,580.46 $32,170.08
Paired Samples p-Value 0.977625 0.077973 0.002324
Audi
Byblos
BLOM-GDR
Audi-GDR
Solidere-B
Solidere-A
Along the same arguments, but this time with buy and sell commissions of 0.3%, the columns under
Moving Average of Table 5 portray the holding period returns (HPR) of both the TA strategy and the “Buy-and-
Hold” approach with daily evaluation during the whole simulation period of more than ten years. Once more, it is
clear that the MA HPRs surpass those of the “Buy-and-Hold” at the three considered moving averages of 100, 50
and 15.
Likewise, the results of combing the RSI decisions with commission charges of 0.3% for buy and sell
operations produce the results depicted in Table 6 which portrays the holding period returns (HPR) for both the RSI
oscillator strategy and the “Buy-and-Hold” approach. The cells of Table 6 make it clear that commissions do not
alter the fact of table 3 where the “Buy-and-Hold” HPR’s surpass those of the RSI oscillator.
Table 5: Summary of results for Moving Averages and Buy/Hold strategies with 0.3% commissions
40 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Stock Description MA(100) MA(50) MA(15) Start Day End Day
Yearly
Buy/Hold
(Average)
Yearly
Buy/Hold
(GM)
MA HPR 29.62% 44.80% 17.70%
Daily B/H HPR -11.19% -5.33% -6.45%
MA HPR -22.04% 117.58% 358.57%
Daily B/H HPR -33.73% 4.63% 222.38%
MA HPR 79.98% 158.29% 249.22%
Daily B/H HPR 26.87% 44.75% 104.43%
MA HPR 379.47% 545.90% 340.20%
Daily B/H HPR 258.70% 304.09% 304.09%
MA HPR 195.07% 137.50% 30.82%
Daily B/H HPR 168.64% 158.94% 135.54%
MA HPR 177.47% 123.35% 17.12%
Daily B/H HPR 140.86% 163.01% 131.13%
Audi 28-Jul-03 23-Oct-14 16.85% 10.96%
Byblos 08-Jul-03 23-Oct-14 -0.42% -0.74%
BLOM-GDR 09-Jul-03 17-Oct-14 16.65% 13.26%
Audi-GDR 04-Jan-05 23-Oct-14 3.95% 2.54%
Solidere-B 09-Jul-03 23-Oct-14 13.96% 8.97%
Solidere-A 08-Jul-03 23-Oct-14 14.07% 9.08%
Table 6: Summary of results for RSI oscillator and Buy/Hold strategies with 0.3% commissions
Stock Description RSI(70,30) RSI(80,20) RSI(60,40) Start Day End Day
Yearly
Buy/Hold
(Average)
Yearly
Buy/Hold
(GM)
RSI HPR -50.80% -17.58% -49.08%
Daily B/H HPR -3.61% -3.61% -3.61%
RSI HPR -44.88% -43.00% -61.00%
Daily B/H HPR 222.38% 222.38% 222.38%
RSI HPR -49.96% -29.79% -61.50%
Daily B/H HPR 106.85% 106.85% 106.85%
RSI HPR -43.28% -24.16% -28.21%
Daily B/H HPR 304.09% 304.09% 304.09%
RSI HPR -55.69% -17.37% -54.30%
Daily B/H HPR 134.58% 134.58% 134.58%
RSI HPR -57.12% -53.15% -60.10%
Daily B/H HPR 128.82% 128.82% 128.82%
Solidere-A 08-Jul-03 23-Oct-14 14.07% 9.08%
Solidere-B 09-Jul-03 23-Oct-14 13.96% 8.97%
Audi-GDR 04-Jan-05 23-Oct-14 3.95% 2.54%
BLOM-GDR 09-Jul-03 17-Oct-14 16.65% 13.26%
Byblos 08-Jul-03 23-Oct-14 -0.42% -0.74%
Audi 28-Jul-03 23-Oct-14 16.85% 10.96%
7. Conclusions
The results of this study suggest that for the Lebanese Stock Market, TA in general and MA in particular is
able to outperform the Buy/Hold model at Moving Average lags of 100, 50 and 15. In fact, the resulting information
depicted in Tables 2 and 4 provide sufficient evidence of the outperforming ability of TA Moving Average strategies
in overcoming the classical efficient market Buy/Hold approach.
41 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
The MA(100) and MA(50) are individually significant across all the data sets corresponding to both the
banking and real estate sectors of the Lebanese Stock Market. On the other hand, the TA strategy corresponding to
MA(15) succeeded in outperforming the Buy/Hold approach under the banking sector; however, it failed under the
real estate sector. These findings suggest that MA trading may be used as a principal tool to forecast and predict the future behavior of most Lebanese banking and real estate sectors with high success on the long MA(100) and
medium MA(50) ranges. Less confidence ability is put on the short ranges like in MA(15) as per the aforementioned
results.
On the other hand, TA strategies under the RSI oscillator when applied to the Lebanese Stock Market
proved to be deficient and could overcome the classical efficient market Buy/Hold approach.
As a final point, it is worth mentioning that most securities’ traders look for a trading mechanism in the
wrong place. In fact, the search for that magic system that never fails is very difficult since it is impossible to
identify a unique “for-all-times” mechanism. Indeed, as suggested by many investigators and traders, the real trading
system is found in the integration of trading philosophy, trading psychology, and market knowledge (Tudela, 2008).
Nevertheless, one must keep in mind the principal clue behind TA: “If you cannot figure out what a chart is telling
you, do not trade!” (Brooks, 2009).
8. Limitations
No use was made of financial and economic reports. Undeniably, governments and media release dozens of
reports every week that offer insights into where the financial markets are heading. In addition, news articles, central
banks announcements and government policies usually dictate how different financial products and future prices
will perform (Person, 2004).
A trader should be careful in that one of the real dangers with data-mining research based strategies is over-
fitting a model to describe the past without being able to forecast the future. Indeed, a correlative fit of past data is
not at all a guarantee of success unless it is backed by a sound support theory (Pham, 2013).
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44 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Telstra, Market-Based Management and Knowledge
Peter J.C.K. Gisbeya
aSwiss Management Centre University, Baarerstrasse 112, Zug, 6302, Switzerland
Abstract
Telstra is a major Australian telecommunications and media company operating within a highly competitive domestic and
international business environment. It has in recent years adopted measures and strategies in order to make itself more customer-
facing and responsive to changing customer needs and requirements. Moreover, it has improved its ability to exploit and disperse
valuable information across its various businesses and locations. This paper seeks to shed light on the nature of market-based
management (MBM) pursued in the same organisation. It finds that there is significant evidence of Telstra efficiently and
effectively applying concepts associated with the generation and use of knowledge, a key facet of market-based management.
Keywords: MBM; knowledge; information; tacit; sharing; customer; advocacy
1. Introduction
As Telstra (2015a) suggests, Telstra is a leading Australian telecommunications and media company. As
Telstra (2015b) notes, the company was founded in 1901 as Post Master General (PMG), becoming Telecom
Australia on the 1st of July 1975 and latterly Telstra on the 13th of April 1993. As Telstra (2015a) confirms, its
mission is to create a “...brilliant connected future for everyone” (p. 4).
As Telstra (2015b) indicates, Telstra offers a wide range of telecommunications and information services. Moreover,
Telstra’s principal activities include providing telephone exchange lines, servicing local and long-distance telephone
calls, supplying mobile telecommunications services, providing a broad data and Internet services, and offering pay
TV services.
Furthermore, as Telstra (2015a) confirms, its vision is “…to be a world class technology company that
empowers people to connect” (p. 4). Telstra (2015c) provides further supporting detail for what Telstra’s intentions
are concerning its vision, noting that it is “…to do for customers what no one else has done: create a world of 1 click, 1 touch, 1 button, 1 screen, 1 step solutions that are simple, easy and valued by individuals, businesses, enterprises
and government” (p. 1). Since 2005, Telstra has systematically implemented a market-based management (MBM)
approach to marketing (Brown et al., 2008). MBM places customers at the heart of the business and makes the
company sell services to meet their needs. Regarding Telstra, and in connection with MBM, this case paper will
particularly focus on the significance of the generation and use of knowledge (Ellig, 1995; Ellig and Gable, 1993;
Koch, 2007; Nonaka, 1991).
2. Literature Review
Market-Based Management (MBM) is a framework which “…seeks to adapt the principles of a free society and market economy to improve management practice in organisations” (Ellig, 1996, p. 73). Holian (2007) also
indicates that MBM “…attempts to harness the power of markets inside a firm” (p. 23). Building on the work of
Ellig (1996), Koch (2007) defines MBM “…as a philosophy that enables organisations to succeed long term by
applying the principles that allow free societies to prosper” (p. vii). Additionally, Gable (1995) points out that MBM
fosters a decentralised decision-making process within firms, regardless of job titles.
45 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
A focus on making firms more market-based therefore lies at the heart of MBM. In this context, it is also suggested
that a firm’s decision-making authority is moved to where knowledge is located (Jensen & Meckling, 1992; Ellig,
1995; Cowen & Parker, 1997). Moreover, the literature indicates a clear rationale for firms to implement MBM,
since it “…seeks to improve organizational performance by exploring analogous elements in market economies and
organizations” (Ellig, 1996, p. 740).
The literature identifies six key elements of organisations committed to MBM: mission and systems, values
and culture, roles and responsibilities, compensation and motivation, generation and use of knowledge, and internal
market (Ellig and Gable, 1993; Ellig, 1995). Correspondingly, Koch (2007) refers to five dimensions of MBM,
namely visions, virtues and talents, knowledge processes, decision rights and incentives.
Generation and use of knowledge is analogous to the market principle of free flow of ideas. ‘Free flow of ideas’ and
the deployment of knowledge incorporates freedom of action, exchange and speech. Tellingly, Andani (2014) notes
that: “An organisation can do the best job of identifying opportunities, solving problems, and making decisions only
by using the best knowledge available within the organisation” (p. 2). This view is supported elsewhere in the
literature; in particular, with employees being allowed to make decisions based on local knowledge, whether tacit or
explicit, productivity is increased within the firm and the firm is more client-focused (Ellig, 1995; Nonaka, 1991).
Moreover, Charles Koch Institute (2013), in determining ten guiding principles of MBM, emphasises the importance
of using, seeking and sharing high-quality knowledge.
Furthermore, the generation and use of knowledge helps executives and senior managers develop their
epistemological awareness and ability to improve the connections between such knowledge and workers’
responsibilities within the relevant businesses (Nobles and Redpath, 1995). In order to fully use knowledge that is
dispersed, tacit, subjective, and subject to change, organisations must give individuals spheres of influence within
which they can use their own judgment. Individuals also need ways to understand how their decisions and actions
affect the decisions and actions to others in the organisation (Cowen and Ellig, 1995).
3. Discussion
As a brief overview, profound changes that have taken place at Telstra in recent years, the implementation
of far-reaching reforms to its marketing strategies outlined by the then chief executive Sol Trujillo in November of
the same year (Telecompaper, 2005), and the importance of knowledge to Telstra as explicated by the MBM
framework.
Firstly, however, it is important to bear in mind the wider backdrop of fundamental change in the
Australian telecommunications industry since the beginning of the early 1990s, with Telstra facing competition for
the first time and becoming a public limited company in 1991 (Telstra, 2015b).
Between 1991 and 1994, Telstra also underwent a significant transformation of its internal communications environment; it benefitted from voice and data platform standardisation, and vastly enhanced access to dispersed
information within the firm (Butler and Weill, 1997).
Regarding these internal changes, Butler and Weill (1997) approvingly note: “The introduction of a standardised
environment has provided Telstra for the first time with a consistent and effective, corporate-wide, approach to IT”
(p. 37).
In October 2006, Telstra strategically repositioned its marketing plan in order to implement a Market Based
Management (MBM) approach. Moreover, at the same time, it introduced its Next G™ mobile broadband network,
responding to customer needs identified as part of the MBM approach (Telstra, 2006).
Telstra provides customers with an integrated telecommunications experience using its own assets and content
services such as Sensis® and BigPond®. Indeed, with its Next G™ network, it offers Australia's largest and fastest
national 3G mobile network, unparalleled by any of its competitors (Telstra, 2015a).
46 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Secondly, the Australian telecommunications industry has undergone a rapid transformation in previous decades,
principally due to the impact of technology and competition.
Regarding technology, in an information society such as Australia, access to information is live, online and
mobile (Given, 2004). Technology has greatly altered the way people make use of information. People increasingly
look for choice, convenience, control and flexibility of the information important to them.
Regarding competition, the Australian government in recent decades has committed itself to opening up the
Australian telecommunications market with the implementation of relevant deregulation and privatisation policies
by successive administrations since 1990 (Butler and Weill, 1997). Telstra's strategy therefore involves the creation
of an easy to use, simple and intuitive solution that provides a real advantage and cost benefit to individuals,
businesses, enterprises and government. It aims to do this by integrating the assets that Telstra owns and sharing
content across home phones, mobiles, Internet and cable TV. This is achieved by offering five core products: home
phone, mobile phone (pre-paid and post-paid), fixed broadband, wireless broadband and Pay TV (Telstra, 2015a).
Telstra’s approach to MBM strategically places the needs and wants of an organisation's customers at the centre
of all business activity. There are five key concepts underpinning Telstra’s MBM philosophy:
i) Customer focus and profitability - focusing on customers and their needs rather than products and
technology;
ii) Creation of customer value - creating superior value over the competitors' product and providing
exceptional value to the customer; this value may be tangible such as providing a physical product or
intangible such as service and account management;
iii) Customer retention and advocacy - creating customer loyalty and encouraging customers to promote
your brand
iv) Competitor analysis - understanding the competitor's differentiation, market share strategy and customer
segmentation and
v) Cross functional teamwork - a collaborative approach to working together, sharing information and
building creativity and problem solving capacity in order to bring a greater and more positive
customer experience.
Telstra uses strong market research to underpin the basis of all marketing activity. Moreover, in order to
understand its customers, Telstra divides its business and consumer customers into unique segments so as to better
make sense of their needs.
Segment needs are differentiated in four ways, namely:
i) Customer demographics including age, income, ethnicity and family status;
ii) Preferred marketing style;
iii) Understanding, acceptance and use of technology;
iv) Buying decisions and motivations.
The role of knowledge, and how it is generated, used and shared is therefore of crucial importance for Telstra.
Telstra’s 4G service now covers 94% of the Australian population. Moreover, its customers remain its highest
priority and it continues to improve the way it interacts with them on a daily basis (Telstra, 2015a).
47 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Specifically, in order to respond to the changing needs of the Australian and increasingly international community,
Telstra needs to reliably and constantly capture information within and within the firm in real-time, fully discerning
its value and significance.
As Brown et al. (2008) notes, regarding the transformation in Telstra started in 2005, “…the new Telstra
leadership communicated its new vision and developed a strategy around the approach of market-based
management…. In 2006 Telstra re-organized with a customer facing structure….It developed learning programs for
implementation across the whole organization starting with the marketing and product management functions in all
business units” (p. 32-33).
Moreover, Brown et al. (2008) indicates that by February 2008, Telstra had put into practice detailed
procedures linked to learning and change management and institutionalised the market-based framework in all
customer-facing parts of the business. Since then, Telstra has gone on to embed the market-based framework
elsewhere in the organisation, particularly at support function level. Ross (2009) indicates that Telstra committed itself to spending A$200 million from 2006 to 2011 on staff training, including the creation of a ‘Telstra Learning
Academy’. Moreover, Ross (2009) suggests that Telstra has used new technologies to enhance control over its
technical work allocation and monitoring processes, especially through the provision of relevant and ‘real time’
information in connection with performance management.
The findings of Brown et al. (2008) and Ross (2009) therefore suggest that Telstra has significantly
committed itself to enhancing the way in which it generates, uses and shares high-quality knowledge.
At this point, it is worth re-emphasising that, in the five years after the unveiling of Telstra’s market-based management strategy, Telstra committed itself to radical change in many areas. In particular, there was
organisational restructuring around customer segments and the building of the national Next GTM network.
Moreover, there was a complex transformation of core systems and processes at Telstra Consumer. Additionally,
there were new product and service offerings, by Telstra Consumer and Telstra Business, respectively. Furthermore,
it can be tentatively suggested that the same changes delivered tangible results, particularly regarding revenue
growth for mobiles and broadband (Telstra, 2006; Telstra, 2007; Telstra, 2008; Telstra, 2009; Telstra, 2010).
The evidence provided by Telstra concerning the next four years is similarly impressive in terms of the
impact it believes its Market-Based Management approach to marketing has had on corporate performance (Telstra,
2011; Telstra, 2012; Telstra, 2013; Telstra, 2014; Telstra, 2015a).
It may be concluded from the preceding points that the relevant changes had a positive and significant impact on the
availability and quality of Telstra’s knowledge. However, as Lamberton (1997) contends, a continuing input of tacit
knowledge is necessary for sustained innovation and growth; new technologies in themselves are not enough.
In any case, all of the points raised thus far indicate that the careful generation, use and sharing of knowledge by
Telstra is key to its business performance. In this regard, an efficient, comprehensive and scalable knowledge
management system is essential (Delisser, 2004). Moreover, the relevant research literature clearly indicates that the
design of an efficient organization involves the careful use of information (Bernus and Nemes, 1999; Daft and
Lengel, 1984; Samuelson and Marks, 2012).
Samuelson and Marks (2012) notes: “A firm should assign decision responsibilities to those managers with
the best information on which to act” (p. 596). Crucially, the aforementioned changes in work practices at Telstra
have led to the creation of a significantly decentralised organisational structure, better mimicking the external
markets outside Telstra and giving managers a significantly greater degree of decision-making autonomy.
For corporations across the world, such as Telstra, it is becoming more and more difficult for them to both survive
and achieve strategic business objectives without widespread and ever more effective use of information technology
48 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
(Porter and Millar, 1985). However, while IT may play a significant role in producing competitive advantage, the
advantages in terms of superior corporate performance may not be sustained (Powell and Dent-Micallef, 1997).
Notwithstanding the increasing and positive impact of knowledge-sharing practices for Telstra’s
competitiveness and market performance, there are many barriers that make it difficult for its knowledge
management systems to achieve their pre-determined goals (Riege, 2005).
However, Telstra’s Business Principles serve to usefully mitigate against such negative influences, especially as
they are underscored by underlying values of service, respect for the individual, integrity, commitment and
accountability, trust, leadership and teamwork (Telstra, 2015c).
4. Conclusion
The evidence gathered in this case paper suggests that Telstra has convincingly applied in a variety of ideas
the ‘generation and use of knowledge’ element of MBM. Scholarly support for this viewpoint is strikingly provided
by Brown et al. (2008), especially in connection with the early stages of MBM implementation at Telstra.
Furthermore, Ross (2009) confirms the significant and positive impact of new technologies on the extent and quality
of knowledge available at Telstra, certainly from a management point of view.
However, it is clear that customer advocacy in particular remains both one of the central foci of Telstra’s MBM
approach, and an improvement area (Telstra, 2011; Telstra, 2012; Telstra, 2013; Telstra, 2014; Telstra, 2015a).
Having said this, the projected trajectory in this area for Telstra is clearly upward at the current time (Telstra, 2015a).
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50 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Locus of control of young Emirati professionals: The socialization
process
Antiado, D. F.,a Castillo, F. G.,b Tawdrous, M. I. c a, c
University of Modern Sciences, Dubai, United Arab Emirates
b University of Fujairah, Fujairah, United Arab Emirates
E-mail address: [email protected]
Abstract
Locus of control is perhaps one of the most interesting topics and issues in modern day behavioral psychology and socialization. In a competitive global market and a multicultural and diverse workplace, the young professionals of today have to keep pace
with the demands of a fast-changing environment. This paper is an eye opener on understanding issues that impact on young
professionals in a multi-cultural, competitive and knowledge-based society. The degree to which they are able to control their
environment – their locus of control will significantly affect their work experience and professional growth.
Keywords: locus of control; young professionals; behavior; socio-cultural; growth.
1. INTRODUCTION
Locus of control is perhaps one of the most interesting topics and issues in modern day behavioral psychology and
socialization. In a competitive global market and a multi-diverse workplace, the young professionals of today have
to keep pace with the demands of a fast-changing environment. Their ability to control events in their lives and
strategize how they will manage their careers and lifestyle requires adjustment and fine-tuning. Making adjustments
and trying to cope is determined by their locus of control and ultimately, they become competitive professionally,
socially and economically. Different societies are facing this scenario because of work migration and movements of
talents across countries and not to mention as a result of globalization. Many countries are facing these challenges as
a result of global phenomenon and this trend will surely affect both local and international talents. As society finds
itself with these challenges brought about by a multicultural and diverse environment and experiences varied
influences coming from various sectors in the society, makes the locus of control vulnerable to those changes. If the society has a homogenous environment then we can expect the same results however, if they are exposed in a
multicultural and diverse environment then there is tendency that their shared values, beliefs, and behavior will
change.
The concept which was originally developed by Rotter (1966) refers to Locus of Control as an individual's
perception about the underlying main causes of events in a person’s life. The authored further mentioned that locus
of control can either be internal and external. He argued that behavior was largely guided by "reinforcements"
(rewards and punishments) and that through contingencies such as rewards and punishments, individuals come to
hold beliefs about what causes their actions. These beliefs, in turn, guide the kind of attitudes and behaviors people
adopt. While according to Zimbardo (1985, p. 275), a locus of control orientation is a “belief about whether the
outcomes of our actions are contingent on what we do (internal control orientation) or on events outside our personal
control (external control orientation)."
In the case of young Emirati professionals in the United Arab Emirates known as YUPPIEs, belong to the
Generation Y who had grown in an environment where they have witnessed many changes in their lifetime. As a
result, their society experienced generation gap and the young professionals tends to behave differently because of
the influence and exposure in the environment around them. At early age these young professionals are given responsibility by their parents to manage their business and started to be independent to some extent. The country is
dominated by foreign/expatriates which is account to more than 2/3 of the total population. Because of these, young
51 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
professionals became more independent in managing and setting priorities in their life, and at the same time being
able to balance their work and social and professional life.
Most of the young professionals are able to work in both public and private at a young age which makes
them responsible and productive citizens of their country. In the process, they learn to manage their time and
balance the demands of work to their life. Emiratis have become fast learners and adoptive type of Arabs, due to
their exposure to multicultural and diverse environment than other nationalities. As a result, they tend to be flexible
and responsive to these challenges and changes. Locus of control orientation provides the individual person the direction of what his is purpose in life to include ones’ plans and aspirations. Their orientation serves a as guide for
them to explore potential opportunities that come their way and discover their well being.
The United Arab Emirates Society: In Focus
Due to globalization of talents, we have seen many issues, challenges and changes that surround the
workplace diversity. It’s happening all over the world and its impact was felt in the United Arab Emirates society in
general. Relative to its size and oil wealth, the UAE has a small population, estimated at 2,624,000 in 1997. Before
1970, the local population was tiny (estimated at eighty-six thousand in 1961) and lacked most of the technical skills
needed for a modern society. The commercial production of oil triggered rapid population growth which eventually
lead to improvements in diet, health care, and living standards, and the importation of a large scale of mostly male
foreign laborers. The figures started to increase gradually because UAE started to open its door for opportunities for
foreign workers to explore their talents and take advantage of the opportunities.
The country is a multicultural society consisting of different nationalities which accounts for more than
65% in its total population, and its growth in the past 30 years accelerated gradually more than any Gulf States in the
region. United Arab Emirates is considered as a home of many opportunities for many nationals across the world
and this trend is perceived to continue thru the years. This young country in the Gulf region was part of the Trucial
States before each countries decided to become independent. The locals are described as respectful and courteous to
their elders and are expected to listen more rather than talk. Emiratis stand close to each other when interacting. It is acceptable for men or women to hold hands. The presence of many ethnic groups has led Emiratis to be tolerant of other social customs, yet they remain conscious of their own customs as markers of cultural identity. The society started to change a little bit because of the various influence and changes in the society where
their younger generations started to adapt. The latter factor has generated a dependence on expatriate labor; the UAE has become a multiethnic society, and Emirati nationals account for only about 20 percent of the population. Language is also an important aspect of their cultural expression that is derived from Arabic language and started to adopt English as a medium of communications in business, commercial trading, education, hospitality and many more.
2. Literature Review
Psychologist Julian B. Rotter (1954) suggested that our behavior was controlled by rewards and
punishments, and that it was these consequences for our actions that determined our beliefs about the underlying causes for these actions. Our beliefs about what causes our actions then influence our behaviors and attitudes. In a
similar study by Weiner (1980) “People who have internal locus of control believe that the outcomes of their actions
are results of their own abilities. Internals believe that their hard work would lead them to obtain positive outcomes”.
Both Rotter (1954) and Weiner (1980) have the same sentiment on the locus of control of individuals which
characterizes their capability and ability to face situations.
Table 1: Internal and External Locus of Control
External Locus of Control Internal Locus of Control
Individual believes that his/her behaviour is guided by fate, Individual believes that his/her behaviour is guided by his/her
52 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
luck, or other external circumstances personal decisions and efforts.
Source: http://en.wikiversity.org/wiki/Locus_of_control
Spector (1982) suggested that individuals with an internal locus of control should be more job satisfied because they are less likely to stay in a dissatisfying job and are more likely to be successful in organizations. More generally the
research of Mamlin, Harris and Case (2001) found the following trends:
• Males tend to be more internal than females.
• As people get older they tend to become more internal.
• People higher up in organizational structures tend to be more internal.
Those finding maybe applicable in other countries or demographics however in the case of young professional
in United Arab Emirates, this may subject to further studies and investigation to determine the differences. The
locus of control can be attributed to the self-esteem as Locke, McClear and Knight (1996) noted that “a person with
a high self-esteem will view a challenging job as a deserved opportunity which he can master and benefit from,
whereas a person with low self-esteem is more likely to view it as an underserved opportunity or a chance to fail” (p.
21). This study is very similar to Emirati culture and behavior as they started to find jobs that requires challenge and
they can apply their experiences. As a matter of fact at young age they are able to work for their family business and
private entities. The ratio is 1:5 which favor the women in terms of studying and working because they realize that
they want to use their studies in valuable ways to show that they have something to contribute in the society.
In a study by Jacobs-Lawson et al (2011) they mentioned that “people with an external locus of control tend to believe that the things which happen in their lives are out of their control, and even that their own actions are a result
of external factors, such as fate, luck, the influence of powerful others (such as doctors, the police, or government
officials) and/or a belief that the world is too complex for one to predict or successfully control its outcomes.” The
Locus of control orientation provides the direction on how to manage the challenges and changes around us and
other things beyond our control and significantly affects our lives in general. The research study aims to know the
locus of control of young professionals in the United Arab Emirates. The age, civil status, and gender affects the
respondents’ locus of control which had been taken account as a factor determining how they behave in the social
process. The locus of control which is a core feature of personality is not a fixed trait and is affected by one’s
response to success and or failures throughout life. This study investigates the control orientation of the young
professionals in UAE (Emiratis or locals) in response to the challenges of the workplace affected by a fast changing
multicultural environment.
3. Methods
The research location was in Dubai, United Arab Emirates however various professionals are represented in
different Emirates (city) across the country. Both male and female Emirati respondents were given survey
questionnaires and follow up interviews had been conducted to validate their responses and views of the study. The
data used in this study is a combination of primary and secondary data from various sources. The questionnaire was pre-tested before actual test in order to incorporate the suggestions of other researchers/evaluators. The
questionnaire used is a five point (5) Likert Scale and interviews were conducted to validate the study. The sample
size of the study is N=93 which served as a sample or representative of the population of young professionals in
United Arab Emirates.
4. Data Analysis and Result
The research study is an attempt to discover the “Locus of Control of Young professional in United Arab
Emirates. The results of the research study are presented with corresponding interpretation, findings and
observations. This research study is exploratory and uses descriptive type of research with a clear purpose of
identifying the rationality behind its values, personality and behavior according to variables identified.
Q1. What is the Locus of Control of the Respondents?
Table 2: Summary of Means of Locus of Control
Mean Interpretation
53 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Internal Locus of control 2.699 High
External Locus of Control-
Power of Others
1.914 Average
External Locus of Control-
Chance
2.011 Average
Table 2 shows the summary of means of the locus of control of the respondents. It shows that the respondents tended
to have a high Internal Locus of Control. This means that they believe in their own capability to control themselves
and influence the world around them. In fact from an interview conducted by the researchers to validate the
responses, the male are more aggressive in their behavior towards their ability and potentials. This is because of
their exposure in their family business and society in general. The UAE society is changing as the society started to
accept females in the work place. That is one of the responses by one of the female respondents’ who believe that
the trend of females staying at home only may have changed little by little in the society. This is because there are
many female who going to school to be educated. In fact there are more females going to school compared to males.
The pattern in the society contributed to the responses of both males and females to aspire to be competitive in their
field of interest and specialization. On the other hand both perceived that their locus of control as affected by the
power of others and due to chance was average. It clearly shows that they tended to believe in their capability to
control the events in their lives more than entrust it to fate or let powerful others influence them.
Q2. Is the locus of control of the respondents affected by age?
Table 3: ANOVA of Locus of Control Across Age
Sum of
Squares
Df Mean
Square
F Sig.
Internal Between Groups (Combined)
Within Groups
Total
4.318
21.252
25.570
18
74
92
.240
.287
.835 .654
Powerful Between Groups (Combined)
Within groups
Total
7.176
26.136
33.312
18
74
92
.399
.353
1.129 .343
Chance Between Groups (Combined)
Within groups
Total
4.977
28.013
32.989
18
74
92
.276
.379
.730 .769
**p<0.01
*<0.05
Table 3 indicates a one-way ANOVA showing that there is no difference in the locus of control between the
respondents across age group. It explains that locus of control is not affected by age as a factor. Interviews indicated
that all age groups are optimistic about their future, and they see a bright future ahead.
Q3. What is the Locus of Control of the respondents according to gender?
Table 4: Summary Table of Means of Locus of Control across Gender
Internal Locus of Control External Locus of
Control- Power of Others
External Locus of
Control- Chance
54 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Male 2.693
HIGH
1.855
AVERAGE
1.984
AVERAGE
Female 2.710
High
2.032
AVERAGE
2.065
AVERAGE
Total 2.699
HIGH
1.914
AVERAGE
2.011
AVERAGE
Table 4 shows the summary of means of the locus of control of the respondents according to gender. It explicitly
explains that both males and females tended to have high Internal Locus of Control. Across gender, they are in
control of the events they encounter, and whatever direction they choose is of their own doing and/ responsibility.
On the average, both genders believe that their fate depended on powerful others or by sheer chance. Table 5. ONE WAY ANOVA of Locus of Control across Gender
Sum of Squares Df Mean
Square
F Sig
Internal Between Groups (combined)
Within Groups
Total
.005
25.656
25.570
1
91
92
.005
.281
.019 .890
Powerful*
gender
Between Groups (combined)
Within Groups
Total
.651
32.661
33.312
1
91
92
.651
.359
1.813 .182
Chance* gender Between Groups (combined)
Within Groups
Total
.134
32.855
32.989
1
91
92
.134
.361
.372 .543
**p<0.01
*<0.05
Table 5 indicates a one-way ANOVA showing that there is no significant difference in the locus of control
between the respondents across gender groups. The age comparison is very similar and identical in terms of
responses. The young Emirati professionals have grown in number both in private sectors and government
institutions as they started to value their contribution in the society. Gender wise, the UAE government had been
perceived as giving the opportunities for both genders to contribute significantly in the workplace. The females who
were interviewed felt empowered in the sense that they find themselves becoming productive in society, and able to
take charge of their lives like their male counterparts.
The gender issue is a major concern for the research study because UAE is still the adolescence stage as far
as locus of control is concerned however, they are in the stage that they can be able to adopt and be flexible to those
changes and challenges ahead of them. This research study further showed that gender is not a factor for locus of
control or to their decisions.
Q4. What is the Locus of control of the respondents according to civil status?
Table 6: Summary Table of Means of Locus of Control across Status
Civil Status Internal
Locus of control
External Locus of
Control - Power of Others
External Locus of Control -
Chance
55 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Married 2.92 HIGH 1.92 AVERAGE 2.00 AVERAGE
Single 2.63 HIGH 1.8 AVERAGE 2.02 AVERAGE
Divorced 2.5 HIGH 2.5 HIGH 2.0 AVERAGE
Total 2.699 HIGH 1.914 AVERAGE 2.011 AVERAGE
Table 6 shows the summary of means of the locus of control of the respondents according to civil or marital
status. It confirms that married, single and divorced respondents have HIGH Internal Locus of Control and
AVERAGE in terms of External Locus of Control- chance or circumstances happening as a matter of luck. The,
married and single respondents tended to have AVERAGE External Locus of Control while the Divorced tended to
have HIGHER External Control when powerful others try to influence them. The result indicates that the locus of
control of the Divorced is affected when it comes to powerful others influencing them. One of the sensitive issues
that young professionals of UAE are facing is about marital status. The question is very private and to some extent
very difficult to ask as locals are not really willing to disclose their marital status and they are only willing to share it
to persons they know well. The marital status is a conservative question to Arab people because they want to protect
their privacy and confidentiality of information about their personal life. In fact in actual interview some are not
comfortable and willing to answer and some wants to keep it within themselves. The respondents was ask to be
honest in all of their responses in order to arrive with accurate answers and perspective on locus of control.
Q5. Is the locus of control of the respondents affected by status?
Based on tables 7, 8 and 9 below the locus of control of the respondents is partially affected by civil status.
Only Internal locus of control is affected by status. Married respondents have higher internal locus of control. While
table 6 indicates a one way ANOVA showing that the difference in the internal locus of control means scores
between married group (N=25, M=2.920, SD=.2769), the single group (N=64, M=2.625, SD=.5774), and the
divorced group (N=4, M=2.500, SD=.5774) were statistically significant, F(2,6)=3.265, p=.043 n2=.865. Tukey’s
HSD tests showed that the internal locus of control mean score of the married group is statistically significantly
higher than the singles and divorced group. However, the divorced and single groups did not differ significantly.
Table 7: ANOVA of Internal Locus of Control Across Status
Sum of Squares df Mean Square F Sig.
Between groups
(combined)
1.730 2 .865 3.265 0.43*
Within groups 23.840 90 .265
Total 25.570 92
**p <0.01, * P <0.05
Table 8: ANOVA of External Locus of Control- powerful others across status
Sum of Squares df Mean Square F Sig.
Between groups
(combined)
1.472 2 .736 2.080 .131
Within groups 31.840 90 .354
56 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Total 33.312 92
Table 8 indicates a one way ANOVA showing that there is no significant difference in the external locus of
control- powerful others between the respondents across status groups. This means it doesn’t affect their well being
in the process as they still believe they are capable to handle their situation. Since the information show us their
current responses it remains to be seen in the future their differences thru comparative study in 2-3 year period.
Table 9: ANOVA of External Locus of Control- chance across status
Sum of Squares df Mean Square F Sig.
Between groups
(combined)
.005 2 .002 .007 .993
Within groups 32.984 90 .366
Total 92
**p<0.01, * p<0.05
Table 9 indicates a one way ANOVA showing that there is no significant difference in the external locus of control-
chance between the respondents across status groups. This means that chance across status there is no major
difference as to their responses. Overall the socialization processes of young professionals are very significant and
inter related to each one.
5. Conclusion
In summary, the results of the present study indicate that the locus of control of young Emirati
professionals in UAE tend to be internal. Age - wise, no significant differences in the locus of control was found.
No significant differences across genders was also found. The workplace is perceived as giving opportunities for
both genders to contribute significantly. In terms of status, married respondents tended to have higher internal locus
of control.
The results of the study imply that the young Emirati working professionals perceive their working
environment as manageable and are able to have a degree of control over their lives amidst a fast-changing
multicultural environment. Further indicates they have a stable faith in their abilities as they face the challenges of
the circumstances they are into.
This research study can be a supplemental study about their emotional intelligence and how it affects their
emotional well being as young professionals.
Overall this study is an eye opener to find out how other nationals/citizens’ locus of control impacts on their behavior, attitudes and values in the society. A counseling and/ mentoring program for all young professionals
would be beneficial to guide them as they respond and or meet the challenges in the workplace and continually
attain success in life. And lastly, the study indicates various observations that may occur in the future for other
young professionals due to international competition and changes in the society.
- The locus of control affect their lives which is not permanent and may change thru the years.
- Feedback is very important and assessing their behavior towards work life balance.
- Partnership and collaboration is important tool in locus of control.
- Social engagement is critical in well being of young professionals.
6. Recommendation
From the above results, conclusion and discussions it is evident that Emirati Young professionals are very
competitive as compared with other Arabs in the GCC region. They are able to maximize the use of their skills and
57 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
abilities in their work place. Aside from that they are adoptive to the changes and challenges they are facing in their
lives as to work, school and social life. Locus of control may change over time due to social factors that affects
attitudes, behaviors and shared values. As a result the pattern may have a strong shift based from the dominant
influencer that brings those change in behavior and beliefs.
The Locus of Control as a research study in the Middle Eastern region is quite new. Comparison with other
Arabs is really a good study to explore in the near future. Identifying their similarities and differences is very good
topic to be considered. This will highlight the persona of individual as to the uses of their locus of control. The society is changing and this change will be their passport for success in order to be responsive and adoptive to
society.
References
Hans, T. (2000). A meta-analysis of the effects of adventure programming on locus of control. Journal of Contemporary Psychotherapy, 30(1),33-60.
Hattie, J. A., Marsh, H. W., Neill, J. T. & Richards, G. E. (1997). Adventure Education and Outward Bound: Out of-class experiences that have a
lasting effect. Review of Educational Research, 67, 43-87.
Jacobs-Lawson, J. M.; Waddell, E. L.; Webb, A. K. (2011) "Predictors of Health Locus of Control in Older Adults". Current Psychology 30 (2):
173–183. doi:10.1007/s12144-011-9108-
Lefcourt, Herbert M. Robinson, John P. (Ed); Shaver, Phillip R. (Ed); Wrightsman, Lawrence S. (Ed), (1991). Measures of personality and
social psychological attitudes. Measures of social psychological attitudes, Vol. 1., (pp. 413-499). San Diego, CA, US: Academic Press,
xiv, 753 pp.
Mamlin, N., Harris, K. R., Case, L. P. (2001). A Methodological Analysis of Research on Locus of Control and Learning Disabilities: Rethinking
a Common Assumption. Journal of Special Education, Winter.
Rotter, J. (1966). Generalized expectancies for internal versus external control of reinforcements. Psychological Monographs, 80, Whole No. 609.
Spector, P. E. (1982) Behavior in Organizations as a function of employees locus of control. Psychological Bulletin, 91. 482-497.
Weiner, B., ed. (1974). Achievement Motivation and Attribution Theory. NY: General Learning Press.
Zimbardo, P. G. (1985). Psychology and life. Glenview, IL: Scott Foresman.
http://www.everyculture.com/To-Z/United-Arab-Emirates.html [Available]. Online. [Accessed 7 April 2015]
http://psychology.about.com/od/personalitydevelopment/fl/What-Is-Locus-of-Control.htm [Available]. Online. [Accessed 1 May 2015]
________________________________________________________________
Special Thanks: Dr. H. Levenson for allowing us to use her research questionnaire entitled “Levenson Multidimentional Locus of Control Scales
© 1973 Journal of Consulting and Clinical Psychology 41:397-404. Used with permission.
Antiado, D. F and Tawdrous, M . I are Assistant Professors - College of Arts and Science, University of Modern Sciences, Dubai, United Arab
Emirates. Dr. Antiado is a psychologist and guidance counselor with more than 20 years of experience in the Philippines and United Arab
Emirates. Dr. Tawdrous is a senior statistician with more than 20 years of experience in Egypt and Middle East.
Castillo, F. G. Jr., is a Faculty Member at School of Business/MBA program - University of Fujairah, Fujairah, United Arab Emirates. He holds
professional certifications and qualification in Human Resource Management and Quality Management. Dr. Castillo is an industry practitioner
before shifting career in the academe. He has more than 10 years of academic and administrative experience including consulta ncy and trainer
role in major companies in UAE. He won international awards in education and research given by international awarding body in Hong Kong,
United Arab Emirates and Singapore.
58 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Digital financial services-mobile money
Rajnia, Arshi Zareenb, Priyanka Chaddhac
a Department of Commerce, Bharati College, University of Delhi, 110058, INDIA, Email-
bDepartment of Commerce, Bharati College, University of Delhi. 110058, INDIA, Email-
cDepartment of Commerce, Bharati College, University of Delhi. 110058, INDIA, Email-
Abstract
Today mobile money represents a great opportunity for the country, still large number of people are not able to find a viable
alternative to the cash economy and informal financial services. Many studies observed that the digital financial services in the
form of mobile money has had a positive qualitative and quantitative impact on the enhancement of financial inclusion in a
developing economy. Mobile money has a potential to generate revenue stream between 1% and 5% of an MNO’s total revenues.
Although the full potential of digital financial services in India has not yet been realized. With more than 900 million subscribers
across India (which is expected to rise to 1.16 billion by 2017), telecom service providers see mobile money as the next big
business opportunity. In India, majority of the population falls into the 16-30 age bracket, the biggest adopters of technology and
the convenience of mobile commerce. As the youth population they are more prone to the use of new technology as compare to
the others we want to study the use of mobile money among the college youth in Delhi. This paper provides insight into the lack
of mobile money adoption among college youth in Delhi. The study was geared towards investigating the use and awareness of
mobile phones for mobile banking and mobile money services. The authors investigated whether participants in the study
perceived mobile phones as easy to use for various tasks including mobile banking and mobile money transfers and whether
mobile money services were adopted
Keywords: Mobile Money, Mobile payment, Financial Inclusion, Digital Wallet, Mobile banking
10. Introduction
Mobile money services, which were essentially non-existent at the turn of the century, are now available in
over 70 countries, and are used to move billions of dollars every month. In many countries, the number of outlets—
storefronts where customers can open accounts and deposit or retrieve funds associated with transactions conducted
on their mobile phones—exceeds the number of bank branches (Pénicaud, Claire 2013). For the unbanked, who lack
access to traditional bank accounts but who nonetheless have high rates of mobile phone ownership, mobile money
is playing a critical role in financial inclusion by providing access to stored value accounts and a growing set of
financial services. The growth of mobile money has closed the loop in a positive feedback cycle that increases the
incentives for the unbanked to use mobile phones, which in turn increases the market for companies delivering
phone-based financial services. As mobile phones become more capable and less expensive, mobile money will
drive digital inclusion in developing countries in ways that go far beyond the set of currently available transaction-
59 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
focused services.(John Villasenor 2013). With roughly 100 million Indians living away from their hometowns in
other cities across the country, there is a need for safe, timely, and cost-effective money transfer facilities, especially
in remote areas. This is where mobile banking and payments will play a pivotal role (Chowdhury 2012). There are
nearly 900 million mobile connections across India, and this figure is expected to rise to 1.16 billion by 2017.
According to the Telecom Regulatory Authority of India (TRAI) there are 350.37 million rural subscribers. With
more than 900 million subscribers, telecom service providers see mobile money as the next big business opportunity.
Currently, mobile money service is primarily used for Domestic Money Remittance (where the customer moves
cash to a bank account using a digital wallet), payment of utility bills, recharges, settling post-pay bills, travel ticket bookings etc. But there are many other avenues where mobile money can be used, which may include merchant
payments (both online and offline). The full potential of digital financial services in India has not yet been realized.
Millions of people still lack a viable alternative to the cash economy and informal financial services, and mobile
money represent a great opportunity for the country. The mobile phone has had a positive qualitative and
quantitative impact on many of the world’s poor is no longer an issue for debate, and the simple fact that many
invest in a few months’ salary to purchasing one suggests that it continues to meet a broad spectrum of base user
needs from directly creating revenue generating opportunities to indirectly supporting survival. As a personally
carried, connected device the mobile phone is in a prime position to bring mobile money services to the world’s
unbanked, and today there is much activity, debate and not a little hype on its potential (Ramussen, 2009). In India,
as in other markets, increased competition in mobile telephony has resulted in a reduction of the unit cost of voice
per minute. Indian MNOs have had to rely on non-voice revenue streams to hedge against diminishing voice
revenue. Mobile money is one such revenue stream and can generate between 1% and 5% of an MNO’s total
revenues. Globally there are already four MNOs that derive over 10% of their revenues from mobile money
operations, while in Kenya M-PESA contributed 18% of direct revenues for Safaricom in 2012-13 FY. India should
be no exception.
In India, more than 50 percent of the population falls into the 16-30 age bracket, the biggest adopters of technology
and the convenience of mobile commerce. As the youth population they are more prone to the use of new
technology as compare to the others we want to study the use of mobile money among the college youth in Delhi.
This paper provides insight into the lack of mobile money adoption among college youth in Delhi. The study was
geared towards investigating the use of mobile phones for mobile banking and mobile money services. The author
investigated whether participants in the study perceived mobile phones as easy to use for various tasks including
mobile banking and mobile money transfers and whether mobile money services were adopted.
1.2 Mobile Money
Mobile money generally refers to financial transaction services available to anyone with a mobile phone—
including the unbanked. The bricks-and-mortar component of mobile money systems is the network of shops (also
called “outlets” or “branches”) staffed by small business owners who are authorized “agents” of the mobile money
service provider. In addition to providing a means to store value, mobile money is commonly used for person to-
person transfers. As mobile money systems have matured, service offerings have broadened beyond person-to-
person transfers to include bill payment, shopping, payments from employers to workers, cash withdrawal at ATMs,
payment and collection of rent, and access to interest-bearing savings accounts and loans.(John Villasenor
2013).While mobile money can be used by anyone, its impact has been greatest on the unbanked in developing countries, who often live in places without traditional bank branches—or, if they are in larger towns and cities, may
be unable to meet minimum balance requirements associated with some bank accounts. Many of the unbanked, do,
however, own mobile phones, and thus have devices suitable for financial transactions literally in hand. In addition,
they often live and work in close proximity to retail establishments selling groceries and other goods. Mobile money
systems provide the missing link in the chain by turning retail establishments into locations where cash can be
converted into and out of electronic funds. Once the funds are in electronic form, transactions can be conducted
using a mobile phone.
ICICI Bank presents "Mobile Money", an account on your mobile phone where your mobile number itself
is your account number. Some of the key services you can avail through your Mobile Money account: Deposit
Money, Prepaid Recharge, Transfer Funds, Pay Bills, Withdraw Cash, Pay Merchants.
60 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
According to MMAI/GSMA (2013) Mobile money is a transformational service that uses information and
communication technologies (ICTs) and non-bank retail channels to extend the delivery of financial services to
clients who cannot be reached profitably with traditional branch-based financial services. Typical examples of
mobile money services are e-wallets that are used to make peer-to-peer (P2P) transfers and a range of payments, or
to receive salary and government to person payments (G2P). The average value of a P2P transaction on a mobile
money platform is USD 35 (Rs 2191).
The key characteristics of a mobile money service are:
• customers get money into and out of the service using a network of transactional agents that operate outside
bank branches; and
• Customers initiate transactions using an interface that is available on basic mobile handsets.
Although there is currently no standard regulatory definition of mobile money and electronic money (e-money)
suitable for global use, countries that have developed their own definitions tend to echo several common elements.
Mobile money is monetary value that is:1
• available to a user to conduct transactions through a mobile device;
• accepted as a means of payment by parties other than the issuer;
• issued on receipt of funds in an amount equal to the available monetary value;
• electronically recorded;
• mirrored by the value stored in an account(s) usually open in one (or more) bank(s); and
• Redeemable for cash.
In jurisdictions where e-money has been defined in regulation or legislation, mobile money is a form of e-
money. For the telecom operator, revenue accrues from the transaction cost that the customer is charged, for money remittance services. The cost varies on the basis of the ticket size for remittance transactions, and the merchant
service fee that the merchant bank agrees to pay for transactions done by the customer using this instrument. This is
not dependent on the telecom consumer, as it is an independent service, said Pradeep Sampath, chief operating
officer, MMPL, a 100% subsidiary company of Tata Teleservices.
2. Review of Literature
According to CGAP-GSMA Mobile Money Market Sizing Study (CGAP-GSMA, 2009) an estimated 3.5
billion people worldwide currently lack access to formal financial services, and there will be 1.7 billion unbanked
people with mobile phones in 2012. The largest barrier to mobile phone ownership is cost – with the average Total
Cost of Ownership (TCO) how much of a consumers income is required to own and use a mobile phone, currently
standing at ~$11 across 77 of the lowest income countries. Research by Nokia suggests that a TCO of $5 or less per
month would enable the majority of world’s lower income consumers to join the world’s cellular-connected
community – with 12 countries including India, Pakistan and Indonesia already in these ranks (Nokia,
2009).According to a GSMA report, about 67% of retail spending in India is carried out in cash. It feels that mobile
money services could potentially replace cash transactions and enable micro transactions to proliferate. Millions of
people would be able to store, send and spend money at low transaction costs using their mobiles.
Jan Chipchase (2009) has specified that the market potential has created an environment where services pilots are being rolled out at breakneck speed, players in this space are advised to look at the edges of the systems –
in particular the role of agents in mediating mobile money transactions. The careful use of real-world analytics
combined with contextual qualitative understanding has the opportunity to reveal not only what people are doing,
but also the nuances of how and why. The author believes that this in turn will lead to the next round of service
innovation insights.
Diniz, Albuquerque and Cernev (2011) focuses on mobile payment/mobile money (as opposed to mobile
financing in general) with a special stress on local development (but not limited to works that deal with development
or developing countries. This study tries to fill the knowledge gap by providing a comprehensive literature review,
which attempts to analyze significant experiences in this field, especially in developing countries. The review is to
map out the existing knowledge on mobile money by pointing out the main sources of information on the subject,
and defining the topics that are most frequently researched. In addition, it examines which locations most studies
61 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
focus on, and which methodologies are being applied to these studies, as well as the determining factors and
contexts of the published studies.
Jake Kendall et.al (2011) present the results of some initial probes to understand how market players are
harnessing M-PESA as a platform for new services, and to gauge the emerging ecosystem of these M-PESA enabled
services. They find an ecosystem of firms has sprung up to facilitate the technical integration of existing financial
institutions’ back end systems with the new mobile money platform. They also find a number of innovative new
businesses and “pure play” startups which operate solely over the mobile money platform. They said, significant barriers remain which block the development of a more fully developed ecosystem including the high price of
money transfers and the difficulty of integrating to the mobile money interfaces (especially that of M-PESA). Firms
wishing to outsource their day-to-day cash transactions with clients to the mobile money system may face a new
challenge, as they must find new opportunities for interactions with their clients to reinforce rapport, build trust,
educate, and cross sell new products.
N. Chaudhary (2012) also specified that there is a need for safe, timely, and cost-effective money transfer
facilities, especially in remote areas. This is where mobile banking and payments will play a pivotal role. With
continued support from partners, government, and RBI, mobile banking will continue to break new ground in 2012.
Since this service is used to perform day-to-day transactions, the ecosystem for mobile banking must be mature in
order to make the service complete and useful—right from banks to merchants, agents, utility companies, and
neighborhood vendors. Large banks and telecom companies, such as Union Bank of India and Nokia partnering with
Obopay, represent a turning point for India. Alice S. Etim (2014) studied that the basic mobile phones were widely
adopted and used mainly for communication with mostly family and friends, they were rarely used for servicing
high order tasks like mobile banking or mobile money transfers in Nigeria.
Rajiv Lal and Ishan Sachdev (2015) in their research, analyzed an array of five successful mobile money
deployments from across the emerging markets to attempt to understand which characteristics are critical for the
success of a mobile money service, particularly at launch. The mobile money services they analyzed cover a
disparate set of geographies with different political climates, economic situations, and pre-existing levels of
financial infrastructure, yet they observed significant commonalities among the key competencies required for
success, and the approaches taken to develop those key competencies by the successful services. They find that
consumer and context oriented design orientation is the key success factor, not the specific product offerings, and
can also be generalized to other mobile money deployments.
As the mobile money is a growing concept that why we want to study its impact among Indian youth in Delhi.
3. Objectives of the study
The objectives of the study are:
1. To understand the concept of mobile money in Indian context. (i.e. what change will it bring to consumer
mind sets and their buying behaviour. How it will change the concept of not only shopping but also non-
commercial transactions of customers like for eg an advertisement is there of kotak money, where mobile
money is used to pay shagun to a distantly living sister etc.)
2. To check the awareness of mobile money among the youth.
3. To study the most popular brand of mobile money among youth.
4. To study the proportion of mobile money spent by the youth.
5. To study the areas where youth is using mobile money.
6. To study problems faced by youth in using mobile money.
7. To study the possible reasons for less usage of mobile money among youth.
4. Hypotheses of the Study-
62 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
H0 : Youth are not aware about the various brands available for mobile money.
H0 : There is no relationship between usage of online services and usage of mobile money for them.
H0 : Smart phone does not play any role in usage of mobile money.
H0 : Youth does not use mobile money for any purpose
5. Research design and Methodology:
This paper provides insight into the lack of mobile money adoption among college youth in Delhi. The
study was geared towards investigating the use of mobile phones for mobile banking and mobile money services.
The authors investigated whether participants in the study perceived mobile phones as easy to use for various tasks
including mobile banking and mobile money transfers and whether mobile money services were adopted.
5.1. Sampling Fundamentals
The focus of the study is the awareness and usage level of youth across various mobile money services
available in Delhi therefore the sample of the study consisted of students studying in various colleges in Delhi. The
study was administered to a small sample of 250 students, studying in different colleges In Delhi. The sample
included both girls and boys coming from different family backgrounds. Among 250 students 82 were boys and 168
were girls. The convenient random sampling technique is pressed into service to select the sample respondents. The
responses were collected using a questionnaire survey method. The details of data collection and questionnaire
development are discussed in next section.
5.2. Data Collection
For the proposed work, data will be collected from both primary and secondary sources. The secondary
data was collected from various journals, magazine, report MMAI/GSMI. Primary information was collected by
using Questionnaire survey method.
5.3. Questionnaire Design
In order to develop questionnaire, extensive review of existing research study questionnaires was conducted.
The study used non-disguised questionnaire to collect data. In order to minimize the respondents response error,
close ended questions has been considered in questionnaire because the closed questions have guidance of answers
that may encourage the respondents to have more interest in answering the questionnaire. In order to give more
response category to respondent 5 point Likert-scale was considered. Two 5 point Likert- scales has been used for
getting the responses of respondents. The questionnaire was administered to a small sample of 250 students. Out of
250 questionnaires 236 were found valid and thus used for the analysis. The sample included both girls and boys
coming from different family backgrounds. Among 236 students 68 were boys and 168 were girls.
5.4. Pilot-Testing of Questionnaire
For conducting questionnaire survey, it is necessary to test the validity and reliability of the scales which are
developed to test the particular variables. In order to test the validity and reliability of the questionnaire, the pilot
testing of questionnaire were conducted by collecting the 10% responses of total sample size and the reliability
statistics is computed using Cronbach Alpha reliability statistics. The value of Cronbach’s Alpha (0.901) was found
adequately high to consider the questionnaire reliable and consistent.
5.5. Data Analysis Techniques (Statistical Tools)
63 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
For data analysis, SPSS (Statistical Package for the Social Sciences) version 17 was used. Various statistical
tests are applied to analyze the data. In order to see characteristics of data, the descriptive statistics was computed;
which consist of central tendency and the frequency distributions with graphical plots. Further cross-tab analysis and
one sample t-test statistics is computed to see the difference in the mean and variance patterns of responses.
6 Results & Findings
6.1 Awareness level: The awareness of respondents was measured across various mobile money services like PayTm,
Google Wallet, PayPal, PayUMoney, Mobilink, Pocket and others. Cross-tab analysis was done regarding the
awareness of boys and girls in sample for above mentioned mobile money services. The results of cross-tab
analysis were plotted in the form of histogram as shown in figure 1. It was found that 100% of respondents knew
the concept of mobile money and were aware about one or more mobile money services available in the market.
However, it can be clearly seen form the graph that boys were found more aware about the mobile money
options available in the market than girls except for ‘PayUMoney’ and ‘Pocket’, where the awareness among
girls is little higher than boys. In addition the awareness of both girls and boys were found highest for ‘PayTm’.
Therefore we can conclude that PayTm is most popular brand among college youth followed by ‘PayUMoney’.
Figure 1
Figure 2 depicts the relationship between the awareness of a particular brand of mobile money with its
usage rate. The ‘PayTM’ brand was found to be the most popular and used brand among the available ones and is
closely followed by ‘PayUMoney’.
64 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Figure 2
6.2. Usage of Mobile & Mobile Money
a. Type of Mobile used: Figure 3 shows that majority of students i.e., around 84% use smart phones irrespective of
the family and income background from where they come. Usage of smart phones and using a number of mobile
applications supports the result of 100% awareness of mobile money services among college going youth.
Figure 3
65 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
b. Relationship between mobile usage and mobile money usage
Karl Pearson coefficient of correlation has been used to find the relationship between mobile usage and
mobile money usage. It was found that there exists a very weak positive but significant relationship (r = 0.254)
between the two. This shows that although respondents are using frequently mobile phones for shopping and other
activities but they are not using mobile money for them.
6.3. Usage Of Mobile Money
a. Duration of usage:
Bar graph is prepared in figure 4 to analyse the duration for which the respondents are using mobile money.
It was found that most of the respondents have recently adopted the services. Around 61% of the respondents started
using mobile money in the last six months only. As compared to 100% awareness and popularity the usage of
mobile money is lacking far behind. Study found resistance among respondents for using mobile money as
compared to the traditional means. By now they have become more comfortable and confident in using traditional
means and therefore efforts needs to be made to make mobile money as their comfort zone. Therefore there is a need
of increasing its usage by making it more acceptable in market by vendors and by using promotional offers. They
are aware of mobile money but they also have to be made aware of its simplicity and security of use, only then they
will be encouraged to use more of mobile money services.
Figure 4
b. Awareness:
Although there is 100% awareness among youth but still its usage is limited to a small amount of money. It
can be clearly seen from figure 5, 69% of all respondents spend between Rs.1000 – Rs.5000 only which is not even
1% of their total expenditure. The youths of today are considered as more tech-savy than their elders and also they
do most of their work (like online shopping etc.) online. But still the use of mobile money is lacking far behind.
Therefore, it can be concluded that inspite of higher level of awareness the usage rate among youth is very low.
Figure 5
66 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
c. Area of Usage:
Table 1 shows result of t-test applied on the responses of various statements concerning the respondent’s
mobile money usage areas. Considering that the youth now-a-days use online services also on behalf of their parents,
relatives and friends all possible usages areas have been included in the questionnaire. The results of t-test are found
to be significant for all usage areas. On a 5 point likert scale ranging between ‘always’ to ‘never’, it was found that
on an average only sometimes the respondents use mobile money for recharging their mobiles and entertainment,
rarely for fund transfer, bills payment, college fees, taxi bills etc. and never for loan payments and investment. This
also justifies the low amount spent by youth on mobile money.
Table 1: Areas of usage of mobile money
One-Sample t- Test
Statements
N
Test Value = 0
t df Sig. (2-tailed)
Mean
Difference
95% Confidence Interval
of the Difference
Lower Upper
Mobile Recharge 233 33.288 232 .000 3.2618 3.069 3.455
Fund Transfer 231 25.834 230 .000 2.2078 2.039 2.376
Entertainment 232 30.116 231 .000 2.7284 2.550 2.907
Bills payment 232 25.737 231 .000 2.3750 2.193 2.557
Loan Payment 232 22.568 231 .000 1.9052 1.739 2.071
Investment 231 22.614 230 .000 1.8961 1.731 2.061
67 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
College Fees 232 26.221 231 .000 2.3578 2.181 2.535
Taxi Bills 232 24.983 231 .000 2.0216 1.862 2.181
Others 232 37.728 231 .000 2.3750 2.251 2.499
6.4. Problems related to usage of mobile money:
The scale used to test the significance of problem areas the study used 5 point likert scale ranging from
‘strongly agree’ to ‘strongly disagree’. The results were found significant representing the neutrality of respondents
on the issues & problem areas associated with mobile money (see table 2). The reason could be the low usage rate.
Since the respondents don’t use mobile money services much frequently, either they are not aware with the
problems or they have not faced it yet.
Table 2: Problem areas of using Mobile Money
Statements N
Test Value = 0
T Df
Sig. (2-
tailed)
Mean
Difference
95% Confidence Interval of
the Difference
Lower Upper
Possibility of wrong amount
debited 234 45.455 233 .000 3.1410 3.005 3.277
Chances of errors & Frauds 234 46.779 233 .000 3.2137 3.078 3.349
Resolving of Complaints 234 46.661 233 .000 3.2350 3.098 3.372
Timely problem solution 234 44.605 233 .000 3.1368 2.998 3.275
7. Challenges faced by Mobile Money In India
Technology evangelist Sam Pitroda told IANS in an interview that “People do not understand the larger
concept. I really wanted to create a leather wallet metaphor on mobile phone — one that gives all the functionalities
I get in leather wallet. It has four phases – mobile banking, mobile payment, mobile commerce and mobile
transaction. In India, the telecom service providers like Bharti Airtel and Vodafone India have developed their
individual mobile wallet platforms to grab the opportunity of promising future of mobile money in India. But the
mobile wallet segment is facing challenges in India. The factors such as alternative money transfer channels, lack of
awareness, stringent policies on restriction of cash-out facility, low profit margins and poor internet connectivity in
many areas are holding back its growth.
In an interview with TOI, Suresh Sethi, business head – M-Pesa, Vodafone India said, while this industry is still
nascent, it offers exciting opportunity for innovations and experiments. “Our current offering is the outcome of our
post extensive research and customer insights from our pilots. Given the number of mobile users in India, mobile
68 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
banking has the potential to emerge as a game changer in terms of costs, convenience and speed of reach”. He also
added that their new tie-up with ICICI Bank has created a platform to enhance financial inclusion even in remote
areas.
Bharti Airtel too has been expanding substantially in catering to the need of customers with its Airtel
money. The company is creating a state-of-the-art technology platform and training programs to educate the masses.
However, it is facing the problem of low penetration of mobile in proximity payments which is currently less than
2%. The basic factor of low proximity payments is the lack of required infrastructure for mobile payment acceptance.
The total number of POS terminals in India is less than 700,000 which equates to 5.4% penetration. To add to this
concern, more than 13 million retail establishments with less capability and incentive to acquire POS terminals are
expanding in India.
Another key challenge in enhancing proximity mobile payments in India is the apparent unwillingness of
various players to interoperate in order to adopt the technology at scale. Mobile payment service providers are
needed to work together with banks so that a seamless ecosystem for the efficient use of technology can be created.
All players in India try to solve specific problems within limited geographical reach. The partnership model
which is presently used in other developed economies is still yet to gain its place in India. The RBI is the strongest
factor to determine future of mobile payments in India as it is the provider of the payments bank license. Both
telecom operators and third party payments service providers are required to apply for the license. The telecom
operators without license can at least make use of their network indirectly as they are not allowed to use their
network for payments bank) for last mile connectivity. However, those with payments bank license will be able to
allow cash withdrawals through a wallet which would solve a portion of the problem. Companies like Paytm, having
its operations in the transaction space do not have physical retail networks in rural areas, where a major section of
the unbanked population resides.
International remittance which is currently not allowed for non banks can be offered through payments
banks’ wallets an additional revenue stream. Although cash withdrawal, international remittances etc has been
allowed to be performed by payment banks, the proliferation of mainstream proximity mobile payments in India still
seems to be a distant dream. The Indian central bank, the Reserve Bank of India (RBI), felt that the context in India
was very different from that of other countries which had launched successful mobile money services, and therefore
decided to develop a very proscriptive regulatory framework based on a system they felt would work best. In
particular, they felt that other countries a) had services which focused only on remittance, and not a complete set of
mobile banking tools, which the RBI wanted deployed in India, b) had relatively poor banking infrastructure
compared to India, c) had a national identification number which could be used to facilitate transactions, which India
didn’t yet have at the time, and d) had MNOs with a monopoly position (or an effective monopoly position), which
made it easier for them to gain scale (Rajiv Lal and IshanSachdev (2015)). From all these we say that there are lot of
challenges in India to make the idea of mobile money successful in India.
8. Discussion & Conclusion
From all these results we conclude that there is awareness regarding the mobile money concept among
youth and they were aware about one or more mobile money services exist in the market. Majority of students in our
study use smart phones irrespective of the family and income background from where they come. Thus we can say
that smart phone plays a significant role in the use of mobile money as without smart phone we can’t access the
mobile money services. With the help of smartphone one can download the various apps to use the mobile money
more efficiently. It was also found out from our study that boys were more aware about the mobile money options
available in the market than girls and PayTm is found to be most popular brand among college youth followed by
‘PayUMoney’. The youth spend Rs. 1000-5000 as expenditure on mobile money. It was found that the respondents
use mobile money for recharging their mobiles and entertainment, rarely for fund transfer, bills payment, college
fees, taxi bills etc. and never for loan payments and investment. This also justifies the low amount spent Rs. 1000-
69 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
5000 by youth on mobile money. It has also been found that since the youth are not using this service frequently
they are not too much aware about the issues and problem areas related with the mobile money.
9. Limitations
The limitation of our study is the small sample size and we can increase the sample size to get more appropriate results. As we have only focused on the youth regarding their usage of mobile money we can also work
on the other age group to study their usage of mobile money in India. Various others factors can also be studied for
examples the reason for low uses, problems faced by persons not using this service.
References
Alice S. Etim (2014) Mobile banking and mobile money adoption for financial inclusion, Research in Business and Economics Journal, Volume 9
August, 2014.
CGAP-GSMA (2009).Mobile Money Market Sizing Study, blog post.
Chowdhury, N. (2012). Mobile Money for Financial Inclusion in India. User Experience Magazine, 11(2).
Diniz, Albuquerque and Cernev (2011) Mobile Money and Payment: a literature review, Proceedings of SIG GlobDev Fourth Annual Workshop,
Shanghai, China December 03, 2011
John Villasenor 2013, Smartphones for the Unbanked: How Mobile Money will Drive Digital Inclusion in Developing, Issues in Technological
Innovation, No-25, September 2013 Countries
Jake Kendall et.al (2011) An Emerging Platform: From Money Transfer System to Mobile Money Ecosystem, Legal Studies Research Paper Series
No. 2011-14, School of Law, University of California, Irvine
Jan Chipchase (2009) Mobile Phone Practices & The Design of Mobile Money Services for Emerging Markets, Mobile money transfer conference,
December 2009
MMAI/GSMA (2013) Mobile Money: the Opportunity for India, MMAI/GSMA POSITION PAPER, Submission to the Reserve Bank of India’s
(RBI) Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households, 13 November 2013
Pénicaud, Claire(2013) State of the Industry: Results from the 2012 Global Mobile Money Adoption Survey. GSMA Mobile Money for the
Unbanked, February 27, 2013.
Rajiv Lal and Ishan Sachdev (2015) Mobile Money Services - Design and Development for Financial Inclusion, Harward Business School, Working
Paper 15-083, July 2015
Ramussen, Stephen (2009), Hype Cycle and Mobile Banking, Presentation to the Mobile Money Summit, June 23rd.
70 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
71 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Cyberloafing and innovative work behaviour among banking sector
employees
Ayşe Esmeray YOGUN
Toros University
Email: [email protected]
Abstract To being an online has been increasing every day. Employees are online day long by different method of access to web sources.
To understand and lead to positive results of technology using is an important and practical matter for companies since it is so inevitable. The main purpose of this paper to examine the role of cyberloafing to predict innovative work behavior of employees
in Adana and Mersin/Turkey from the banking sector. Doorn’s (2011) Cyberloafing Questionnaire and Innovative Work
Behavior Scale (originally Janssen, 2000) were used for data gathering and both measures used that have been used and validated
previously by other studies. Data were collected from 200 employees, with a .50 percent response rate. Questionnaires are completed anonymously. The sample of the study comprised men (n = 48) and women (n = 52), respondents’ average age was 31
years. Stepwise regression function of SPSS was applied to see the per role of cyberloafing dimensions on innovative work
behavior and t test was used to understand the group mean difference between gender and public & private organization types.
The result of the study shows that informational function with β =.20, p <.001; social function with β =.13, p <.05, while le isure function with β = -. 11, p <.05 effect on innovative work behaviors. Thus this unique research, it is aimed to start new discussions
in the literature, to find constructive way of managing the reality of cyberloafing in today’s’ online workplace.
Keywords: Cyberloafing, cyberslacking, innovative work behaviors, stepwise regression, managers, non-managers banks
1. Introduction To survive in the current aggressive marketplace, organizations are to be an innovative more than ever before.
Ramoorthy et al. (2005) found that to accomplish the assignment, organizations attempt to bolster workers, to
advance and show signs of improvement powerful and productive results. Globalization of the commercial center
and clients, the greater part of the cutting edge associations face surviving difficulties. Consequently, the innovative
work conduct is definitely key for associations to survive and to develop in the current aggressive world of
workplace (In Khan, 2012: Jung, Chow, & Wu, 2003; Tierney, Farmar, & Green, 1999). Despite the frequently
emphasized importance of the innovative work behavior (IWB) for organizational success, the measurement of the
IWB, antecedents are still not understood properly.
Cyberloafing; utilizing the web for non-business related goals are an across the board “undesired work conduct”
(CWBs) in the working environment, yet scientists have not given careful consideration to this concept, particularly
approaching the cyberloafing in positive work results, for example, innovative work behavior like in this paper. This present study will find the potential positive results of cyberloafing exercises to understand innovative work conduct
of bank representatives including chiefs.
2. Literature Review And Hypotheses Development Innovative work behavior is a phenomenon that incorporates with the creativity. According to Janssen (2000)
employees need to be skilled to innovate not only to directly innovate, advancement, and development, but also such
issues like quality management and corporate entrepreneurship (Sharma & Chrisman, 1999 in Kahn, 2012).
The internet has made business more powerful by expanding representative profitability, beating the restricted time
and space and empowering better cooperation with clients. On the other hand, the usage of the internet at work has
its pros and cons. Cyberloafing (Lim, 2002), one of four classes of counterproductive work practices (CWBs),
characterized as practices that damage companies and/or individuals in companies (Robinson and Bennett, 1995;
72 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Spector and Fox, 2005). Surfing amid work hours at work is common in the contemporary work environment
(Malachowski, 2005). These undesired work practices called "cyberloafing" and characterized as "any intentional
demonstration of representatives' utilizing their organizations' web access amid an available time to surf non-
employment related sites for individual purposes and to check individual email" (Lim, 2002, p. 677). Through
cyberloafing, employees waste time and less occupied with their work, which, thus, diminishes their effectiveness
(Malachowski, 2005; Stewart, 2000). For instance, it is accounted that 59% of the utilization of the web is not
applicable to work matters (Griffiths, 2003). Cyberloafing additionally causes issues in data frameworks and
information security for the organizations (Levoie and Pychyl, 2001; Sipior and Ward, 2002). After the existed writing results of cyberloafing has been sought and numerous examination has been led to distinguish what conveys
to cyberloafing practices of employees (Blanchard and Henle, 2008; Liberman, Seidman, McKenna, and Buffardi,
2011, Lim, 2002). Burnout, foul play convictions toward the association, outer locus of control and lack of sleep are
some different discoveries which bring loafing (Blanchard and Henle, 2008; Henle and Blanchard, 2008; Krishnan
and Lim, 2010; Lim, 2002). Opposite, responsibility, fulfillment and association and equity recognitions are found
as diminishing cyberloafing (Liberman et al., 2011; Lim, 2002). There still does not have a comprehension of the
consequence of cyberloafing with a positive point of view in the paper. In this manner not very many studies are
recognized in a broad writing hunt, examined cyberloafing from a positive viewpoint. Lim and Chen (2012) are a
special case based with their "cyberloafing is a gain or drain at work?" titled study. The aftereffect of their study
gives a helpful viewpoint to analysts to show that cyberloafing not just for negative results and discoveries propose
that perusing exercises positively affect workers' passionate while messaging exercises have a negative effect.
Another remarkable study, which inspects cyberloafing with a positive point of view were performed by Coker
(2011) named as "opportunity to surf" that indicates cyberloafing empowers reclamation of mental limit and
encourages sentiments of self-rule. Another positive result identified with cyberloafing is said in the examination of
Belanger and Van Slyke (2002). The authors of the paper were demonstrated that cyberloafing could prompt an
enhanced comprehension of existing information. Moreover, cyberloafing exercises additionally "serve to open
blocked innovation channels" (Oravec, 2002, p. 63) which demonstrates that an increment of innovation by cyberloafing.Another issue should be mentioned here is that cyberloafing is an inevitable reality for the companies.
There are some studies shows that cyberloafing is the most common way that employees’ waste time at work and
reducing productivity (Malachowski, 2005). The amount of time employees spend on cyberloafing is also increasing
every day (Blanchard & Helne, 2008; Greenfield & Davis, 2002; Mills, Hu, Beldona, & Clay, 2001).
The lack of studies on the positive impact of cyberloafing in the management literature, possible theoretical
relation between this two concept lead this present paper focuses on examining the cyberloafıng as predictor of
innovative work behavior. Cyberloafing should be highly related to innovative work behavior since self-
development and searching (web, printed document) are associated with cyberloafing (Doorn, 2011) in most of the
scientifically valid IWB scale (Janssen, 2004). Insomuch as, for searching the scale of this research, it is found that
there are same questions both in IWB scale and cyberloafing scale, such as self-improvement, wandering and
searching for acquiring new skills.
IWB were chosen daily innovative work behaviors at work are crucial for surviving and competing
performance of the companies (Janssen, 2000; Oldham and Cummings, 1996). Therefore, the companies support
employees to innovate more than ever. If IWB is so crucial issue of organizational performance as prevalent work
behavior potential predictors should be examined properly to improve the practical application for companies.
Organizations have already implemented policies aimed at internet use. These policies indicate that organizations
recognize the potential risks of internet at work. However, cyberloafing does not only have to lead to negative
consequences. Organizations should realize that the Internet also can provide positive effects which they can utilize. By providing possibilities for organizations to influence cyberloafing, cyberloafing becomes more tangible and
better to control for organizations. The point of the present study was to investigate the cyberloafing as indicators of
innovative work conduct. The conceptual framework is given in Figure 1. differences in gender and public-private
sector banks in cyberloafing. Another aim of the study is to examine the innovative work behaviors’ group mean
differences according to gender and public& private banks. The combination of the above literature formed the main
problem statement of this study as
73 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
H1: Informational cyberloafing activities would be correlated with an innovative work behavior.
This study described cyberloafing as a multi-dimensional construct: the combination of different activities together
with the behaviors of cyberloafing. The four activities considered in this study are the social, informational, leisure
and virtual emotional activities: Social activities consisted of expressing yourself or share information via blogs (e.g.
Facebook); informational activity, involved searching information and news (e.g. CNN); leisure activities described activities related to playing games online or download music (e.g. YouTube), finally, the virtual emotional activities
contained all activities on the Internet that were not categorized within the other three activities (e.g. gambling,
dating, shop online).
The four behaviors of cyberloafing were: Development, Recovery, Deviant and Addiction behavior.
Development behavior considered related to the learning and acquiring new skills. Recovery behavior viewed
cyberloafing as a way to recover from work activities. Deviant behavior considered the engagement in cyberloafing
to avoid work activities. The last behavior was the Addiction behavior, related to the compulsory use of cyberloafing
activities. Then again, Belanger and Van Slyke (2002) found that cyberloafing could lead to employees an improved
understanding of knowledge. This indicates an increase of creativity due to Cyberloafing at work despite some
disadvantageous. Below, Figure 1 is the model of the research statement:
Figure1. Research Model
Li and Chung (2006) set a typology of cyberloafing examples as four distinct capacities that clarify individuals
can utilize the web sources. These capacities are: social capacity (e.g. utilizing the Internet to speak with
companions or colleaques), informational capacity (e.g. utilizing the Internet to pick up the data), leisure capacity
(e.g. Web for stimulation) and virtual emotional capacity (e.g. remaining web exercises like betting or dating). The
hypothetically informational capacity is straightforwardly related to the innovative work conduct related practices,
for example, advancement, securing new aptitudes and adapting new way or strategies.
Informational
Social
Leisure
Virtual Emotional
PREDICTORS
IWB
OUTCOME
74 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
3. Method
This study is performed within the private bank branches in the Adana and Mersin cities in the south of Turkey.
The banking sector is chosen because employees within bank can be considered as knowledge workers; “a
professional who applies ideas, concepts and information” (Rahman & Abdul-Gader, 1993, p. 303). The tasks of the worker vary from collecting, processing and analyzing information and thus are focused more on mental than
physical efforts (Chen, Hsu, Tung, & Lee, 2010; Gururajan, 2004). Also, the employees in banks use the Internet
during their work. The scope of the study thus is limited to bank employees (managers, non-managers).
This study is based on a survey method which is sent and filled by email paradoxically to answer the survey was
itself cyberloafing activity for the sample. To collection of the data, a convenience sampling technique was used. In
total, volunteer employees of 7 banks with 35 branches participated in this study resulting in a total sample size (N)
of 118 respondents. 200 email addresses were posted for the research and all employees were received an email
with explanation letter and survey attachment. Thus, 118 of the employees accepted to participate in this study while
18 of them were totally empty. Email addresses were gathered by researcher personal visiting to branch managers.
A pilot study was carried out in Turkey (Mersin city) with 34 sample size. After pilot study 3 questions
addressing virtual emotional function (shopping online, play gambling and date online) from cyberloafing scale has eliminated because of the managers’ feedback since those questions already include illegal behavior and participants
can’t answer or sincerely answer those 3 questions. Therefore the main survey performed with 9 questions and 3
dimensions (social, informational and leisure) to test of research hypotheses. Exploratory factor analysis (EFA) was
used to explore the dimensions of the cyberloafing items. Using 9 items, pre-analysis tests for the suitability of the
data for factor analysis were computed as recommended by Hair et al. (2007). The Kaiser–Meyer–Olkin (KMO)
measure of sampling adequacy was 0.91, and the Bartlett test of sphericity was significant at p < 0.001, indicating
suitability of the data for analyses for factor analyses following Hair et al. (2007), factor loadings should preferably
over 0.50, while cross-loadings should not exceed 0.30. All 3 dimensions with 9 items were used for the main
survey, according to the result. The other measures had good reliability, i.e., Cronbach’s alpha value was 0.87 for
innovative work behavior and, 0.84 for cyberloafing scale. A total of 118 employees’ turn back while 18 were
excluded because almost totally empty.
The demographic information indicated that the average age was between 30-39 years, 52% of the participant
was female (52 employees), all participants have university degree even 12% (12 employees) with post graduate
degree, 37% of the participants have 5-10 years tenure and 30% were managers (30 employees) while the rest of the
participants in non-managerial positions (70 employees). The data were collected both from governmental (n = 2)
and private sector branches (n = 98). It is unbalanced in this study, because of the privatization of the banking sector.
3.1. Instruments Cyberloafing Activities: To assess the cyberloafing activities, used the scale used by Akca (2013 originally by Doorn,
2011). The scale ranges from 1 = “never,” to 5 = “constantly.” Examples from the 9-item measure of cyberloafing
includes “learn new skills, develop myself, relax and acquire new abilities. Coefficient alpha was.84 for this current
research while alpha was 0,929 for the original scale. Respondents' sex was controlled for on the grounds that men
will probably take part in cyberloafing than women(Lim and Chen, 2009). Age was controlled since it has been
found that people in their late 20s to mid 30s will probably utilize the Internet (Reed, Doty, and May, 2005).
Innovative work Behavior: Innovative work behavior is measured by using the nine items from originally Janssen
(2000 with α = 0.95) and translated according to the scientific method by Mete (2007 to 0,935 alpha value). These
nine items measured the extent to which an employee engages in innovative work behaviors, with 1 = ‘never’ and 5 =‘always’ as anchors. These nine items yielded a coefficient alpha of 0.87 which is very close the original alpha
value of the scale. Data coding was done such that a higher score indicated a higher level of innovative work
behavior. Examples from 9 items include “Creating new ideas for difficult issues, searching out new work methods,
techniques or instrument.
4. Findings
According to Table 1 there is a positive correlation between Informational cyberloafing and social cyberloafing
function (r =.63, p <.05), and innovative work behavior (r =.60, p <.01) And there is negative .-14 correlation
75 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
between informational and leisure function whereas, social function is correlated with leisure positively with r =. 23,
and innovative work behavior with r =. 50, and leisure cyberloafing activities are negatively correlated with
innovative work behavior with r =-. 20.
Table 1 Correlations and Mean, SD, α Values
Scale Subscales M SD α 1 2 3 4
Informational 54.08 11.63 .92 --- .63* -.14* .60**
Social 28.08 5.45 .84 --- 23* .50*
Leisure 3.97 3.14 .54 --- *-.20
IWB 96.92 20.15 .91 -
*p<.05 , **p<.01, N=100
For the main research question stepwise regression was conducted to understand the role of which
informational, social and leisure activities on innovative work behavior. Step 1 indicates that informational function
(β =.44, p <.001) is the most positive predictor of innovative work behavior causing 38% variance in it, F (1) =
44.42, p <.001. Step 2 shows that social cyberloafing function is the second important predictor of innovative work
behavior and 42% variance is explained by the predictors, F (2) = 27.78, p <.001, indicating that addition of social
cyberloafing increased 4% of variance in innovative work behavior. Step 3 shows that the leisure cyberloafing
function is the least important predictor of innovative work behavior in this model and only 44% variance is
explained by the predictors, F (3) = 17.40, p <.001, showing that adding leisure function to model increased 2% of
variance in total innovative work behavior. As seen in Table 2 model results indicate that the informational function
(β =.20, p <.001) and social function (β =.13, p <.05) Have a significant positive effect, whereas leisure function (β
= -. 11, p <. 05) has a significant negative effect on innovation work behavior.
Table 2 Regression Analysis: Innovative Work Behavior and Informational, Social and Leisure Cyberloafing Function
Predictors ∆R²
β
Step 1
Informational
.38
.44***
Step 2
Informational
Social
.04
.29***
.24*
Step 3
Informational
Social
Leisure
.02
.20***
.13*
-.11*
76 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Table 3 shows t-test of sex and organizational type (public and private sector) for cyberloafing and
innovative work behavior. The results are significant for sex in informational, t(94) = 1.04, p < .05, social, t(94) =
1.45, p < .05, and leisure, t(94) = 1.34, p < .05, indicating that women bank managers have more informational, less
social and lower leisure cyberloafing as compared to men in line with existed literature findings. Men and women
also significantly differ in innovative work behavior, t(94) = 1.11, p < .05, indicating men to score high as compared
to women. For public-private banks, the mean of group difference shows significant difference for informational,
t(94) = 1.00, p < .05, social, t(94) = 1.31, p < .05, and leisure, t(94) = 1.82, p < .05, indicating public sector bank
managers to show more informational and less social and less leisure as compared to private sector bank workers. The results were also significant for innovative work behavior, t(94) = 1.42, p < .05, which indicates private sector
bank workers to be higher on it as compared to public sector bank workers.
Table 3 Mean and t Values
Variables Women=52
M SD
Men=48
M SD
t
Private=98
M SD
Public=2
M SD
t
Informational 57.77 10.95 53.73 10.54 1.04* 56.07 10.76 56.13 10.37 1.00*
Social 27.81 5.46 29.94 5.31 1.45* 30.13 5.48 29.36 97.80 1.31*
Leisure 4.40 3.05 5.84 3.17 1.34* 5.73 3.36 4.83 3.09 1.82*
IWB 96.31 18.60 101.01 16.70 1.11* 100.31 17.52 97.80 15.27 1.42*
Degree of freedom = 96. *p < .05.
5. Conclusion
Definitely this study is not without limits, which aims to contribute a unique perspective for practical advice and
future research for academicians about the inevitable reality of the working life “cyberloafing”. The main limitation
concerns a potential generalization problem of every budget and time limited research that all analysis performed
with only 100 sample size despite 300 were mailed. Another limitation is data were based on self-report measures
that potential threat to the internal validity of this study’s findings and definitely it is a paradox that while answering
the survey, participants were cyberloafing again, according to definition.
Lack of between sector comparison is another crucial limitation, other sectors’ work settings might be somewhat
different from a bank setting because of working policies (Flynn, 2005; Henle & Blanchard, 2008). Malachowski
(2005) indicates that education, insurance, public sector, research and development sectors are more convenient for
time-wasting, whereas shipping and receiving, manufacturing, healthcare, finance and banking, marketing,
communication sectors are more time-conserving. And also unbalanced participation of the public sector employees another important limitation of the study. Informational and social cyberloafing are valid predictors of cyberloafing
at work in the banking sector, according to the findings. Due to pilot study result 3 questions addressing virtual
emotional function (shopping online, play gambling and date online) from scale has been eliminated because of the
managers’ feedback since those questions already include illegal actions against a job contract employee has signed.
Despite many limitations, the findings provide a contribution for future research in generating a more
complete understanding of the consequences and characteristics of cyberloafing without present and misleading
traditional counterproductive approach.
The amount of time employees spend on cyberloafing is also increasing everyday inevitably; current estimates range
from 3 hours per week to 2.5 hours daily at work (Blanchard & Helne, 2008; Greenfield & Davis, 2002; Mills, Hu,
Beldona, & Clay, 2001). So it would be appropriate to ask the question, if cyberloafing seems to happen under most
conditions so inevitably, how is it possible that any work done on daily organizational life with this cyberloafer
77 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
person? If cyberloafing is so prevalent, there should be more constructive and managerial motivation to increase
positive outcomes of cyberloafing rather than fruitless attempt to stop cyberloafing of employees. Thus, taking brief
breaks from a task has been identified as a best practice for improving the creativity in teams (Paulus & Brown,
2003; Paulus & Nakui, 2005). These positive and constructive approach by organizations, can facilitate to keep
cyberloafing under control with positive outcomes. Understanding the cyberloafing is a crucial and practical matter
for organizations since the use of the Internet has its dark side and inevitable in somehow.
Very few studies are identified in an extensive literature search, related positive outcomes of cyberloafing
in a work setting. The existed literature has paid attention to finding out what are the negative results of the
cyberloafing.Therefore, given the scarcity of studies on the positive outcomes of cyberloafing literature, this
research almost uniquely focuses on cyberloafing activities as predictors of IWB. In this study very new and
important predictor is added to IWB and cyberloafing literature. Performed analysis showed that informational and
social cyberloafing to have high internal consistency except for leisure cyberloafing with innovative work behavior.
Anandarajan and Simmers, (2005) Maslach and Leiter (1997), Belanger et all. (2002) and Oravec, (2002)
are other researchers that indicating possible outcomes of cyberloafing such as decreasing burnout, less stress and
anxiety level. There is also a significant sex difference in informational, social and leisure cyberloafing scores,
indicating that women bank managers have more informational, less social and less leisure cyberloafing as
compared to their men colleagues.
According to sex, employees are significantly changing in innovation scores, men have higher as compared
to women, in line with some researchers’ findings. Again, in parallel to existing literature, t public sectors bank
managers’ to have higher scores in informational and less social and less leisure as compared to the private sector.
Consistent results were found in this present study with Batt (2000) findings that under standardized procedures and
bureaucratic structures, employees will have less opportunity to engage in cyberloafing in comparison to settings
where employees more optional free behavior (Batt, 2000) such as in the private sector. Furthermore, findings
showed that innovative work behavior is higher in the private banking sector. Consistent with Khan and other
researchers (2012) result innovative work behaviors are more in the private settings, because innovative work
behavior is required for the organization to survive in the global market (Mukherjee & Ray, 2009).
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Study on the significance of economic planning for retirement
community
M. Baskaran1* & R. Chandrasekaran2
1Research Scholar, Bharathiar University, Coimbatore, Tamil Nadu, India 2Director, Dept. of Management Studies, Karpagam College of Engineering, Coimbatore, Tamil Nadu, India
* M: +918870553333, E-mail: [email protected]
Abstract
There is an inescapable need for management of personal finance to cater for living expenses of elders in order to have a decent
life style until the end of their silver years) Hence every individual need to be aware of as to how to make savings prior to
retirement or generate the savings with whatever funds that they have already got so that they can spend their rest of their life peacefully without having any uncertainty or fear. When such savings is possible and feasible, seniors at this stage will fee l the
sense of confidence amongst themselves in the society with significance without depending on others. Even timely food, rest and
relaxations are very much essential to seniors, generally at growing old age. Many researchers have done a lot of research in
relation to planning about retirement life. However, in this research we have discussed that the similar things in a different angle commencing from the base level.
KEYWORDS: Retirement, Plan vs. Planning, Government schemes, Individual plans and Care.
1. Introduction
Retirement is generally significant life events which many of individuals will ever experience in their life. Commencing from both a personal as well as financial perspective, comprehending a secure retirement is an
extremely wide procedure so as to take sensible planning with years of persistence. Once anyone attains retirement
age; it will be an ongoing process amidst their committed responsibilities that they have to plan for their post
retirement life in their silver years. Although all the individuals would like to retire comfortably, the complexity and
time required in building a successful retirement plan can create the entire process giving the impression nothing
short of daunting. Though, it can frequently be done by means of fewer headaches that individual may think of, all it
takes is small assignments, a realistic savings along with investment plan with a long-term commitment.
Retirement also tagged along with a tendency of expectations and their aspirations as they age. Although they
attain a particular age towards retirement, it does not mean that they individual must automatically retire. Post
retirement life can be catorigized as individual seeking independent living based on the essential living needs or the
lifestyle that they seek even though they prefer to retire at the early age as sufficient resources have been created to
meet the long term expenses of senior living. The precise age to retire can differ from individual to individual,
depending on their commitments, available resources and circumstances.
The actions individual take in the pre retirement stage starts or commences a decade before their retirement, are
critical towards getting the next phase of smooth post retirement plan and living. One need to analyse the following
aspects mentioned in Table 1 while taking a decision on the senior living.
Table 1. Decisive Factors for Senior Living
S.No Decisive factor
1 See if you are saving is adequate
2 Stagger your retirement benefit with that of your spouse’s
81 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
3 Do not automatically quit on stocks.
4 Do the math on your mortgage.
5 Make friends with the young’uns.
The procedure of determining retirement income goals as well as the actions in addition to decisions essential in
the direction of achieving those goals are of paramount importance. Retirement planning comprises recognizing
sources of income, estimating expenses, implementing a saving program as well as managing assets. Prospect cash
flows are estimated towards determining the retirement income goal determination is achieved.
There is a huge reward waiting in favour of individual in retirement, individual can at last go on those trips
constantly dreamed of, with no worry or concern running out of vacation days or else coming back towards plenty of
work in addition to an annoyed boss.
Research from many countries around the world shows not only that individuals display low levels of financial literacy but also that financial illiteracy can be linked to lack of financial planning and insufficient resources in
retirement (Lusardi and Mitchell, 2011a, 2014). Using data recently collected via a questionnaire especially
designed to be comparable to surveys administered in a number of other countries (Australia, France, Germany,
Italy, Japan, the Netherlands, New Zealand, Romania, Russia, Sweden, Switzerland, and the United States), this
paper aims to assess how Canadians fare in terms of financial literacy and retirement planning.
The Canadian case is important for many reasons. For decades, Canada has had some of the lowest levels of
poverty among seniors (see, e.g., OECD, 2011). Although old-age poverty seems to be changing according to recent
and forecasted trends (Fréchet, 2012) public retirement programs provide a high income replacement ratio, typically
from 60 percent to 90 percent or more, for workers with earnings below the median. For those individuals,
retirement planning may be relatively simple.
On the other hand, retirement planning can be particularly important Canadians earning above the median
income. Income floor programs (the so-called 1st pillar) in combination with compulsory public savings plans (the
2nd pillar) do not guarantee a sufficiently high replacement (Clavet et al., 2013). Indeed, these programs provide
retirement income capped at approximately CA$19,000 per year in 2014, meaning that replacement ratio decline to
well below 50 percent for those earning above the median. Hence, workers in these earnings brackets need to put aside additional savings (the so-called 3rd pillar) to ensure that their retirement income adequately replaces earnings,
for example through an employer-sponsored pension plan or tax-sheltered vehicles. In recent years, much of the
policy debate has evolved around the question of whether or not middle- and high -income Canadians are saving
enough for retirement. Other important trends are also taking place, including a shift from defined-benefit (DB) to
defined-contribution (DC) pension plans, though this has been more limited in Canada than elsewhere (Gougeon,
2009), and a decline in the coverage of private-sector employer-sponsored plans, which may have stabilized
(Milligan and Schirle, 2014).
Proposed reforms have followed two strands. The first strand has focused on expanding the 2nd pillar (the
contributory Canada Pension Plan and its sister Quebec Pension Plan; see for instance Wolfson, 2011 and 2013, and
Milligan and Schirle, 2014, for an overview), and sometimes the 1st and 3rd pillars (see, respectively, Townson,
2009, and Ambachtsheer, 2008, for examples). One argument often made is that Canadians have low levels of
financial literacy and thus expansion of relatively simple mandatory programs may be advantageous.
The second strand focuses on voluntary savings plans. One change to the 3rd pillar is currently being gradually
implemented at the federal level and in some provinces: pooled Retirement Pension Plans (PRPPs), which are being
legislated under various names in each province. PRPPs are individual accounts with “group investment options,” offered by privateprivate financial institutions. Accounts include additional features such as automatic enrollment
and default options, and the inclusion of these options can be linked to the notion that purely voluntary savings
programs are unlikely to be effective due, among other factors, to lack of financial knowledge.
Existing evidence revealed low levels of financial literacy in Canada (Task Force on Financial Literacy, 2010;
MacKay, 2011; Mullock and Turcotte, 2012; Lalime and Michaud, forthcoming). However, this evidence drew
mostly from the 2009 Canadian Financial Capability Survey, which did not use questions comparable to those used
82 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
in other countries. Comparisons can be useful as they highlight similarities and differences across countries. They
can also draw attention to important features of the data, for example the groups that consistently display the lowest
levels of financial literacy, irrespective of institutional setting, and the effects of financial illiteracy.
2. Facts and needs of retirement
Individual’s retirement desires are different. Towards working out how much human being need and think in
relation to how long determination have in retirement, what sort of lifestyle individual will want as well as where
individual will live. One of the prime reasons that people engage a financial planner is to recognize while they can
retire. Now the thought of retirement can cause anxiety, lot of feel overwhelmed as well as unprepared. In reality,
one of the main dilemmas intended for those approaching retirement is balancing the life they desire to live today by
means of the life they want to live in retirement. There are a few familiar, yet avoidable mistakes so as to prevent a
lot of people commencing from retiring on time. However by means of proper planning, individual can steer clear
of mistakes encountered or foreseen so as to have the retirement as planned.
Paying off individual mortgage prior to individual retirement is subsequently the main concern. However
creating certain so as to it is not individual merely retirement plan. The interest person pay on mortgage is advanced
than a few after-tax return individual might earn on individual savings as well as with the intention of return is
guaranteed. With the aim of something a small number of investments can put forward. However there are risks in
leaving serious retirement saving in anticipation of individual got rid of individual mortgage. Individual might finish
up comprise a mortgage meant for longer than anticipate, owing towards changing in circumstances such as ill health or else loss of work so as to decrease ability towards making repayments or a life shock similar to separation
could upset plans. Generally overlooked areas of retirement planning are estimating health care costs might be in
retirement as well as including this in the calculation of income desires. Frequently, individuals assume
determination cover these expenses in retirement. However, this simply is not true. It costs towards retirees are
rising every year so it is important to expect. The research line related headed for costs comprises the following five
lists. The entire research lines as well as the topics therein are shown in Figure 1.
Figure 1: Needs of Health Care
83 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Individuals are living longer currently. On average, 65-year-old men be able to live until they're 86 and 65-year-
old women until 88. In the future, people certainly live even longer. Men reaching 65 in 2031 can expect to live until
88 and women until they are at least 90. Assure that individual plan to retire at 65. Seniors need to save or else
having alternative plan (Figure 2) towards generating income meant for 20 years or more in order to meet the
expenses of any medical emergencies.
Figure 2: Investment Plans for Retirement
Anyone who cared for an aging parent knows the toll it can take on their loved ones with their savings and the
time as well as money needed towards providing quality care. Children were willing to contribute for a decent living
for their parents, since this gave them a feeling of comfort and reduced their guilt of not being able to take care of
them in their advancing age. Please remember, India has changed, but when it comes to parents-children relationship,
we should be proud that our children do care for us and the meaning of family has not been lost to the levels that we
see in the Western societies.
But unlike the Western World, where the State does take care of senior citizens, in India, the seniors have to
plan for their Silver Years. The Middle Class has paid taxes throughout their lives, but never got anything in return
from the Government. In the Western Countries, everyone paid taxes but the State takes care of them especially when they became old and are required to be taken care of. In India, we got nothing. Only for the poor and the
destitute, there are Old Age Homes, mostly run by Charitable Institutions. The Middle Class had to save money for
the old age and had to fulfill all family obligations. Pension was restricted to a select few only. Going back to the
Preparing
for
retirement
Credit money into an
Individual
Retirement Account
Enquire employer
towards starting a plan
Do not touch retirement
savings
Consider essential
investment principles
Be acquainted by means
of individual retirement
needs
Contribute towards
employer’s retirement
savings plan
Commence saving, keep
saving along with
sticking to the goals
Gain knowledge in
relation to employer's
pension plan
84 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
basics, being debt free happens when individual spend less than earn and are committed to live that way. In order to
stay debt free, individual need to plan for the long-term and make permanent lifestyle changes.
3. Budget concerning individual expenses
Successful individuals as well as corporate live by means of budgets. To create personal budget, one has to
consider the current expenses, the long-term plan as well as generating the emergency fund. Budget will also take
into consideration of sundry expenditures that individual can spend which is unforeseen or casual expenditure of
momentary nature. One has to be honest concerning the expenses as well as goals while developing the budget to
meet these needs which can be followed for years by them. This will facilitate them leading a lifestyle without any
debt and stress thereupon. There are cases where few have failed since they lost sight of the plan as they do not have
the passion and discipline to follow it through.
Major expences in retirement
The figure 3 explains how huge the expenses are while planning for the retirement in India. It is quite obvious
to see that the major chunk of finances will be spent on housing.
Figure 3: Proportions of Major Expenses
Major Expenses Percentage
Housing 46.89%
Food and Beverages 15%
Transportation 13.82%
Medical care 12.10%
Table 2: Source of Money
RETIREMENT PLANNING: SOURCE OF MONEY
Employment
Income
As individual progress through working life, annual employment income will probably be the largest source of incoming funds
that individual receives as well as the largest component of contributions to individual retirement fund. The maximum amount
of employment income can contribute to retirement fund each year.
Social
Security
Gone are the days where the elders in their silver years were made to live with what has been given to them or destined to get
what has been thrusted on them in terms of living and care and their essential needs. With the advent of nuclear family, the
concept the expectations of elders at present are well defined and the aspirations are to get the desired life style and their needs
to fund the living expenses when retired and the reduced size of nest egg. Planning to live in a retirement community will
ensure their social security benefits are achieved with proper retirement planning.
4. Retrain thinking and spending
Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty
pounds, annual expenditure twenty pound ought and six, result misery.” Charles Dickens, David Copperfield
85 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Debt free living is an effortless concept which can be said easier than done. Lot of individuals spent most of
their life time learning towards living in debt. The determination takes time, commitment, skill towards retraining
thinking, spending as well as get back to living this way. Living debt free requires change, with change is a process.
Plan along with planning of retirement community is an extremely essential in the learning stage itself. However,
everything has changed now with education and awareness amongst the people. In childhood days, parents take care
of their children while when they grow as youngsters they are earning sufficiently towards spending for the comfort
of their parents. As they age the young generation not able to take care of them continuously for various reasons beyond their control. Hence, the need to plan for their retirement life should be like any other planning for education,
home, vehicle, health.
Everyone concerned need to involve themselves broadly linking the behavioural aspects covering personal
responsibility, financial awareness, financial capability or understanding, retirement planning, financial preparing,
income replacement and all these are for the long time for a peaceful retirement life. These considerations are not
only for the seniors retirement life but also for everyone to plan their normal life for living and thereafter for their
retirement life.
Saving meant for retirement is a function so as to be often put on hold by means of those who feel they have
enough time to start planning as well as save later. Whereas it is certainly not too soon to start saving for retirement
for any age group, those who fall within the age range of 55-64 are more aware of its significance, as retirement is
imminent. As such, age 55 to 64 is a critical period to get a realistic assessment of how financially prepared people
are for retirement.
Table 3: Finacial Assessment
Assess Whether Individual
Financially Ready for
Retirement
Assessing individual financial readiness will assist individual to determine whether they have a projected shortfall as well as whether they need to modify their retirement strategies, goals along with objectives.
Individual need towards including the balances of all of the accounts, the income tax rate, the average rate
of return on the savings as well as information about his or her current income.
Re-Assess Your Portfolio
With the possibility of receiving large returns on individual investment, the stock market can be attractive,
especially if individual are starting late. Along with the possibility of a high return comes the possibility of
losing most of individual initial investment. As such, the closer to retirement, the more conservative want to
be with individual investments since there is less time to recuperate losses. Having said that the retirement
savings on track can provide great satisfaction, it is significant to continue on that path and increase
individual savings where individual can. Saving more than individual is projected to need, that will assist to
cover any unexpected expenses.
Appropriate implementation of those key components is necessary in guaranteeing an economically secure
retirement. This engages looks at every possible source of retirement income. The developed world's populations are continuing to age, by means of fewer and fewer working age people remaining towards contributing to social
security systems. Greater burdens are being placed on the system. People live longer than ever before due to
advancement in health care and their life style. This leads to putting strain on the system as well as could leave
governments with no other viable option but to reduce social security benefits or suspend them altogether, however
poor they are. In accumulation, many employers who used to offer defined benefit plans are now shifting to define
contribution plans due to the increased liability as well as expenses that are associated with it, thus increasing the
uncertainty of a financially secured retirement for many.
5. Financial Investment
Financial investments refer towards putting aside a fixed amount of money as well as expecting a few kind of
gain out of it within a predetermined time frame. An individual can invest in some of the following before he moves
into retirement:
▪ Mutual Funds: Investment programmes funded by means of shareholders so as to trade in expand holdings
as well as are efficiently managed.
86 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
▪ Fixed Deposits: A fixed deposit is a financial instrument make available by means of banks which provides
investors through a higher rate of interest than a regular savings account, in anticipation of the specified
maturity date.
▪ Bonds: In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt
security, under which the issuer owes the holders a debt and depending on the terms of the bond, is obliged to
pay them interest and or to repay the principal at a later date, termed the maturity date.
▪ Stock: The capital rose by means of a company or else corporation throughout the issue along with
subscription of shares. ▪ Equities: The value of the shares issued by means of a company.
▪ Real Estate: Property consisting of land or else buildings.
▪ Gold Investment: The Table 4 and Figure.4 illustrates the growth rate of Gold from 1925 to 2015
Table 4: Year and Gold Rate
Year 10 Grams Gold Year 10 Grams Gold
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
18.8
18.1
30.8
36
62
99.2
79,2
112
71.8
185
1975
1980
1985
1990
1995
2000
2005
2010
2015
540
1330
2130
3200
4680
4000
7000
18500
24599
Figure 4: Growth of gold rate
6. Retirement planning
Any individual can dream of moving towards a new location on retirement. While retirees are no longer tied
towards the job, they can finally choose their retirement destination based on various factors like a warmer climate,
pursue hobbies etc. and to encompass quality health care facilities in case they need them. Selecting a place to retire
requires a great deal of thought as well as planning. Moving to a lower cost locale than where people live now can
give nest egg a much needed boost. Our ‘Best Places’ to retire lists can assist individual find an idyllic locale on the water, tucked away in the mountains or else deep in country/outskirts. Individual have also tracked down towns so
as to be especially green, educated as well as historical. If there were one perfect spot to match the needs of each
87 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
retiree, deciding where to settle would be simple. Regardless of individual ideal or else deal breakers, there a few
key things to look for while deciding where to live in retirement. A generation ago, the primary concern meant for
retirees seeking a new location was climate. Nowadays, financial considerations weigh much additional heavily.
Low cost of living and housing costs are significant to most of individuals.
The area should be growing as well as have qualities that attract newcomers, like natural endowments such
recreational land, visible history such as landmark buildings, historic monuments and a vibrant economy where
people can find work. It should also have a low crime rate, be relatively close to good retail shopping as well as a major media market. Individual might also think why towards move away from civilization; however individual can
easily begin to feel isolated. Mainly and significantly for seniors, a full-service medical facility should be within
reasonable driving distance. Taxes are another deciding factor for most people. Currently, there are few
countries/few states which do not hold personal income taxes. Choosing an area by means of a smaller tax break
however a lower cost of living or lower property taxes might put people ahead of the game taking a balanced focus
on life planning over tax planning.
Prior to making any decision, pre-retirees should first determine whether a move is necessary. Earlier to making
any decisions about where you want to live, it helps to do some research. Here is where to start Table 5 represents to
select the best place,
Table 5: Selection of Best Place
Population o Identifying likeminded groups/people
o Particular geographical area
Economy
o Area of the production
o Distribution or trade
o Consumption of goods
o Services by different agents in a given geographical location
Climate o Weather conditions prevailing in an area
o General or over a long period
Cost of Living o Maintaining a certain standard of living
Crime Rates o Number of offenses
7. Socio demographic profile
This research puts forth the socio-democratic and economic profile of the oldest old, along with insights on their
dependency for various requirements like daily routine and health care, among others. It also presents findings
pertaining to the welfare schemes and support systems available to them at the community level. In 2015, a socio
demographic profile has been carried out a survey in 8 cities of India, covering 833 respondents, all from the oldest
old i.e. 80 + years in age. The cities covered were Delhi, Mumbai, Hyderabad, Chennai, Patna, Kolkata, Bhopal and
Ahmadabad.
Table 6: Socio Demographic Profile
Age
Group
(Years)
DEL
MUM
HYD
CHN
PTN
KOL
BPL
AHD
80-84 73.3 84.2 72.3 72 66 75.5 82.4 77.2
85-90 18.3 12.9 27.7 23 27 22.5 13 22.8
Above 90 8.3 3 0 5 7 2 4.6 0
88 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
Figure 6: Socio Demographic Profile
Is your Site Suitable for a Senior Living Facility? What Factors are Important?
Senior living projects are specialized projects and therefore have unique location requirements which can make
a difference between and average and a successful project. Most Indian cities have options to locate a senior living
project in its in growth corridors, however, factors such as availability of healthcare, social eco system, connectivity
besides the aesthetics of the site ecosystem continue to play a major role in selection of the project by senior
residents.
Table 7: Location Decision Influencing Factors
HEALTHCARE ACCESSIBILITY CRIME RATE
Spread, quality of and access to healthcare facilities from various
locations within each corridor. Typically the site should be within 20-
30 minutes from a good secondary and tertiary care hospital.
Incidences of crime or the perceived sense of security of lack thereof
in different pockets of the city. Sometimes a suburban undeveloped
area can be perceived as risky from a crime perspective in-spite of site
level security.
SOCIAL ECOSYSTEM AESTHETIC ECOSYSTEM
Presence of social amenities such as temples, clubs, retail mall,
entertainment and other recreational facilities in the nearby catchment.
Presence of well –maintained public parks, roads, water bodies, control
of density, general cleanliness etc., found within locations in each
corridor.
EDUCATION ECO SYSTEM CONNECTIVITY
Spread, quality of and access to educational facilities play a role in
selection of a project. In many cases, presence of such institutions in
micro catchment offers great advantage.
Connectivity to major city modes, retail and entertainment activity
hubs and work places. Considers both existing and proposed
infrastructure initiatives within the city to ensure ease of commute.
GROWTH PERSPECTIVE LAND VALUE
Expected growth in items of civic amenities and infrastructure in a
particular corridor in order to take advantage of capital appreciation.
Lower land value (to ensure affordability) for locations within the
corridors can be a strong attraction.
CONGESTION INDEX EMPLOYMENT DESTINATION
Lower traffic congestion, lower density of population and lower
presence of polluting industries etc., are preferred by senior citizens for
selection of a senior housing project.
Access of employment hubs and facilities play a strong role since
seniors especially in the independent living stage want to stay
employed even if it is part-time or consultative employment.
A suitable location for setting up a CCRC in one which scores high on the positive attributes such as healthcare
accessibility, social ecosystem and connectivity; and low on negative attributes such as lan value, congestion and crime index. Healthcare accessibility, social ecosystem and connectivity are important considerations for seniors and
hold higher weight age in the selection criteria. The good thing about senior living facilities is that it is possible to
move out of the city into more affordable zones. However, the developer has to be cautions that the project does not
89 The International Journal of Business and Management Research “IJBMR” 2016 Volume 9, Number 1
go too much off the social and economic connect of the city in which case the project would face difficulties from an
occupancy perspective.
Senior Living – What is the Demand for Senior Living in India?
Demand for senior living comes from a variety of customer segments with varying needs and wants. However,
primarily the need for better healthcare in old age, secure surrounding and a social support system designed to take
care of the senior are prime drivers for demand for such assets. The four primary types of customers as per our
research are:
Table 8: Types of Senior Living Occupants
TYPE 1 TYPE 2 TYPE 3 TYPE 4
Aspirational well heeled empty
nester couple wanting a better
quality life
Aging retiree facing early or
advanced signs of constant
healthcare needs
Non Resident coming back from
outside India or from other state
Short term stay seniors wanting
to stay for 3-6 months a year
• Offers suburban lifestyle
• Couple would find the concept
of campus living appealing
• Values being part of peer
group of like-minded people /
similar social strata
• Willing to pay premium for
good project design and proper
brand
• Seniors staying alone who like
the campus like social
environment
• Appreciates long term
healthcare requirements
• 6% of seniors in India have some
form of dementia
• Family not able to take good care
of senior in their limited
resources
• Brings relief to second generation
from care giving and still
allows connect on a 24/7 basis
• Values professional care
environment which is required
at this stage
• Highly relevant where support
system is absent
• Requirements are similar to
well-heeled empty nester
couples
• Large customer segment in
Middle East, North America,
Europe and Australia
• Focused reach through NRI
regional groups
• Both – (a) seniors staying
abroad wanting to come back
as well as (b) children staying
abroad; with parents here will
fuel demand for projects
• Travelling NRI’s coming to
India on short stays due to
weather, visits, functions or
religious requirements.
• Possible to also attract
foreigners to come and stay in
such projects owing to cost
advantage offered vis-à-vis
similar facilities in the
developed nations.
• Health and wellness stay
• Rehabilitation & recuperation
stay
8. Conclusion
As a result of an increasingly aging population, governments may be forced to suspend social security benefits
in the future. However, individuals need to take care about, how much money needs to save for retirement will
depend on desired standard of living, individual expenses and target retirement age. Based on family strength,
situation and health planning also will be differing. We hope this research article will help to analyse about needs of
retirement planning and way of plan based on banking sector.
Retirement planning is strongly associated with financial literacy. This result has been found in many countries
and the estimates in Canada are similar to those of other countries. This is relevant in the Canadian context because
of the relatively low level of financial literacy, even among the more fortunate Canadians (i.e., those with higher education and income), who may need to rely more and more on voluntary savings programs to fund their
accustomed level of consumption in retirement.
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