Vikalpa: The Journal for Decision Makers

Socially, economically, politically, and technologically, our world is transforming in complex ways that are beyond what we could have fathomed even five years ago. Now, more than ever, managerial decisions have far-reaching consequences in the way that organizations fail or succeed in bridging commerce and compassion, sustainability and profitability, and move from vision to effective strategic implementation. Solving problems, making decisions, and picking the courses of action are the most critical aspects of being in charge because it is risky and very difficult. Bad decisions can damage a career, influence peoples' lives, and hurt an organization's performance. But, where do bad decisions come from? In many cases, they can be traced back to the way the decisions were made. Maybe the right questions were not asked. Maybe the right alternatives were not explored or may be the data collected was wrong. Sometimes, the fault of poor leadership decisions lies not in the decision-making process, but rather in the mind of the decision-maker.

How does an organizational manager make the correct leadership decisions when the unexpected occurs or the existing plans are insufficient or important organizational core values and goals are threatened? Critical Thinking in decision-making helps the professionals ask relevant questions, gather opinions from various groups, interpret complex problems, and make wise decisions. The development of critical thinking skills in international executives has never been more vital than it is today. The engagement in managerial critical thinking is about learning to apply experience-based, team-based, and formal problemsolving methods to situations. It is essential to develop a keen ability to overcome and become self-aware of biases, false assumptions, myths, and faulty paradigms that can hamper effective decision-making.

This study explores pay satisfaction-related issues of software professionals in India, specifically assessing the impact of different dimensions of pay satisfaction on intent to leave. Since satisfaction with pay is an emotional/affective reaction and is likely to be influenced by personal and environmental factors, the study explores some social psychological processes like leader-member exchange, justice, and voice that are likely to impact pay satisfaction of these professionals. Using a sample of 306 software professionals drawn from various organizations, the study tests the various hypotheses.

Three broad trends emerge from the data:

First, process dimensions of pay satisfaction are better predictors of the professionals' intention to leave the organization.

Second, distributive justice predicts both the amount and process dimensions of pay satisfaction whereas procedural justice predicts only the process dimensions.

Finally, the hypothesis that LMX leads to voice which leads to procedural justice which in turn leads to satisfaction with the process dimensions of pay satisfaction found support from the data and the strength of relationships was stronger for structure and administration dimension as compared to raises dimension of pay satisfaction.

The findings suggest that though pay levels are important, the HR Department needs to make additional efforts towards the processes through which pay and raises are determined as these processes might provide the crucial advantage for retaining software professionals in an environment where salary levels are competitive. Additionally, since both the pay-related processes and procedural justice are important, these processes need to be both effective and fair. Though fairness in appraisal and pay- related processes can be built through various HR systems like participation (voice), the results show that these processes will be effective only if they are implemented well by the immediate leader. The results have implications for leadership development and training on appraisal and pay-related processes. Unless the leaders are trained appropriately and made aware of the social psychological processes that go on in a team, the design of systems by the HR Department may not be effective.

Since distributive justice is an important predictor of pay satisfaction, comparison with relevant others plays an important role in pay satisfaction. The HR Departments in these organizations needs to identify pay levels that compete in the market. Indians are shown to have a familial identity and value the opinions of their kith and kin; hence, acknowledging and incorporating the inputs of social comparison person (family and friend) might provide more useful insights into how these professionals perceive distributive justice.

Up to the beginning of the last decade, financial economics was dominated by linear paradigm, which assumed that economic time series conformed to linear models or could be wellapproximated by a linear model. However, there is increasing evidence that asset returns may be better characterized by a model which allows for non-linear behaviour. Though more efforts are now being directed towards the Asian stock markets in the light of their increasing importance to the investment world and the world economy, there is an extremely sparse literature, which utilizes recent advances in non-linear dynamics to examine the data generating process of the South-Asian stock markets.

This study investigates the presence of non-linear dependence in three major markets of South Asia: India, Sri Lanka, and Pakistan. It was, however, realized that merely identifying non-linear dependence was not enough. Previous research has shown that the presence of nonlinear characteristics usually takes the form of ARCH/GARCH (Autoregressive Conditional Heteroscedasticity or Generalized Autoregressive Conditional Heteroscedasticity) type conditional heteroscedasticity. Keeping this in view, this study investigates whether the non-linear dependence is caused by predictable conditional volatility. It has been found that the simple GARCH (1, 1) model has fitted all the market return series adequately and accounted for the non-linearity found in the series.

The findings reveal the following:

The application of the BDS test developed by Brock, et al., (1996) strongly rejects the null hypothesis of independent and identical distribution of the return series as well as the linearly filtered return series for all the markets under study.

With the possibility of linear dependence causing the rejection of independent and identical distribution (IID) being eliminated by linear filtering, the study also shows that non-stationarity of return series is also not a cause for non-IID behaviour by applying Augmented Dickey Fuller test and Phillips-Perron test.

This implies the presence of non-linear dependence in the return series. For researchers in the developing countries, it is time to embrace the shift to non-linearity as it would provide a better understanding of the underlying dynamics of financial time series.

However, the results are not necessarily inconsistent with efficient market hypothesis, simply because non-linearity does not essentially imply predictability as the future price changes can be predictable but only with a time horizon too short to allow for excess profits. The implications of non-linear dependence and presence of GARCH effects go beyond the issue of market efficiency. The common assumption of constant variance underlying the theory and practice of option pricing, portfolio optimization, and value-at-risk (VaR) calculations needs to be revised. If the assumed stochastic processes do not adequately depict the full complexity of the true generating processes, then any derivatives in question may be mis-priced.

Corporate governance issues have attracted a good deal of public interest because of their apparent importance for the economic health of corporations and society in general, especially after the plethora of corporate scams and debacles in recent times.

Corporate governance issues flow from the concept of accountability and governance and assume greater significance and magnitude in the case of corporate form of organization where the ownership and management of organizations are distanced. And, it is in this context that the pivotal role played by the board of directors in maintaining an effective organization assumes much importance. A major part of the debate on corporate governance centres around board composition especially board size and independence. Various committees have mandated a minimum number of independent directors and have given guidelines on board composition. However, the relationship of board characteristics such as composition, size, and independence with performance has not yet been established.

This paper addresses this question: Does the board size and independence really matter in terms of influencing firm's performance?

The findings suggest that:

There is an inverse association between board size and firm performance.

Different proportions of board independence have dissimilar impact on firm performance.

The impact of board independence on firm performance is more when the board independence is between 50 and 60 per cent.

Smaller boards are more efficient than the larger ones, the board size limit of six suggested as the ideal.

Independent directors have so far failed to perform their monitoring role effectively and improve the performance of the firm.

The guidelines on corporate governance should take into account the ‘cross-board’ phenomenon while defining the criteria for eligibility for appointment as an independent director.

Lack of training to function as independent directors and ignorance of the procedures, tasks, and responsibilities expected of them could be reasons for the independent directors' non-performance.

A bad performance leads to an increase in board size, which in turn, hampers performance.

Guidelines are provided for future studies to include different variables to see which board composition is suitable for different companies at different stages of life cycle.

Nowhere is the fast changing nature of the global business landscape more perceptible than on the ethics front. With a spate of recent unethical behaviours by large corporations in the Western world, especially in USA, their societies have become intolerant to businesses that manifest unethical behaviour. Legal and regulatory frameworks in these countries have been swift to respond through stringent laws such as the Sarbanes Oxley Corporate Reform Act. Consequently, most businesses based in these countries have become extremely risk averse on the ethics front. Few of them would like to have anything to do with any unethical company in any part of the world. This changed mindset has significant ramifications for Indian companies that have global aspirations. No Indian company that hopes to globalize in any manner can afford to ignore these changes sweeping the global business arena on the ethics front.

Business ethics encompasses much more than mere compliance with laws and regulations. It is about every individual in the organization acting ethically, about creating an ethically sound working environment within the organization and about modeling ethical behaviour by leadership at all levels. Research suggests that it makes good long-term business sense to be ethical.

For a company's ethics policy to be successfully implemented, it is essential that:

The code of ethics is clearly communicated to employees.

Employees are formally trained in it.

They are told how to deal with ethical challenges.

The code is implemented strongly.

The code is contemporary.

The company leadership adheres to the highest ethical standards.

When an employee gets no clear answers from the organization while dealing with decisions that have inherent ethical dilemmas, he tends to chart his own course of action by drawing on his intuition, conviction, and beliefs, and assessing the pressures of the situation at hand, putting the organization at considerable risk.

Globalizing Indian companies essentially have two options. One is to sit back and wait for the tightening of regulatory and societal screws on them, forcing them into ethical behaviour in a reactive mode. The other approach is for them to proactively herald the new era of business ethics by becoming torch bearers of the new order of things. It is in the organization's selfinterest to take a proactive posture on the ethics issue, and be well-prepared for the shape of things to come. We also show how this can be done and what challenges must be addressed for success on this journey.

Increasingly consumer shopping behaviour is being seen from the holistic perspective of the entire shopping experience. The holistic view requires a retailer to focus on the shopper experience with the store. Thus the retailer focus is not on the store itself but what the store means to the shoppers. This implies that a retailer needs to understand the ‘way in which’ different shoppers perceive the same store.

This paper refers to three key dimensions that influence the ‘way in which’ consumers look at a retail store:

Shopping environment

Socio-cultural context

Individual roles, motivations, and behaviour.

These dimensions take into account not just the differences between shoppers in terms of their individual motivations, but also try to model the variations caused in shoppers due to cultural influences. One key theme of this paper is the variation caused in the perceived hedonic value of shoppers. Hedonic value refers to the ‘sense of pleasure’ associated with shopping. In the Indian context especially, several retailers have referred to cultural differences and the resultant differences in shopper hedonic orientations. However, there are a few existing frameworks available that enable assessing the association between hedonism and culture in the Indian shopping behavioural context. This paper provides a theoretical framework and a robust research agenda that will help researchers and retailers alike address this need.