Vol. 2(4) April 2009
Behavioral Risk Management for Improper Risk Taking
Goto Shigeyuki
Many errors in risk management result from psychological
biases in decision-making under uncertainty. Even when we actively seek to eliminate
such biases, they remain unconsciously. This suggests a need to change our mind
set. Because biases are always with us, we must consider counter-measures to mitigate
them when they appear. This paper recommends building a particular framework, as
a routine within the traditional risk management process that monitors for improper
risk-taking. The routine is called Behavioral Risk Management (BRM). Tools derived
from behavioral study, error management and quality control methods are the components
of such a routine.
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Smokers need not Apply
Bernott Jenna, Boehm Casey, Mishra Jitendra1* and Mishra Bharat 2
With ever increasing global competition, companies and
businesses are now looking for new ways to cut cost. Companies and businesses have
now targeted the health sector as being one of the largest in the company’s operations.
The average cost per smoker is approximately $1623 in excess medical expenses and
$1760 in lost productivity according to the U.S Centers for Disease Control and
Prevention or at least $96 billion in direct medical expenditures and $97 billion
in lost productivity every year12. Spectrum Health in Grand Rapids decided to become
smoke free and announced that they will dismiss workers if they don’t go smoke free
at the end of 2006. Spectrum reasons were a) Tobacco addiction kills five million
people worldwide each year, including more than 400,000 Americans b) Health care
costs are 2.65 billion annually. c) Smoking employees have six and a half more days
absent per year than non-smokers. d) Second hand smoke is responsible for 3000 lung
cancer deaths each year. An increasing number of companies ban smoking in the workplace.
Companies like Union Pacific; Omaha Nebraska banned smoking in the workplace and
won’t hire smokers. Lowe’s home improvement retail chain doesn’t allow smoking on
its campuses or on its store properties including parking lots. Alaska Airlines
requires a nicotine test before hiring people. Kalamazoo Community College stopped
hiring smokers for full time position in Michigan. Weyco, Okemos, Michigan decided
to become a non-smoking employer. Weyco fired four (4) employees because they refused
to stop smoking even off company premises at their homes. Weyco instituted a policy
in 2003 of no longer hiring smokers and offering smoking cessation program to the
current employees who smoked. The four employees refused to take a “nicotine test”
and were fired. Further, a study of 2500 postal employees found that the absentee
rate for smokers was 33 percent higher than for non-smokers (Working Smoke Free.com)
Smokers are absent from work 50 percent more than non-smokers. They are 50 percent
more likely to be hospitalized and have 15 percent higher disability rates. Smokers
miss more work than non-smokers due to sickness. Smoking causes a weak immune system
because of the carcinogen found in the cigarettes. Therefore, smokers use more sick
days due to their weak immune system4. A large U.S Airline found that smokers are
absent from work as many as 6.16 days per year on average compared with 3.86 days
for non-smokers. Employees who smoke are prone to being less productive. Employees
who take four ten-minute (4x10) smoking breaks a day actually work one month less
per year than workers who don’t smoke (Working Smoke Free.com). The American Lung
Association1 concluded that smoking attributed health-care expenditure amounted
to $75.5billion in 1998. The WSJ8,10,18 (Wall Street Journal) reports that even
WHO (World Health Organization) banned the hiring of smokers to promote its public
health campaign against tobacco use. The authors point out in the paper that smokers
are more absent, more prone to sickness, disability and are less productive compared
to non-smokers.
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Business Factions and Combination of Capital of Indian
Firms
Nidheesh K. B.
This paper combines two rival threads of the business
finance literature: the first filament relates to the firm’s capital structure decisions,
with stress on the pecking order theory and the trade off theory; the second filament
relates to business clusters, particularly in the context of emerging markets. The
blend is then used to identify a basic model to buttress the capital structure decisions
of group-associated and non-group firms. In universal, the results corroborate that
affiliated firms are significantly different from their independent counterparts.
In terms of their capital structure decision the results show that the average leverage
of affiliated firms is higher than the equivalent measures for non-affiliated firms.
In terms of the main determinants of capital structure decisions, we found that
group association has a strong result on capital structure decisions such that group
profitability has a sturdy negative effect on the leverage decisions of affiliated
firms. This may be that profitable groups create internal capital markets to avoid
having to resort to expensive external finance. Researchers also find that size,
as well as growth, does not matter for the capital structure of group-affiliated
firms, whereas these factors are critical for the capital structure decisions of
independent firms. In addition, only liquidity has a positive force on the capital
structure decisions of affiliated firms while intangibility and profitability, group
debt and group size has a negative effect. However, researchers do not find any
significant differences between group and non-group firms in terms of the impact
of age and stock illiquidity on capital structure decisions.
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Modeling Economic Phenomenon with Elementary Catastrophes
Ungureanu Laura* and Galiceanu Mihaela
In the research to shape the company’s activity many
types of approach have been crystallized. And so there exist models in which the
company is considered a homogenous ensemble in report with its environment for work,
the wagers being caught in ensemble as a production-work factor. From this perspective
the company follows only to maximize the profit on short term. The changes occurred
in the exogenous economic factors of the company have a decisive impact over its
evolution. Catastrophes theory is concerned with sudden and discrete changes in
system state variables which result from a slow, smooth and small change in one
or more parameters. The underlying mathematics of catastrophe theory is essentially
that of qualitative dynamics and particularly that of the theory of generic bifurcations
of dynamical systems. The purpose of this paper is to present three applications
of bifurcation and the catastrophe theory to study qualitative properties in economical
dynamics.
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Employees Relationship Management (ERM): Strategy
to Focus on Employees
Singh Sumanjeet
Business today is undergoing a silent revolution. For
the first time businesses are recognizing the power of individual. Just as customer
relationship management (CRM) is focused on increasing the value of customer base,
employees relationship management (ERM) is focused on increasing the value of the
employees’ base. The concept of (ERM) is based on the conviction that satisfied
employees tend to be more loyal, more motivated, more likely to have positive impact
on the retention of customers, all of which is better for business bottom-line.
The concept of ERM is more than attracting and retaining employees, in fact it is
a part of modern business strategy that aims to satisfy the employees to make them
loyal. As today, most of the organizations are suffering from talent crunch, formulation
of good ERM strategy and its successful implantation can reduce the intensity of
problem. In the present article, an attempt had been made to study the concept of
ERM and benefits from its implications.
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FDI in Services Sector: An Empirical Analysis with
Special Reference to the Delhi Region
Agarwal Ranjana* and Sebastian V. J.
The economic role of FDI is increasingly becoming significant
in the Indian economy with the transition of FDI policy from a restrictive phase
of seventies and early eighties to a relatively liberal phase of nineties. FDI is
an important indicator of economic growth and also stimulator of competitiveness.
Foreign direct investment has been seen as a dominant determinant to achieve high
rate of economic growth because it brings in scarce capital resource, raise technological
capability and increase efficiency through enhancing domestic competition. The share
of services sector is large in terms of GDP. In developed countries, majority of
GDP is contributed by services sector. In developing countries like India, share
of services has been increasing in terms of GDP. The contribution of services sector
in Indian economy is now almost half of GDP. It is expected to increase further
with very high growth rates. After liberalization, FDI inwards flows have increased
tremendously. A look at FDI statistics shows that distribution of FDI is uneven
across sectors. What is the role of FDI in services sector? Which countries are
contributing to service sector FDI. What are the main sectors in services where
FDI is flowing? What is the pattern of investment in each sub sector? Which firms
are receiving more investment? This paper looks into these issues by examining primary
data. A microanalysis of firm investment pattern has been done for Delhi region.
Using primary data, this examines investment patterns of firms in 3 major sectors
from 2004 to 2006. Data used is for Delhi region taken from Department of Industrial
Policy and Promotion It is seen that FDI flow is skewed across different sub sectors.
The financial services sector is receiving much more FDI as compared to other sectors.
Few firms have much more FDI flowing in as compared to others. Three firms namely,
Citi Financial, Kappa Industries and India Bulls are receiving maximum FDI. Policymakers
liberalized FDI norms for overall development of the economy. Policy should be made
so that all firms, small, medium and large benefit from investment process.
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Innovative Instructional Methods for Technical Subject
Matter With Non-Technical Pedagogy: A Statistical Analysis
Willow Charles* and Mosca Joseph
Instruction of technical subject matter to a relatively
non-technical audience and vice versa in higher education is a daunting task. In
this paper, a junior 300-level Management Information Systems (MIS) course as a
student requirement for graduation in the School of Business Administration is selected
for in-depth analyses and discussions. In the more recent years, MIS, as an area
of study amongst AASCB-accredited Business Schools, has constantly fell victim to
cogency problem of its subject matter, often referred to as its ‘Identity Crisis’.
One is the management-focused Objectivists Information Systems Management (ISM)
and the other information-technology-centered Constructivist’s Computer Information
Systems (CIS). Both ideologies are intriguing and useful and in fact necessary to
deliver the contents which encompass a gamut of MIS to students of higher learning.
The pedagogical problem of MIS while balancing the ISM and CIS is discussed with
an empirical analysis.
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