2019 -20

Project Title:Digital Transformation Journey for Small and Medium Enterprises in Growth Economies - Antecedents and Consequences
Principal Investigators: Kiran Pedada, Assistant Professor, Indian School of Business (Principal/ Co-Investigator); Srinivas Pingali, EFPM Student, Indian School of Business (Co-Investigator); S. Arunachalam, Assistant Professor, Indian School of Business; Rajendra K. Srivastava, Dean and Novartis Professor, Indian School of Business
Small and Medium Enterprises (SMEs) are critical to emerging/ growth economies around the world. They are essential for growth and employment generation and have been the focus of recent government policy in growth markets such as India. Digital Transformation is critical for companies gearing themselves for the future and remaining competitive. Although existing research provides insights on the importance of digital transformation and its benefits for a firm’s competitiveness and growth, there is a limited understanding of the antecedents and consequences of digital transformation in SMEs situated in growth markets. This study examines this area and develops theories on how SMEs look at digital transformation, the triggers for embarking on this journey, and the benefits they seek as an outcome.

Project Title: On Endorsement Disclosure on Instagram
Principal Investigators:  Abhishek Rishabh, FPM Student in Marketing, Indian School of Business
Manish Gangwar Executive Director - Institute of Data Science at ISB, Associate Professor of Marketing, Indian School of Business
In this research proposal we plan to examine the endorsement disclosure behavior of social media influencers. Federal Trade Commission (FTC )in US, Committee of Advertising Practice (CAP) in UK and now CCPA in India require social media influencers to disclose their endorsements clearly on social media website such as Instagram, Twitter, Facebook etc.
However, many of these influencers donot disclose because they feel by posting ads on social media platform their
Project Title: Government Banks and Capital Misallocation
Principal Investigators: Apoorva Javadekar Assistant Professor, Indian School of Business; Indraneel Chakraborty, University of Miami.

Many emerging market economies have a significant presence of government or public sector banks (PSBs), often along with private banks. PSBs aim to satisfy two objectives: provision of capital on competitive terms to the real economy (commercial role) as well as provision of capital for social objectives to under-served constituencies (social role). This paper documents the inferior performance of the PSBs when competing side-by-side with private banks in their commercial role. We further trace the real effects of poor performance of PSBs in their commercial role on their social role. Our results provide an opportunity for policymakers to reassess the optimal composition of the financial sector in emerging markets for the two objectives.

Project Title: Do Social Ties Trump Collateral In Determining Loan Performance ? Evidence Using Same Day Loan Repayments
Principal Investigators:Prasanna Tantri Assistant Professor, Nitin Vishen Doctoral Student, Indian School of Business; Sumit Agarwal National university of Singapore
We compare default rates of collateral based individual loans and joint liability-based group loans. The two types of loans are directed at different segments of the credit markets and often analysed by researchers in different silos. The argument being that low-income households do not have any collateral to offer. However, in our dataset, we have borrowers who have both kinds of loans which are running simultaneously and are required to be repaid on the same day. Many of these borrowers have collateralized individual loans. If individual collateral-based lending is more potent, then we expect to see a lower default rate on individual loans. If, on the other hand, social ties matter more than individual collateral, then we expect the opposite result. Our initial results show that among such pairs of loans, group loans out-perform by 10.24 percentage points.

Project Title: Mapping India’s innovation landscape
Principal Investigators: Anusha Sirigiri, Assistant Professor, Entrepreneurship, Indian School of Business & Deepak Jena, Assistant Professor, Strategy, Indian School of Business
We propose to create and freely disseminate datasets that we hope will not only spur data-driven rigorous India-specific academic research on innovation but will also generate insights-based discussions among practioners and policy makers about the future of innovation in India. While there is global consensus that innovation drives economic growth, the nature of innovation varies widely across nations. These country-level and firm-level differences are attributed to numerous factors in extant research. These are factors such as strength of judiciary, investments in R&D, organization of R&D, knowledge sharing within and across firms etc. Despite of ample research in this area, less is known about what drives innovation in emerging markets such as India. One of the key reasons behind this is the dearth of comprehensive and reliable India-specific data related to innovation inputs and outputs. In order to address this research gap, we propose a study that will summarize the current state of innovation by investing in building an Indian Patent Database that is on par with the US National Bureau of Economic Research (NBER) -like datasets and also creating a survey that will allow us to understand underlying processes leading to successful innovation. Our goal will be to contribute to innovation knowledge base published in top journals.

Project title: Physical and psychological costs of social class imprint at work: Role of organizations in explaining the SES-Health Relationship
Principal Investigator: Pooja Mishra, Assistant Professor, Organisational Behaviour, Indian School of Business; Co-Investigator: Marko Pitesa, Associate Professor, Organisational Behaviour and Human resources, Singapore Management University.
One of the key and most disconcerting findings in the literature on socioeconomic inequality is that people from lower socio-economic (SES) environments are in systematically and substantially worse health (Adler et al, 1994).
Moreover, subjective SES tends to be a stronger predictor of health than objectively measured SES, suggesting that the root of the issue lies in psychological differences due to SES background differences (Alder et al, 2000). However, specific ways in which SES psychology impacts health are poorly understood (Adler et al, 1933; Alder et al, 2000).
We propose that one unifying factor connecting SES, it’s psychology, and health, is work. As key sites in which socioeconomic advancement takes place, organizations might themselves create systematic differences in psychology and behavior as a function of SES that may explain how health disparities are generated. This possibility is additionally relevant in light of the evidence of the class ceiling (Freidman, Laurison, & Miles, 2015; Laurions & Friedman, 2016). Given the importance of health for performance and career success (Miraglia & Gary, 2016), a possible SES-based health and wellbeing disadvantage might at the same time partly explain reasons for SES-based achievement gaps as well.
We draw on behavioral economics research on the impact of resource scarcity on decision making (Banerjee & Duflo, 2011; Shafir & Mullainathan, 2013) to propose that work will differentially impact health of workers from higher versus lower SES families even when provided with the same education and job opportunities. Workers often trade health for contributions to their organization, most notably by coming to work instead of taking needed rest or convalescence, a phenomenon known as presenteeism. We propose that workers from lower SES families will exhibit higher job concerns due to their chronic risk aversion / scarcity mindset, as well as their objectively more precarious current life circumstances (as parental SES is associated with current SES). This, in turn, will lead to higher presenteeism, undermining health (and thus explaining the SES-health puzzle), and, in turn, longer-term performance (and thus explaining the class ceiling puzzle).
We effectively propose that modern organizations extract higher value at the expense of workers’ health among those from lower social classes, due to dynamics of economic dependence and precarity, ultimately leading to reproduction of disadvantage and inequality. We propose and test both organizational and psychological intervention strategies that can attenuate this problem.
The role of organizations in affecting the SES-health/well-being relationship is especially important in emerging economies such as India, where the chances of socio-economic mobility is higher. Given the emerging gig-economy and plethora of opportunities, this is high time we ask this question that are we negatively affecting the health of workers from low SES for economic growth? For example, Some research shows that gig-economy actually negatively affects the health of the workers (Bajwa et.al, 2018). Given that majority of these workers come from low SES, it is important to investigate how this gig-economy is affecting their physical and mental-health.

Project Title: Reverse Brand Acquisition and the International Growth of Emerging Market Firms
Principal Investigators:  Kiran Pedada, Assistant Professor of Marketing, ISB; S. Arunachalam, Assistant Professor of Marketing, ISB; Mayukh Dass, Associate Dean and J.B. Hoskins Professor of Marketing, Texas Tech; Rajendra Srivastava, Dean and Novartis Professor of Marketing Strategy and Innovation, ISB
Historically, multinational companies in developed markets used acquisitions as a strategic tool to enter emerging markets such as India and China. However, recently, firms from emerging markets are increasingly acquiring brands from developed markets and creating a global presence. We refer to this phenomenon as “reverse brand acquisition.” Given that the institutional context of emerging markets is different from that of developed markets, the knowledge gained from past studies in the context of acquisitions is not sufficient for understanding the phenomenon of reverse brand acquisition. Using a multi-method approach and building on the resource advantage theory of competition, this paper develops a new theoretical model that can explain and predict phenomena related to reverse brand acquisition.

Project Title: Sectoral Herding in the Indian Capital Market

Principal Investigators: Abdul Mohi Khizer, Doctoral Candidate-Accounting, Indian School of Business; Vijaya Subrahmanyam, Ph.D, Professor of Finance, Mercer University, School of Business and Economics; Geoffrey Ngene, Ph.D, Associate Professor of Financial Economics , Mercer University, School of Business and Economics

This paper aims to resolve the inconclusive studies on herding behavior of investors in the capital markets, especially in emerging economies by employing a tick level dataset from BSE. This rich transactional data allows us to identify the behavior of investors at individual trader level and broad investor category level (i.e. institutional, retail, broker). This clear identification provides a neat setting to test capital market nuances unlike prior literature that infers investor categories based on trade size. Moreover, we intend to analyze herd behavior and its implications in the context of business groups (a peculiar feature of Indian market that plays a critical role and has a dominant presence). This study contributes towards understanding investor behavior, information dissemination implications via herd behavior and entails non-trivial insights to policy makers on legislations to ensure efficient capital market. Lastly, the study intends to explain herding driven crisis phenomenon in other developed economies along with suggestions to avoid it in future.

Project Title: Transportation Network and Domestic Trade

Principal Investigator: Shekhar Tomar, Assistant Professor, Indian School of Business, Hyderabad

The recent work in the quantitative trade literature has highlighted that the size of intra-national trade barriers is as much as or more than the inter-national trade barriers faced by the emerging market countries. Thus, large welfare gains can be achieved by these countries by reducing their domestic trade barriers. These barriers can be caused by various factors like transportation infrastructure, institutional barriers, information frictions etc. In the proposed study, we plan to answer the following questions using India as our benchmark case. (i) How much does transportation cost contribute to the domestic trade barriers? (ii) What is the optimal road network infrastructure? And (iii) what matters more for trade; last mile connectivity or big highways?

Project Title: Unaccepted Credit Ratings: Consequences for Firms and Policy Makers

Principal Investigators: Sanjay Kallapur, Professor of Accounting, Indian School of Business,  Hariom Manchiraju, Assistant Professor, Indian School of Business; Abdul Mohi Khizer Doctoral Candidate-Accounting, Indian School of Business; Rajesh Vijayaraghavan, The University of British Columbia

The recent financial crisis in the US has brought the focus on the role of credit rating agencies for the effective functioning of the capital markets. Flawed ratings resulted in large losses on securities from ratings that were overly optimistic. Academics and regulators suggest that a possible reason for the biased ratings is the business model of the rating agencies, the so called “issuer pay model”, where the main revenue stream of rating agencies is from the firms whose securities they rate.  In addition, there is an aspect that theoretically the issuer firms will select the ratings agencies that provides them with the most favorable ratings – “ratings shopping.” However, there is very little empirical evidence on whether firms actually engage in selecting their ratings, and the consequences of their decisions.
In this paper we analyze the issue of credit rating shopping in light of the recent SEBI disclosure requirement of unaccepted ratings by credit rating agencies. This requirement offers a unique setting to add further evidence in this large question, by also focusing on how firms react if the users of the credit ratings are actually aware of firm’s decision to engage in ratings shopping. Prior research documents credit rating shopping in various settings (Bolton, Freixas, & Shapiro, 2012; Griffin, Nickerson, & Tang, 2013); But the biggest concern with the entire existing literature is the unobservability of the counterfactual, i.e. ratings that were solicited but not accepted are unobserved to the researchers. This issue pushes researchers to create implicit assumptions of rating shopping when structuring the research design. For instance, Flynn & Ghent (2017) assume firms to have engaged in rating shopping, in the current year, if they disclose ratings from fewer rating agencies in comparison to the previous year. The underlying assumption is that the firm must have approach the same set of agencies in the current year (as earlier), but due to unfavorable ratings, it decided to selectively disclose.
This assumption of shopping, and all the conclusions in the literature (academic and policy level) are bereft of the basic variable required to conclusively identify if firms are engaging in credit rating shopping and its implications. Bae, Driss, & Roberts (2017) in a recent paper, identify this limitation of credit rating literature as the biggest source of inconclusive evidence. In light of these concerns, we exploit the SEBI mandate that requires credit rating agencies to disclose any ratings that were issued but were not accepted by the issuer. This regulation eliminates the opacity between the capital market and firms when credit ratings are issued.
We build on this setting and will plan to answer questions that will establish the value of the mandate, the transparency brought about by the mandate, and examine the functioning of the private debt market. Our ultimate aim is to make a novel contribution to research on an Indian capital market setting, and specifically, identify amendments to the regulation towards building an efficient and transparent Indian debt market.