Mukund R. Dixit

Insurance Industry in India: Structure, Performance, and Future Challenges

With the liberalization and entry of private companies in insurance, the Indian insurance sector has started showing signs of significant change. Within a short span of time, private insurance has acquired 13 per cent of the life insurance market and 14 per cent of non-life market. However, there is still a huge untapped demand for insurance. Insurance companies have a pivotal role in offering insurance products which meet the requirements of the people and, at the same time, are affordable. Some of the challenges faced by the insurance sector pertain to the demand conditions, competition in the sector, product innovations, delivery and distribution systems, use of technology, and regulation. To understand the growth and development and the future prospects of this sector, this colloquium addresses the following issues: What will be the demand for insurance? What types of innovative strategies of insurance education and awareness will we require to encourage the Indian consumers? With the changes following bank participation in insurance, will the nature of competition in this sector intensify? What kind of competitive and risk pressures will the insurance businesses experience? What are their implications for profitability, margins, and efficiency? The average size of the polices will continuously decline as the insurance companies increase the geographic coverage. As a result of this, the intermediation costs will go up. What are the implications of these on average costs? What will be the product market scenario? Has the insurance sector benefited from the knowledge base of global companies? To what extent have the technology gains in telecommunications, computer information, and data processing contributed to increased efficiency and productivity of insurance companies? The following key points emerged from the responses of the panelists: The future in life insurance will be determined by the increase in pure protection products, a refreshing look at unit-linked plans, launch of customized plans, and improved service levels. The insurance sector will grow steadily rather than rapidly. While the law and regulations are in place to ensure financial strength and solvency of insurers, the regulators challenge lies in monitoring compliance. The opportunity for financial services is increasing all over the world. Big domestic companies with significant market shares in the local countries will have the opportunities to commence business in other markets. Keeping in mind the complexities of the industry, multi-product, multi-channel, and multisegment route needs to be followed for growth. The challenge of successfully implementing bancassurance lies in training the staff, integrating the insurance products, and ensuring best quality service. Agents in the insurance sector are critical for its success and, in order to gain competitive advantage, quality people are needed but attracting and retaining agents is a challenge.

Strategic Orientations and Innovation in Resource-constrained SMEs of an Emerging Economy:

While previous research has explored the linkages of strategic orientations and innovation for large businesses of developed economies, relatively little is known about these linkages for SMEs of emerging economies. To study these linkages, data were collected from owners or senior executives of 162 manufacturing SMEs in the Punjab region of India. Our results show that while customer orientation has been found to enable innovation for large firms, it does not directly facilitate innovation for Indian SMEs. The customer-oriented SMEs create successful innovation through better utilisation of their dynamic resources. Therefore, creation of dynamic resources by SMEs is more critical than that of unique resources for successful innovation. Implications of our findings are discussed for theory as well as practice.

Performance implications of industry appropriability for manufacturing SMEs : The role of technology orientation

Purpose – Industry appropriability – the degree to which firms in an industry can appropriate benefits from their innovations – is a crucial dimension of industry environment. Small and medium manufacturing enterprises (manufacturing SMEs), because of their limited resource base, tend to be especially sensitive to the appropriability conditions in their industry. The purpose of this paper is to understand the influence of industry appropriability on firm outcomes (innovativeness and performance), and posits technology orientation as a dynamic capability that helps firms overcome appropriability barriers in their industry. Design/methodology/approach – Data were collected from 162 manufacturing SMEs in India. Multiple linear regression analysis was used to test the proposed hypotheses. Findings – This study reveals that the perceived level of appropriability of manufacturing SMEs impacts their innovativeness. Further, findings also support technology orientation as a crucial firm-specific characteristic wh...

Does strategic planning determine innovation in organizations? A study of Indian SME sector:

While some researchers argue that strategic planning assists new product development and can be viewed as a framework for innovation, others believe that it restricts creativity and innovation. Despite a literary appreciation that strategic planning is linked to innovation, the nature of this relationship remains ambiguous. In this study, we argue that this relationship is context dependent and contingent on other organizational factors. Data for this study were collected by administering standardized survey questionnaires to entrepreneurs or other senior executives of small and medium businesses in India. Quantitative analysis of data obtained from 162 small- and medium-sized enterprises (SMEs) in the manufacturing sector reveals a positive relationship between strategic planning and innovation. This study also establishes a significant positive moderating role of commitment to learning on the relationship between strategic planning and innovation. Implications for theory and practice are discussed.

Measuring the effectiveness of strategic planning: proposing a second order operationalization

Purpose The purpose of this paper is to demonstrate a multi-dimensional second-order operationalization of strategic planning, to advance the understanding of this construct. Design/methodology/approach Data on the strategic planning construct were collected using survey questionnaire administered to 123 small and medium-sized manufacturing enterprises (SMEs) in India. Findings The findings clearly reveal that the strategic planning construct can be effectively operationalized as a second-order multi-dimensional construct. Research limitations/implications Data for this study have been collected primarily from SMEs of manufacturing firms. Further investigation in other kinds of firms may help in the enhancement of the construct. Originality/value Scholars have long called for using second-order constructs in strategy research. Operationalizing multi-dimensional constructs as unidimensional leads to inaccurate results and interpretations. By demonstrating a second-order operationalization of strategic planning, the authors illustrate better ways of operationalizing a construct. At the same time, this operationalization should help in better understanding of the implications of strategic planning on firm performance.

Design leaps: business model adaptation in emerging economies

Purpose Firms take design leaps when they imitate an established business model developed either by another firm or in another market to create business opportunities. While recent research has suggested the use of contextual intelligence for imitation, the exact process of adaptation of a business model is not fully understood. The purpose of this paper is to outline the process through which an emerging market firm adapts a developed market business model for creating business opportunities in the local market. Design/methodology/approach This paper investigates the journey of Air Deccan, the pioneer low-cost airline in India, from its founding until its successful adaptation of a (Western) business model and eventual failure. The authors use a qualitative case-based approach to study business model adaptation. Findings The authors find that adaptation involves the incorporation of following design features: novelty to overcome problem of institutional voids, elasticity to exploit unexpected increase in demand and efficiency to serve large volumes. Based on the evidence, the authors suggest the introduction of global efficiency measures as the boundary conditions of business model adaptation in emerging markets. Research limitations/implications The paper contributes to the literature on business models by suggesting elasticity as a unique design feature relevant for emerging markets. This paper provides granular understanding of business model toxicity. Practical implications Entrepreneurs and managers – looking to enter emerging markets through opportunity creation – should focus on providing contextually novel design features in the adapted business model. The authors also caution practitioners against the perils of toxicity arising out of combining contextual novelty with efficiency. Originality/value Recent literature suggests that multinationals need contextual intelligence to successfully monetize their investment in emerging economies. This paper provides rich description of the challenges faced by entrepreneurs in emerging markets, local innovations used to overcome them and boundary conditions.

Entrepreneurial growth actions and their financial consequences in a start-up: insights from a low cost airline venture in a competitive environment

This paper investigates the financial consequences of entrepreneurial growth actions in a start-up. It argues that the growth actions in a start-up create an imbalance in the demand for and supply of money for the start-up. This imbalance does not hurt if the external business environment is munificent. However, if the environment turns hostile the imbalance may force the entrepreneur to take crisis decisions that destroy the very texture of the venture. We develop insights into this situation by tracing the development of a low cost airline venture in India. We identify two distinct growth phases: early growth and emergent growth. We present a comparative analysis of these two phases on different parameters: growth actions of the venture, financial consequences, stance of the environment and implications for the texture of the venture. The paper concludes with a discussion on start-up aspirations, growth actions, financial imbalance and maintenance of the texture of the venture.

Strategic breakthroughs as flagpoles of innovation process

This paper empirically investigates the innovation process, from ideation to market leadership. The focus is on the nature of innovation process, action-outcome linkage, and learning from the environment. Our conceptualisation of the innovation process being a series of strategic breakthroughs is built on the experiences of Samsung Electronics in creating two world-class products: microwave ovens and semiconductors. Our findings demonstrate that the process of innovation progresses through the occurrence of four types of strategic breakthroughs: entry, platform, springboard, and leadership. Based on our analysis, we infer that the process of innovation is more predictable and controllable in its early stages, but turns random in the later stages. Our explanation for such behaviour adds to the current understanding of innovation process. We also describe the role played by the external (environmental) and internal (organisational) factors in facilitating the emergence of strategic breakthroughs.

New environmental stimuli, challenges of entrepreneurial firms and growth leaps: evidences from multisector case studies

This paper conceptualises and delineates five challenges faced by entrepreneurial firms in responding to the stimuli for growth provided by the new environment of globalisation, deregulation and liberalisation. It identifies key managerial actions that lead to growth leaps in the context of these challenges. It provides evidences from case studies in three different sectors – software, aviation and energy – in support of its contention. It also articulates how entrepreneurial firms miss the growth leap opportunity. Though the literature is replete with studies on enterprise growth, the knowledge about challenges in responding to growth stimuli provided by the new environment is limited. This paper is a contribution in this direction.

TI Cycles: New Product Strategy (A)

Mr K K Paul, General Manager, Marketing, of TI Cycles of India (TI Cycles) were discussing the opportunities to increase the sales and market share of the company. This had become imperative in view of the near stagnant sales and increased competition in the standard and special bicycles. They were quite sure that the company’s strength and standing could be enhanced through new product introductions. For this purpose, they reviewed the company’s performance, developments in domestic bicycles market, competition and competitiveness in domestic and international markets, and the company’s role in developing the ‘Specials’ category of bicycles. Ramkumar, 40, was a post-graduate in management from the Indian Institute of Management, Ahmedabad and a cost accountant. He had taken over as Vice President of TI Cycles in 1995. Earlier, he was General Manager, Finance, of TII Group, the parent holding company of TI Cycles. He had worked for 12 years in all with the Group. He had also worked as the head of finance at TI Cycles itself. Paul had been at TI Cycles in the marketing function in different capacities including exports and managing the eastern region immediately before taking over as the General Manager.