Researchers at Cambridge Judge and the University of Cambridge are studying various aspects of the Indian economy and its contribution to global markets. This section highlights some of these researchers and their projects.
Does Empathy Improve Marketing Performance? The Role of Cognitive versus Emotional Empathy in High Autonomy Sales Environments
Professor Jaideep Prabhu
Increasingly companies empower salespeople with a high degree of autonomy in how they price and sell services. This practice is particularly prevalent in emerging economies, especially where companies such as Unilever attempt to reach remote rural markets through autonomous salespeople drawn from those communities. The performance of salespeople, however, varies greatly across individuals in these environments. Why do some salespeople in high autonomy environments perform better than others?
The authors propose that a salesperson’s ability to see the world from a customer’s perspective (cognitive empathy) versus their ability to feel what a customer feels (emotional empathy) differentially influences pricing, volume, and service quality outcomes. The authors test their thesis on data from a high-autonomy salesforce in Bangladesh. To deal with the possibility of a potential omitted variable that simultaneously drives both cognitive empathy and sales performance, the authors use the ratio of the number of daughters relative to the number of children that salespeople have as an instrument for cognitive empathy. The results suggest that cognitive empathy increases salesperson prices, sales volume, and service quality outcomes, while emotional empathy increases sales volume but decreases prices and service quality outcomes.
Materially Poor but Socially Rich: How Community Trust Can Protect Low-Income Groups Against Myopic Decisions
Professor Jaideep Prabhu
Why do the poor make short-sighted choices in decisions that involve delayed payoffs? Foregoing immediate rewards for larger, later rewards requires that decision-makers (a) believe that future payoffs will occur, and (b) are not forced to take the immediate reward out of financial need. Low-income individuals may be less likely to believe that promised future payoffs will occur, and less able to forego immediate rewards due to higher financial need; they may thus appear to discount the future more heavily.
We propose that trust in one’s immediate community – which, unlike generalised trust, we find does not covary with levels of income – can protect against the effects of low income on myopic decisions. Specifically, we hypothesise that low-income individuals with higher levels of community trust make less myopic intertemporal decisions because, based on their past experience, they believe their community will serve as a buffer, or cushion, against their financial need. This enables them to choose the delayed payoff if they prefer to do so.
In archival data and lab studies, we find that higher levels of community trust among low-income individuals lead to less myopic decisions. We also test our predictions with a two-year community trust intervention in rural Bangladesh involving 121 union councils (the smallest rural administrative and local government unit in Bangladesh) and find that individuals in treated union councils make less myopic intertemporal choices than those in control union councils due to differential levels of community trust. We discuss the implications of these results for the design of domestic and global policy interventions to help the poor make decisions that could alleviate poverty.
Financial Inclusion and Mobile Payments
Professor Jaideep Prabhu
Professor Jaideep Prabhu is exploring financial inclusion and mobile payments. Large numbers of people in emerging markets are currently unbanked and therefore do not benefit from the many financial services that banks provide. While microfinance institutions have risen up to provide unbanked consumers access to relatively cheap credit, access to safe, reliable and cheap means of sending, saving, and spending money still remain outside their reach. A major innovation that has the potential to bridge this gap are mobile phone based payment systems. These payment systems have already met with considerable success in some markets. In Kenya, for instance, over eight million subscribers of Safaricom (a telecommunications firm) use their cell phones today to send, spend and save money. In the Philippines G-Cash, a service offered by Globe Telecom, enables consumers to send money from cell phone to cell phone, buy goods and services, pay for business permits and pay off micro loans. Firms, governments and NGOs in countries as far afield as India, South Africa, Ghana, Bangladesh, Pakistan and Sierra Leone are now looking seriously at introducing such services to unbanked and underbanked consumers. Interestingly, some companies like Obopay have also introduced such services in developed economies such as the United States.
Mobile payment services offer many opportunities as well as pose challenges for firms and governments alike. For firms, the key questions include:
- Which consumer segments are most likely to adopt such services first?
- What business model or models would work best?
- Specifically, how should these services be priced, distributed and promoted to target consumers?
For governments, the questions are:
- What impact are these services likely to have on consumer welfare?
- What are the potential hazards of such services?
- What are the regulatory implications: namely, what role should non-banking institutions such as mobile operators play in offering financial services to economically vulnerable consumers?
Along with colleagues at the Centre and elsewhere, Jaideep is engaged in research that aims to find answers to these questions. This research uses multiple methods (interviews, financial diaries and large surveys) and looks across time and countries. The key countries where this research is currently being done (or will be done shortly) include Kenya, India and South Africa. While this research is likely to take time and require considerable money and effort, its fruits are bound to have significant implications for countries, companies and consumers alike.
Use of ‘Information for Action’ based on Health Management Information Systems Implemented at State and District Levels throughout India
Professor Geoff Walsham
Professor Geoff Walsham has just completed a one-month action research project based at the National Health Systems Resource Centre (NHSRC) in New Delhi. The NHSRC is a technical support institution of the National Rural Health Mission (NRHM) of the Government of India. The NRHM was launched in 2005 to bring about substantial positive change in the way that public health care is delivered in India, especially to the rural poor. The focus of Geoff’s work was to advise the NHSRC on the use of ‘information for action’ based on health management information systems implemented at state and district levels throughout India. The work resulted in a series of recommendations on issues such as organisational design and human capacity development, and the development of a new tool called a state readiness matrix. Professor Walsham will be presenting a seminar on the work in Michaelmas Term 2009.
Note to Protectionists: Globalisation of R&D Isn’t a Zero-sum Game
Professor Jaideep Prabhu
Professor Jaideep Prabhu, the Nehru Professor of Indian Business, is exploring the globalisation of R&D centres by multinationals, especially in India and China. His preliminary research, based on a survey of 500 largest MNCs, show that:
- contrary to the received wisdom, a large number of MNCs are locating their R&D centres outside the developed nations
- China and India are rising in terms of multinational R&D facilities
- the US still dominates in terms of inbound R&D facilities
- patterns of R&D location vary across industries
- the number of a country’s science and engineering PhDs is the most important driver of multinationals’ R&D location in that country
These findings have several managerial and public policy implications, which are discussed in his upcoming paper, co-authored with Gerard J. Tellis, Andreas B. Eisingerich, Jaideep C. Prabhu, and Rajesh K. Chandy.
Implications of Indian Liberalisation: More than Meets the Eye
Dr Paul Kattuman
Dr Paul Kattuman analysed the evolution of market competitiveness in Indian manufacturing industries over the 17-year period from 1981, spanning the domestic liberalisation of 1985 and the more comprehensive reforms of 1991. An observer looking at summary measures of market concentration might conclude that not much happened under either liberalisation episode. In fact, Paul’s research shows that market share grew significantly more turbulent, and the relationship between market share growth and initial share changed considerably. Domestic and comprehensive liberalisation saw different types of course corrections in these processes. But in both liberalisation episodes they tended to offset one another in their impact on observed market concentration, which therefore, changed little.
Call-Centre Jobs are Anything but ‘Electronic Sweatshops’
Dr Bhaskar Vira
Extensive field research conducted with Indian call centre employees by Dr Bhaskar Vira, a lecturer in the University of Cambridge’s Geography Department, debunks the widely held perception of call centre jobs as ‘dead-end’ work; instead these jobs are perceived by Indian workers as opportunities for a newly emergent middle class to enjoy access to relatively high incomes, and high consumption lifestyles, while also providing workers with transferable skills that are potentially of value in the development of the wider (service) economy.