In April 2020, Alisha Moopen, Deputy Managing Director of Aster DM Healthcare, a network of clinics, hospitals, and pharmacies in the Middle East and India, must create her company’s budget for the 2021 fiscal year in light of the onset of Covid-19. The pandemic had forced Aster to indefinitely cancel elective procedures, which represented 70% of the company’s revenue. Meanwhile, materials costs increased as the Aster team had to procure enough personal protective equipment (PPE) to keep frontline staff safe from the virus, even as revenue from clinics and pharmacies declined. To offset the impact of the pandemic, Alisha and her team must decide whether to implement austerity measures, such as temporary salary decreases, whether to request temporary rent reductions from their landlords, and whether to renegotiate their debt covenants with their lenders. They must also decide what assumptions they can make about revenue: when elective procedures will resume, whether their new telehealth practice will gain traction, and when clinic and pharmacy revenue will recover.
Multinational corporations (MNCs) hire auditors to assess their business partners’ compliance with quality, working conditions, and environmental standards. Independent third-party auditors are widely assumed to outperform second-party auditors employed and thus controlled by MNCs. Synthesizing literatures on auditor independence and outsourcing decisions, we compare how independence and control can affect auditor performance. Using proprietary data from a global apparel brand, we find that second-party auditors outperform independent third-party auditors, and that third-party auditors’ performance improves when MNCs concurrent source audits, using both second- and third-party auditors. However, both second- and third-party auditors perform better with more independence from the entities they audit—specifically, when auditing factories most recently audited by a different firm. These findings yield important insights for more effective monitoring of business partners.
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Anjali Raina is the Executive Director of the Harvard Business School India Research Centre. In her leadership role at the IRC, Anjali focuses on building and maintaining relationships with senior business leaders in the region to facilitate the work of the center in research, educational programs, community building and faculty development.
Under her leadership, the IRC has facilitated the writing of over 168 case studies on Indian Business Practice and supported half a dozen research projects. Anjali has co-authored several case studies such as Aadhaar: India’s ‘Unique Identification’ System, TeamLease: Putting India to Work (II) Legally; Pratham – Every Child in School and Learning Well; Naina Lal Kidwai: Investing in Her Country; Tech Mahindra and the Acquisition of Satyam Computers (A); HN Agri Serve : Growing Prosperity as well as an HBR Article on The Ordinary Heroes of the Taj.
Anjali wears several additional hats. She is a Director on the Board of Harvard Business Publishing, India, the Regional President (Western Region) of NHRDN, an Advisor to The Akanksha Foundation, Trustee to LIFE Trust, an Advisory Member on the Board of HBS Club of India, and on the Advisory Board of the Indian Business School.
Prior to joining HBS IRC Anjali spent 15 years with Citigroup India, most recently as Country Director, before which she worked for more than a decade with ANZ Grindlays Bank PLC. Anjali holds an MBA from the Indian Institute of Management, Calcutta, a bachelor's degree (Eng. Hons) from Loreto College and is an alumnus of HBS having completed the Advanced Management Program.