Strategic Management of Small Firms in the UK - Essay Example

Chapter 3: Research methodology 3 Introduction This study is centred on exploring and analysing the strategic management of small firms in the UK. The objective of this study is to explore, and assess the literature about strategic management of small firms. Moreover, the study focuses on various issues ranging from business planning approach within such firms to the management processes employed by them. In order to discover the desired objective, two key questions shall be probed. These include: - What is the source of comparative advantage among small enterprises? And - How well does strategic management influence small enterprises? This research study falls into two key phases, which includes theoretical and empirical. The chapter will identify the research methodology for this study on whether it is qualitative or quantitative. The qualitative method is founded on a sound theoretical basis whereby a comprehensive literature review aimed at exploring the research topic is included. The theoretical aspect of the research in turn focuses on two key aspects, which include formulating a typology and analysing the current approaches and processes, employed by small firms. The deduction of the typology is used to help in embodying the findings and conclusions observed from previous research studies on similar topics. The observations made therefrom are likely to contribute immensely in arriving logical conclusions. The quantitative method, which is based on empirical data, includes collecting primary data through survey method, which involves collecting the necessary data through questionnaires. These include semi-structured questions aimed at managers of SMEs in the UK. The effectiveness of any research methodology is based on the philosophical underpinnings with regard to the approaches adopted. It also depends on the appropriateness of the research methods implemented and the level of accuracy of results derived therefrom against the knowledge required for the given study. Hence, the key assumptions made of crucial significance for conducting and for achieving effective evaluation of the data collected. This chapter aims to discuss the philosophical assumptions, the design strategies, research approaches and strategies used for the purpose of this study. Furthermore, this chapter also discusses the research instruments used, the methods of data collection and methods of analysis of the data used in this study. 3.2. Research approach A research approach comprises of detailed plans and processes that elaborates on the broad assumptions with regard to the research topic and the detailed methods applied for data collection, analysis as well as interpretation (Crewel, 2013: p. 3). For the purpose of this study, different research approaches will be first provided followed by research design and method. Then, the source of data and sample, data collection and data analysis will be presented. 3.2.1. Quantitative Research Approach: Quantitative research is a research approach that helps the researcher in testing the theories used to examine the relationship between various variables. These variables are then measured using various analytical methods and instruments, resulting in the generation of numbered / statistical data that can be easily interpreted, thus enabling easy and better interpretation of the observations made. Using this technique assists the researcher in presenting the collected data in a structured report format. The report is done in the form of various chapter ranging from introduction to the theoretical and empirical framework, literature reviewed, the methods of data collection implemented, as well as instruments used for analysis, interpretation and discussions. The quantitative research approach enables the researcher in testing the accuracy of the theories, assumptions and hypotheses used in the study deductively, similar to that observed in the qualitative research approach. Furthermore, this research approach helps the researchers in preventing researcher bias thus enabling objective interpretation and analysis of the collected data. It also enables effective deduction of alternative theories, and explanations of the data collected and in accurately generalising the results derived to the larger population thus enabling easy replication for future studies (Creswell, 2013) 3.2.2. Qualitative Research Approach: The qualitative research approach uses a realistic approach whereby the key focus is on exploring and understanding the peculiarities and singularities of the context of the study as is, in the actual world. It entails studying the variables in their actual surrounding without manipulating the centre of focus / key variables involved in the study (Creswell, 2013). This research approach helps the researcher in employing effective research methods that help in exploring, observing as well as collecting vital information needed for the study. It also helps in analysing the same effectively and accurately (Denzin and Lincoln, 2000). The qualitative research approach helps the researcher in identifying and emphasising the key issues related to the phenomenon being studied /observed through the case studies. According to Fischer (2005), the case study approach is a qualitative research approach that helps in the descriptive analysis of an individual or group under study and in effectively explaining the context as well as purpose of the study. The objective of the research is to gain a better understanding on the needs of Strategic Management of Small Firms in UK to enable growth. We apply the qualitative research approach in order to gather more information and describe the situations involving the process. In addition, we have applied the quantitative research approach since it allows us to statistically measure some of the variable, alongside their impacts and influences on the Strategic Management of SMEs. So, the study uses a combination of both qualitative and quantitative research approach. 3.2.3. Inductive & Deductive Research Approach: The research approach can be classified into two categories: The inductive approach and the Deductive approach. The inductive approach focuses on the development of theories, which are proven based on analysis of the data collected. The deductive approach, on the other hand, emphasises on developing and proposing novel ideas and theories. The theories must originate from the data collected and testing the research hypotheses (Saunders, Lewis, and Thornhill, 2007; Hesse-Biber & Leavy, 2004). Figure 3.1 Deductive Research The inductive research approach is based on the interpretive philosophy whereby the reality of the subject / phenomenon under study is explored through a range of factors or variables. The variables include emotions, actions or intentions of the participants observed as a part of the study (Arbnor & Bjerke, 1997). The deductive research approach in contrast is founded on the positivist philosophy whereby the key focus is on using the scientific or actual physical principles for analysing the collected data. The inductive research approach is known to be highly useful researching a ‘new’ or emerging issue and hence used in studies that require extensive study of a phenomenon that is relatively ‘new’, or emerging. The phenomenon may not be studied in-depth so far (Creswell, 2011). The deductive research approach, on the other hand, is known to be highly useful in exploring topics, which have already been explored and analysed ensuring greater availability of ample literature and theories developed therefrom. The deductive approach is based on the discussions included in the literature review as well as in the theoretical framework, and the observations are drawn from the existing theories. Figure 3.1 Inductive Research For the purpose of this study, the deductive research approach is used since it helps in effectively analysing the collected data based on a sound theoretical framework. Also, this method enables the researcher in carrying out surveys and lowering the risks associated with data collection due to limited availability of time at the disposal of the researcher. 3.3. Research design A research study can be categorised into various different categories depending on the nature and purpose of the research and the research problem that the researcher aims to address and explore. This includes exploratory research, causal research, descriptive study, explanatory research, and exploratory research as well as interpretative among others. The choice of an appropriate research design depends on the type of the research, objective of the study as well as the intended audience. Also, other factors such as previous research on similar topics, the extent and scope of the research problem being explored, and the availability of existing information with regard to the study must also be taken into consideration and clearly defined (Yin, 2009). The various types of academic research include exploratory research where the problem is ambiguous; descriptive research where the intended audience is aware of the problem; and exploratory research where the research problem is clearly defined (Yin, 2009). A research study may include multiple approaches (Saunders et al., 2007) hence for the purpose of this study a combination of these research designs are used and applied to ensure greater validity and accuracy of the data collected, thus enabling accurate interpretation. Exploratory study: The key aim of exploratory research study is to gain insights into the topic of research and generate ideas from the observations made therefrom. This type of research design is known to be especially useful in effectively breaking down complex problem statements and /or research questions into smaller understandable sub-problem statements in the form of research hypotheses. Furthermore this type of research design is highly effective in analysing and exploring contradictory opinions and observations made through literature review of historical studies and is accurately deciphering the meanings behind the data collected and apply it in practical settings (Churchill and Iacobucci, 2009: p. 60). Casual Research: This type of research method is known to help the researchers in effectively analysing the impact and influence of one variable on another. In order to achieve this objective, this method entails an in-depth study of two different types of variables namely dependent variable and independent variable. However, this type of research design ensures that the study is not confined to observation of the relationship between any given variables but also entails a critical and comprehensive study of all aspects critical to the research topic in question. It enables the researchers in observing the impact and influence of all variables on one another thus enabling them to study all aspects of a given phenomenon. The hypotheses in this type of research are directional in nature and are mainly aimed at understanding the cause-effect relationship among variables variables, that is, the dependent and independent (Zikmund and Babin, 2012). Descriptive Research: This type of research design is especially helpful / useful in obtaining vital information necessary for the formation of hypotheses. This in turn helps the researcher in arriving at logical conclusions with regard to the likely associations / relationship between them. The fundamental purpose of this type of research is to depict effectively and describe the profile of the target subjects, which includes people, events, as well as situations. This type of research design is deemed to be extremely useful in exploring the research questions, substantiating the research hypotheses, and in seeking solutions and causes behind a given phenomenon under study / observation (Zikmund & Babin, 2012). There are five common research strategies that include experiments, case studies, surveys, and archival analysis (Yin, 2003). Each of the outlined strategies has both advantages and disadvantages. There are also differences in ways of collecting and analysing data. According to Yin (2003), the differences fall under the three conditions: 1- The type and nature of research questions 2- The extent in which a researcher has control over real behavioural events. 3- The level of focus on contemporary and historical events. Survey is the most appropriate strategy for this research. The strategy is appropriate since the main aim of our research is to evaluate how strategic management influences SME’s growth and unravelling the sources of comparative advantage among SMEs firms. Survey would form a good strategy in collecting and analysing data. 3.4. Source of data and sample Success of a study is credited to usage of an effective data collection method. It is thus very critical to choose the appropriate data collection method. The selected method determines how the data is collected. Interviews, questionnaire, documentation, observations, standardised tests, archival records are some of the frequently used methods for data collection. According to Sekaran (1992), there are two categories of data; primary and secondary. For this study, we have collected primary data using a survey questionnaire. We sent the questionnaire survey to the top 100 SMEs in UK listing by profitability. The profitability was determined from the Yorkshire post (February 4, 2014), and questions were answered through monkey survey website. The gathered data enabled us to observe, understand and analyse strategic management process that these firms use. It is clear that the strategies have enabled growth as well acting as a source of competitive advantage. We have gathered more knowledge about the practical situations of SMEs about the use of SMEs growth strategy theories. 3.5 Data collection Primary data: Primary data refers to the data /information collected by a researcher for the purpose of the study. This data is unique to the research study and is collected by the researcher especially to substantiate the research hypotheses. This data is original and does not include or have any reference to the previous studies. Since this method entails collecting fresh and original data it is directly related to the key issue or problem of the research study and can be collected through various methods such as interviews, surveys, questionnaires etc (Crowther & Lancaster, 2009). Primary data is highly useful and beneficial in various ways: Advantages of primary data: It is highly accurate and ensures greater validity because the data collected is original and specific to the research study It can be collected through various instruments such as surveys, interviews, and questionnaires thus ensuring greater accuracy in the form of vital information that can be acquired. The increased accuracy is afforded by face-to-face interviews or online questionnaires, which can help in acquiring information on a larger scale. Primary data affords a relatively realistic perspective / view of the problem in question and is more relevant since it is current. Secondary data: Secondary data refers to data collected by the researcher based on previous studies. This includes exploratory case studies, which are collected from historical studies. Secondary data can be collected through various sources including online journals, books, government portals, relevant websites etc., among others (Crowther & Lancaster, 2009). This method of data collection ensures various advantages such as: Cheaper forms of data collection: The data collected via secondary sources are relatively cheaper and faster as compared to the primary sources of data collection. Ensure greater access to vital data across the globe: Since the secondary sources of data are readily and easily available from across the globe via online sources, it enables the researcher in accessing greater information related to the study, thus enabling accuracy in data interpretation and analysis. Saves time, effort and investment required for collecting data. 3.6 Sample Selection “Sampling is the process of selecting a sufficient number of elements from the population so that by studying the sample, and understanding the properties or the characteristics of the sample subjects, we will be able to generalize the properties or characteristics to the population elements” (Sekaran, 1992, p. 226). A sample is a subset of the population. There are several sampling techniques that a researcher can use. Sampling procedures allow researchers to get the required data from a subset or subgroup rather than the whole population. The ability to get all the detail about a population from a sample reduces the amount of data required to fit the purpose of the study. For our research, we have used Probability sampling. Probability sampling entails a random selection of study participants randomly in a manner that accord all members of the study population equal probability of being in te sample. Our criteria for sample selection of data to be included into the survey considered factors such as: 1- SMEs that fit the definitions that we have provided earlier. 2- UK SMEs that are selected to be either fastest growth or highest profitable return. 3.6. Questionnaire Questionnaire refers to a set of questions specifically framed with the intention to collect required information from the target audience with an intention to apply the collected information to a larger population. The questionnaire comprises of a form containing a list of questions either descriptive or otherwise, requiring the respondent to answer them either in person or via online sources as applicable. The questionnaires are usually availed to the target respondents based on the choice of the population sample and the answers collected therefrom are used for interpretation and analysis purposes. The objective of using questionnaires is to collect statistically useful information from the target audience via a series of questions. The effective questionnaire design can ensure greater data validity and reliability. It also affords the researcher the ability and opportunity to apply the collected data and statements received from the respondents to a larger population (McBurney & White, 2009). Inclusion of inappropriate questions or an ineffectively designed questionnaire defeats the very purpose of the questionnaire survey and render the information so collected valueless. Thus, it is of utmost significance to ensure that the questionnaire is designed appropriately and in the most effective manner possible, by eliminating the risks involved and overcoming the challenges likely to be faced by the respondents. The effectiveness of the questionnaire largely depends on the nature of questions and the methods through which they are posed. It is of utmost importance for the researcher to ensure that the question designed help in collecting appropriate data. The questionnaire also helps in comparison and analysis, minimises researcher bias, and are varied and not repetitive in nature (Gillham, 2008; Beiske, 2003). The three common types of questions used in questionnaires or surveys include open-ended questions, closed questions and Likert scales. Open-ended questionnaires do not offer respondents a choice of possible answers. Instead, respondents answer the questions according to their understanding. An example of an open-ended question include: What differentiates your service or products from those of competitors? In closed questionnaires, participants choose answers from a predetermined set of answers. For example, what was the annual turnover of your company in last year? (a) Less than £2 million, (b) £2-£5 million, (c) £5-£10 million (d) more than £10 million. Unlike the open-ended and closed questionnaires, the Likert scale asks respondents to make their response based on a continuum of probable answers. For example: did your company size change in the last three years? (1) Increase (2) decrease (3) the same. For our survey, we used all three types of questions discussed above. The questions provide both qualitative and quantitative information. While developing the questions, we focused on questions that will provide us with data related to the main theme of our research. 3.7. Data analysis plan In order to analyse the data effectively and accurately, data reduction is a necessary step. We designed a standard questionnaire (Appendix 1) for top 100 SMEs in the UK by profitability. Data reduction is done by highlighting the relevant information for analysis and by taking 30 SMEs as a sample out of a population of 100 SMEs. In addition, some of the findings are summarised and displayed using statistical graphs such as bar charts, flow charts, histograms and tables in order to get a clear picture. The data that focusses on the literal expression of the study is categorised and displayed using direct quotes from the questionnaires. We selected the quotes that are unique and with clear answers under each category. On the basis of the theoretical foundation, our findings are closely related to our framework as well as data collection and data analysis. This is done by incorporating previous studies and our research findings. To sum up, we are expecting to accomplish detailed analysis point by point in order to give clear discussion to readers. The aim is to draw accurate conclusions on the basis of theoretical background and empirical findings. 3.8. Chapter summary This chapter has included a detailed and comprehensive overview of the research methodology used in the study. Th chapter also includes the purpose and the key objective behind the choice of research method used, the type of research design used, the philosophical underpinnings of the study, among others. The study uses exploratory approach to discussing and interpret the case studies with a key purpose of developing and evaluating the causal links and relationships between the key variables. The in-depth overview of the research design, research approach, and the research methods used in the study helps understanding the key reasons and purposes behind the use of such methods and its relevance to the study in question. 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