Chapter 3: Research Methodology3.1. Introduction:
The purpose of this chapter is to present the research philosophy, approach and strategy that are used in this project. The choice of research design and data collection methods is justified by indicating their advantages and limitations compared with other available methods.
3.2. Research philosophy:
This study reflects the principles of the positivist philosophy. This paradigm is concerned with testing theories and providing material for the development of laws (Bryman and Bell, 2003, p.14). It assumes that “reality is objectively given and can be described by measurable properties, which are independent of the observer […] and his or her instruments” (Myers, 2009, p.37). The positivist research philosophy involves “highly structured methodology to facilitate replication” (Gill and Johnson, 1997, cited in Saunders et al., 2003, p.83). Therefore, reliability is likely to be high (Collis and Hussey, 2003). One limitation of the positivistic paradigm is that validity is low when measures do not reflect the phenomenon that is being investigated (Collins and Hussey, 2003).
3.3. Research approach and strategy:
There are two methods of data collection and analysis that are available to researchers, qualitative (inductive) and quantitative (deductive). In order to achieve its aims and objectives, this study employs a deductive approach, which involves the testing of hypothesis deduced from theory (Bryman and Bell, 2003). The rationale for this choice is that the quantitative approach is appropriate when collecting data related to the frequency of occurrence of a variable (determinants of FDI in Bulgaria) and provides the researcher with the opportunity to “explain casual relationships between variables” (Saunders et al., 2003, p.86).
However, by adopting an inductive approach the researcher is able to gain more in-depth understanding of the research context and allows a more flexible structure of the research (Saunders et al., 2003). On the other hand, qualitative research makes it difficult to generalise results to a larger population (Myers, 2009) and findings are often subjective since they rely on the judgement and interpretation of the researcher (Collis and Hussey, 2003).
3.4. Research design:
In order to achieve its aims and objectives, this study will employ a cross-sectional design. This framework requires examination of more than one cases and collection of data on the variables of interest at a single point in time (Bryman and Bell, 2003). The present project will use it to establish variation in respect of the different determinants of FDI, suggested in the Dunning’s eclectic theory, by obtaining data from major investors in Bulgaria. The choice of this research design is backed up by the assumption that the investigated variables could not be manipulated by the business research in contrast to experimental design (Bryman and Bell, 2003).
* Reliability: The probability that research findings would be the same if the study is repeated using cross-sectional design is high, given the same conditions and clear explanation of the procedures involved (Bryman and Bell, 2003).
* Validity: Internal validity of cross-sectional research design is likely to be weak since it is “difficult to establish causal direction from the resulting data” (Bryman and Bell, 2003), whereas external validity is usually strong if the sample under investigation is appropriately selected (Lee and Lings, 2008).
3.5. Data collection methods:
This study involves the collection of both primary and secondary data.
3.5.1. Secondary data:
Secondary data involves both raw and published data collected for other purposes (Saunders et al., 2003). The project made use of online academic databases to obtain relevant academic journals and articles within the area of international business and FDI in emerging economies. Qualitative data was sourced out from books, as well. It was used to establish the basis for the literature review.
Raw secondary data, which involves the most recently available statistical information about the FDI inflow in Bulgaria during the last 11 years, is obtained from the Bulgarian National Bank. This kind of data gives a researcher the opportunity to analyse it for the purposes of a longitudinal study, aiming to “chart trends over time and perhaps to relate these to wider social changes” (Bryman and Bell, 2003).
Although secondary analysis provides a number of benefits, including time and cost saving and access to high quality data, there are some considerable limitations such as subjectivity; hence, disputable reliability (Bryman and Bell, 2003).
3.5.2. Primary data:
Primary data is collected by self-administered online questionnaires. A number of similar studies, looking for causality, have adopted this method which is easy and less time-consuming to conduct (Collis and Hussey, 2003). However, it lacks flexibility – one of the advantages of semi-structured and unstructured interviews (Bryman and Bell, 2003). The problems of missing data and low response rate that are associated with the self-completion questionnaire are other limitations of the method (Saunders et al., 2003). The physical distance and the limited time prevented the employment of interviewer-administered questionnaire.
The questionnaire includes three sections of both closed and open-ended questions (see Appendices). The questions are pre-coded, in order to ease the analysis of answers. The first section involves questions about the MNC characteristics (industry, home country, year and size of investment). The second section includes questions about the motives of MNCs to enter the market in Bulgaria. This section is based on the Dunning’s location-advantages theory. The final section of the questionnaire considers the impediments to investment in Bulgaria.
The sample is randomly selected from an official document of the Bulgarian Foreign Investment Agency (BFIA) enlisting the major foreign investors in Bulgaria. This study assumes the 100 companies included in this list as the population under consideration. The size of the sample is 30 MNCs which is relatively representative.
A total of 30 MNCs were approached to take part in the survey via e-mails. Then, a link to the online questionnaire was sent to all participants, accompanied by a cover letter (see Appendices). The low response rate (7%) necessitated the follow-up emails to organisations that had not responded. Eventually, 25 companies completed the survey (83%).The sample is representative for three of the industrial sectors that receive FDI, i.e. manufacturing, electricity, gas and water supply and IT sector.
3.6. Data analysis methods:
Since positivistic philosophy is usually associated with quantitative research methods and statistical analysis (Saunders et al., 2003), this study obtained primary data and analysed it using quantitative research strategy. This approach is adopted by most business researches and involves the collection and analysis of numerical data (Bryman and Bell, 2003).
In order to establish relations and to analyse an economic phenomenon (Barrow, 2001), this study applies statistical methods when analysing the data obtained from the survey. Initially, the project adopts exploratory data analysis approach or descriptive statistics. This approach is normally associated with the use of tables and diagrams to summarise and present quantitative data (Collis and Hussey, 2003). The rationale for adopting this strategy is that it provides an appropriate instrument to establish a trend and to examine the dynamics and determinants of investment inflow in Bulgaria for the period between 1998 and 2009, which is the objective of this project.
3.7. Ethical issues:
Diener and Crandall (1978, cited in Bryman and Bell, 2003) identify four principles, with regard to ethics in business research: whether there is harm to participants, a lack of informed content, an invasion of privacy, and whether deception is involved.
This study is going to address each of the indicated areas. First, confidentiality and anonymity of participants would be maintained. Second, all participants would be given detailed information for the purpose of this research and their involvement in the study. Third, personal data would be protected by the relevant data protection legislation. Finally, all participants would be given the right to withdraw from answering any question that they might consider as potentially deceptive or harming their dignity.
The purpose of this chapter was to outline the research methodology that is adopted in order to achieve the aims and objectives of this project. The selected research approach, strategy and data collection methods are critically reviewed and compared with alternatives. Finally, sample features are discussed and ethical issues are considered. The following chapter deals with the analysis of the collected data.