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This chapter provides a detailed description of the research design and methodology used in this study. The purpose of this study is primarily to gain a deeper understanding of the research that concerns the avoidance of the market participants in anticipating the major increase in the foreclosures which resulted in sub-prime mortgage market crisis originated in 2005 and 2006, thus making suggestions and providing effective and efficient measures which can be implemented to cope up with market situation taking into consideration Lehman Brothers Holdings, Inc, an ex-global financial services group. There are several factors that resulted in the U.S. sub prime mortgage crisis. It aims to develop a framework of the variety of the factors that are likely to be involved during the crisis.
The research design takes into account the different methods of collecting, analysing and interpreting data under these circumstances. This chapter justifies the decision to adopt a mixed method approach for the study, which includes the collection and analysis of both qualitative and quantitative data.
One aim of this study is to investigate the appropriateness of mixed methods for this type of research, particularly the use of "triangulation", as shown in fig.. Polit and Hungler (1998) defined the concept of triangulation as: "The use of multiple methods or perspectives to collect and interpret data about some phenomenon to converge an accurate representation of reality". This research study will use a variety of data sources which is an example of the process of triangulation.
This chapter discuss the research paradigm and associated concepts used in the study before presenting an overview of the mixed methodology approach used. The chapter then goes into detail about the data collection methods including the semi-structured interview and survey techniques, which are used in the study. A concurrent research approach (Figure 3.1) is used to confirm and corroborate the findings from each approach.
Fig x: The Structure of Research Approach
3.1. Research Process
Methodology has been used very ordinarily in casual sense, but misusing of methodology has made it extremely difficult to do an important conceptual distinction between the implementation of scientific investigation (appropriate methods) and the philosophy that resolves how these tools are organized and deduced (Krippendorff, 2004). Ordinarily, research methodology is different to the research methods. According to Strauss and Corbin (1998), research methodology is the approach of thinking about and studying social reality; whereas methods are set of practices and procedures for gathering and analysing the data. Research methods are the procedures to gather primary or secondary data through questionnaire, interviews or focus groups (Catherine, 2002). Saunders et al (2003) argues that methodology can properly refer to the theoretical analysis of the methods appropriate to a field of study or to the body of methods and principles particular to a branch of knowledge. In order to select appropriate approaches to fit with research questions, it is necessary to realize that different approaches are attaching to different research philosophies. The most significant and initial requirement in order to carry out a superior research is understanding of the research process. It basically included the entire process of collecting of data to test and analyse them by comprehending the research problems, generating research hypotheses and theoretical assumptions to carry on the research (Remenyi and Williams, 1995).
To support, Saunders et al further illustrates it with the "onion" theory of research process. The "onion" theory consists of five levels: Research Philosophy, Research Approaches, Research Strategies, Time Horizon and Data Collection Methods. The researcher has undertaken many exercises and has adapted the concepts from the above theory which are explained in the following part, and believes it would be helpful to carry out the research.
Source: (Saunders et al, 2003)
Fig x: The Research Onion theory
3.2. Philosophical Approach
All research (whether quantitative or qualitative) is based on some assumptions about what are the constituents of 'valid' research and which methods are appropriate. To evaluate qualitative research, it is important to know what these (sometimes hidden) assumptions are. For our purposes, philosophical assumptions are those which relate to the underlying epistemology which guides the research. Epistemology refers to the assumptions about knowledge and how it can be obtained (Hirschheim, 1992).
Guba and Lincoln (1994) suggest four underlying "paradigms" for qualitative research: positivism, post-positivism, critical theory and constructivism. Saunders et al (2003) states that there are three views that dominate the literature based on the underlying research epistemology: positivism, interpretivism and realism and believe that all of them play equal important part in business and management research. This three-fold classification is the one that is adopted here
Positivism is defined as an observation of social reality whose end product of the research is generalised like physical and natural scientists (Remenyi and Williams, 1998). The researcher is independent and is not affected by the subject matter of the research. Positivism is the external reality and its knowledge is based on observations of this reality (Easterby-Smith et al., 2002).
Interpretivism, on the other hand, is contemporary issue as the social world of business and management is very complex to provide it by explicit 'laws' in the way of physical sciences (Saunders et al, 2003). If research philosophy is related to the above concept it is very much inclined towards an Interpretivist approach. Remenyi and Williams (1998) strongly argues that it is necessary to discover the particulars of the condition to understand the authenticity or perhaps a reality working following them.
Realism, as been explained, is a belief that reality exists that is independent of human thoughts and beliefs (Saunders et al, 2003). Therefore, realism has many philosophical traits of positivism as it is also related to external macro aspects of society.
However it needs to be said that, while these three research epistemologies are philosophically distinct, in the practice of social research these distinctions are not always so clear cut (Lee, 1989). There is considerable disagreement as to whether these research "paradigms" or underlying epistemologies are necessarily opposed or can be accommodated within the one study. The researcher too believes that there is no one approach that is better than the other. It basically depends on the research and its questions; it could be a mixture of both positivism and interpretivism.
The researcher believes that the research approaches could help better understand if the researcher is a Positivist or Interpretivist. There are two main types of the research approach namely; "deductive" and "inductive" approach (Saunders et al, 2003; Sekaran, 2003).
The deductive approach is when a researcher conducts a theory of hypothesis and after that develops a research strategy to test it (Saunders et al, 2003). These theories are then deduced from general assumptions (Collins and Hussey, 2003). The data collected for research is mainly quantitative in nature for e.g. surveys, questionnaires etc (Eden et al, 1996). The hypothesis is first deduced, expressed in operational terms, tested and examined to get the outcome of the research. If necessary, theory is modified in the light of findings (Robson, 1993).
On the other hand, in inductive approach researcher collects the data initially and then develops a theory as a result of research analysis (Saunders et al, 2003). The data collected for research is basically qualitative for e.g. interviews (Eden et al, 1996). Before carrying out a research design, proper understanding of the topic is required to adopt a particular approach; lack of the knowledge would lead to having difficulties in between (Easterby-Smith et al., 2002). These approaches are connected to different research philosophies, the deductive approach relates more to positivism and the inductive approach relates more to interpretivism (Saunders et al, 2003). The major differences between both the approaches are shown in the Table 3.2.1 below.
Major differences between deductive and inductive approaches to research
Moving from theory to data.
The need to explain causal relationships between variables.
The collection of quantitative data.
The application of controls to ensure validity of data.
The operationalization of concepts to ensure clarity of definition.
A highly structured approach.
Researcher independence of what is being researched.
The necessity to select samples of sufficient size in order to generalize conclusions.
Gaining an understanding of the meanings humans attach to events.
A close understanding of the research context.
The collection of qualitative data.
A more flexible structure to permit changes of research emphasis as the research progresses.
A realization that the research is part of the research process.
Less concern with the need to generalize.
Adapted: Saunders et al, 2003
Table 3.2.1 Differentiation between deductive and inductive approaches to research
In terms of the researcher's personal learning, according to the classification by Kolb researcher is an Accommodator, this demonstrates research traits of a positivist and therefore the researcher prefers to do things, and solve problems in an intuitive manner (Appendix Four). The researcher prefers practical fields such as logical approaches. The researcher learns from participation, which is action centred learning (Kolb, 1984) (Appendix Five). As someone who deals with 'numbers' on a daily basis in examining organizational performance, the researcher will be drawn more to pragmatic studies as opposed to case study, experiential or interpretative approaches. From the previous studies and past industrial experience the researcher will analyse interview data from a sample. The researcher will undertake interpretivist stance and analyse data from executives and also from the top level managers to identify the reason for the crisis and failure of Lehman Brothers Holding Inc. The researcher studies experiences in natural settings, attempting to interpret phenomena in terms of the meaning people convey (Denzin and Lincoln, 1998). This philosophical approach matches with the study the researcher intends to apply to this study.
The purpose of the research is to describe how the sub-prime mortgage crisis arise which lead to the failure of Wall Street's fourth biggest investment bank, Lehman Brothers Holding Inc.
Consequently this research will seek to increase understanding around the issue of the boom in sub-prime mortgage market due to excessive sub-prime mortgage lending without anticipating future losses and affecting major Wall Street's financial institutions including Lehman Brothers Inc. This will involve interviews with managers and executives across the organization, for which a suitable questionnaire will be developed. Later, it may be necessary to supplement the quantitative work with further qualitative work.
3.3. Research Approach and Strategies
The research approaches can be broadly classified into: qualitative and quantitative research. Qualitative data is mainly related to concepts which are based on a subject in a real manner as is possible (Robson, 1993), whereas quantitative data is concerned with testing of theories and hypothesis to carry on the research (Bryman, 2004). Depending on the nature of the problem or the subject of the research the methods are used. Gill & Johnson (1997) even argues that sometimes both the approaches are required to carry out the research effectively. The key differences in these methods are highlighted in the Table 3.3. below:
Based on meanings derived from numbers.
Collection results in numerical and standardized data.
Analysis conducted through the use of diagrams and statistics.
Based on meanings expressed through words.
Collection of results in non-standardised data requiring classification into categories.
Analysis conducted through the use of conceptualization.
Table 3.3â€¦Key differences between Qualitative and Quantitative approaches
Robson (1993) defines three traditional research strategies, i.e. real world social research, experimental surveys and case studies. In this case, the social research and experimental surveys can encounter faulty information which may not be reliable for carrying the research accurately. Yin (1994) points that a case study methodology is more appropriate as it defines experiential inquiry that explores the new and current phenomenon within real-life context.
The researcher believes that using the case studies would be more reliable source and research outcomes would be more accurate. This will provide multiple data and full knowledge about the company and its present and past strategies to improve or amend them for future growth and development. This will involve the use of multiple respondents within the organisation and various data collection methods from interviews and documents. The research is basically focused on the small number of audiences which includes the managers and other supporting staff in the organisation. According to Saunders et al (2003), the attention should be paid towards the research design: reliability and validity, because of the high possibility of attainment of incorrect information. Therefore, the researcher will appropriately use the qualitative methods i.e. interviews, case studies, and research design to get the reliable information for the quality research.
Alvesson and Deetz (2000) make reference to the characteristics of an ethnography, which is a method, but for some "it is even a paradigm". This means the research is basically established on the participants' observations over a long time period and non-structured interviews which includes the ethnography method (Atkinson and Hammersely, 1994). The researcher has worked in the similar industry and hence ethnography method will help to get key information that can guide the researcher in carrying out research more effectively (Prasad, 1997). In contrary to this, Wolcott (1995) says that these ethnographic methods are sometimes more stressful and sometime there is a risk that the researcher may get wedged with the details and local understandings without being able to say something systematic of wider theoretical interest. Wolcott (1995) suggests that the personal interviews could be more informative than the observations or ethnographies. Therefore, critically evaluating both the points, researcher has used both the ethnography and interview methods to provide more solutions to the organisation in its research.
However, the issue pertaining to this approach is the validity and one sided view that is only the management aspect will be studied. This implies that it would be uncertain to observe a clear pattern of the problem as investors or employees might refrain from personal interaction as issues are related to their economic stability especially in the environment where crisis has mainly affected. But, this study requires analysing the impact of the sub prime crisis from the dualistic view point of investors as well as management of the organisation.
To eradicate this problem of qualitative approach the researcher has used a method of quantitative research to reach employees and understand their say on the impact of the sub prime crisis on the organisation. However, the researcher will shift from an ethnographic approach to a positivist approach as the focus of the survey will be on accumulating as many details as possible to understand the employees' point of view.
For this research as explained above the researcher attempts to understand the point of view of both the management and investors through various strategies of case study method and employees opinion which are in great number. Thus, this uses both quantitative and qualitative methods, involving the researcher to establish close contact with one or a few key informants in the organisation who will then guide the researcher and provide help with crucial information. Creswell (2003) makes reference to 'concurrent' procedure of following mixed approach, in which the researcher converges quantitative and qualitative data in order to provide a comprehensive analysis of the problem. Supportively, Tashakkori and Teddlie (1998) state one method can be nested within another method to provide insight into different levels or units of analysis. Recognizing that all the methods have limitations, researchers felt that biases inherent in any single method could neutralize or cancel the biases of other methods. (Creswell, 2003) These theories support the use of mixed approaches the researcher will adopt in this study.
3.4. Research Methods
To meet the information needs of the research objectives, the researcher can gather secondary data, primary data, or both (Kotler, 2004). Secondary data provide a good starting point for the research and often help to define the problems and research objectives. In most cases, however, secondary sources cannot provide all the required information and the researcher must also collect primary data.
Primary data consist of the information collected for the specific purpose at hand (Kotler et al, 2001). It is the data which is gathered by the participant's personal observation. As with the secondary data the researcher must be careful to obtain relevant, accurate, current and unbiased information when conducting primary research. Primary research undertaken by the researcher may be either qualitative (measuring a sample of respondent views) or quantitative (providing statistics from a large sample of respondents) depending on whether an exploratory, descriptive, or casual research approach is adopted, the requirements of the particular research objectives, and the resources available to the research project (Kotler et al, 2001; Aaker et al, 1998).
Secondary data are data that were collected by the persons or agencies for purposes other than solving the problem at hand (Aaker et al, 1998). Secondary data can be collected internally (through company profit and loss statements, balance sheets, sales figures, and prior research reports) or externally (through government publications, periodicals and books, and commercial data). Consequently, secondary data is one of the cheapest and easiest means of data collection. Kotler et al. (2001) recognises that 'researchers usually start by gathering secondary data' to provide a backdrop to subsequent primary research (Kinnear and Taylor, 1996).
3.4.1. Qualitative Primary Data Collection: Interviews
18.104.22.168. Individual interviews
The researcher has carried out individual interviews with the managers and Senior Associates of Nomura Holdings, Inc (two from equity research team and two from different lines of business) to understand management perception of the impact of the sub prime crisis both from the organisation and industry scenario. As a result, the researcher was able to achieve a refine view of the impact and the experiences of the people affected by the organisation's decision of bankruptcy which consequently facilitated in providing information to the depth related to the sub prime crisis and its impact on Lehman Brothers Holding, Inc which is presently Nomura Holdings, Inc.
The researcher also tried 'snowballing' (Knight, 2002) technique by asking interviewees if they could refer any other colleagues who might express similar tendencies.
22.214.171.124. Interview preparation
An interview guide to the preparation of the interviews, to cover the relevant topics during the process of interview have been suggested by Arskey and Knight (1999). The questions consisted of blend of open response and fixed questions, which helped in checking response validity suggested by Kvale (1996). This also provided further clarification for the answers which were required for the research.
126.96.36.199. Interview settings
Interviews were conducted taking prior permission of the concerned team/ department Manager of Nomura Holdings, Inc. Mails were sent to them explaining the project and their essential assistance and permission required to take the interviews. The interviews were conducted in the Manager's office at Nomura Holdings, Inc, Mumbai Regional Office while an ongoing support was facilitated through the medium of telephonic conversations. These interview transcripts were further analysed and interpreted.
188.8.131.52. Interview transcription and analysis
All interviews were proposed to be transcribed and analysed using QSRNvivo, but the research had just four interviews and QSRNvivo is advantageous only when the research includes large focus groups. Therefore, the interviews were analysed on the findings during the interview inductively in order to establish themes for analysing and reviewing of data collected.
3.4.2. Qualitative Primary Data Collection: Personal Observation
The researcher has been associated with Crisil Ltd, a Standard and Poor's company, India's leading ratings, research, and risk and policy advisory company as a Research Associate-Global Analytical Centre for more than a year. The researcher had an experience of constant management coordination and presentations based on financial research of companies in different sectors, which included Nomura Holdings, Inc. The researcher is aware of the management support and the employee's strength working in Nomura Holdings, Inc. While learning about the various changes the researcher was keen to know the impact of the sub prime crisis on the organisation. The researcher has used own past knowledge and work experience which has helped in coming to some conclusions for this research.
3.4.3. Quantitative Primary Data Collection: Questionnaire Survey
There was a questionnaire survey designed for collecting responses from the employees of the organisation. This protocol was changed as the concerned department Manager was reluctant to assist in the survey. According to the management, the organisation was catching up pace again after the economic downturn and asking employees at this point of time about their past issues and view point could accelerate the forgotten pain. Thus, to maintain the synchronization within the organisation the survey could not take place.
3.4.4. Quantitative Secondary Data Collection: Internal Survey Reports
There were certain internal research carried out to understand employee's frame of mind and considering employees opinion on the impact of the sub prime crisis. At the time of crisis too there were various interviews whose data collaboration was done for internal records and to evaluate the strategies. As the survey was not possible the concerned department manager made many of these reports available for references which were strictly used only for collating information about employees' sensitivity and outlook on the crisis.
3.5. Research Suitability
3.5.1. Researcher's knowledge and skills
The researcher is graduated in Bachelor's in Business Management Studies from Mumbai University, India, in 2007 with a first class honour. During the final year of the term, during 2006 to 2007 academic year, the researcher undertook a qualitative research on repositioning of 'Aqua-guard' brand in India which achieved a 2:1 result. In addition, the researcher carried out some small scale projects which included formal presentations in the final year and included research skills analysis. The researcher gained appropriate knowledge and researching skills while carrying out these graduate level course-works.
3.5.2 Researcher's personal position in the industry and the organization
The researcher's position within the finance industry and Lehman Brothers Holding Inc is suitable for conducting the research study as the researcher has been associated with Crisil Ltd, a Standard and Poor's company, India's leading ratings, research, risk and policy advisory company for more than a year. The researcher had an experience of constant management coordination and presentations based on financial research of companies in different sectors. The responsibilities included data analysis of the financial reports of the company, product and process streamlining and researching on implementing new ideas and techniques to improve team performance and efficiency. Therefore, the result from this research will enable the researcher understand in depth the cause and effects of the sub-prime crisis due to the avoidance of the forecast by rating agencies six months prior to the declaration of the crisis.
The researcher holds the responsibility to conduct this research sincerely with dedication and interest in the subject area along with an experience which will definitely help in understanding the problem and facilitate with some relevant conclusions over the research which would help the researcher in the future business practice.
3.5.3 Research originality
There is an adequate amount of research in terms of the sub-prime mortgage market crisis, but none of the researchers in their research report, plasters on the effects of the crisis in the global economy and the ignorance of rating agencies attention pre-declaration by financial institutions and organisations. Therefore this research has the potential to provide new outlook on the sub-prime mortgage crisis which examines the crisis from its root and demonstrate some effective solutions which would help in conquering the problems in the practical business environment.
3.5.4 Limitations to the research
Time being the most essential aspect of this research as otherwise if the research was not completed on time it may have lead the researcher in a delay in getting his degree. Since the concerned officials (respondents) were busy with their respective projects, time was a big apprehension in this research. Eventually with the co-operation of the concerned managers the author was successful in the end to accomplish his research on/ before the stipulated time.
Ethical issues: Ethics are ways of thinking about what is right, moral or good, and involve a process of moral reasoning and justification (McLaughlin; Muncie, 2006). Confidentiality and anonymity are vital in terms of gaining access to organizations and individuals. It is the responsibility of the researcher to keep the promises while dealing with confidentiality of the company etc. (Saunders, 2003). As researcher is working to know how the project managers should handle requirements change, thus it requires access to data and information at managerial level. If data not handled proficiently might lead to data loss or could be against the policies of management. It is to insure that the data collected from the company will be only used for the academic submission and will never be used for any personal benefits. Keeping the sensitivity of the information collected in mind, researcher will not use names of people, except of the ones from whom permission will be granted. These ethical concerns will be strictly kept in mind and will be followed throughout the research process.
This chapter has illustrated the methodology phase of the research project. An effective consideration has been made to the suitability of different research methods available to the researcher. The chosen methodology has been defined and the justification for decisions has been presented. The next chapter of the dissertation presents the findings of the research project.