Descriptive research methodology involves during early research and follows investigation of the literature review and new information in research methods. The literature review helps to select the practical and effective method for the research. In this study the phenomenon contains the assistant and bears experience of the principals in learning requested information and appreciate information and adjusting to the operating norms. (Boullion, 1996 cited in Roberts, 2004: 134)
This part also indicates the different methodology methods which were used for the research. It will present different trajectory of theoretical approaches and explain and justify which methods can be able to answer the research questions. It holds philosophy of research, the research approach, research strategies, data collection, design of questions and finally summary. (Questions are attached after summary)
Figure 3.1 The research onion (Saunders et al., 2009:138)
Many studies point out different approaches for design of methodology. However, none of these approaches describes all the variables as research design variables change from research to research. Gray (2004) point out that figure 3.1 do not contain theory of epistemologies and perspectives and it illustrates the new methodology of deductive or positivism. (:31)
3.2. Research Philosophy
Research philosophy addresses to the progress of knowledge and the nature of information. Basically it is explaining how researcher is developing knowledge in a specific research and gives different view of the essential assumption for the study, especially when a researcher view the world. Three ways of thinking about research philosophy will be examined follow; ontology, epistemology and axiology.(Saunders el at., 2007 :102)
Ontology is examining the nature of existing. It can describe the study of social science, managements and businesses. The research examines the research questions and believes that one approach can be more useful than other approaches. Therefore, it should be examined other approaches when a researcher looks for answer a specific question. It focuses on objectivism and subjectivism.( Saunders el at., 2007:108)
Objectivism is to find the objective truth in their existing and objective truth has a reality. Gray points out that the realty is out there and objectivism helps to discover the truth. (2004:17)
Subjectivism focuses on the revision of the development of social constructionism. Remenyi et al., work indicates that the necessity of the aim to recognize which reality is behind of the situation.(1998:35 cited in Saunders el at., 2007 :108) This research refers to qualitative research.
This research focuses on a question of what it means to know. The aim of asking this question is to find what kinds of knowledge is valid. This research contains below approach;
Positivism is address to natural science. The research deal with scientific observation which opposed to philosophical thought. Hughes and Sharrock(1997) said that positivism failed as some of assumptions just base on scientific inquiry. (cited in Gray, 2004:18) Because, science begins from theory, however, the theory cannot present without observation which is related social science. It is also said that the natural science and social science use same logical and methodological ethics, they just deal with facts, not with values. Furthermore, Bryman (1988) adds that many different kinds of positivism are available and they do not totally agree on its important components.(cited in Gray, 2004:18)
One of components is post-positivism and attempts to base upon the force of criticisms made of positivism.(Robson, 2002:27) Researchers often prefer to deal with an observable social reality as result of research will be mixed between social science and natural science. The approach believes that a researched person needs to find what the reality is.
Constructivism is used for qualitative research. states that is important for researchers to recognize social actors roles. It considers that investigators should have a good understanding of social structures. It is said that the constructivist researchers will have the multiple social constrictions of knowledge. This approach use interview and observation as research methods.
Realism addresses to scientific approach. This research considers that each research has different subjects so that researchers need to use different methods. There are two kinds of realism forms need to be contracted in order to understand the realism for business and management research. The first form is direct realism which indicates that what people see are what they are getting and the second direct form is critical realism which illustrates that what we see are sensations things in the real world, the things are representation of real things.(Saunder et al.2007:105) Critical realism identifies importance of multi level work such at the level of organizations. The direct realism, on the other hand advises that the world is not changing it controls, in the business context.
It is studying changes in value. It is said that the value is affecting human actions
Overall, one approach can be more useful than other approaches depending on all research questions which need to be replied. Post-positivism, constructivism and realism address to management and business research. (Saunders et al 2009:106) In my study I would like to discuses hedging, foreign exchange risk and whether hedge or not hedge. The investigation will carry on questionnaire survey which is related to qualitative and quantitative research method. In my study I use post-positivism, constructivism and realism as each approach give a good explanation of business science. Application of social science and natural science will help. It is said that the both science agree same logical and methodological ethics, they just deal with facts in realty, not with values. (Gray, 2004:18) Post-positivism, constructivism and realism deal with facts in reality which is very useful for my research.
3.3. Research approach
Different kinds of research approaches are available. Some research approaches are below. There are two different research reason can be examined into two part.
Deductive or Inductive Research
Deductive and inductive researches are the one of research approach and characterize different philosophies. "Dewey out-lines a general paradigm enquiry that underpins the scientific approach, consisting of in discovery (induction) and deductive proof (deduction)." (1933 cited in Gray, 2004:6)
Summarize of deductive research relates to empirical data. The researched person applies different theories and models. This approach works from specific observation to general theory and aims to find what is important for this research. It collects the data, after analysing the data it will develop theory.(Gratton and Jones:27)
On the other hand, deductive approach applies existing theories and analyses them with different methods. It starts to work from theory through data collection. It reviews the results in order to refute or adapt or confirm the theory which used to improve hypothesis and asks what, when and how many. (Gratton and Jones:27)
3.2.1. Qualitative researches
Qualitative researches indicate the sort of data collection. The researches contain more emotional felling, belief and thoughts data. (Gratton and Jones 2003:21) In other words, they base on human behaviours (knowledge, thoughts, fears etc.) and also researches addresses to social science. Besides, these research studies also offer quality values in the process of new thoughts or theories.
However, they are not considered as numeric value."The data used do not accommodate quantification, specification, objectification or classification because of that; common statistical procedures cannot be used for data display analysis." (Mauch and Park,2003:18) Furthermore, qualitative researches require the researcher to involve with people, events and ambience considered as an integral element of study development.
3.2.2. Quantitative researches
Quantitative researches focuses on measurement. Quantitative researches recognize a depended variable effect and aim to discover if any independent variables affect that another variation. (Bryant,2004:97) These studies base on measurable quantities or numerical analysis from surveys and tests. It contains data from human subjects and also existing data is also used. These researches involve topic choosing, data collecting and analysing data and reporting.
It is said that three followed challenges take a place in the research studies. (Bryant, 2004:99)
Enough data school should be related with the research questions;
Using a huge quantity of qualitative data should result from detailed researches;
The last challenge indicates that you should understand the date and should explain what you covered.
I would like to explore the extent of the decision of hedging and challenges of foreign exchange rate which are related and collaborate with each other in some ways. I analysis the literature review in this part in order to see the reality so that it can be said that inductive approach is more useful for my research. Base on the research questions and the aim of the study which help me to choose appropriate approach for my study. There are two the chosen methods which are quantitative researches and quantitative researches as tools are used to collect the information and analyses the information. I interview one company which is dealing with different currency in order to trade. The questionnaires aim to create strong debate the answers during this interview.
3.4. Research Strategy
Research strategy takes essential part in the research. It is a plan which helps researchers to answer the research questions. This strategy provides a clear understanding of objectives and derived of research questions. It is specify the resources where researchers collect the data. There are a few strategies which are used in research design and they are called test study.
(Saunders et al. 2007:135)
Yin (1994) brought in five different research strategy; experiment, survey, archival analysis, history and case study. The below table indicates type of research questions being asked. These types of research question are Why, How, Who, What, Where, How many, How much.
Form of research question
Control over behavioural events
Focuses on contemporary events
who, what, where, how many, how much
who, what, where, how many, how much
yes / no
Figure3.2. Different Research Strategies (Yin 1994, p.6)
Experiment addressees to natural sciences and also social science and how and why questions are being asked in a research.
Survey is very popular strategy in business research. It contains a huge amount of data in an economical system.
Action research is used to develop a theory and indicates which action researches are appropriate research strategies. The theory applies data gathering and facilitation of change. (Saunders et al. 2007:142) It bases on study phenomenon and it tries to find solution of organization matters. Researchers can work on changes which affect the social processes and observing.
Ground theory is the good example of the inductive approach and addresses to the data. said that this theory is useful for study to predict and describe behaviour and it builds and develop the theory. (Goulding 2002 cited by Saunders et al. 2007:142)
I would like to gather date from a manager in one trading company in London. The aim of questionnaire to discover what is their perception about currency exchange rate. I used the question of Why, What so that the approach of experiment and case study are more suitable for research questions.
Data Collection Methods
Regarding Figure 3.1, data collection methods are sampling, secondary data, observation, interviews. Gray (2004:30) indicates that questionnaires are one of the data collection methods. I use my research interview (primary data) and secondary data.
Type of data Collection: Primary and Secondary
Two kinds of data are used in a research: primary and secondary data. Primary data are collected by a researched person in order to address to the research problem. Secondary data are organized by other people. Steward and Kamins said that if secondary data are used by researcher, this researched person will have an advantage of using reach secondary data compared with primary data researcher.(1993, cited in Saunders et al. 2007:263)Secondary data saves researcher time and it is costless. Primary data is more costly and takes time to complete it. There are many kinds of methods which are used to collect data in qualitative researches. Some of these follow;
Using case study
Role-play & simulation
They are also part of statistic methods.
Sample size of your research issues;
Statements of the chosen statistical test;
Most authors advise that in order to evaluate secondary data the researcher should use a range of validity and reliability. Besides, I use secondary and primary date in my research.
Validity measures secondary data and indicates whether findings appear to be. Sometimes researchers have a problem to undertake analyses as they think that findings are accurately measure the research but in reality they are not. Validity divides into two steps.
Internal validity examines the relationship between research interments and purpose of measurement.
External validity measures the findings which refer to data these can be generalized across people, settings and time period.
Regarding Black, "reality is an indication of consistency between two measures of the same thing."(1999 cited by Gray:92) Reliability addresses to quantitative research. It measures two different occasions. However, reliability can give error when the researcher chooses the time. If enough time has been given to respondents it might not seen any errors. Besides, It is possible to see that sometimes participants may not be able to give necessary information because of the company policy.
I made the research questions after reviewing literature. Questionnaire based on hedging and hedging interments and currency exchange risk. I use the validity on my research in order to avoid misunderstanding of the questions and review the questions before the interview. Some data collected from reliability.
Overall philosophy of research, research approach, research strategies and data collection are discussed. Positivism, constructivism and realism research philosophy are characterized. I found inductive, qualitative and quantitative approach very useful for my research. In the data collection methods of hedging against currency exchange risks are used primary, secondary sources. I used reliability in the research in order to eliminate validity.
Which currencies does Metalux Ltd deal?
What currency risk is Metalux LTD facing during its currency transactions?
Some believe that currency risk affects the value of the company. Do you think it is true? If so/If not, please describe why?
Which degree foreign exchange risk hedging can reduces currency risk?
As a trading company do you believe that it is possible to reduce the foreign exchange risk by dealing their foreign affiliates by borrowing in the domestic currency? Yes or No? Why?
What do you know about hedging?
Does hedging protect your company against expected exchange rate changes? Why
What are alternative hedging transactions obtainable to Metalux LTD seeking to hedge transaction exposure risk?
What factors affect Metalux LTD's hedging decision?
What instruments does Metalux LTD use for hedging? Why?
It is said that hedging affects the firm's investment decision. Do you agree with it? Why?
What is the benefit of hedging?
What is the limitation of hedging?