Quantitative approaches to the Financial Market

Published: November 26, 2015 Words: 2013

Quantitative methodology tends to "gather factual data, to study relationships between facts and how such facts and relationships accord with theories" (Fellows and Liu, 2008). The purpose of this strategy is to explain a social phenomena rather than to understand the meaning of things itself (Smith, 2003). The main advantage of quantitative approach is fast and economical, meanwhile the procedures are more reliable and results of the research can be replicated (Naoum, 2009).

However, the principles of quantitative approach focus on the facts in natural word. Thus, as Bryman (2008) argued that quantitative methods could ignore the human value and interpretation and distinguish the people from the world. The analysis of the variables creates a statistic view of social life which is apart from people's life. Furthermore, a quantitative research relies on "instruments and procedures hinder the connection between research and everyday life". (Fellows and Liu, 2008)

Qualitative approach

In contrast, qualitative methodology seek to obtain "subjective" issues in the natural world and lay stress on people's internal perceptions, meanings, experiences, opinions, views and understandings rather than the numerical testing and verification to the world (Creswell, 2007).

As comments by Bryman (2008), qualitative method could be influenced by outside learning and cannot be replicated as quantitative data. Furthermore, due to resource constrains, the sample size cannot stand for the whole population. In addition, the information might be interpreted subjectively with bias; meanwhile, misunderstanding of interviewer can also cause the unquantifiable risk to the research.

Each of the methodology has its own strength and weakness. The comparison of quantitative and qualitative research methodologies are shown in the table below:

Table 3.1 The comparison of quantitative and qualitative methodologies

Source: Naoum (2009)

Triangulation Research Approach

A mixed method can synthesize the strength and reduce weakness of these quantitative and qualitative approaches. When there is a combination of quantitative and qualitative methodologies aiming to study the same problem or phenomenon, it forms a triangulation (Kummar, 2005). As asserted by Fellow and Liu (2008), adopting a triangulation in the research can be very powerful "to gain insights and results, to assist in making inferences and in drawing conclusions". The process of triangulation is illustrated as figure below.

Figure 3.1 Triangulation of quantitative and qualitative data

Source: Fellow and Liu (2008) Research methods for construction, 3rd edition.

Research Design

Functionally, this research design intends to provide a general plan and procedures to answer research questions(Kumar, 2005), considering data collection method and analysis within constrains of data assessing, time, capital and ethical issues (Saunders et al., 2007).

3.2.1 Literature Review process

This research intends to commence with literature review which can provide secondary information in data collection and become a secondary research included in this research paper. A quantitative data collection will be conducted based on the previous literature materials in order to examine practical situation of the "Quota" and its Pricing System utilizing in construction procurement procedures over construction industry in China.

3.2.2 Data collection

Primary data collection will be conducted in this dissertation. Prior to analysis the results, the primary data will be conducted to establish and examine how the professionals perceive and implement quota and pricing system based on the factual execution, knowledge and professionals' views as well as practical executed situation of this system under and after the circumstances of the National Bills of Quantities carried out in 2003 over China's construction procurement process. During the collection processes, a triangulation methodology allocating with structured questionnaire, semi-structured interview and case study methods are employed to gather both quantitative and qualitative data.

3.2.1.1 Questionnaire Survey

Structured questionnaire

The purpose of structured questionnaire is to obtain primary information which could be quantified and analysed to show the facts, attitudes and perceptions of person on quota and pricing system over construction procurement in China.

Adopting a questionnaire survey does have a range of benefits. Like comments by Naoum (2009), the method of data collection is perceived to offer relatively higher validity of results as this survey covers different area in China, including Shenyang, Beijing, Shanghai and Xinjiang and other provinces. Due to it is administrated and transmitted by internet as well as time permitted; it is really a quick method for conducting data collection. Meanwhile, questionnaires can be completed flexibly when the respondents are convenience and provide less opportunity for mistake arising from perception or attitudes in interview methods.

Whilst the advantages are attached by researchers, the limitation of a questionnaire cannot be ignored. Because this survey is dependent on the construction industry and professional knowledge, all the questions setting in questionnaire should be simple and straightforward to understand and answer. Furthermore, this method is inflexible for researchers to probe and follow up other interesting points (Bryman, 2008). Meanwhile, there is no opportunity to clarify ambiguity from the respondent's answers. Moreover, the respondents may answer what the researchers want to hear, of which also can lead to inaccuracy in a research result. In addition, under pressures of modern business, there may be fatigue for the respondents in the construction industry and cause less priority for questionnaires. However, it is possible that not getting all responses back, typically the response rates lie between 40%-60% or considerably lower than this rate. (Naoum, 2009)

Closed-ended and Open-ended questions

According to the aims of the questionnaire, all questions produced in this structured questionnaire are devised from the findings from the literature view. The questionnaire was organized using mainly closed-ended questions which can be analysed straightforward without writing by respondents. However, two open-ended questions were constructed to allow respondents to act their views if they wish.

According to Naoum (2009), a pilot study was carried out with several professionals providing a trial run for the questionnaire, involving wording techniques, identifying ambiguous questions. After feedback from pilot study, a few minor amendments were revised to ensure better clarity of questions and eliminate ambiguous words in this questionnaire. Furthermore, from the background information from respondents of pilot study, the content and questionnaire formation could also be refined.

Sampling in structured questionnaires

A sample is "a specimen or part of a whole population which is drawn to show what the rest like" (Naoum, 2009). The aims in selecting a sample are to obtain maximum precision in research estimations within given samples. Meanwhile, it should avoid bias in the selection of the samples (Kummar, 2005). Saunders et al. (2007) classified samples as two general types: probability (random) and non-probability (non-random) sampling.

In this questionnaire survey, non-random sampling will be conducted to address the research questions and objectives, due to constraints of time and resource. The questionnaire will be sent to professional construction cost estimator working in different regions in China. The sample size intends to be 60. Ideally, the sample will be enough to elicit better response rate, however, the sample size is restricted by time and capital resource. Internet web questionnaire method has been chosen as it is cheaper than postal type; meanwhile it can obtain a wide coverage of cities.

3.2.1.2 Qualitative Semi-structured Interviews

In order to supplement deficiency in structured questionnaires, semi-structured interview will be conducted to collect more in-depth subjective information from respondents.

Semi-structured Interview

In structured interview, a set of predetermined questions are presented in the same order and wording, including open-ended or closed-ended questions, whilst the interviewer will control during the interview process (Kummar, 2005). In contrast, there is no predetermined list of questions in unstructured interview. However, Semi-structured interview is the spectrum between structured and unstructured interview (Fellow and Liu, 2008).

Semi-structured interviews will also be employed with several professionals working in the industry and the literature review has provided basis of questions in interview through identifying the functions of quota pricing system in variation valuation, resources optimization and effective tool to solve disputations in construction industry in China

Semi-structured Interviewing method is a major technique for collecting qualitative factual information and opinions using purposive samples to gather detailed information as well as valid and reliable data which are relevant to research question and objectives (Saunders et al., 2007). In this research, carrying out a semi-structured interview is a flexible qualitative method which can obtain a high response rate and provide opportunities to correct misunderstanding from questionnaires and are intended to verify and validate the results devised from previous literatures and completed questionnaires (Kummar, 2005).

Sampling in semi-structured interviews

In order to gather the valid and reliable primary qualitative data, the semi-structured interview will be carried out with experienced professionals working in construction cost estimating field. Three purposive samples have been chosen based on contactability and availability from different cities in China, 1 of which were face-to-face, 2 of which were telephone interviews. They come from Development Company, building company and construction consultancy, so that the information can be gathered in different participants in a project and this can provide the chance to examine the views of different needs to quota and quota pricing system in construction activities.

3.2.1.3 Case Study

In order to qualitatively support and illustrate the hypotheses devised from literature reviews, case studies research will be carried out in this research. As argued by Kummar (2005) that case study is a method used to study a social phenomenon through a thorough analysis of the individual case. Meanwhile, it provides opportunities for intensive analysis of different specific details to generalize a broader theory.

Case study of education system

A collective case study will be employed to investigate how the education system impact on practice of Quota pricing system through examining three types of textbooks in education system in China.

The book named Construction surveying and cost estimation management is published by Tongji University in 2007, which is widely used by a number of universities in the course of quantity surveying and interrelated course in China. In this book, there is a special chapter to introduce the principles of quota pricing system. Furthermore, Construction Quota is chosen from the text books of self-study higher education examination in China. In the course of construction cost estimation, construction quota system and related knowledge is taught as a basic part for further knowledge study. Construction Cost Estimating and Control is one of fascicules in professional training and examination, which is published in 2009. In the qualification examination of professional cost estimator, being an important part, the principle of quota and quota pricing method occupied the comparative proportion as well.

Through the analysis of quota system offered in these books from different fields in education system in China, the fundamental influence of quota pricing system on academic structure to professionals will be explored.

Sampling in case study of education system

In the case study, three purposive case samples will be chosen. These three cases are chosen from different education field, including general university, self-study higher education examination and profession training. From the analysis of different fields, the results are convictive.

3.3 Ethic Statement

All data in this research will be collected and analysed complied with the ethical and professional guidelines of Nottingham Trent University (2009). According to Bryman (2004), to ensure the respondents will uphold during the research process, a statement explaining the purpose of research and use of the data gathered from the questionnaire will be provided before the questions so that informed consent is obtained by each investigator.

Meanwhile, additional statement of intent will emphasize the participation is voluntary and the data will be analysed and treated as confidential and anonymity. This confidentiality will avoid and potential harm caused to the respondents. Each of respondents will be provided a final report results (Bryman, 2004).

3.4 Summary of Research Methodology

This research will review the relevant previous published literatures as theoretical and empirical basis to determine the facts in practice of quota system over construction procedures in China. In order to achieve the research aims, this paper will be combined with structured questionnaires, semi-structured interviews and case study to examine and establish the reasons that why the Quota Pricing System is persisting over construction procurement in China under the mandatory of National Bills of Quantities procurement method. This dissertation will therefore utilize triangulation methodology, of which quantitative and qualitative data will be involved.