ACT 3312 – RESEARCH METHODS

Lesson 07
Quantitative Research Design

Quantitative research comes with inline the positivist paradigm and in terms of
deductive research. Deductive means, testing a theory using hypothesis. However, it is
not building a theory. Building a theory means, inductive. Positivism talks about that
the reality is externally available, the knowledge can be detached from the respondents
and can be measured with quantitative techniques. Quantitative research is used for the
manipulation; the researchers don’t strive to change the values or using numbers/ raw
data to get a statistical output/ evidences to test the hypothesis.

Quantitative research design means, a plan/ map/ decision before starting the process of
research. Under the conceptual framework/ conceptualization means, placing tentative
or predicted relationships, variables into a diagram/ framework. An explanation also
given to the particular diagram. This kind of conceptual framework can be seen in
qualitative research too. Research design means, the different decisions made in relation
to the quantitative research. Example; decision on the sample, decision on the data
collection and data analytic tools, decision on the data analysis, decision on the
hypothesis. Experience the reality means, the data collection process as at the planning
stage we are away from the field. However, when we actually go to the field the data
collection process would be hard or deviate from the plan. Operationalization means,
the process of identifying certain relevant measures for variables in quantitative
research. Assume you wants to measure information quality of financial statement as
information quality cannot give a value itself.

Introduction

• Your research/ systematic attempt or a systematic investigation that should aim at

creating or advancing knowledge.
• This is an ambitious (not easy) undertaking and it is therefore vital to take a careful,
methodical/ rational, thoughtful (clear understanding) and thorough approach to

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 produce an outstanding design. In fact, the design/ the plan is very important when
carrying out the research.
• If the research problem requires to do a qualitative research, then do a qualitative
research. If the research problem requires to do the quantitative research, then do a
quantitative research. Do not mix these both at the undergraduate level as it is
difficult. In fact, the method depends on the research problem or the question.
• Research design is the ‘recipe’ to your research.
• There are two major research designs: qualitative and quantitative.
• It must be emphasized that one cannot decide whether qualitative or quantitative
studies are better or useful than other.
• Also, there are no predominates (supporting points/ pros and cons/ advantages/
dominating features) for the appropriateness of either qualitative or a quantitative
study.
• Although quantitative studies seem to be more common in economics and finance,
and qualitative in anthropology (studying on human being behavior), there is plenty
of examples of very insightful qualitative studies in economics and good
quantitative studies in anthropology. However, it is not mandatory to align to one
method.
• The inductive research is the research that introduce a new theory by using facts and
information. Here a new investigation occurs. Therefore, highly qualitative studies
are conducted as the facts and information doesn’t bring the numbers. The deductive
research is to test the theory, in various different context. Here the validity of a
theory is tested or whether the theory works in a particular situation is focused.
• A new investigation often starts with qualitative studies exploring new phenomena
and, later on, quantitative studies follow to test the validity of proposition formulated
in previous qualitative studies. In fact, qualitative studies can be used to develop a
new theory while, quantitative studies test the validity of the theory at different
contexts.
Example;
Take the law of demand, the factors that determine the law of demand ‘d have
created through facts and information initially by asking from people through the

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 interviews and surveys with people. For an instance, you may ask from people, what
do you concern when purchasing a product. People may answer price, willingness
and etc. To develop such a theory the facts and information initially. Then, take
those facts and information to a context; canteen, market place or supermarket to
collect the actual data such as, price, price of alternative goods, income level and so
on. Then the validity of such factors can be tested, by using quantitative design
which uses numbers and data.
• You should be aware that there are no general guidelines as to when a qualitative or
quantitative method is more appropriate. In deciding your method, the following
questions can be considered:
- What is your research problem?
- Are you attempting to conduct an exploratory, descriptive, causal or
predictive study?
If it is exploratory study or explore deeper or search the reasons behind why
something happens or happened in deeper, then choose the qualitative
research. Example situation ’d be failure in implementing management
control system.
If it is descriptive or describing the situation, a qualitative research should
be conducted. Assume one company has implemented a management
control system properly whereas another one fails, you can describe the
process they adopted in successful implementing technique, their decision
making, the processes they adopted, management practices of them.
Causal or predictive study focuses on the relationship or cause and effect or
what creates the other or independent and dependent situations. Then the
quantitative research should be focused.
- What are the objectives (what kind of expected outcomes)?
If the objective is to describe a situation, a qualitative research is preferable.
If the objective is to explain, examine, predict and investigate a situation, a
quantitative design should be chosen.
- What kind of information do you want to obtain the outcomes and what do
you already have access to?

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 Assume you collect the facts and information from interviews or the
qualitative data, then the qualitative design is preferable. If the secondary
data are used or surveyed data are used or measured knowledge are used,
then quantitative research is preferable.

Quantitative Research (QR) Design

• QR uses numbers as evidence/ information.

Example; secondary data in financial reports, questioner to measure responds with
a scale
• Formally, QR is that ‘any research that involves the manipulation of numbers to
make claims, provide evidence, describe phenomena, determine relationships, or
determine causation.’ Here manipulation means, taking the statistical evidence
through statistical techniques applied to the raw data. Making claim means,
hypothesis testing. For the descriptive analysis, use the descriptive statistics. To
describe relationships, use the correlation. To determine causation, use the
regression.
• Example;
• Assume one has to provide a description about the organization’s sales drop from
2Mn to 1Mn indicating 100% decrease. Though there are numbers, it is not a
quantitative research, a no hypothesis is there and no statistical techniques. Then
they have to use qualitative research.
• In order to become a quantitative research, there should be hypothesis and those
hypotheses should be tested through statistical techniques.
• QR uses a number of methods to collect, interpret, and report what these numbers
mean. But, these methods are usually very systematic in order to maintain
consistency of these numbers across different contexts. In order to become a
quantitative research, one has to go through this process. Very systematic means,
they are very much objective or rigid or rules, laws and techniques that developed
outside are followed as it is.
• Therefore, QR is said to be generalizable or statistical generalization is there. (results
can be applied to other contexts and situations through statistical or mathematical

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 modeling). Statistical generalization starts with studying from a sample and talking
about the population. Generalization may occur in two ways;
1. Assume one wants to study about, the impact of cooperate governance on firm
performance of the listed companies. According to the statistical generalization,
no need to collect the data from all the companies in stock exchange. Based on
the statistical significant and the error term the sample can be decided. Once the
study is carried out based on the sample, then you talk about the entire stock
exchange. That is possible in quantitative.
2. Similarly, after completing the study the same manipulation of data can do with
a statistical or mathematical model. Assume one has developed a regression
model as this,
Firm performance = 𝛼0 + 𝛽1 Cooperate Governance + 𝜀
based on the CSE data. Suppose following values are taken through that formula;
Firm performance (ROA) = 1.1 + 0.5 Cooperate Governance + 𝜀
This same model can be applied to another stock exchange. Only, one has to do
is collect the data from another context or assume from Bombay stock market
(Collect the ROA to determine the firm performance), applied to the same
formula where another generalization occurs as the formula was developed in an
objective manner. (sort of a replication occurs)
• Another important consideration in QR is sampling. Here one can carry out a study
based on a sample.
• Qualitative can not be generalize as no proper sampling occur as selecting few
people for an interview based on one’s willingness.
• A lot of QR is also deductive (testing a hypothesis that has already been established
before the numbers have been collected).
• Statistical significance in QR is a very specific term. Statistical significance means,
at what level one has to accept or support the hypothesis.
Example; 95% level of confidence
• For a quantitative design, there is no need to get the results 100% accurate to accept
the hypothesis. However, 95% is sufficient.

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• Deciding whether to do QR requiring first that you understand what your audience
(supervisors in the department) and purpose (exploratory, descriptive, causal) expect
from your argument. Assume there is no supervisor who does the quantitative
research in the department, then one can’t do quantitative research. Basically, the
administrative setting affects.

Conceptual Framework (CF)

• A graphical or narrative explanation of key factors, concepts or variables to be

studied and the presumed relationship(s) among them is called as a conceptual
framework. The CP has two types; graphical and narrative explanation. CP is about
presenting the concepts, factors and showing a relationship among them.
Example;
Assume, one going to study the relationship between the cooperate governance and
firm performance. Cooperate governance is the independent variable, while
dependent variable is the firm performance. This relationship can be graphically
present as follows;
key factors, concepts or variables

Independent Variable Dependent Variable

Cooperate + Firm
Governance 𝐻1 Performance

Presumed relationship

• According to the literature or the theory you use, assume it can be found that this
presumed relationship is positive (+). Apart from that, the hypothesis also should be
indicated in the CF. The theory or the literature helps to identify the relationships
between the variables.
• In a narrative presentaion, things are explained with words only, without the above
diagram.
“The depended variable of this study is firm performance and the independent
variable is the cooperates governance. Based on the agency theory or based on the

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 past research findings such as…this person this person... according to them there is
a positive relationship between cooperate governance and firm performance.
Therefore, this study expects a positive relationship. Further, this expected positive
relationship ’d help the researchers to develop a first hypothesis H1 of the study.”
• As a trend people put these both graphical or narrative explanation together or
narrative explanation is followed by a graphical presentation.
“… The above discussed relationship can be further illustrated with the diagram
presented below.”
• At the undergraduate level you can choose one of them or both.
• CF is not a mandatory requirement but it is useful if you want to stay in the topic.
Not mandatory means, even without such presentation hypothesis can be shown at
the end of the literature review. Just you can jump in to the hypothesis at the end of
the literature review. However, revisiting and to be in the topic it is needed.
• CF plays the role of a road map in your research or it assist to attain a destination
with clear picture.
• This CF summarize what you are going to do and works as a plan.
• The conceptual framework or theoretical basis is where you position your research
within the current stock of academic knowledge. Here you position your knowledge
in the same position that the other researches positioned their knowledge. For an
instance, you show the same diagram that the other researches drawn where you try
tor par with them or positioning among themselves or no difference. In fact, there
are no new knowledge creation.
• If the CF is there hypothesis should be shown in the right after the diagram (third
chapter). If it is expected to have no diagram or just a narration, then include it in
the literature review chapter (second chapter).
• Assume you might add a new variable to the existing diagram, then your research
do not positioning in the same place or it will be new or different.
• Remember we are undertaking academic research
- Academic research builds on existing academic knowledge as the
research problem comes from the literature.

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 - It is positioned within a paradigm of knowledge and expresses the reasons
from this choice.
- It aims to provide something original.
• A conceptual framework is what makes it academic research. The difference
between, academic research and business research and surveys is using literature
and this conceptual framework.

Defining Your Conceptual Framework

• Search through the literature for the core theories;

- Group authors by the methodology used.
- Highlight key theoretical approaches in the field of study.
- Evaluate/critique the competing conceptual frameworks.
- Explain your choice
• Suppose you decide to have CP. CP should be based on a theory. The chapter
would form as follows;
3.2 Conceptual framework
- Agency theory (the theoretical support should be shown by describing
the theoretical relationships as per the theory)
- Compare/ similarities and contrast/ differences application of different
conceptual framework with intext citation and references.
- Come to a conclusion that which framework you use with reasons.
- Draw the diagram

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 Necessity of a qualitative framework

• If you want you can have a CP for the qualitative research too. However, the way
of drawing is different. When CP can be there in in QR;
- The research problem is an issue of theoretical or practical interest.
Example;
Assume you are studying about successful in change management
process, and it has theoretical importance as well as practical important.

Unfreezing

Change Change Management

Freezing

Here no direction or hypothesis should be shown as it is a theory. This

shows hoe they have apply this model. Similarly, you can enquire or
explore orc describe about this phenomenon by using these three
elements. Unfreezing, change, freezing might be factors while, change
management is the phenomenon. However, no dependent or independent
variables.
- The paradigm of the study covers philosophical assumptions about the
nature of the world and how we understand it. Paradigm is a descriptive
or exploratory and it is an interpretive research. So, no hypothesis. But try
to understand the situation through this model .so a diagram can be
shown.
- The literature review covers a critical and evaluative review of the
thoughts and experiences of others. Before you draw this, you have to
again carry out a literature review and see the way of positioning.

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 Selecting a Research Design
• Research design involves a series of decisions related to few different aspects of
testing the theory (conceptual model) empirically. After you identify the contractual
framework, here you try to test it. Therefore, some more decisions have to be taken
which is in need to utilize in testing the theory empirically or using actual data.
• Such decisions revolve around:
- What kind of investigation (this is what generally known as design)
You have to decide whether it is a qualitative investigation or quantitative
investigation based on CP.
- Causal (laboratory), correlation (survey) or group differences/ranking
In casual you do tests where some factors present and where that same
factors are absence.
Example;
You show the advertisement to set of people and the other set will not
know the advertisement and then you tell both the sets to buy the product
and search the behavior.
Correlation means kind of a survey to establish a relationship between
independent and dependent variables.
An instance for a group differences or ranking is, if you want to study the
quality of the financial statements before 2012 (the year in which IFRS
was applied to Sri Lanka) and after 2012 by comparing.
- Unit of analysis
This means, from whom you collect data. There is a major rule that both
independent and dependent variable should measure from same unit of
analysis; Individual, firms, sector, groups
Assume your study is firm performance and corporate governance, from
the firm you will be collecting the data where unit of analysis is the
companies. Assume you’d study the employee satisfaction; the
individuals would be the unit of analysis. Assume you going to study
about the public sector performance and the private sector performance,

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 the sectors are the unit of analysis. You’d collect the data from those units
of analysis.
- What kind of respondents
Population, sample, sample size and sampling technique
Population means, everyone faces the research problem. For an instance,
job satisfactions which cover the all the employees. If the sample is used
sample size and the sampling technique should be decided.
- What kind of data collection method
Measurement and measurement tool, and data collection technique
Examples; surveys, interviews, observations, content analysis, ratio
- Threat to validity and reliability of investigations (designs) in sampling,
data collection, specially measurement tool
Validity means, whether the data collected actually represents the
research problem. The reliability means, is there any repetition of the
same data collection process or you get the same data set again and again
or doing the same thing again and see whether the answer is same.
Example;
There are financial statements which are not audited are not valid and
reliable. Therefore, there is a threat. You can remove such data from the
study saying that data is not valid and reliable or not accurate. Take only
valid and reliable data.
Experiencing the Reality: Collecting Data
• Since research design focusing on various decisions on conducting the research.
Decisions involved in data collection
- Decision on type of data (primary and secondary)
You should decide whether you collect, primary data or secondary data.
Both the quantitative and qualitative research can be done through
primary and secondary data. However, collecting primary quantitative,
primary qualitative, secondary quantitative or secondary qualitative data
depends on the research problem. Sometimes, both the primary and
secondary data are used. Primary data means, collecting fresh data purely

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 for the research. It means, no one else has collected such data before. You
are the first person to collect the data specifically for the purpose of your
research. Secondary data means, for your research, you are going to use
the data that have been collected by someone else or some other
regulatory authority for other purpose. Example; using data in annual
reports as it doesn’t prepare for the use of your research, it was prepared
for the stakeholders.
- Nature of data (Factual data, opinions / attitudes etc., Quantitative Vs
Qualitative)
Factual data are the data such opinion or attitude or descriptive. For an
instance, factual data can be collected as, facts and information asking
about the age, weight, salary scale, income level, their opinion etc. factual
data can be collected as qualitative or quantitative forms.
Assume you are going to collect data on information quality, of financial
statements. You can collect data from people where they reveal facts and
information by asking a question like “what is your opinion on the quality
of the financial statements?”. The respondent come up with a descriptive
answer which is become qualitative form.
Information quality in the financial statement can be collected in a way of
quantitative form by using a scale; 1 – 5 scale which is called liquored
scale. There you collect the data in relation to the scale to quantify it. For
an example, you can ask the person to rate or scale or give a scale based
on your opinion about the quality in the financial statements. Though it is
a factual data respondent were asked to quantify it.
- Measurement scale and measurement instrument (specially in relation to
quantitative studies)
This measurement scale and measurement instrument specifically comes
under the quantitative studies. In quantitative studies, you can use the
scales as a guide and it is compulsory if you use a questioner.
Measurement instrument means, questioner that asks from the people to
collect all the information. However, in some cases assume you collect

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 the data on profitability and it may not be there in the financial statements
as it is. So, there will eb instance you have to measure the profitability
through ROA or ROE. In such a case, no questioner can not be used. Then
there you have to collect a data collection reporting format. Assume you
prepare an excel sheet and collect the data to calculate the ROA and the
ROE to knew the profit. Measurement scale is the ratio and measurement
instrument are the data collection reporting format in here.
- Data collection methods (probably for primary data)
⬧ Questionnaires (in a survey)
A descriptive answering questions brings qualitative data while, if
the respondents were asked to quantify the answers then it brings
the quantitative data.
⬧ Interviews
Similarly, the question may ask to rake, brings the qualitative data.
So, questioners can be customized to collect the quantitative or
qualitative data. Scales can be used qualitative research but the
purpose of the research may not achieved.
⬧ Observations
Observe and maintain a diary. Observing the exam participant’s
behavior and record it as a descriptive note brings a qualitative
data. Sometimes, observer can rate too. Assume give a rate for the
preserving one meter between two people. There you get a
quantitative data. In accounting research, these types of
observations are not that much popular/ rare.
⬧ Content analysis
Analyzing a content of a document resource. That may be
quantitative or qualitative research. For an instance, assume you
study about the profitability, you can do a content analysis by
writing a paragraph about profitability which categorize under the
qualitative study. Also, profitability can be measured through the

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 figures/ profitability ratio in the financial statements where it
becomes the quantitative data.
• One of the important points to be noted here is methods are atheoretical and
amethodological. So, each data collection method can be employed across
paradigms and methodologies. There ae two main paradigms; phenomenology/
interpretivism and positivistic/ positivism. There are two main methodologies;
quantitative and qualitative. Above mentioned data collection methods, can be used
in both positivism and interpretivism, quantitative and qualitative research. Nothing
belongs to one particular. Through the customization, any methodology can be used
in those four types. Such for methods do not belong to the any theory (atheoretical)
or methodology (amethodological) solely.
• However, each paradigm and methodology employ these methods more customized
ways, thus exists many variations of each method
- Questionnaire: structured, semi-structured and unstructured
Structured means, respondents has options to mark. Example; election polls.
Semi structured means, there are proportion of questions that are fitting to the
structure and another proportion which require a detailed writing. Example;
exam paper contains both MCQ and the descriptive questions. Unstructured
means, the questions which require a descriptive answers/ detailed explanation.
- Interviews: structured interviews, semi structured interviews and unstructured
interviews – also depth-interview and focus-group interview
- Observations: structured and unstructured – also participant and non-participant
observer
• Remember scientific research/ quantitative/ positivist research prefers structured
methods. Semi structured and unstructured are belong to interpretivism/ qualitative
research.
• Just because you use numbers, it doesn’t become a quantitative research, there
should be a cause and effect relationship. The relationship should be established
with the aid of a technique like correlation and regression.

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 Example
Intellectual Capital (IC) is defined as knowledge related intangible assets which creates
competitive advantage and superior performance for a firm in a sustainable manner
(Kehelwalatenna & Premaratne, 2014). Considering a dearth of studies on the above
theoretical expectation in the Sri Lankan context, an empirical study expects to
investigate the impact of IC and its components on firm performance of listed
companies on Colombo Stock Exchange during 2000 – 2014. IC is composed of human
capital (HC), structural capital (SC) and relational capital (RC). Past IC performance
studies revealed that firm size and leverage influence significantly on the relationship
of IC and IC components and firm performance. According to literature return on assets
(ROA) is a measure of firm performance, market capitalization (MKTCAP) is a proxy
measure for firm size and debt to equity (DE) ratio is a proxy for leverage. Using the
above information;

This given question/ interpretation is a discussion is called the conceptualization.

By following that conceptualization, a conceptual framework has to be made.

Conceptualization means, elaborating or explaining the theoretically expected

relationship between independent and dependent variables using the literature.

Before developing a CP, the information should be gathered on the theoretically

expected relationship and explain before you develop a framework.

Here the first sentence tells that what you are going to test using some data.

Dearth of studies – lack of knowledge

Control variables are the variables that control the relationship with the external
effects. They are not directly involved in the relationship, while they indirectly
decide the strength of the relationship. Therefore, they kept aside/ outside.

Human capital (HC), structural capital (SC) and relational capital (RC) are the
control effects while, firm size and leverage influence are the external effects.

Before the conceptual framework this kind of a narration should be there. That is
called the conceptualization. You have to put this in the body of the research. Do
not put it in the annexure.

Here, two type of relationship can be built; IC and FP and the components in IC and
FP

Only show the alternative hypotheses by taking directly from the narration. Null
hypothesis are not shown in research papers.
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(i) Develop a conceptual framework.

Independent Variables Dependent Variable

Intellectual Capital

Human capital 𝐻1𝑎 𝐻1

+
+
Firm Performance
𝐻1𝑏
Structural capital
+ (ROA)

Relational capital
𝐻1𝑐
+

Control Variables

Firm Size
(MKT CAP)
Leverage
(DE)

(ii) Derive hypotheses to be tested through the empirical evidence.

H1 : There is a positive relationship between IC and firm performance

H1a : There is a positive relationship between HC and firm performance

H1b : There is a positive relationship between SC and firm performance
H1c : There is a positive relationship between RC and firm performance

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(iii) Construct regression models that would estimate the hypothesized
relationships in (ii) above.
y = a +bx
here y is firm performance but it is measured as ROA (y). Constant we don’t
know so it is signified through ∝0 (a) Also, 𝛽 1 shows the b or the slope. Here
the independent variable is IC. Here ROA is shown as depending on IC but,
in reality it may depend on many other factors not only on IC. Assume IC
affects only 20% to the ROA and if the equation stops from ‘𝛽 1IC’ (bx), the
equation is not balance as other factors (control variables or any other
independent variables we don’t know) are not shown. In order to show them,
put 𝜀 (error term). Here remember to concern the control variables out of the
other variables.

ROA = ∝0 + 𝛽 1IC + 𝛽 2MKTCAP + 𝛽 3DE + 𝜀 (1)

ROA = ∝0 + 𝛽 1HC + 𝛽 2SC + 𝛽 3RC + 𝛽 4MKTCAP + 𝛽 5DE + 𝜀 (2)

Here there are two hypotheses; H1 is one hypothesis and H1a, H1b and H1c are
another set of hypotheses. Therefore, there is a need of regression model.
Regression model starts with the simple model y = a + bx;
y = dependent variable
a = constant
b = slope of the line y
x = independent variable
b

0 x

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 Operationalization
• This has to be done in some research only.
• It is the process of defining variables into measurable factors.
• When you take a variable as it is, it is difficult to measure. Assume there is a variable
called firm performance. However, firm performance is measured through the ROA.
This process is called as the operationalization. This occurs variables as it is their
existence, no measure can be done. It is required to go through the operationalization
process with the help of literature.
• In your research you should go through this process. This is a part of a methodology
chapter.
Example;
Assume you wants to measure the concept of firm performance. This firm
performance may have certain variables. They can be productivity, profitability,
growth of the firm. Assume those variables can be interpreted through the indicators
like; asset turnover ratio, return on asset and return on equity, sales growth
respectively. Subsequently, you can identify which data to be collect through
literature.

Concept Variables Indicators Measure/ measurement

Asset turnover Revenue/ average assets
Productivity
ratio
ROA = gross profit/ average
assets
Firm Profitability ROA and ROE
ROE = net profit/ average
Performance
equity
The difference between last year
Growth Sales growth sales and this year to a
percentage

• Below it is another example for operationalization. That person uses information

content, relevance and etc. as the variables of information quality. The definitions
were taken from the literature. He has used the survey to scale the answers.

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19
 Content of the Methodology Chapter
For a quantitative research following should be included;
1. A description about the research strategy (positivistic/ interpretivism)
2. Sampling (population and sample)
3. Conceptualization
4. Hypothesis
5. Operationalization
6. Data collection methods
7. Data analysis methods

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