Chapter Three3.1 IntroductionThis chapter outlines the methodology adopted for this study’s primary research, which consists of a survey of managers in firms listed on the Saudi Arabian stock exchange, and a series of semi-structured interviews with a number of those survey participants. The mechanics of the methodology are detailed first, followed by an in-depth explanation of the use of managers’ perceptions as a measure of firm performance as well as the overall research perspective and approaches to the research that were considered and rejected. A discussion of the data analysis techniques employed and their contribution to the results’ validity and reliability is then presented, along with an explanation of the study’s limitations and ethical considerations. 3.2 Research Methodology3.2.1 General DescriptionThe first stage of the primary research is a survey consisting of 24 questions administered to managers at 40 firms listed on the Saudi Arabian stock exchange.
The full survey is presented in Appendix A. There are four main components of the survey: First, some demographic information pertaining to the type and size of the firm in terms of number of departments or divisions, number of employees, and annual revenue is gathered.
Second, the firm’s strategic management methodology and the strategic management tools utilised are identified. The third part of the survey identifies the firm’s plans developed from its selected strategic management tools by collecting information on the manner in which the planning process was conducted, and the implementation steps created from the process. And finally, the survey gathers information to conduct an assessment of the organisations’ performance outcomes following the deployment of strategic management tools and the resulting planning/implementation processes.
The performance outcomes are measured by managers’ perceptions, using a six-point Likert Scale (from 0 to 5, with 0 representing “no effect” and 5 representing an “extremely positive” effect). These questions are shown in Table 2 below: QuestionsScale Responses0*How would you rate the impact of SMT on gathering information needed for planning? * How would you rate the impact of SMT on developing objectives for the firm as a whole? * How would you rate the impact of SMT on developing objectives for individual departments? * How would you rate the impact of SMT on monitoring performance in the period covered by the planning? * How would you compare your firm’s performance using SMT to the most recent period in which you did not use SMT or used a different SMT? No EffectSlightly Positive, but Much Less than ExpectedModerately Positive, Slightly Less than ExpectedPositive, About as ExpectedVery Positive, Better than ExpectedExtremely Positive, Major Impact* Did the use of SMT make planning, performance measurement more efficient or easier? Table 2: Managers’ Perceptions Survey QuestionsThese six questions form the basis for semi-structured interviews with a number of survey participants to gather further insights into how managers perceive the role and effectiveness of tools in contributing to the performance of their firms.
A key part of this segment of the research analysis investigates the manner in which these perceptions of performance are related to the subsequent year’s planning, as suggested by the study of internal and external influences on planning processes done by Dutton and Duncan (1987). 3.2.2 Use of Managers’ Perceptions as a Measure of Firm PerformanceAs discussed in the previous chapter, managers’ perceptions present some challenges to their use as a measure of firm performance.
Managers’ perceptions are affected by a number of cognitive and behavioural filters such as confirmation bias, mental accounting, and false consensus, simple gaps in information, and the managers’ own personalities and preferences (Roxburgh, 2003; Valle Santos & García, 2006: 753). Valle Santos and García (2006: 765) offer this rather blunt warning on the use of managers’ perceptions in research: “... the presence of biases in managers’ opinions should also remind us that using managers as informants in scientific research carries some risks. Thus, when researchers ask managers for their opinions, the phenomenon being studied should be simplified and clarified as much as possible in order to reduce the process of simplification associated with the perception process.
Moreover, the formulation of the questions should be shielded from the affective influence of the managers’ beliefs, so the respondents should be asked for clear evidence of their statements. Researchers would be advised not to rely on managers as a sole source of information, but rather to compare managers’ opinions with information obtained from other sources. ”