Chapter three: methodology
Chapter three: methodology
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The objective of this study is to compare and contrast the corporate governance systems of both the United Kingdom of Great Britain and the People’s Republic of China, taking the differences in ideologies into consideration - Chapter three: methodology introduction. In the same manner, the research aims to answer the following questions: (1) how does corporate governance work in the United Kingdom? (2)How does corporate governance work in China? (3) What are the similarities between the Corporate Governance system in China and the corporate governance system in the United Kingdom? (4) Where does the difference lie between the Corporate Governance in the United Kingdom and the Corporate Governance in China? (5) Does the difference in ideologies of both countries, in one way or another affect the corporate governance of both countries? (6) What is the future of Corporate Governance systems of both the United Kingdom and China?
Qualitative data shall be used throughout the whole research. This type of research shall be used in order to be more experienced and opened up to the topic of corporate governance in the UK and in China. It would look into the effects of corporate governance on the current development being experienced by the country in present times. This research shall focus on written documents including magazines, books, websites, memos, annual reports, and so on.
The structure of applied research shall be used in order to analytically review corporate governance systems in both countries. Applied research is basically concerned with the application of research techniques, procedures, and methods that form the body of research methodology as applied to the collection of information about various aspects of a situation, issue, problem or information gathered can be issued for policy formation and administration.
Several methodologies shall be used in order to review the corporate governance in the UK and in China analytically. These methodologies would be of vital importance as this paper delves into the status of corporate governance in China and in the UK. It would look into the current status of corporate governance in both countries, looking into their strengths that paved the way for the development both countries are facing, and how these strengths helped fuel their rise as two of the most developed countries in the world. In order to do so, articles on the corporate governance in China and in the UK shall be used in order to support this study using only those that have been published or written from the year 2000 to the present. These articles would give evidence as to how the strong points of these systems affected their economic development considering that corporate governance is one of the factors that have contributed greatly to the development of China and that of the other developed countries such as Great Britain, making foreign investors more and more interested in investing their countries.
In the same manner, these articles shall be used to support an exploratory research in order to help find the weaknesses that haunt the corporate governance systems of China and the UK, focusing on the problems and hindrances that serve as a barrier to development as well as the threats that could that could curtail or slow down further development.
Having used the techniques of applied research, this study shall also take into one of its forms, descriptive research. Descriptive research attempts to describe systematically a situation, problem, phenomenon, service or program, or provides information about, example, the living conditions of a community, or describes attitudes towards an issue (Key, 1997). Using this particular form of research, the researcher would look into the corporate governance systems as a whole. It would provide information about the certain system, the living conditions of both countries and the people’s attitudes toward the issue at hand, corporate governance.
Correlational Research and Ethnographic Research
The main emphasis of this research attempts to discuss and establish the existence of a relationship, association, or interdependence between two or more variables. The paper would look into the differences and similarities of both systems, taking into consideration the different factors that could possibly affect them. China, being a communist country adopts a different one from the corporate governance of Great Britain, a country who believes that government intervention in state businesses would never be acceptable. Similarly, corporate governance depends on whether or not a certain country has enjoyed the fruits of its industrialisation for a long period of time. In addition to this, banks and financial institutions have played a very important role in the corporate governance of the UK; has this, in one way or another affected the development being experienced by both countries today. In the same way, the role of financial institutions shall be given importance as how this affects corporate governance.
The history of both countries and the political ideology that they embrace shall be correlated to the corporate governance systems that both countries adopt. History books shall be used to gain primary data on the History of Great Britain and China, starting from when they have industrialised. Great Britain, is of course been the pioneers of industrialisation, being the country where the Industrial Revolution started. China, on the other hand, is said to have ‘authored’ the world’s greatest economic story that could never be found in any history book. Is this the factor why both countries have different corporate governance systems?
The political ideology being embraced by these two countries shall also be taken into consideration. Being a communist country, the People’s Republic of China has been more open to government intervention than the UK, who does not regard government intervention as part of their law. Has this also, in one way or another affected the corporate governance systems of both countries? History books, the communist manifesto and other documents from the World Wide Web would be used in order to examine and analyse this phenomenon. This analysis would include the difference of the governance of corporations in communist and liberal countries.
The history of both countries shall be analysed through Historiography, a historical research that focuses on the gathering and analysing historical evidence. Historians rely on the primary sources such as articles in history books, the World Wide Web, journals, etc.
Culture, in the same way is another factor to be considered. In contrast to that of Great Britain’s, China’s patriarchal society has been reflected in their corporations. Has this influenced the board members in their evaluation of companies and how they govern their corporations? History books and other documents from the World Wide Web shall also be used in analysing the effects of culture on the corporate governance systems.
In doing so, ethnographic approach to the issue shall be used to look into the effects of culture to the corporate governance. It aims to systematically describe the culture of the United Kingdom of Great Britain and the People’s Republic of China, aiming to understand the native’s view of their own world. It would take a detailed look on what is happening at the social setting. In doing so, both the emic and etic perspective shall be used (Leedy & Ormrod, 1990).
This research would look at the current situation in both countries by looking at the bigger picture. It would look into why the country has adopted that particular kind of corporate governance system.
The Chinese, referring to their country as the Middle Kingdom has developed a sense of cultural superiority since the ancient times thus, calling other races as barbarians which contributed to their isolation in the ancient times. Has this historical fact contributed to the development of the Chinese’s own corporate governance system even with their adaptation of some western styles and practices? At the same time, has the white-man superiority issue contributed to the fact that the United Kingdom developed their own corporate governance system without incorporating Chinese practices now that China has eclipsed them in the world stage?
Being aware of the cultural differences of both countries, the paper shall now be adjusting its ethnographic research to address the specific situation, thus collaborative ethnography shall also be applied. It would provide a detailed understanding of the specific situations such as the customs, traditions, and practices of the culture that could affect corporate practices.
The emic perspective, being defined as the insider’s or native’s view of his or her world (Leedy & Ormrod, 1990) is very important as this would help in the analysis of how the people from China and UK see their culture which could greatly affect on the adoption of policies. In the same way, the etic perspective, being defined as the outsider’s view of the experiences of a specific cultural group (Leedy & Ormrod, 1990), this would help the researcher interpret the culture and how they affect corporate governance systems of both countries based on research.
As a method, ethnography as a method shall be including the following features:
a. Corporate Governance Systems shall be observed and studied in everyday contexts rather then under experimental conditions set by the researcher/s.
b. Data are gathered from a variety of sources.
c. The approach to data collection is unstructured in a sense that it would not be following a plan that has been initially fixed by the researcher.
d. The research would be focused on the corporate governance system of China and the UK.
e. The analysis of data would involve interpretation of meanings and functions of human behaviour obtained through research.
The use of the ethnographic approach shall be used in order to prevent this paper from making sweeping generalisations (Leedy & Ormrod, 1990).
China, being a communist country adopts a different one from the corporate governance of Great Britain, a country who believes that government intervention in state businesses would never be acceptable. Similarly, corporate governance depends on whether or not a certain country has enjoyed the fruits of its industrialisation for a long period time. In addition to this, banks and financial institutions have played a very important role in the corporate governance of the UK; has this, in one way or another affected the development being experienced by both countries today.
In order to evaluate the corporate governance systems of both countries, this study would also present a case study of different companies and how corporate policies follow the system. Unlike random surveys, these companies and corporations would not represent the populations of corporations and companies in both countries. Instead, they will give the readers and the researcher a clear picture of how companies function and how they formulate policies based on the corporate governance system adopted by the country.
Statistics on the status of these companies, their yearly report shall be obtained to analyse the effects of corporate governance to their productivity. Companies in China shall be compared to its performance before the state decided to improve their corporate governance system.
The research would then use content analysis. Content analysis is a technique used for gathering and analysing the content of the documents (Leedy & Ormrod, 1990) retrieved from the World Wide Web. The content shall be sorted into themes, analysing only what is in the text as the purpose of the writer of these articles could not be very clear to the researcher.
The AGIL System of Talcott Parsons
The corporate governance systems of both countries shall be evaluated based on the AGIL system developed by Talcott Parsons. The system shall be evaluated based on the following:
a. Adaptation (A): The system being able to cope with the situation of external situational demands.
b. Goal Attainment (G): The system being able to define and achieve its primary goals.
c. Integration (I): The system being able to regulate the interrelationship among the other functional components (A,G and L).
d. Latency (L): The system being able to furnish, maintaining and renew the motivation of individuals and the cultural patterns that create and support the motivation (Ritzer, 2003).
Based on the AGIL scheme, the following questions shall be asked, and be answered through this paper:
a. Does the corporate governance system of the United Kingdom of Great Britain cope with the external demands being required of their country being one of the developed countries in the world?
b. Does the corporate governance system of the People’s Republic of China cope with the external demands being required of their country, being one of the fast rising economies of the world nowadays?
c. Does the corporate governance system of both countries adapt the environment of their system to the needs of the corporations?
2. Goal Attainment
a. Were China and Britain able to define the goals of their corporate governance systems?
b. Were China and Britain able to achieve its primary goals?
a. Were the systems being adopted by the two countries (China and Great Britain) able to regulate the interrelationship of its component parts?
a. Were the systems being adopted by China and Great Britain able to furnish, maintain and renew the motivation of individuals and the cultural patterns that sustain them? (Ritzer, 2003)
The use of the AGIL scheme in this paper is seen to be of vital importance as this paper would be analysing the structure of the corporate governance systems of both China and the UK. It would also look on how it functions, how it addresses the needs of their countries to fuel their development.
At the same time, the Talcott Parsons AGIL scheme shall be used as a framework that could help in suggesting possible solutions to address the problems of the corporate governance systems of China and the UK.
It would look into the structure of these companies and how it has been formatted to suit the policies being implemented through the corporate governance systems of China and the UK. At the same time, it would look into how the company functions based on their structure, based on the AGIL scheme, the role of the boards, the shareholders, stakeholders and the directors. How these systems operate shall be examined based on the following assumptions:
a. systems have the property of order and interdependence of parts
b. system tend toward self-maintaining order, or equilibrium
c. the nature of one part of the system has an impact on the form that the other parts can take
d. systems maintain boundaries with their environments
e. allocation and integration are two fundamental processes necessary for a given state of equilibrium of a system
f. systems tend toward self-maintenance involving the maintenance of boundaries and of the relationships of parts to the whole, control of environmental variations, and control of tendencies to change the system within (Ritzer, 2003).
In the same manner, the agency-structure integration shall be analysed, making use of Anthony Giddens’ structuration theory. In surveying the society and the structure, this very popular sociologist argues that the basic domain of the study of the social sciences, according to the theory of structuration does not merely depend on the experience of an individual actor nor the experiences of the society but the social practices that has been present throughout history. This theory would help focus on social practices and how it has affected the systems of corporate governance in the aforementioned countries. Looking into how the patriarchal society of China has affected their boards, how state-intervention has affected how companies are being controlled and in the same manner, how liberal democracy has affected that of Great Britain’s system in governing their corporations (Ritzer, 2003).
A phenomenology of corporate governance systems in both China and the UK shall also be used. A phenomenology, rooted in philosophy focuses on the lived experiences of individuals. It would be focusing on a first-person view, and interpretation of the gathered data (Ritzer, 2003). This will also be used in order to point out the flaws of the corporate governance systems of both countries, and how these became barriers or hindrances to the development that countries have been dreaming of, and how these could curtail the development being experienced by both countries.
It would provide a narrative description of how the corporate system in UK and in China operates, what the government does to make sure that companies operate according to the system they have adopted. In the same way, this phenomenology would aim to get the experiences of certain companies, especially those in China as the country improved their corporate governance system. In the same manner, it aims to give a in depth exploration of other possibilities in connection with the research question, based on Talcott Parsons’ AGIL scheme once again.
Aiming to review the corporate governance systems in both China and the UK, this paper aims to incorporate results and findings of previous studies and researches made to support the different information being presented in this study. The figures obtained from these researches could help in giving credibility to this paper.
Lastly, this research would develop a new theory based on the results and findings through the use of grounded theory. A qualitative research approach developed by Glaser and Strauss in the 60s, the purpose of grounded theory is to develop a theory about the phenomenon. This theory will be grounded or rooted in observation (Ritzer, 2003).
It would begin with the raising of generative questions which would serve as a guide to the research but would not be static or confining. The researcher then begins to gather data and core theoretical concepts shall be applied. Tentative linkages shall be developed between the theoretical core concepts and gathered data. After doing so, the researcher would be engaged in verification and summary in the effort to evolve toward one core, central category. The following analytical strategies shall be applied:
Coding- a process for categorising qualitative data and describing the implications and details of the different categories.
Memoing- it is a process of recording the thoughts and ideas of the researcher as it evolves throughout the study. Memoing goes beyond marginal notes and comments for this study in the researcher’s efforts to develop the core concept (Ritzer, 2003).
The theory that shall be developed shall be used in order to assess and predict the future of the corporate governance systems of both the United Kingdom of Great Britain and the People’s Republic of China.
The research methodology has been structured in this way to look into the corporate governance systems of the UK and China, taking into consideration the factors that cause the disparity between the two. It is for this reason that politics, culture and history shall be analysed in order to produce the analytical review of the corporate governance systems in United Kingdom and in China.
Both countries are on the list of developed countries in the world, but somehow, one of them remains to be the best that could really help in fuelling development. However, there are of course barriers and hindrances to development which should be corrected. Thus, this paper also aims to address those needs, and that is why a new theory shall be developed in the end based on the data gathered.
How the companies in their countries function and their annual performance rate is very important in this study as it could give a clear picture of how efficient the corporate governance systems are.
The question now remains, which country adopts a more effective way of governing corporations? Should countries wanting to develop follow that of Great Britain’s, considering that it is one of the countries that has long experienced industrialisation and development? Or should they be following that of China’s, considering the huge development it has experienced in a short period of time, eclipsing the UK as the fourth largest economy of the world just last year.
Key, P. (1997). Descriptive Research. Retrieved September 30, 2007 from
Leedy, P.D. and Ormrod, J.E. (1990). Practical Research: Planning and Design (8th Ed). Ohio: Merrill Prentice Hall.
Ritzer, G. (2003) Sociological Theories. New York, US: McGraw-Hill Higher