Kings College London U NIVERSITY

OF

L ONDON

This paper is part of an examination of the College counting towards the award of a degree. Examinations are governed by the College Regulations under the authority of the Academic Board.

MSc EXAMINATION 7SSMM 100 RESEARCH METHODS May 2008 TIME ALLOWED: THREE HOURS This is an OPEN BOOK Examination There are TWO sections. Answer TWO questions from Section A, and TWO questions from Section B. ANSWER EACH OF THE QUESTIONS ON A SEPARATE PAGE IN YOUR ANSWER BOOKLET. BE SURE TO INDICATE WHICH QUESTION YOU ARE ANSWERING BY GIVING THE QUESTION NUMBER BEFORE THE ANSWER.

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CALCULATORS MAY BE USED. THE FOLLOWING MODELS ARE PERMITTED: CASIO fx83/ CASIO fx85

TURN OVER WHEN INSTRUCTED 2008 Kings College London SECTION A

(1)

Brouthers and Bamossy (1997) investigated the role of key stakeholders in the negotiations about the formation of international joint ventures between Western European multinational enterprises and Eastern European State-owned enterprises. (a) Brouthers and Bamossy used a case study methodology. Why do you think they chose a case study methodology in preference to alterative research methodologies? Do you think their choice was appropriate? (5 marks) Explain in principle the ways in which key stakeholders may influence joint venture negotiations in the pre-negotiation stage. (5 marks) What were the main empirical findings of the study with respect to the extent and frequency of intervention of key stakeholders? (5 marks) The case studies were based on retrospective interviews. What problems do you anticipate with the use of retrospective interviews, what biases might the use of retrospective interviews introduce, and how might such biases be reduced? (5 marks)

(b)

(c)

(d)

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(e)

Identify examples of good case study practice provided by Brouthers and Bamossy, and explain why they are examples of good practice. (5 marks)

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(2)

Write short notes on each of the following: (a) (b) Explain, with examples, the difference between nominal, ordinal, interval and ratio scales. (5 marks) When is the use of the Spearman rank correlation coefficient appropriate? How would you interpret a value of the Spearman coefficient that is close to zero? (5 marks) What is the appropriate test if you want to look for a relationship between two variables measured on nominal scales? (5 marks) What is the difference between probability and nonprobability sampling? Explain with the aid of an example how quota sampling differs from stratified random sampling. (5 marks) Suppose you want to estimate a population mean based on a sample. Initially you set a 1% level of significance, but later you change this to a 5% level of significance. What effect will this have upon the required sample size? (5 marks)

(c)

(d)

(e)

(3)

Factor analysis is a technique often used in the analysis of questionnaire data. (a) Suppose you wanted to evaluate consumers perceptions of a particular make of car. Explain how you might design a
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questionnaire survey using semantic differential rating scales to provide measures of these perceptions. (5 marks) (b) (c) What is the purpose of exploratory factor analysis? (5 marks) What is the minimum number of respondents you would require to the questionnaire survey if you were planning to undertake an exploratory factor analysis? (5 marks)

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(d)

How would you decide which loadings from the rotated factor matrix should be considered meaningful, and thus which variables load on which factor? (5 marks) How would you assess the reliability of the scales generated by the factor analysis? (5 marks)

(e)

(4)

Suppose you want to design an experiment to establish the average length of time it would take employees to finish four tasks (A, B, C and D). Furthermore, suppose you have enough resources to enable volunteers to carry out 80 tasks in total as part of the experiment. (a) Explain how you would set up the experiment if you were intending to analyse the resultant times using a one-way analysis of variance. (5 marks) Explain how you would set up the experiment if you were intending to analyse the resultant times as a randomised block design. (5 marks) Explain how you would set up the experiment if you were intending to analyse the resultant times as a 2-way factorial design. (5 marks) Under what circumstances would be advisable to set up the experiment as a 2-way factorial design? (5 marks)
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(b)

(c)

(d)

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(e)

Under what circumstances would be advisable to set up the experiment for analysis using a one-way analysis of variance? (5 marks)

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SECTION B

(5)

The College Careers Service wanted to find out whether the choice of degree subject has any effect on graduates' starting salaries, and upon whether gender made any difference. They therefore collected the following data on the starting salaries ('000) of 18 students. Degree Subject Male Female ----------------------------------------------------------------------------Humanities 17, 14, 14 12, 14, 13 Science & Engineering 20, 16, 18 12, 11, 16 Management 12, 10, 14 14, 16, 12 The data were subjected to analysis of variance, and the following results were obtained: Sources of Sums of Variation squares --------------------------------------------------------Degree 19.0 Gender 12.5 Degree*Gender interaction 37.0 Total 114.5 --------------------------------------------------------(a) Plot the cell means with gender on the x-axis and the starting salary on the y-axis. Does the diagram suggest interaction between the degree subject and gender? Explain your answer. (5 marks) Complete the ANOVA table. (5 marks)

(b)

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(c)

The Careers Service is particularly interested in comparing the starting salaries of male and female graduates from the same degree course. Which multiple comparisons test will be most appropriate and why? (5 marks) What conclusions can you draw from the analysis of variance? (10 marks)

(d)

(6)

Frederick Schut and Peter Van Bergeijk set up a model of the prices of pharmaceuticals in 32 different countries in an attempt to see if the pharmaceutical industry practised international price discrimination. PRICEi = + i
1

GDPNi + 3 CVNi +

PPi +

DPCi + 6IPCi

The variables were defined as follows: PRICEi = the pharmaceutical price level in the ith country divided by that of the United States GDPNi = per capita domestic product in the ith country divided by that of the United States CVNi = per capita volume of consumption of pharmaceuticals in the ith country divided by that of the United States PPi = a dummy variable equal to 1 if patents for pharmaceuticals are recognised in the ith country, and equal to 0 otherwise. DPCi = a dummy variable equal to 1 if strict price controls were applied in the ith country, and equal to 0 otherwise. IPCi = a dummy variable equal to 1 if price competition was encouraged in the ith country, and equal to 0 otherwise.

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Schut and Van Bergeijk obtained the following estimates: Variable Model (1) coefficient standard error +38.22 +1.43 - 0.59 +7.31 - 15.63 - 11.38 32 7066.90 0.811 6.39 0.21 0.22 6.12 6.93 7.16 Model (2) coefficient standard error +32.60 +1.66 - 0.88 6.31 0.24 0.25

constant GDPN CVN PP DPC IPC n SSE R2

(a)

32 11077.4 0.704

Explain in economic terms why Schut and Van Bergeijk included each of the three dummy variables. What signs do you expect for the parameters 4, 5 and 6? (6 marks) Which of the regression significant? (6 marks) coefficients are statistically

(b) (c) (d)

Test the overall significance of the regression. (5 marks) Test to see whether the joint inclusion of the three dummy variables adds significantly to the explanatory power of the model. (8 marks)

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(7)

A financial analyst has collected the following data on the assets invested in a long-term mutual fund and the annual percentage return: Assets Return Assets Return ---------------------------------------------------------300 29.3 730 15.0 70 27.6 436 14.4 3004 23.7 143 14.0 161 22.3 117 13.7 827 22.0 75 12.9 295 19.6 610 11.3 29 17.6 264 9.9 421 16.0 27 7.9 99 15.5 71 6.7 756 15.2 719 3.3 ---------------------------------------------------------(a) Calculate the Spearman rank correlation coefficient. (10 marks) Test whether there is a significant (use = 10%) association between the size of the assets invested and the percentage return. (10 marks) Does your answer in part (b) suggest there is a causal relationship between the size of the assets invested and the percentage return, or that there is a lack of a causal relationship? (5 marks)

(b)

(c)

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(8)

The age profile of a sample of 359 employees at a large company is as shown below. The mean age of the sample is 43.0 years, and the standard deviation is 5.0 years. Age Number of (years) Employees -------------------------------------under 29 2 29-31 4 31-33 6 33-35 9 35-37 14 37-39 34 39-41 51 41-43 55 43-45 58 45-47 52 47-49 38 49-51 22 51-53 8 53-55 3 55-57 1 over 57 2 ------------------------------------(a) (b) Do the ages follow a normal distribution? Use = 5%. (20 marks) How would your analysis differ if it were known that the sample was drawn from a population of mean age 43.0 years and standard deviation 5.0 years? (5 marks)

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