CHAPTER 3: RESEARCH METHODOLOGY
Research methods may be understood as all those methods /techniques that are used for conduction of research. Research method or techniques, thus, refer to the methods the researchers use in performing research operations (Kothari, 2004: 7). In this study different methods were employed to collect relevant quantitative data for analysis to get answers for the questions and to test the hypothesis systematically.
A research design is the strategy for the study and the plan by which the strategy is carried out (Coldwell and Herbst, 2004). Kothari (2004) states that research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure .He further underlined that the design includes an outline of what the researcher will do from writing the hypothesis and its operational implication to the final analysis of data. It implies that it will specify methods and procedures for the collection, measurement and analysis of data. This study employed Cross-sectional Survey research design with a quantitative approach. The instruments were constructed to measure the research variables such as leadership behavior, basic principles of cooperatives, managers’ financial knowledge and decision making competencies, leadership skills and training , division of responsibilities and cooperatives business performances.
The quantitative data were collected from 162 samples of the primary coffee farmers’ cooperatives managers, chairpersons and directors. The results of descriptive and multiple regression analysis were used to test hypotheses and get answers for the research questions.
POPULATION AND SAMPLING METHOD
The target population for this study were 312 primary coffee farmers’ cooperatives managers/leaders. These cooperatives were organized in three cooperatives unions (i.e., Oromia, Sidama and Yirgacheffe coffee Farmers Unions).
The population of the study were only primary coffee farmers’ cooperatives managers, chairpersons and directors in West, East and Southern Ethiopia. Time, cost and problems of geographical location in accessing target sample respondents were barriers for the possibility of selecting primary cooperatives managers (respondents) on random basis from all cooperatives in Ethiopia. This problem was tackled by selecting data enumerators from the offices of cooperatives promotion agency of each zone. The stratified random sampling technique was used to select the samples for data collection.
In the area of the study, the population density of primary coffee farmers’ cooperatives varies greatly within the region. The stratification was on the basis of number of primary coffee farmers in each union and the regions (union) they are situated. Cooperatives with large numbers in a region were given the highest sample size. In general the size of the sample in each stratum (region or union) is based on population size of the stratum.
All coffee farmers’ cooperatives in East, West and Southern Ethiopia were managed under same governance principles and proclamation, but they differ in region, total number of cooperatives organization, number of stake holders (members) and geographical location. These are the major factors for stratification.
Samples of the study
Krejice and Morgan (1970) developed a model about the determination of sample size for research activities. They state that for the population size (N) = 300, the sample size (s) =165, and for N=320, s = 175. In this study,the population size (N) of primary coffee farmers’ cooperatives were 312 managers, chairpersons and directors. Hence, the 312 primary coffee farmers cooperatives leaders were the population out of which 175 samples size (s) were selected by using stratified random sampling method.
The sample size (s) of 175 from the population size (N) of 312 were selected from the primary cooperatives leaders organized under the three coffee farmers cooperatives unions in three geographically different regions in West, East and South Ethiopia. The name and numbers of cooperatives union in these different regions are: Oromia, Sidama, and Yirgacheffe regions with 240, 47 and 25 primary coffee farmers’ cooperatives respectively.
The proportional allocation of the three strata for each region is based on per cent (%). Proportional allocation is considered most efficient and an optimal design when the cost of selecting an item is equal for each stratum,there is no difference in within-stratumvariances,andthe purpose of sampling happens to be to estimate the population value of some characteristic (Kothari, 2004).
The percentage of sample allocation was based on intracooperatives and intercooperatives unions. The intracooperatives allocation shows the sample size of cooperatives from the same union or region. In this case the sample size from the total 240 Oromia primary cooperatives was (137) 57.1 percent. The sample size for Sidama primary cooperatives was 23 from total 47 and Yirgacheffe 15 samples from total 25 primary cooperatives with 48.94 and 60 percent respectively. The proportional intercooperatives allocation for the total sample (175) from the total population (312) was 78, 13, and 9 percent for Oromia, Sidama and Yirgacheffe respectively (see Table 3-1).
Stratified sampling technique was used in dividing the population into groups, or strata, and then samples were taken using a simple random sample from each stratum (Dowdy, 2004). The sample of this study was divided proportionally into different stratum based on each population which has homogeneous characteristics. Subsequently a random number of observations from each stratum were drawn. This applies to sampling without replacement i.e., once an item is selected for the sample, it cannot appear in the sample again. All population of each stratum was labeled and coded (Appendix B).
The samples were given equal probability of being picked up and each item in the entire population to have an equal chance of being included in the sample (Kothari, 2004). The population of each stratum was placed in its respective container to draw the sample on random basis. The lottery system was also used to pick out each sample from the container of stratum based on probability. Every sample was given equal chance of selection from the stratum of population. Then 175 samples out of 312 populations were selected for data collection.
Data Collection Method
To get relevant, accurate and sufficient data for the research questions and hypothesis a survey was conducted in selected coffee farmers’ cooperatives in East, West and South Ethiopian in different regions and geographical location. Structured closed ended questionnaires were employed for data collection. The 175 questionnaires were given to nine (9) enumerators to contact the respondents at their offices. All the enumerators were given orientation about distribution and collection of the completed questionnaires.
Kothari (2004) describes that enumerators should be trained to perform their job well and the nature and scope of the investigation should be explained to them thoroughly so that they may well understand the implications of different questions put in the schedule. Enumerators should be intelligent and must possess the capacity of cross examination in order to find out the truth. Above all, they should be honest, sincere, hard working and should have patience and perseverance.
In this study, the enumerators were selected and trained to make them aware on how to collect data. They are all working in each bureau of cooperatives promotion agency. Their academic and work experiences were found relevant and rich.
According to Kothari (2004), this method of data collection is very useful in extensive enquiries and can lead to fairly reliable results. It is, however, very expensive and is usually adopted in investigations conducted by governmental agencies or by some big organizations. This study focused in rural area coffee producing farmers’ cooperatives. Even though it was time taking and expensive to collect data from the regions and woredas of rural areas, the government officials deliberately assigned enumerators who were paid to collect data. As the enumerators are experienced and offered orientation about data collection, the respondents were not in a problem to understand each item of the questionnaires. The duration of data collection was from May to July 2014 and took three months.
The survey questionnaires consists 5 parts. Part one consists of questions related to the basic cooperatives principles dimension, part two apprehend basic responsibilities of leadership dimension, part three includes financial knowledge and decision making competency dimensions, part four consists managers skills and training dimensions part five covers dimensions of leadership behaviour and part six is about cooperatives business performances.
In developing the first section of the questionnaire, the basic cooperatives principles were used as guidelines to evaluate managers’ perceptions of traditional cooperative principles; because it is a key factor in achieving the objectives and the success of cooperatively organized business performance. If a manager is unfamiliar with these principles, they will not implement the operation of the business. Consequently, the cooperatives’ business performance could be adversely affected. The cooperative principles were presented to managers in questions format for their evaluation and ranking relative to the importance the principles, with response choices ranging from 1 to 5 (where 1 = not important, 5 = extremely important).
The second section of the questionnaire considers managers’ perceptions of the division of primary responsibilities between the managers of primary cooperatives and managers of the union. This helps in understanding the proper division of responsibility between unions and primary cooperatives. The lack of understanding may lead to conflicts between the manager of primary cooperatives and unions regarding control issues and decision-making authority within the cooperative. These alternatives were presented in matrix format, where managers were instructed to choose on a 1 to 5 scale (where 1 = union manager most responsible, 2 = union manager more responsible, 3 = union manager and primary coop manager equally responsible, 4 = primary coop manager more responsible, and 5 = primary coop manager most responsible).
The third section of the survey deals with financial knowledge and decision making competency. Questions related to the cooperatives leaders financial knowledge and decision making competency were developed. Managers were asked to rate their perception in each of the defined areas based on a 1to 5 scale ranging from 1 = strongly disagree to 5 = strongly agree
The fourth section of the questionnaire consists of primary cooperatives managers training and skills level. A series of questions were contained in the questionnaire about their technical training and skills level based on a 1 to 5 scale ranging from 1= strongly disagree to 5= strongly agree. .
The fifth section of the questionnaire includes leaders’ satisfaction on their leadership behavior. Managers were asked to rate their leadership behavior in each of the defined areas based on a 1to 5 scale ranging from 1 = strongly disagree to 5 = strongly agree.
The sixth part of the questionnaire is about the cooperatives business performances. This variable allowed leaders of primary coffee farmers’ cooperatives to give their responses about the performances in each of the items based on the scale of measurements ranging from 1=strongly disagree to 5= strongly agree.
Nature of Data Collected
The level of measurement scales that was used for this study was Likert response scales. The scales are used to capture data on dimensions of basic cooperatives principles, division of primary responsibility, financial knowledge and decision making competency, managers training and skills ,leadership behaviour and cooperatives business performances. As the nature of data for dependent and independent variables were the perceptions of leaders, the Likert Scale was used to collect data for this study.
As Wall et al., (2004) quoted in Zulkiffli and Perera (2011), managers are often encouraged to evaluate business performance through general subjective measures that can reflect more-specific objective measures. The objective data were not adequately available from each cooperatives and it was believed that the subjective data were reflecting the performances of each cooperatives regardless of their business size. When subjective measures are employed, managers can use the relative performance of their industry as a benchmark when providing a response, and objective performance measures, in contrast, can vary based on industry and can obscure the relationship between independent variables and business performance (as a dependent variable). Moreover, the objective data available to the researcher may not be compatible with the intended level of analysis. In this study all the data collected were subjective perception of the respondents.
Although marketers often talk about variables, they also use the word item, which usually refers to a survey question put to a respondent. Another important term that is frequently used in market research is construct, which refers to a variable that is not directly observable (Mooi and Sarsedit, 2011).
In this study the construct ‘the Role of Leadership’ has five variables. These variables are measured by multiple items or questions developed and included in the data collection instruments. According to Mooi and Sarsedt (2011) this aspect of combining several items are called scale development, operationalization, or, in special cases, index construction.
The items used in questionnaire that help to measure each variable (IV and DV)
are presented in the tables as follows:
Measures of Basic Cooperative Principles
The scale items employed in this study to measure the variable of basic principles of cooperatives are described in the following table.
Basic Cooperative Principles
1. Voting is by members on democrat (one member, one vote) basis
2. Membership is open
3. Equality is provided by patrons /owners
4. Net income is allocated to patrons as patronage refund
5. Exchange of goods and services is at market prices
6. Have a duty to educate and train members
7. Maintain political and religious neutrality
8. Have equality of the sexes in membership
9. Focus on sustainable development for their community through polices approved by their members
10. Members democratically control the capital of the cooperative
11. Cooperatives are autonomous self-help organizations controlled by their members
12. Cooperation among cooperatives
13. Cooperative societies are autonomous self-help organizations controlled by their members
14. Cooperative inform the public particularly the youth about the nature and benefits of cooperatives societies
15. No government interference in cooperatives businesses
16. Management appointment is free of ethnic partiality
Source: Adapted from Adria. and Wade (2001)
Measures for Division of Primary Responsibilities between top level union
managers and primary cooperatives managers.
The scale items for measurement are presented in table below:
Items for Division of Responsibility variable
1. Setting the direction of the business for the welfare of the cooperative members
2. Managing the day-to-day operations of the cooperative
3. Maintaining accuracy of the minutes of the board of directors’ meetings
4. Acting in good faith with reasonable care in handling the affairs of the cooperative
5. Ensuring employees understand cooperative philosophy
6. Approving purchase of major capital assets
7. Developing programs for implementation of cooperative policies
8. Establishment and evaluation of programs
9. Furnishing information needed for long-range planning
10. Educating the general public about the cooperative and its activities
11. Keeping current on legislation concerning cooperatives
12. Encouraging membership and active patronage
13. Informing members of developments within the cooperative
14. Hiring, training, and setting compensation for employee
Source: Adapted from Adrian and Wade (2001)
Measures of Financial Knowledge in Decision Making
The scale items to be used for the measurement of financial knowledge and decision making are presented in the following table:
Items for financial knowledge and decision making variable
1. Analyze cost/profit relationships and other financial data to guide business decision making
2. Manage the cash flow of the business (i.e. cost of operation, control sales/production)
3. Identify and assess business risks, select risk-management strategies, and develop and evaluate a risk-management plan.
4. Forecast future budgetary needs and prepare a budget to include short-and – long expenditures
5. Analyze the components of financial plan
6. Members are encouraged to give suggestion before decisions are made
7. For many decisions, the rules and regulations are developed as I go along
8. I keep everyone informed about decisions, events and developments that affect their work
9. I delegate responsibility and authority to others and allow them discretion in financial decision- making
10. I am keenly aware of my own strengths and weaknesses in financial decision making.
11. Financial statements are disclosed to members
Source: Literature Review
Measures of Leadership Behaviour
The scale items to be employed that measure leader’s behaviour of primary coffee farmers cooperatives managers are depicted on the following table.
Items for the variable Leadership behaviour
1. Create an atmosphere of mutual trust
2. Demonstrate honest, ethical behavior in all transactions
3. Lead by example as in « doing what I ask others to do. »
4. Demonstrate decisiveness in all transactions.
5. Communicate a clear vision with recognizable goals for the cooperative and its members
6. State expectations clearly and confirm understanding.
7. Expect people to be accountable and offer support.
8. Translate cooperative goals practically and meaningfully for members’ benefits.
9. Make and communicate decisions promptly.
10. Resolve conflict with the goal for all to succeed.
11. Communicate with charisma and effectiveness to cooperative members.
12. Take responsibility for decisions without finger pointing.
13. Involve others in planning actions.
14. Praise people for work well done.
15. Delegate in a way that encourages others to have full ownership
16. Appropriately provide authority to others to make decisions
17. Believe in and provide training that teaches leadership, teamwork and technical skills
18. Implement innovation as a method to improve performance.
19. Create forums to celebrate cooperatives successes
20. Manage forthcoming change, real or rumored, efficiently.
21. Use time constructively and efficiently
22. Help cooperative members by listening without pre-judging.
23. Have excellent relationships with cooperative members and work associates regardless of gender and ethnic differences.
24. Am accessible to communication.
25. Encourage people to communicate their differing opinions
Source: Literature Review
Measures of Leadership Skills and Training
The scale items to measure leadership skills and training are presented in the table
.Items for the Variable Leadership Skills and Training of leaders
1. Acquired knowledge of leadership/management
2. Work capably with large amount of information
3. Know how to motivate colleagues for effective performance
4.Knowledgeable about the members needs and performance of the cooperatives .business
5.Trained in Business planning
6. Develop and maintain good, cooperative working relationship with others
7. Know Financial and Resources management
8. Skilled in Managing diversity of ethnics and gender
9. Committed to appreciation /application of social responsibility, sustainably, humanity and ethical considerations
10. Skilled in Customer care and customer service management-external and internal
11. Get good input before making decision
12. Trained in Human Resource management
13. Skilled in Quality awareness and managing according to quality standards and procedures
14. Skilled in Quality awareness and managing according to quality standards and procedures
15. Trained in Customer service management
16. Skilled in Planning and running meetings and effective follow-up
17. Skilled in Business writing, e.g. Letters, reports, plans
18. Trained in Change management
19. Skilled in Financial and commercial understanding (e.g. Budget, profits & loss, cash flow etc.)
20. Trained in Decision making
21. Skilled in Training and developing members, coaching and mentoring
22. Trained in Production management
23. Trained in Business communication
24. Skilled in motivating of team and individuals team members for better performance
25. Analyze financial information quickly
26. Produce high quality work
Source: Literature Review
Measures of Cooperatives Business Performances
Table3-7 Measuring items for the cooperatives business performances variable
1. Management finds the coop’s financial statements (balance sheet and income statement)are very important to show performances
2. Dividend paid for members had been satisfactory in each year 3, The business had been profitable for each year
4. Return on investment (ROI) had been very good compared with other cooperatives
5. The coop provides training and technical support on improved production method to members
6. The coop members production satisfies the market needs
7. The coop production increases each year due to market demand
8. The supply of coffee has high share in the market compared with other coops
9. There was regular survey of members needs 10.The coop provide bonus to active patron members
11.There was coop evaluation and incentives based on performances
12.Debt from bank paid on-time to the borrowers(bank)
13.Net worth(total liability-total assets) increases each year
14.The solvency of the business was high to meet long term obligations
15.The gross margin (sales revenue – cost of produce sold) has been high to meet operating costs and to realize savings for members
16.Coop has been conducted meeting of all members once per quarter(or as by-laws) to discuss leaders action, plans, benefits, etc
17.Coop protects the quality of coffee production
18.Solvency and liquidity of the coop’s business has been high compared with other coops
19.Coffee farmers satisfaction has been high with the coop performances
20.The coop has been financially strong
21.Revenue per member increased each year
22.Surplus per member increase each year
23.Asset per member increased each year
24.Number of members increased each year
25.The coop increased its market share of export market Source: Literature Review
DATA ANALYSIS AND TEST OF HYPOTHESIS
The descriptive statistics and multiple regression analysis were employed to analyse data. The descriptive statistics were used to identify missing data, normality and outliers, correlation of variables and frequency of observations in data set. It helped in preparing data for next further statistical analysis.
Multiple regression analysis involves combining several predictor variables in a single regression equation. With multiple regression analysis, we can assess the effects of multiple predictor variables (rather than a single predictor variable) on the dependent measure (Jackson, 2009). The multiple regression analysis models used to test the relationship between independent variable and dependent variables.
The mathematical function of the model is formulated as follows:
BP = β0 + β1 (BCP) + β2 (PR) + β3 (FKD) + β4 (LST) + β5 (LB)+ E
Β0represent the constant;
β1… β5denotecoefficients of the predictorvariable BCP Basic cooperatives Principles variable
PR Primary Responsibilities of Leadership variable
FKD Financial Knowledge and Decision Making variable
LST Leadership Skills and Training variable
LB Leadership Behaviour variable
E Error (Residuals) and
BP represents the response variable (Business performance of cooperatives).
The general model: Performance =f (Leadership) +E
The information obtained from questionnaires was manipulated with the help of SPSS (Statistical Package for the Social Sciences) version 20 computer program. Analogue models like frequencies and percentages were calculated and the results were represented by histograms.