Reserch Methodolgy Formulation

CHAPTER 4
RESEARCH METHODOLOGY
The chapter presents the research methodology spreading into thirteen parts such as statement of the problem; objectives of the study; hypotheses of the study; scope of the study; research design; sampling plan; data collection; validity and reliability scheme, analysis and interpretation; terms and definition; limitations of the study; significance of the study and chapter scheme.
4.1 Statement of the Problem
The Indian cotton textile industry remained a pioneer industry in the country’s economic growth. It has made phenomenal growth, especially after achieving independence (Sidhu, 2001). In 2001, the industry accounts for thirty percent of country’s exports, with presence in yarn, fabric and garments, and have a fair degree of diversification in terms of export markets. However, the expected shake out in the global textile market in future allows no room for pleasure. India can either become a commanding player in the world textile market, with a strong cotton textile industry, or miss this opportunity. If it goes for a miss, the industry itself will be threatened from cheap imports (Ganesh, 2002). It is assumed that WTO will mean better distribution of the world trade, in no way it will be free for all, and only the fittest will survive. The WTO benefits for India will not be any different that for the other developing countries. In total, the industry, which constitutes the major contributor in Indian business and its foreign trade, is going to witness a sea change in the new world trade order. As a result, industry has to fight for its share in international textile trade (Katti et al., 2000).
In such a scenario, it becomes imperative to examine the problems of the industry such as low cotton yield, poor quality of cotton ginning (Raichaudhuri, (1995); modernisation and rationalisation, lack of raw material and other inputs, low demand for cotton cloth, high incidence of mortality and sickness (Dhingra, 2001); low productivity, high cost of input factors (Ministry of Textiles, 2002).
To make use of the emerging global opportunities and for the sake of "Market Competitiveness of Indian Cotton Textile Industry in the New World Trade Order" the industry has to be competitive in terms of higher productivity, adapting latest technology, seeking the higher quality standards, lower input cost of every factor of production and innovative in terms of new product development, and production processes.
4.2 Objectives of the Study
The present study attempts to analyse the following aspects of Indian cotton textile industry:
(i) Trends in the Indian cotton textile trade and including competitors and trading partners;
(ii) Factors affecting the competitiveness of the industry under study;
(iii) Threats from the competitors and from the other environmental factors;
(iv) The opportunities in the textile business offered by the new world trade regime;
(v) Identify the areas in textile business need to be most focussed upon;
(vi) Restructuring options for improvement in the competitiveness of the industry; and
(vii) To give suggestions for the macro and micro level changes for a sustainable growth of the industry.

4.3 Hypotheses of the Study
In view of exploratory research carried out by collecting information from the knowledgeable persons and review the existing literature, the following hypotheses have been developed:
H1: India’s share in global textile trade is constantly decreasing over a period of time (Murty, 1995, Patra, 2002);
H2: India has enough potential to become world leader in the textile business (Ganesh, 2002, BT, 2003);
H3: China and other South East Asian countries (Korea, Taiwan, Hong Kong, Malaysia, and Thailand) are posing a big challenge to Indian cotton textile industry (Teli, 1994, Raichaudhuri, 1995, Dhingra, 2001, Lal, 2002, Ganesh, 2002, Panchmukhi, 2002);
H4: There will be a ‘favourable’ impact of MFA on Indian textile business (Mackay, 1990, Katti et al., 2001, Dhingra, 2001, Lal 2002).
H5: Indian cotton textile sector is price competitive in international textile market (Kathuria, 1995, Sampath, 2002);
H6: Indian cotton textile industry is globally competitive in terms of input factors: raw material, labour and transportation, finance, power and technology at global level;
H7: Most of the Indian textile concerns are not much focussed on value addition; and environmental factors and infrastructural bottlenecks particularly- roads, power, and ports are hindering its growth (Panchmukhi, 2002, Babu, 2002, Boss et al., 1998, Singh, 2002).
4.4 Scope of the Study
The present study encompasses the problem of market competitiveness of Indian cotton textile industry in the new world trade era. The researches carried out in the past were probably at the micro level and reveal that the competitiveness of a firm depends upon its internal and external factors. However, there is not a single model for measuring competitiveness (Akyuz, 1998). Researchers have addressed the issue of competitiveness from three broad levels: national, industry and firm (Hoff, et al., 1997). Its variables and measurement techniques characterise each level of competitiveness. In a dynamic market economy, individual firms and industries play a critical role in building and sustaining national competitive advantage. A nation’s competitiveness depends upon the capacity of its industry to innovate and upgrade (Porter, 1998). This in turn depends on the economic environment in which firms grow and develop and must ultimately compete. Whatever may be the issues and measurement techniques; the firm level competitiveness is linked to the industry level competitiveness, which in turn linked to the national competitiveness. Therefore, the unit of analysis can be thought of at the firm level. In contrast, some writers (Porter, 1998) argue that clusters of firms or industries located in the nations do compete amongst themselves in the international market and not with the nations as such. Therefore, they prefer industry as a unit of analysis. Nevertheless, the performance of a specific industry is dependent on the firms within that industry. Researchers have used different methodologies in studying the competitiveness. In literature, the competitiveness has been studied based on whole economy and export-import issues, productivity, market share, and financial power etc. Somewhere, technology and its contribution are considered as important as other factors. In the present study, firms of cotton textile industry deal in home furnishing and made-ups, handlooms and handicrafts, readymade garments and soft furnishings and all cotton textile items are considered as a unit of analysis. The results obtained from such an empirical study of Indian cotton textile firms, hence used for concluding and interpreting the measure of competitiveness in terms of raw material, labour, finance, power, technology, transportation, value addition, information technology, government policy, quality, price, marketing information system (MIS) and environmental factors (Shee, et al., 2002).
4.5 Research Design
Initially, study used exploratory design to get the objectives clearly defined and to formulate the hypotheses. Afterwards, the research used descriptive design by forming a structured questionnaire and surveying 81 cotton textile firms of India. Table 4.1 depicts the description of objectives of the study, hypotheses of the study and related questions placed in the questionnaire, which seeks information about them.
Table 4.1
Description of Objectives, Hypotheses and Questions
Objective
Data/Question seeks
Information
Hypothesis
Data/Question seeks information
O1
Secondary Data
H1,
Secondary Data
O2
Q. 5,7,8,9,10,12,14,15
H2
Secondary Data
O3
Q. 2,3,17,19
H3
Q. 17
O4
Q. 4,20
H4
Q. 4.
O5
Q. 1,18
H5
Q. 5
O6
Q. 11,13,16
H6
Q. 7,8,9,10,12,14,15
O7
Q.21
H7
Q. 1,2,3,11,13,16,18
4.6 Sampling Plan
The sampling was done on the random basis. For selecting the sample a list of cotton textile firms, deal in home furnishing and made-ups, handlooms and handicrafts, readymade garments and soft furnishings and all cotton textile items, in India was prepared on the basis of information given in various directories: All India Textile Directory, 1988 and Sidhanta Business Directory (Haryana), 2001. To update the information some cotton textile firms who have participated in TEX-STYLES INDIA 2004, New Delhi, (February 29-March 04, 2004) also considered. At last, a list of 315 cotton textile firms was finalised to constitute the target population of our interest. Key informants included top and middle level management of the firm. Questionnaires were filled by personal interviews from each firm.
4.7 Data Collection
An extensive literature review facilitated theory development and item generation. The literature search includes several journals, articles, books, newspapers and business magazines. So the principal data collection methods used were combination of the analysis of the literature, statistical data from secondary sources, questionnaire survey and the content analysis. The term ‘content analysis’ means information analysis of the key events of an industry recorded in reports, research papers, compendium, and handbook of statistics, business magazines, newspapers and Internet.
To answer the research questions (objectives of the study) and to verify/test the tentative answers (hypotheses of the study), the required information is identified. Then, questionnaire (a copy of the questionnaire is appended as Annexure-1) was developed, which was the main instrument used to collect the required information. The questionnaire was designed keeping in mind both qualitative and quantitative aspects of cotton textile firms. The qualitative data was collected using scaling techniques on a 5-point Likert scale. The values on the scale signifies a continuum from ‘1 to 5’ as anyone of the below mentioned row:
1, …………………………………………, 5
not focussed, ……………………..., very much focussed,
very dissatisfied, ………………………...., very satisfied,
poor, …………………………………….…...., excellent,
very low, ……………………………….……, very high,
strongly disagree, ………………………, strongly agree.
Further, the question items were structured in terms of ranking of responses; the highest rank was accorded score equal to ‘1’. Some questions were on comparative rating scale. The questionnaire was designed, considering the different measures of competitiveness like price (Q. 5), raw material (Q. 7), labour (Q. 8), finance (Q. 9), technology (Q. 10), power (Q.12), transportation (Q. 14, 15), value addition (Q. 16.), information technology (Q.11), MIS (Q. 13) and environmental factors (Q. 2, 3). Furthermore, some questions regarding competitiveness within textile items (Q. 15), impact of MFA (Q. 4), threats from competing nations (Q. 17, 19), opportunities for Indian textile business (Q. 20) were also developed. Twenty-one question items were included in the questionnaire.
A total of 100 out of 315 firms (target population) were contacted personally during the year 2003-2004, out of which 85 firms responded positively and provided the required information and gathered 255 filled up questionnaires (three questionnaires from each firm: one from top level and two from middle level management) from them. Secondary data was collected from different previous research studies, including several journals, compendium, and handbook of statistics, articles, books, newspapers and business magazines. Furthermore, Internet is also used for gathering worldwide information.
During the course of editing of the questionnaires, the number 85 in terms of firms and 255 in terms of questionnaires was further reduced by 4 and 13 respectively, when it was discovered that the information recorded in the questionnaires was incomplete and highly inconsistent on one or the other count. Therefore, 81 firms (Annexure-III) were finally considered for further processing of the data and 242 questionnaires were used in the final analysis.
4.8 Validity and Reliability Scheme
Validity is an indication of accuracy in terms of the extent to which a research conclusion corresponds with reality. Validity is the property of a measurement what it is supposed to test (McBurney, 2001). In the present study, the validation and reliability scheme has been performed as follows:
(i) Content and Criterion Validation
Content validity is the notion that a test should sample the range of behaviour that is represented by the theoretical concept being measured and the criterion validity is the idea that a valid test should relate closely to other measures of the same theoretical construct (McBurney, 2001). To assess the content and criterion validation, a "dry run" was made and questionnaires were administered to 20 experts from textile field and academia. Eight questionnaires were collected with suggestions. On the basis of their feedback the final version of the questionnaire developed, which was filled up from the executives of 100 firms.
(ii) Statistical Validity and Reliability
It is the extent to which data are shown to be the result of cause-effect relationships rather than accident. A statistical test establishes only that outcome which has certain probability of happening by chance alone; it does not guarantee that it was the result of cause-effect relationship. For that matter, there is no way to guarantee any of the types of validity of a research result. All methods of judging validity simply increase confidence in the conclusion that has been drawn from the research. Nevertheless, inferential statistics is an essential tool in judging the validity of a research outcome. One of the questions involved in judging the statistical validity of a study is whether enough observations were made to make it likely that the null hypothesis could have been rejected even if it were false. This is the question of power (the probability of rejecting the null hypothesis when it is, in fact, false). In the present study, chi-square test is used at (.05) alpha value for statistical validity. Usually, scientists prefer to make alpha a fairly small number, such as 0.05, 0.01. The reason is that scientists believe that to decide that an experimental finding is true when it is not a more serious error that it is to miss a true finding (McBurney, 2001).
Reliability means the property of consistency of a measurement that gives the same results on different occasions (McBurney, 2001). In the present study, the adequacy of the sample size is justifiable. The size of 242 questionnaires from 81 units (25.71 percent of target population) could be treated, as a large sample constituting of the target population, is adequate enough for the findings. It seems to be safely reliable and adequately representative of total population (Kundu, 2000). Furthermore, chi-square test is used at (.05) alpha value for testing hypothesis. Some hypotheses are tested on the basis of average of responses or majority of observations. Strictly speaking, a measurement must be reliable before it can be valid. We use averages and thus the results may be "valid"
4.9 Analyses and Interpretation
After collection of data through various sources, different techniques have been used for the analysis of data. A set of simple techniques of statistical analysis such as average, weighted mean, percentage, cumulative percentage, annual compound growth rate and ranking has been used. Wherever appropriate, we have used chi-square test. Furthermore, graphical presentation is also done for its easy grasping. Most of them are obtained with the help of the computerized packages SPSS (7.5 version); and Microsoft Excel. Interpretation of data is based on rigorous exercise aiming at the achievement of the objectives of the study and findings of the existing studies. The statistical techniques used in the present study have been elaborated in Annexure-II.
4.10 Terms and Definitions
The terminology used in the study is defined as follows:
(i) Market
The word ‘market’ has been defined in various ways by different authors. According to William, et.al., (2000), it is used in reference to a specific location where products are bought and sold. A market is an aggregate of people who, as individuals or as organisations, have needs for products in a product specific class and have the ability, willingness, and authority to purchase such products. Zikmund, et al., (2001), postulated that a market is a group of potential customers for a particular product who are willing and able to spend money or exchange other resources to obtain the product. Kotler (2002) defined that traditionally, a market was a physical place where buyers and sellers gathered to buy and sell goods. In the present study, meaning of market is more specific; it refers to international market in which countries seek products in a specific product category (William, et al., 2000).
(ii) Competitiveness
According to Organisation for Economic Cooperation and Development (OECD), Ahuja, (1998), Blaine, (1993), Competitiveness is the degree to which a country can, under free and fair market conditions, produce goods and services which meet the taste of international markets, simultaneously maintaining and expanding the real income of its people in the long term. The Concise Oxford dictionary defines the term competitive as an adjective that stands for a strong urge to win by an individual. According to Shee et al., (2002), global competitiveness depends upon three elements: firm/company competitiveness, sector/industry competitiveness and country/national competitiveness and implies that national competitiveness depends on sector competitiveness and ultimately on firm competitiveness. Some authors (D’Cruz, 1993) have explained the competitiveness of company, sector and nation in the following manner:
Company Competitiveness is the ability to design, produce and/or market products superior to those offered by competitors. Sector competitiveness is the extent to which a business sector offers potential for growth and attractive return on investment. Country competitiveness is the extent to which a national environment, which is conducive or detrimental to business. In the present study, the competitiveness of a nation refers to its ability to expand its share in the world market; for a sector, it refers to the ability of an industry or sector in a given country to expand its share of exports in the world market and for a firm it refers to expand its share of production and export in the particular industry (Ahuja, 1998, Kathuria, 1995, Kumar, et al., 2003).
(iii) Cotton Textile Industry
The term "cotton-white gold" was said to be in use in India as far as 4,000 B.C. (Dhingra, 2001). Textile includes: yarn, cloth, fabrics, and other products not made into garments. Finished fabrics includes: (i) Apparel - outer and inner wear; (ii) Household fabrics - furnishings, bed linen etc.; (iii) Accessories- bags, belts, handkerchiefs, etc. and (iv) Industrial fabrics-filter cloth, parachute cloth etc. (Texprocil, 2002). An industry (whether product or service) is a group of competitors producing products or services that compete directly with each other (Porter, 1992). The cotton textile industry consists of mills, handlooms and power looms. The last two constituting ‘decentralised’ sector of the industry. In the organised or centralised sector, a unit, comprising a spinning mill and a weaving mill is called a composite mill. The average size of a spinning unit is about 25,000 spindles and it employs near about 700 workers. The average size of a composite mill is approximately 25,000 spindles and 500 conventional looms with a production level of 40,000 meter per day. Mill is the machinery for processing materials of certain kinds (Hornby, 1989). The term "cotton textile industry" is also mentioned as "textile industry" in the thesis.
4.11 Limitations of the study
The main limitations of the present study are as under: -
i) The sample of study is restricted to 81 cotton textile firms from India.
ii) Primary data collected through the sample survey is not free from biases and inaccuracies on one count or the other were found.
iii) The data here used for analysis are also subject to errors especially as the respondents may have lacked conceptual clarity about the key issues involved, and also these due to natural inhibitions to impart correct information.
iv) In some cases, inferences have been drawn without statistical testing of the statistics calculated for the purpose.
4.12 Significance of the study
The study will enable the Indian cotton textile industry to evaluate itself, where it stands in the global textile market? And set benchmark for striving the status it deserves. Furthermore, research will guide where to work hard for achieving the top slot or at least reaching at par with its global counterparts. The research will suggest how to restructure the industry for by divesting or investing, by collaborating or developing the perspective areas for its sustainable growth. It will also give directions to the industry for enhancing the competitiveness in terms of technology improvement; product development, cost reduction and ultimately increasing its share in the world trade.
4.13 Chapter Scheme
The whole study runs into nine chapters. Chapter 1 on introduction describes, different variants of Indian cotton textile industry including installed capacity, production, consumption, exports, revenue collection and mill closure. Chapter 2 explains WTO agreements in the context of cotton textile sector. Chapter 3 deals with the review of literature consisting of competitiveness and its factors. It also reviewed the impact of MFA on Indian textile business. Chapter 4 deals with research methodology comprising statement of the problem, objectives of the study, hypotheses of the study, sampling plan, validity and reliability scheme, statistical tools and methods used in the study. Chapter 5 deals with empirical analysis of trading partners and emerging competitors of India. Chapter 6 deals with the analysis of competitiveness of different input factor of the industry. Chapter 7 highlights the competitive environment of the industry at global level. Chapter 8 deals with the SWOT analysis of the industry. Chapter 9 concludes and suggests the ways to put the Indian cotton textile industry on a sustainable growth track.