Approach of the research

The objective of this study is to explore how stakeholder management influences firms’ competitive advantage. The subject of this research involves a relatively under- researched area and needs an exploratory study, and thus makes the qualitative approach appropriate for this type of inquiry. Moreover, case studies provide researchers with opportunities to examine complex relationships between the firm and its social networks. Therefore, as suggested by Miles & Huberman (1994) and Eisenhardt (1989), the general research approach chosen to achieve the objective of this study is a qualitative, multiple-case study.

Denzin and Lincoln (2005) described qualitative research as being surrounded by “a complex, interconnected family of terms, concepts and assumptions” and related to “methods connected to cultural and interpretive studies” (2005, p. 2). Gummesson (2006) argues that qualitative research is a superior approach, allowing researchers to examine issues including complex, context and persona. Morgan and Smircich (1980) suggest that the research approach should be selected on the basis of the nature of the social phenomenon to be explored. This study examines the linkage between competitive advantage and stakeholder management, which involves the complex firm-stakeholder relationships, their multitude of interactions, and the uncertainty of the context. According to Gummesson (2006), quantitative methods are not appropriate for these aspects and a qualitative approach is better. Hence, this study follows the features of qualitative research design.

As stated in Chapter 1 and Chapter 2, in order to capture the complex and dynamic aspects of stakeholder interactions and competitive advantage, the research questions of this study were framed to start with ‘how.’ This type of research questions refers to more uncontrollable situations in which the researcher may be involved. According to Yin (2009), the case study approach allows a researcher to examine a social phenomenon and its context and provides more holistic explanations. Moreover, there are some advantages in using a case study method. Orum, Feagin and Sjoberg. (1991, pp. 6–7) state:

1. It permits the grounding of observations and concepts about social action and social structures in natural settings studied close at hand.

2. It provides information from a number of sources over a period of time, thus permitting a more holistic study of complex social networks, social action and social meaning.

3. It allows for time and context specific investigation. 4. It encourages and facilitates theoretical innovation.

In a similar vein, Eisenhardt (1989) argues that case study is a research approach that concentrates on examining a dynamic social phenomenon within individual organisational settings and it is appropriate to use case study research for theory building. Furthermore, multiple-case studies are a robust approach to creating theory because they allow replication and extension across cases (Eisenhardt, 1989; 1991). For the purpose of contributing insights into a relatively unexplored area, case study method can be a useful exploratory approach for acquiring data, where suitably planned and designed (Bryman, 1989). Answering the ‘how’ research questions lead this study on to choose a qualitative research design and take an exploratory research approach. The comprehensive and exploratory features of this study direct it to the case study method. This study examines a topic which is relatively under- researched. Explaining how stakeholder management affects competitive advantage can be better achieved by a profound exploration of the background, processes and outcomes of multiple cases. Given the nature of this study, the use of a qualitative, multiple-case design is deemed an appropriate approach for achieving the research purpose.

Generally, researchers use a deductive approach in quantitative studies and an inductive approach in qualitative research (Strauss & Corbin, 2008). However, some scholars suggest a combination of deductive and inductive methods, termed “abduction” or “systematic combining” (Dubois & Gadde, 2002, p. 555). Charles S.

Peirce (1839–1914) was the first philosopher who introduced abduction as a logic form. He portrays the development of knowledge in analogy to the Darwinian model of evolution (Skagestad, 1979). Peirce (1931–1958) illustrates three modes of reasoning—deduction, induction, and abduction and argues: deduction is the only reasoning of the three that is entirely certain; induction generates a rule only proved in the long run; and abduction indicates that something might be the case. Peirce proposes abduction as a third way between deduction and induction, which is referred to the generation of new ideas (Buchler, 1955). According to Hanson (1958, 1960), both the inductive and the deductive models of inquiry do not describe the processes that lead to discovery. He applied Peirce’s notion of abduction to explain how scientific discoveries occur. Alternatively, Harman (1965) addresses ‘the inference to the best explanation’ and the issues are usually connected with realism. Lipton (1991) further develops it by distinguishing between actual and potential explanations.

The abductive logic is particularly suited to research where some guidance is necessary to manage the development of novel knowledge during the study. For example, Pettigrew (1997) highlights an important characteristic of processual analyses—the ongoing iterating cycle of deduction and induction. Langley (1999) argues that “theory building involves three processes: (1) induction (data-driven generalisation), (2) deduction (theory-driven hypothesis testing), and (3) inspiration (driven by creativity and insight)” (p. 708). This study examines a relatively unexplored topic—the impacts of stakeholder interactions on competitive advantage, within the bounds of a set of well-established academic areas (stakeholder management and competitive advantage). In line with Langley (1999), this study pursues both inductive and deductive approaches iteratively in the process of theory

development, working together with inspiration. It is quite compatible with the abductive logic. As Miles and Huberman (1994) put it, “any researcher, no matter how unstructured or inductive, comes to fieldwork with some orienting ideas” (p. 17). Following the abductive reasoning, an analytical theoretical framework was proposed in the previous section. This framework revealed the important issues that need to be resolved, specified what data should be collected, provided the initial coding scheme for data analysis, and suggested disciplines for interpretation of data.