Purpose Statement

The purpose of this concurrent mixed methods study is to investigate strategic groups of investment firms and to explore corporate boundaries of investment firms. Quantitative methods were used to discover strategic configurations and how they relate to performance.

At the same time the corporate expansion of the PE firm was explored using qualitative interviews with investment professionals and case studies.

Mixed methods research is an approach to inquiry which associates both qualitative and quantitative forms. It is more than simply collecting and analyzing data, as it involves the use of both approaches in tandem so that the overall strength of a study is greater than either qualitative or quantitative research would be stand-alone (Creswell 2009).

4.1.1 Philosophic Worldview

Researchers’ philosophical worldviews remain largely hidden in research (Slife et al. 1995).

A worldview is a basic set of beliefs that guide action (Guba 1990). Worldviews are shaped by past experiences of the researcher, by his cultural, personal and professional background, by his academic discipline, and by the beliefs of his research community and faculty.

Worldviews are also shaped by explicit or hidden agendas of interest groups, political parties and businesses. Although worldviews are primarily a domain of philosophy, the purposes and methods of all scholarly activity are influenced by assumptions on ontology (the nature of the world, i.e. what exits) and epistemology (what human beings can know about it) (Crotty 1998; Huff 2009). Some refer to them as paradigms (Burrell et al. 1979; Mertens 1998).³¹

I believe that the following considerations influence my research. Intellectually, it is difficult for me to exclude any of the worldviews, yet I feel less intrigued by worldviews of rationalists, formalists, and positivists, especially within the context of ‘business matters’. The disciplines strategic management and finance are social sciences. Especially in the discipline

31 Huff presented an overview of worldviews influencing scholarly conversation in roughly the chronological order of their development, including “Rationalist/ Formalist” (Descartes, Leibnitz), “Empiricist” (Locke, Hume, Mill), “Logical Positivist” (Comte, Vienna Circle, Wittgenstein, Russell, Carnap), “Pragmatist” (Pierce, Dewey, Rorty), “Social Constructivist/ Constructionist” (Hegel, Durkheim, Burger, Luckman), “Historicist” (German Historicists, Boas, New Historicists), “Critical Theorists” (Frankfurt School, Marx), “Feminist” (Wollstonecraft, Harding), “Postmodernist”

(Lyotard, Latour), “Scientific Realist” (Einstein, Putnam), and “Critical Realist” (Russell, Sellars, Bhaskar), and how each corresponds to ontology, epistemology and focus of scholarly activity (Huff 2009). John Creswell highlighted four worldviews, including “Postpositivism”, “Constructivism”, “Advocacy/ Participatory”, and “Pragmatism”, and laid out how each shapes the nature of research, particularly regarding the researcher’s choice of quantitative, qualitative or mixed methods designs (Creswell 2009).

of finance, there is a tendency to forget that its central conceptual device ‘money’, in fact is the tangible equivalent for an ideology or beliefs system (see chapter 2.1.1).

In my view, the perception that we understand what is going on around us, in an intelligible and orderly way, is rather naïve. Looking in the rearview mirror of history, it is striking what kind of (from today’s standpoint) absurd views had been generally accepted, heavily institutionalized, massively enforced, and often conceptually undermined by deterministic approaches. Rationalists suggesting that the world is intelligible and orderly and positivists believing that the only authentic knowledge is scientific knowledge which can come only from positive affirmation of theories through strict scientific method, in my view, try too hard to reaffirm than to innovate.

A research design based on a purely deterministic worldview, where the researcher typically begins with a theory, collects data that either supports or refutes the theory, and then makes necessary revisions before additional tests are made, would hardly be able to produce any meaningful answers with respect to the central research questions of this research endeavor.

My scholarly efforts are more influenced by constructivist and by pragmatic worldviews.

Constructivists believe that ‘individuals and groups participate in the creation of their perceived reality’ and that ‘all knowledge, including the most basic, taken-for-granted commonsense knowledge of everyday reality, is derived from and maintained by social interactions’. Pragmatists suggest that ‘truth is modified as discoveries are made and is relative to the time and place and purpose of inquiry’ and that ‘thought is simply an instrument for supporting the life aims of the human organism and has no real significance’

(Huff 2009, p. 112). In their research efforts, constructivists seek understanding of the world in which they live and work, they look for complexity of views, and research questions are broad and general so that study participants can themselves construct the meaning of a situation. Constructivist researchers also recognize that their own backgrounds shape their interpretation, and rather than starting with a theory, they inductively develop a theory or pattern of meaning (Lincoln et al. 1985; Berger et al. 1990; Crotty 1998; Schwandt 2007).

Instead of focusing on methods, pragmatist researchers emphasize the research problem and use all approaches available to understand the problem. Pragmatism is not committed to any one system of philosophy and reality, truth is what works at the time, and is based in a duality between reality independent of the mind and within the mind. Thus, pragmatist investigators use both quantitative and qualitative data. The pragmatic worldview frames the philosophical underpinning for mixed methods studies, and opens the door to multiple methods, different worldviews, different assumptions, and different forms of data collection and analysis (Creswell 2009; Tashakkori et al. 2010).

4.1.2 Mixed Methods

In the middle of the 19^th century most scientists could be described as positivists. At the time of writing positivist view of scholarly activity still dominated many academic fields, while mixed methods were less known and less established (Huff 2009). Recognizing that all methods have limitations, some researchers felt that biases inherent in any single method could neutralize or cancel the biases of other methods. This lead to triangulation,³²

As laid out above, virtually all PE research investigated PE firms as monolithic entities, ignoring the migration of many players toward multi-business investment firms. Paradigms are sticky, also when it comes to PE. In the words of a Senior Managing Director, Corporate Officer and Executive Committee member of one of the largest PE firms: “For us, it has been a diversification effort for over two decades, still people think of us as a PE firm, even if it’s only a quarter of our business”.

a means for seeking convergence across various data sources, evaluators, methods, and perspectives to the same data (Patton 2002; Yin 2009). A mixed methods research design imposes a greater challenge because the collection and analysis of both quantitative and qualitative data takes more time and because it requires the mastering of multiple data collection techniques (Daems et al. 1994; Yin 2009). Nevertheless, the purpose of this study could not have been accomplished otherwise. Each method for itself would have been inadequate to examine the research questions.

At the time of writing, no research existed which would touch on the phenomenon under investigation. With a complete lack of reference points, qualitative research can help to explore the important variables for examination and to provide rich descriptions, qualified arguments, context-specific descriptions, and connections. However, qualitative research is limited by subjectivity, sloppy observations, and intrusion of the researcher in representations.

Quantitative research allows for objectivity, neutrality, replicable procedures, causal laws, abstraction, precision, rigor and verifiability. However, quantitative research is limited by oversimplification and unacknowledged subjectivity of definitions and procedures (Huff 2009). A mixed methods research design was chosen to balance both approaches, to cancel out their weaknesses, to compensate their strengths, and to provide a robust description and interpretation of a new phenomenon.

Most critique on mixed methods research is based on the perception of inherent limitations due to the shallow application of intrinsically incompatible methods. Like in the

32 Triangulation is also a standard technique which is applied during strategy projects by e.g. strategy departments in corporations or by management consultants. For practicability reasons, the ‘80/20’ rule sets the ‘significance’ level rather on ‘80’ than on ’99.5’. Otherwise the approaches are comparable. The human brain (i.e. researcher judgment) becomes the connecting device of all analyses. This must not necessarily be a disadvantage, given that at the time of writing average computer processing power was still far behind the processing power of human brains. Supercomputers with tens of thousands of microprocessors which were built around the millennium came at an expense of tens of millions of dollars per piece and delivered still only about 1/30 of human performance, and even those with higher processing power were barely not applicable in terms of artificial intelligence (AI). Until the processing capacity becomes more affordable and AI becomes a real alternative, the human brain will remain the most powerful information processing device which science has. At the time of writing, there simply was no better alternative than the human brain for triangulation purposes.

parable of two blind men feeling an elephant, an integrated understanding is rarely obtained (Daems et al. 1994). In the following section I will lay out the general research thrust and the overall empirical research design, which was deliberately designed to obtain an integrated understanding and to make the overall research endeavor more robust.