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• Appendix A: Methodology

• Regulatory Policy

• Compliance Costs

• BCC Perceptions Survey

• BCC Survey Summary
• Perceptions of NZ Firms
• Media Statements

• Literature Review
• Focus Groups
  • Conducting the Focus Groups
  • Analysis and Reporting of Results
• Telephone Survey
  • Respondents
  • Sample Structure
  • Sampling
  • Tabulation

The studies already undertaken in New Zealand provided the research team with a valuable starting point for this project, by identifying the nature of the compliance burden, and to a certain degree exploring the way in which this burden manifests itself for different groups. For example, in the 2001 review respondents identified three main ways in which compliance impacted on their business:

1. The time spent complying.
2. The fact that compliance has a stifling effect on innovation and competition.
3. The cost of expert assistance.

These general concepts provided the scope for exploring more specific ways in which the compliance burden can express itself within the context of a single firm, such as the potential for compliance concerns to:

• Distract and divert senior staff.
• Generate disagreement and vexation as to their interpretation/application.
• Create anxiety and/or uncertainty as to whether the requirement has or has not been met, at a given point.
• Create vexing or problematical interaction with regulatory staff.
• Shut down or dampen project morale/enthusiasm, particularly those that are innovative, for fear of regulatory burden.

On the basis of these findings, we recommended that the findings from the should be used as the foundation for this project, which would have the following components:

1. A review of the international and New Zealand literature on compliance.
2. A series of focus groups to identify the particular concerns of New Zealand exporters.²⁴
3. A telephone survey of approximately 400 business owners and managers (with a small number of one to one interviews undertaken as part of the testing phase).

These methods are explained in more detail in the following sections.

Literature Review

The body of literature pertaining to compliance costs was reviewed for this project. The focus was on academic literature and material relating to compliance costs rather than good regulatory practice. In order to supplement this a general search of websites was made to ensure that recent work by governments and other agencies in a global context was also reviewed.

Focus Groups

The objective of the focus groups was to try to extract/reflect the experiences and perceptions of SME exporters on three dimensions:

1. Constraints to export growth: What business inputs, outputs, contexts or leverages are the ones most likely to inhibit growth of their export volume by say 10% to 20% from this year to the next?
2. The New Zealand regulatory environment: Which acts and regulations, if any, feature in their efforts to grow exports from current levels to greater levels? Are these largely negative, largely positive, or mixed in their impact on export growth efforts?
3. Distance to market: How do exporters interpret/define this notion? How is the distance to market perceived by current SMEs who are exporting? How have they dealt with it to date? Are their current strategies (still) viable for increasing their exports by 10% to 20%?

The focus group method was selected as an appropriate method of conducting an open exploration into the research issues. The method aims to investigate people's attitudes, opinions and knowledge of a certain matter in an in-depth manner. A strength of the focus group method is its ability to generate group interactions to bring up issues that might not surface using other research methods. Since it is a less structured research method, it also provides a method of uncovering and probing relevant issues that may not have been anticipated.

The focus group method is excellent for discovering the range of responses of participants, and exposing dimensions or attributes relevant to the research issue. It does not measure the statistical incidence of responses in a population or target market. Caution should therefore be given to not directly infer findings from this kind of qualitative research, without separate quantification or verification.

Conducting the Focus Groups

The four focus groups were conducted at the NRB focus group facilities in Auckland, with participants from the Auckland region. Focus group sessions were of approximately 2 hours each. All the groups were moderated by an experienced moderator.

In each group session, participants were seated boardroom style in a quiet room, with refreshments provided. The intention was to create a relatively relaxed and comfortable environment in which to encourage open response. However, participants were advised not to reveal trade secrets or information confidential to their firm, due to the presence of other participants. There were no real problems with participants discussing the issues and presenting viewpoints in this environment.

Established focus group procedure was employed to ensure an adequate depth of response from the participants. This included the avoidance of leading questions and acquiescent responses. For this particular study, care was taken to not specifically raise the issues of "compliance", but rather to allow participants to bring up and discuss impediments to export in a general sense. Likewise, "distance to market" was also not raised early in discussions, until there had been opportunity to observe the manner and extent to which participants themselves raised such issues.

A moderator's guide was used to ensure coverage of the research issues and to assist "steer" proceedings. However, care was taken to not follow this to rigorously, but rather allow the participants to bring up and discuss issues they saw as of importance relative to export impediments.

A brief questionnaire (see Appendix B) was also used during group sessions to assist in anchoring response regarding how burdensome participants felt various New Zealand based factors relating to their business environment were).

Analysis and Reporting of Results

Each focus groups was video taped and audio taped (with the participants' agreement) to enable a thorough analysis of the discussions by an experienced qualitative researcher. In the separate report on the sessions ²⁵ the results are presented descriptively (rather than numerically) in a generally thematic manner, as is usual with this qualitative style of research. In this summary report this approach has also been taken.

Telephone Survey

The questionnaire that was used for the telephone survey was developed by successive interaction between the MED, the Treasury, Massey University, and NRB Ltd. It benefited from a series of four focus groups that explored the way managers of small business thought and spoke about the two areas of study, viz. the impact of compliance on their business, and obstacles to growth with particular reference to growth in export. These focus groups are reported under separate cover.

A selection of one-on-one interviews was carried out by the principal researcher to assess how well managers could relate to the constructs and question phrasing in the initial draft of the questionnaire. Changes were incorporated as a result of these interviews, and as a result of the MED's review of the questionnaire against their information needs.

The questionnaire (see Appendix B) was built around 4 sections engaging mostly closed questions, and extending to probes on "reasons why" for verbatim commentary on one section.

Respondents

The interviewer contacted the sampled firms and asked for the General Manager, Managing Director, and/or Owner/Proprietor. If this person was not available, a senior manager was contacted. Since the sample list contained the name of the most senior person, or equivalent, the interviewer was generally asking for the person by name. NRB interviewers carried out all interviews over the phone during business hours. Interviews were conducted over October-November 2002.

Sample Structure

The general framework for the sample was that:

1. Firms were sampled nation-wide, urban and rural.
2. The firms were to be "small-to-medium" as defined by having employee numbers in FTE terms of 50 or fewer, as reported at the time of listing.

Quotas were then assigned to ensure adequate sample sizes within:

1. Firm sizes of 1-5, 6-10, and 11-50 employed.
2. Activity types which were of interest to the MED and Treasury respectively. For Treasury, this was firms that export, or had the inherent product/service type capable of being exported. For the MED, this was an informed selection of activities known from background information to have potential for growing the New Zealand economy and/or with particular concerns about compliance. These were primary sector firms, the food industry, small non-food manufacturers, tourism and allied services, and software and business services.

Sampling

1. Sample lists were purchased from UBD Ltd, a firm which systematically canvasses at street level to list all operating firms, their contact particulars, employee numbers and activity type as close to the NZSIC codes as the reporting staff members are able to define it. While both employee numbers and firm type classifications show some variation with those produced by Statistics New Zealand, and while firm type description and list ageing are considerations, this is the nearest quality listing enabling access to purposive samples available in New Zealand.
2. Sample lists were bought to two specifications:
• SME firms engaged in export.
• SME firms falling within selected activity type codes that suited the survey objectives. Codes were chosen from the NZSIC classification, and their grouping into the study targets are shown below.

In each case, the list supplier was directed to divide the available names on the national listing by the required number, multiply this by 3 to allow for non-contacts, and then to sample according to the interval produced by this division, viz. every xth name. The activity groups and their corresponding NZSIC statistical classification are shown below:

Sampled Sectors against NZSIC Codes

Tabulation

The data is presented in the tables as unweighted. The total column is therefore the simple total of the replies of the targeted activity groups. The total column does not purport to reflect SMEs at large; rather the tables should be read as providing insight into the experiences and perceptions of five types of firms of SME size, on a quasi quantitative basis.

Diagnostic opportunity, rather than projectable quantification, has been the priority. Numerical extrapolation of quantities, e.g. relating to turnover, staff numbers, etc. of these segments would not be appropriate.

²⁴These groups were not part of the initial proposal, but were added to answer the needs of the Treasury team.

²⁵National Research Bureau (2002). Constraints and Hurdles to SME Exporting. NRB: Auckland.