Problem Statement
In economics, financial diversification refers to having financial investments in several portfolios to reduce risk exposures (Collins, 2012; Weston & Vullo, 2014). People diversify their resources because of several reasons. While some seek financial liberty, others do so to survive. Corporate portfolio models show that financial diversification can occur in two ways (Okojie, 2010). The first way is horizontal diversification, which refers to instances when companies, or institutions, expand their operations by purchasing similar products, or services (Roberts & Hoover, 2014). The second way is the vertical diversification model, which refers to an organization acquiring assets that misalign with its core business (Strong, 2014).
Based on the findings above, it is crucial to point out that many researchers have investigated how financial diversification works in the corporate sector. However, few of them have explored how this concept relates to the non-corporate sector. In fact, public sector institutions, such as libraries, have always trailed the private sector in this regard (Klentzin, 2010). As this paper depicts, many literatures have shown how financial diversification works in the latter group. However, people do not know much about how such a strategy could work in the public sector (and more so, in public libraries). Based on this reason, this paper investigates whether a financial diversification strategy would improve the financial stability of Clayton County Library, Georgia. The library is located in Jonesboro city, in Southeast Georgia. The city has a population of about 4,274 people. These people visit Clayton County Library about 668,123 times annually (CCLS, 2014). To understand how this library could cater to the needs of its clients, this paper uses the modern portfolio theory as the main theoretical framework of analysis. Similarly, to gain a deep understanding of the study questions, this paper uses the content analysis method to analyze the data.
Significance
The proposed study is unique because it explores an under-researched area of library financial management. The findings of this study could provide vital information concerning how public libraries could overcome their financial constraints and realize financial independence (Bedford & Gracy, 2012). Therefore, insights from this study should provide direction to public libraries about the best financial alternatives for improving their financial performance. Furthermore, they should help such institutions to protect themselves from further financial vulnerability, as depicted through the effects of economic uncertainties on the performance of public libraries (Collins, 2012). Since, for a long time, public libraries have been an important part of societal development, the findings of this study would also provide the impetus for social change by improving the functionality of library systems (Bedford & Gracy, 2012).
Background
Selected articles about library funding methods appear below:
- Roberts and Hoover (2014) and Cross (2011) explored alternative financial resources for public libraries.
- Cottrell (2012), Cottrell (2011) and Mapulanga (2012) showed how public libraries could reorganize their budgets and use their available resources, optimally.
- Okojie (2010) and Fitsimmons (2010) focused on the same topic and said it was essential for libraries to use creative solutions, like promoting their images, as strategies for increasing their financial resources.
Framework
The modern portfolio theory would be the main theoretical framework for the proposed study. Since this model hails from a financial background, it could provide valuable insights regarding the financial alternatives for Clayton County Library. The modern portfolio theory works by seeking innovative ways of maximizing returns within a given portfolio (Okojie, 2010; Cross, 2011). In the same manner, this theory seeks innovative ways of minimizing risks by evaluating current assets. Early adopters of the theory emerged in the early 1950s and 1970s (Cuillier & Stoffle, 2011). They mainly presented the theory as a mathematical model of finance.
Alternative theories to the modern portfolio theory include the Maslow portfolio theory and the random walk theory (Kostagiolas, Papadaki, Kanlis, & Papavlasopoulos, 2013). The latter evaluates the financial wellbeing of different organizations, based on the prevailing market conditions. The main assumption of this theory is the difficulty of predicting market conditions. In this regard, the theory encourages organizations to understand the haphazard changes in market conditions and their effects on organizational processes (Mapulanga, 2012). The Maslow portfolio theory stems from Maslow’s hierarchy of needs, which presupposes that financial investments should follow human needs. This theory adopts a behavioral finance approach. It regards all financial decisions that do not acknowledge human needs as logical deductions of the theory (Kostagiolas et al., 2013). The Maslow portfolio theory differs from the modern portfolio theory because it provides investors with different financial alternatives for their portfolios, as opposed to the modern portfolio theory, which focuses the attention of investors on one portfolio (Kostagiolas et al., 2013). Although these theories do not directly outline the theoretical framework of the proposed study, they act as an important point of reference when adopting the modern portfolio theory.
Research Question(s)
- Would a financial diversification strategy make public libraries financially stable?
- Which alternative sources of funding can public libraries use to improve their financial stability?
Nature of the Study
The proposed study would be a qualitative assessment of the viability of a financial diversification strategy to improve the financial stability of Clayton County Library. The qualitative assessment should outline the nature of research growth from the beginning to the end of the study. Understanding people’s views about financial strategies is consistent with the epistemological expectations of Fitsimmons (2010), who explains how to answer a research project that has many alternatives.
Types and Sources of Information or Data
- Ratings from independent research oversight bodies of reputable universities
- Problem statements written by other doctoral students
- Interviews from a panel of experts and library managers who understand the financial challenges of Clayton County Library
- Secondary information from past research findings which have investigated alternative sources of funding for public libraries
- Interviews and surveys of a research oversight body that helped students to complete their doctoral projects. To fill the research gap, the proposed research would explore these sources of information for possible triangulation.
Possible Analytical Strategies
The Content analysis method is the main data analysis method for the proposed study. According to Reid (2010), the content analysis method depends on explicit rules of coding. The proposed paper would use this method to systematically identify and analyze notable patterns of responses during the data collection process. This process corresponds to the views of McMullen (2011) who describes this process as a textual analysis of data. Therefore, this analytical tool will help to discover and describe the focus of the analysis and create inferences that we could further investigate, or corroborate, using other data collection methods. Researchers have used this tool to determine authorship and understand the empirical basis for monitoring changes in public opinion about different research issues (McMullen, 2011).
Although the proposed research will use important methodological tools to undertake the study, there are several threats to the study. For example, since one researcher will plan and undertake the study, there is a high probability of researcher bias. Furthermore, the respondents may give false information to please, or challenge, the researcher (Patton, 2014). Coupled with the structural weaknesses of the research tools used in this paper, these issues pose a threat to the credibility of the research findings. To overcome them, the findings will undergo an independent review from an academic panel at the university. This strategy aims to minimize research bias by investigating possible areas of omission, or commission, which need correction. The researcher will also verify information obtained from the respondents by subjecting their responses to an independent comparison with models, concepts, and responses obtained from the literature review section. Here, the researcher would note variations between known findings and the participants’ views. The study would investigate significant variations to understand the authenticity of the responses given by the participants. This strategy should improve the external and internal validity of the findings (Priede, Jokinen, Ruuskanen, & Farrall, 2014).
Other Information
This study would meet the ethical requirements of using human subjects in qualitative assessments. Here, the researcher would observe confidentiality, informed consent, and privacy issues when recruiting and sourcing information from research participants. In line with this ethical goal, the researcher would inform the respondents about the purpose of the study – to fulfill academic requirements. The findings of this study could promote social change by improving the relevance and functionality of public libraries. Indeed, by proposing alternative financial strategies for diversification, such institutions should improve the scope of services they offer to their clients and serve a wider population in the same regard (Massis, 2011).
References
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