The Role of Business ResearchTheory Building

Some highlights

The scope of business research

•What is “business” anyway???

•Is research applicable to all business units/functions?

Business research defined

• the systematic and objective process of gathering, recording, and analyzing data for aid in making business decisions

Types of research

PURE• expand the limits of

knowledge• not aimed at solving a

specific pragmatic problem

• theory development

APPLIED• aimed at solving a

specific pragmatic problem

• “action research” is one type

Applications

• identifying problems or opportunities

• diagnosis and assessment

• selecting and implementing a course of action

• evaluating a course of action– Evaluation

• Performance monitoring

Research isn’t always the answer!

• Before doing research consider the following:– time constraints– availability of data– nature of the decision– has the decision already been made?– does the cost outweigh the benefit?

THEORY

A coherent set of general propositions used as principles of explanation of the apparent relationships of certain observed phenomena.

What makes a good theory?

• Validity– It fits the facts

• Generalization– Makes predictions about future or other events

• Replication– It can be repeated with similar findings

Constructs

• In management we often use concepts or constructs as variables

• examples:– leadership

– social responsibility

– GNP

– agency

– honesty

– efficiency

Abstraction

• Concepts abstract reality– Are expressed in words that refer to various

events or objects– Vary in degree of abstraction

• Ladder of abstraction

– Research operates at abstract and empirical level linking concepts together as we begin the journey to construct theory.

Propositions

• Concepts are the basic building blocks

• Propositions propose the linkages between these concepts

theory

propositions

concepts

Lev

el o

f ab

stra

ctio

n

From proposition to hypothesis

Concept A:

Punishment

Concept B:

Attendance

Yelling at students

Increases attendance by 50%

AbstractLevel

EmpericalLevel

Proposition

Hypothesis

A hypothesis is a proposition that is empirically testable. It is an empirical statement concerned with the relationship among variables.

•A variable is anything that… varies!•Make sure that you define, or operationalize all your variables… an operational definition•Null hypothesis

The Origin of the Hypothesis

• Is said to date from the time of Plato (428-347BC), a Greek philosopher.

• Plato believed one should develop a belief and then test it by observation.

The earth is flat!• The medieval church depicted the earth as

flat.• This was linked to religious and other beliefs

in a limited world. They used deductive reasoning based not on fact but on their own beliefs.

• Copernicus, Galileo and others helped prove the earth was anything other than flat.

• The faulty hypothesis did not fit the facts, but it held sway over generations till it was shown to be false.

What makes a good hypothesis?

• precise

• specifies variables to measure

• specifies relationships between variables

A poor hypothesis

• Students spend too much money on fast food.

A better hypothesis

• Students with incomes of less than 10,000 per year spend a higher proportion of their income in fast food restaurants than the established mean for the general population.

Research questions

• Are often used when you are not sure of aspecific hypothesis, you need to generalise

• Helps focus on the problem and identifieswhat can be measured

• Whereas there is normally a single hypothesis, there are normally multipleresearch questions

Theory Formulation

Deductive ReasoningThe logical process of deriving a conclusion from a known premise or something known to be true.

We know that all managers are human beings. If we also know that John Smith is a manager, then we can deduce that John Smith is a human being.

Subject to error!

Inductive Reasoning

The logical process of establishing a general proposition on the basis of observation of particular facts.

All managers that have ever been seen are human beings; therefore all managers are human beings.

Subject to error too!

Double Movement of reflexive thought

• Induction occurs when we observe a fact and ask “why”

• To answer this we develop a tentative hypothesis as the explanation

• Deduction is the process whereby we test the hypothesis

Theories

Theories are nets cast to catch what we call “the world”: to rationalize, to explain, and to master it. We endeavor to make the mesh ever finer and finer.

Karl R. Popper