The Role of Business Research
Theory 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:
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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:
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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
From proposition to hypothesis
Proposition
Concept A:
Concept B:
Punishment
Attendance
Hypothesis Yelling at
students
Increases
attendance by
50%
Abstract
Level
Emperical
Level
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 a
specific hypothesis, you need to generalise
• Helps focus on the problem and identifies
what can be measured
• Whereas there is normally a single
hypothesis, there are normally multiple
research questions
Theory Formulation
Deductive Reasoning
The 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