The Role of Business Research Theory Building

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The Role of Business ResearchTheory Building
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The scope of business research

• What is business anyway???
• Is research applicable to all business
  units/functions?

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Business research defined

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

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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

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Applications

• identifying problems or opportunities
• diagnosis and assessment
• selecting and implementing a course of action
• evaluating a course of action
• Evaluation
• Performance monitoring

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Research isnt 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?

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Nature of truth

• knowledge is socially constructed

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Sources of Knowledge

• Experience
• but may not be systematic
• may not be universal
• Authority
• custom
• tradition
• but how does authority know?

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Francis Bacon
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SOURCES OF KNOWLEDGE

• Experience
• Authority
• Deductive Reasoning
• Inductive Reasoning

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SOURCES OF KNOWLEDGE

• Experience
• Authority
• Deductive Reasoning
• Inductive Reasoning
• Scientific Method
• inductive - deductive

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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!
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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!
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THE SCIENTIFIC APPROACH
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THEORY

• is a system for explaining a set of phenomena by
  specifying constructs and the laws that relate
  these constructs to each other.

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Purpose of Theories

• to summarize and organize existing knowledge
• to explain observed events and relationships
• to predict the occurrence of unobserved events
  and relationships
• to stimulate further inquiry
• identifying areas
• providing leads

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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

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Constructs

• In management we often use concepts or constructs
  as variables
• examples
• leadership
• social responsibility
• GNP
• agency
• honesty
• efficiency

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Abstraction

• Concepts abstract reality
• Are expressed in words that refer to various
  events or objects
• Vary in degree of abstraction
• Research operates at abstract and empirical level
  linking concepts together as we begin the journey
  to construct theory.

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Propositions

• Concepts are the basic building blocks
• Propositions propose the linkages between these
  concepts

Level of abstraction
theory
propositions
concepts
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From proposition to hypothesis
Concept A Punishment
Concept B Attendance
Proposition
Abstract Level
Yelling at students
Increases attendance by 50
Emperical Level
Hypothesis
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• 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

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What makes a good hypothesis?

• precise
• specifies variables to measure
• specifies relationships between variables

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A poor hypothesis

• Students spend too much money on fast food.

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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.

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