Research Methodology Chapter 2 Theory Building

Mrs. Suprika V Shrivastava, Assistant Professor, SCIT

Introduction
Business research is based on sound reasoning. This process involves induction, deduction, observation, and hypothesis testing combined in a systematic way. Essential tenets of scientific research are: Direct observation of phenomena. Clearly defined variables, methods, and procedures. Empirically testable hypotheses. The ability to rule out rival hypotheses hypotheses. Statistical rather than linguistic justification of conclusions. The self-correcting process.
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Introduction
Another important term is empirical testing or empiricism: to denote observations and propositions based on sensory experience and/or derived from such experience by methods of inductive logic, including mathematics and statistics term. Researcher uses an approach to describe, explain, and make predictions based on information gained through observations. Based on the predictions, managers need to take decisions. Critical thinking for managers : reasoning for whatever you say. Two types of reasoning :deduction and induction

Deductions/Induction
Arguments are of two types: deduction and induction Deduction: is a form of argument, where the conclusions must necessarily follow from the reasons given. There is a strong relation between reason and conclusions. For deduction to be correct, it must be both true and valid. Premises (reason) given for the conclusion must agree with the real world (true). The conclusion must necessarily follow from the premises ( (valid) ) The deduction is valid if it is impossible for the conclusion to be false if the premises are true.

Deductions/Induction
E.g. 1: All managers are human beings. (P h b i (Premises 1) i Steve is a manager (Premises 2) Steve is a human being (conclusion) E.g. 2: All men are mortal. (premise 1) Socrates was a man. (premise 2) Socrates was mortal. (conclusion) E.g. 3: Availability of jobs in urban areas causes the migration of people. Based on the established facts you have some conclusions
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Induction
Radically different; there is no strength of relationship between reasons and conclusions in induction induction. You draw conclusion from one or more particular facts or pieces of evidence. The conclusions supports facts, and the facts supports facts conclusions. An inductive A i d ti argument is one i which th premises are ti in hi h the i supposed to support the conclusion in such a way that if the premises are true, it is improbable (unlikely to be true or to happen) that the conclusion would be false false. Thus, the conclusion follows probably from the premises and inferences. (source:
http://atheism.about.com/od/criticalthinking/a/deductivearg.htm) http://atheism about com/od/criticalthinking/a/deductivearg htm)

Induction
E.g. 1: Socrates was Greek. (premise) S t G k ( i ) Most Greeks eat fish. (premise) Socrates ate fish. (conclusion) In this example, even if both premises are true, it is still possible for the conclusion to be false (maybe Socrates was allergic to fish, for example). (source:
http://atheism.about.com/od/criticalthinking/a/deductivearg.htm) http://atheism about com/od/criticalthinking/a/deductivearg htm)

E.g.: A stock broker observes price of gold rising with hijacking, military attacks. (facts) attacks Stock broker may induce from empirical observations that the price of gold is related to political stability. (conclusion). (zikmund)
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Induction
E.g.: sales did not increase during or after the promotional campaign. Conclusion: promotional campaign was poorly executed, sales will not increase. The conclusion is only a hypothesis There may be other explanations also. Retailers did not have sufficient stock to fulfill the customers request. A hurricane came which closed all the retail shops. A strike by the employees employees. Inductive conclusion is an inferential jump beyond the evidence presentedone conclusion explains the fact that no sale increase happened. Other conclusions may also do so. Or may be non of these may support the fact. There is always a doubt in the findings from induction. E.g.: E g : mobile device usage in young generation generation.

Deductions Vs Induction
With deductive arguments, our conclusions are already contained, contained even if implicitly in our premises implicitly, premises. Strengthen the known facts. This means that we don't arrive at new information at best, we are shown i f h information which was obscured or unrecognized ti hi h b d i d previously. Thus, the sure truth-preserving nature of deductive arguments comes at a cost. Inductive arguments, on the other hand, do provide us with new ideas and thus may expand our knowledge about the world in a way that is impossible for deductive arguments to achieve. Thus, while deductive arguments may be used most often with mathematics, most other fields of research make extensive use of inductive arguments.
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Combining Ind ction and Ded ction Induction Deduction

Inductive and deductive reasoning are used together in research. Induction occurs when we observe a fact and ask an explanation for it. We answer the question and give tentative explanation for the same ( yp (hypothesis). ) Deduction is the process by which we test whether the hypothesis is capable of explaining the fact. E.g.: Hypothesis : there is increase in the usage of mobile devises amongst youth by 20% in last 2 years. Secondary data : of last 2 years to prove that there is an increase in the usage of mobile de ices sage devices. Primary data : conduct a survey and get some observations. This will help us to infer that there is an increase in the mobile device has taken place..
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Combining Ind ction and Ded ction Induction Deduction

This is also called double movement of reflective thought (Dewey). A typical way of carrying research : we develop multiple hypothesis which can explain a question. We then design a study to test all the hypothesis at once. We test the hypothesis t d t t t ll th h th i t W t t th h th i and present the results.

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Combining Ind ction and Ded ction Induction Deduction

Premise 1: Use of mobile devices is increased in young people Premise 2 sale of d kt h reduces P i 2: l f desktop has d Mobile has replaced desktop for most of the activities.

Premises 1: Consumption of drugs is increased in IT youth. Premises 2: Affluency makes IT youth spend more on drugs Premises 3: IT has increased lot of money which is making IT people spend more. IT is causing youth spend more on drugs.

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The Research Language

Concepts
A concept is a generally accepted collection of meaning or characteristics associated with certain events objects events, objects, conditions, situations, and behaviors. Classifying and categorizing objects or events that have a common characteristics beyond any single observation creates concepts. E.g.: a man is walking, running, skipping or hopping are concepts related to movements movements. Concepts are building blocks. In organizational theory: leadership, productivity, morale are concepts. In the theory of Finance: gross national product, asset, inflation are concepts (zikmund).
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The Research Language

Concepts
In research, we devise hypothesis using concepts. We d i W devise measurement concepts by which we t t th t t b hi h test the hypothesis. While devising such and instrument, one must take care We conceptualize clearly. Others understand the concepts we use. E.g.: we might want to ask about family income. g g y We need to narrow down the concept by specifying Time period (weekly, monthly, annually) Before and after taxes Income in kind: free rent, employee discount, food stamps Measuring attitude of people: further carefully selected concepts are req ired required.
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The Research Language

Constructs
Concepts have progressive levels of abstraction: that is degree to which the concepts does or does not have something objective to refer to. Table is an objective concept. The characteristics of table are clear. clear An abstraction like Personality is difficult to visualize. Such abstract concepts are called constructs. A construct is an image or abstract idea specifically invented for a given research or theory building purpose. We build constructs by combining more concrete concepts, y g p , especially when the idea or image we intend to convey is not subject to direct observation.

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The Research Language

Constructs
E.g.: job redesign :presentation quality, language skills, job interest Presentation quality : composed of format accuracy, manuscript errors and keyboard errors (more concrete and easy to measure) Language skills : vocabulary ,syntax and spelling. Job interest is most difficult to measure. Will be composed of more concepts and constructs. All the three together will help to analyze job redesign required. If the relation between these concepts and constructs can be shown, we will form a conceptual scheme. Definitions: can be used to reduce the confusion about the meaning of concepts amongst various parties involved. f t t i ti i l d Two types of definitions Dictionary definitions: concept defined with a synonym Operational definition: definition stated in terms of specific criteria for testing or measurement. (important for research)
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The Research Language

Definitions
Operational definition: the definition must specify the characteristics and how they are to be observed observed. E.g.: classification of a college student : freshman, sophomore, junior or senior. (Definition) Operational d fi iti h l you t d t O ti l definition helps to determine, i which class a i in hi h l student should fall. Freshman : Fewer than 30 hours credit Sophomore : 30-59 hours credit Junior : 60- 89 hours credit Senior : 90 or more hours credit hours credit. A more abstract concept : consumer socialization: will be defined in terms of skills, knowledge, and attitude or we may scale that has already developed and validated by someone someone.
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The Research Language

Variables
Variable: is a symbol of an event, characteristic, trait, or attribute that can be measured and to which we assign categorical values. Variables V i bl can b classified as be l ifi d Dichotomous variables: have only two values (0 or 1): employed, unemployed ; male, female Variables may take multiple values: race, religion, various models of a machine. Variables may also be classified as: Discrete: can have only certain values Continuous: variables can take values in a given range
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The Research Language

Variables
Another classification Independent variable: is the p p predictor variable, which causes an , effect on the dependant variable. Dependent variable: is the measured, predicted or monitored variable. It is affected by the manipulation of the independent variable. E.g.: a switch from salary compensation (IV) will lead to increased sale productivity (DV) per worker. Moderating Variable: M d ti V i bl In various relationships, there is an IV and a DV. Moderating variable is a second dependent variable that is g y included because it is believed to have a significant contributory or contingent effect on the originally stated IV-DV relationship. A switch to commission from commission to salary compensation system (IV) will lead to increased sales productivity (DV) per worker, especially among young workers (MV)
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Variables
Intervening variable (IVV) : that factor which theoretically affects the observed phenomenon but cannot be seen measured or seen, measured, manipulated. Proposition : Intelligent workers produce less defective product. Boredom (IVV) B d For causation: one should be able to identify the Intervening variable

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Proposition and Hypothesis

Proposition: a statement about observable phenomenon (concepts) that may be judged as true or false. When a preposition is formulated for empirical testing , we call it a hypothesis. A hypothesis is tentative in nature. Hypothesis have been described as statements in which variables are assigned to cases. Brand Managers in company Z (cases) have a higherthan higher than average achievement motivation. Descriptive Hypothesis: they state the existence, size, form or distribution of some variable. E.g.: In Detroit (case)our potato chip market stands 13.7 percent. g y percent of Company Z stockholders ( p y (cases) favor ) Eighty p increase in companys cash dividend (variable)
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The Research Language

Relational hypothesis
Relational Hypothesis: these statements describe relationship between two variables with respect to some case case. Correlation Hypothesis States that the variables occur together in some specified manner without implying that one causes the other. There are weak claims about the causal linkages. E.g.: Women under 35 purchase fewer units of our product than women who are 35 years of age or older. People in Atlanta give the president a more favorable rating than do people in St Louis.

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Relational hypothesis
Causal Hypothesis An i A increase i f il income (IV) leads to an increase in th in family i l d t i i the percentage of income saved (DV) Exposure to companys message concerning industry problems (IV) leads to more favorable attitudes (DV) by employees towards the company. In causal hypothesis : direction is important. Family income l d t saving. F il i leads to i

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Theory
Theory is a set of systematically interrelated concepts, definitions, definitions and propositions that are advanced to explain and predict phenomena (facts). Difference between Hypothesis and Theory is one of degree of complexity and abstraction. abstraction Theories tend to be more complex, be abstract, involves multiple variables. Hypothesis : tends to be more simple, limited variable statements involving concrete instances. A theory is a set of systematically interrelated concepts, definitions, and propositions that are advanced to explain and predict phenomenon (facts)

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The Research Language

Theory
E.g.: Product life cycle is a theory in marketing A product has 4 stages :(introduction, growth, maturity, decline). In each stage there are many concepts, constructs, and hypothesis. Definitions are also required for communicating the claims of the theory and its consistency in testing to reality. Growth stage: company spends heavily on advertising and g p y p y g promotion to create the awareness of the product. Focus here is to promote the primary demand (concept). High p g pricing may reflect skimming ( g y g (concept) to help the company p) p p y recover the developmental costs. Or the product manager may use low pricing or penetration p pricing ( g (concept) p)
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The Research Language

Theory
In the growth stage, the sale increases rapidly because the customers are repeatedly buying the product There are product. repeated customers (concept). If th company i not able t attract repeated customers, it the is t bl to tt t t d t usually means, death of the product (proposition). The maturity stage is a good time for a company to generate cash (proposition). At this stage, the cost of development of the product and establishing in the market is paid and its time to make profits. Firm now uses extension strategies ( g (construct) to delay the ) y decline stage of the product.
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Theory
In the decline stage, the product will consume disproportionate share of management time and resources relative to their potential future worth. (Hypothesis) To T make the hypothesis f ll t t bl we need th operational k th h th i fully testable, d the ti l definitions of disproportionate share, tie, resources, and future worth. The challenge is to build more comprehensive theories to explain and predict how modifying the product and other variables will help the firm.

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