BUSINESS RESEARCH

METHODS
Handouts 1

Zia Shaukat
m.ziashaukat@yahoo.com
 Contents
Chapter 1: Research in Business ........................................................................................................ 5
Factors which stimulate business research: .......................................................................................................... 5
Information overload. ................................................................................................................................................ 5
Technological connectivity. .................................................................................................................................... 5
Shifting global centers of economic activity and competition. .................................................................. 5
Increasingly critical scrutiny (analysis) of big business. .............................................................................. 5
More government intervention. ............................................................................................................................. 5
Battle for analytical talent........................................................................................................................................ 5
Computing Power and Speed. .............................................................................................................................. 5
New Perspectives on Established Research Methodologies. .................................................................. 6
Sources of Information ................................................................................................................................................. 6
1) Decision support system (DSS): .................................................................................................................. 6
2) Business intelligence system (BIS): ........................................................................................................... 6
Information value chain ............................................................................................................................................... 6
Strategy: ........................................................................................................................................................................ 6
Tactics: ........................................................................................................................................................................... 6
Hierarchy of information-based decision makers .............................................................................................. 7
The research process: .................................................................................................................................................... 7
Characteristics of good research .............................................................................................................................. 8
1. Cleary defined purpose .................................................................................................................................... 8
2. Detailed research process ............................................................................................................................... 8
3. Thoroughly planned design ........................................................................................................................... 8
4. High ethical standards...................................................................................................................................... 8
5. Limitation addressed ........................................................................................................................................ 8
6. Adequate analysis .............................................................................................................................................. 8
7. Unambiguous presentation............................................................................................................................ 8
8. Conclusions justified ......................................................................................................................................... 8
9. Credentials ............................................................................................................................................................ 8
Types of research ............................................................................................................................................................ 9
Chapter 2: Ethics in Business Research ........................................................................................... 10
WHAT ARE RESEARCH ETHICS? ............................................................................................................................. 10
ETHICAL TREATMENT OF PARTICIPANTS ........................................................................................................... 11
Benefits ........................................................................................................................................................................ 11
 Deception ................................................................................................................................................................... 11
Informed Consent ................................................................................................................................................... 12
Debriefing Participants .......................................................................................................................................... 12
Rights to Privacy ...................................................................................................................................................... 13
ETHICS AND THE SPONSOR ....................................................................................................................................... 1
Confidentiality ............................................................................................................................................................. 1
Sponsor-Researcher Relationship ........................................................................................................................ 1
Knowledge Gap ........................................................................................................................................................... 2
Job Status and Internal Coalitions ........................................................................................................................ 2
Unneeded or Inappropriate Research ................................................................................................................. 2
Right to Quality Research ........................................................................................................................................ 2
Sponsor’s Ethics .......................................................................................................................................................... 3
RESEARCHERS AND TEAM MEMBERS .................................................................................................................... 3
Ethical Behavior of Assistants................................................................................................................................. 3
Protection of Anonymity.......................................................................................................................................... 4
Chapter 3: Thinking like a Researcher .............................................................................................. 5
The Language of Research .......................................................................................................................................... 5
Concepts ............................................................................................................................................................................ 5
Sources of concepts: ................................................................................................................................................ 5
The importance of concepts: ................................................................................................................................. 5
Problems in concept use:........................................................................................................................................ 5
Constructs ......................................................................................................................................................................... 6
Definitions ......................................................................................................................................................................... 6
Definitions ..................................................................................................................................................................... 6
Dictionary definitions................................................................................................................................................. 6
Operational definitions ............................................................................................................................................. 6
Variables ............................................................................................................................................................................ 6
Propositions and Hypotheses .................................................................................................................................... 7
Proposition .................................................................................................................................................................... 7
Hypothesis .................................................................................................................................................................... 7
Theory ................................................................................................................................................................................. 9
Models ................................................................................................................................................................................ 9
 Descriptive model ........................................................................................................................................... 10
 Explicative model ............................................................................................................................................ 10
  Simulation model ............................................................................................................................................ 10
Research and Scientific Methods ........................................................................................................................... 10
Deduction ................................................................................................................................................................... 10
Induction..................................................................................................................................................................... 10
Chapter 4: The Business Research Process: An Overview ............................................................ 12
STAGE 1: CLARIFYING THE RESEARCH QUESTION .......................................................................................... 12
STAGE 2: PROPOSING RESEARCH ......................................................................................................................... 13
Resource Allocation and Budgets...................................................................................................................... 13
Valuing Research Information. ........................................................................................................................... 13
Evaluation Methods ................................................................................................................................................ 14
Option Analysis ........................................................................................................................................................ 14
The Research Proposal .......................................................................................................................................... 14
STAGE 3: DESIGNING THE RESEARCH PROJECT .............................................................................................. 15
Research Design....................................................................................................................................................... 15
Sampling Design ...................................................................................................................................................... 15
Pilot testing ................................................................................................................................................................ 15
STAGE 4: DATA COLLECTION AND PREPARATION ......................................................................................... 16
STAGE 5: DATA ANALYSIS AND INTERPRETATION ......................................................................................... 16
STAGE 6: REPORTING THE RESULTS ..................................................................................................................... 16
Unsearchable Questions ....................................................................................................................................... 17
 Chapter 1: Research in Business
Business Research is a process of planning, acquiring, analyzing and disseminating relevant
business data, information, and insights to decision makers in ways that mobilize the
organization to take appropriate business actions that, in turn, maximize business performance.

The primary purpose of research is to reduce the level of risk of organizational decision
(marketing decision, production decision, pricing decision, etc.)

Management dilemma: the problem or opportunity that requires a management decision.

Example on management dilemma:

- What is the most profitable price level, should we charge for our new product.
- Should we invest in Project A or Project B.
- Why the ROE in the banking sector is decreasing while ROE is increasing in
the technology industry.
- And many more.

Factors which stimulate business research:

The following factors cause changes in the business environment:

Information overload. While the Internet and its search engines present extensive amounts of
information, its quality and credibility must be continuously evaluated.

Technological connectivity. Individuals, public sector organizations, and businesses are adjusting
to changes in work patterns (real-time and global), changes in the formation of relationships and
communities, and the realization that geography is no longer a primary constraint.

Shifting global centers of economic activity and competition. Highlight the need for
organizations to expand their knowledge of consumers, suppliers, talent pools, business models,
and infrastructures with which they are less familiar.

Increasingly critical scrutiny (analysis) of big business. The availability of information has made
it possible for all a firm’s stakeholders to demand inclusion in company decision making.

More government intervention. As public-sector activities increase in order to provide some

minimal or enhanced level of social services, governments are becoming increasingly aggressive in
protecting their various constituencies by posing restrictions on the use of managerial and business
research tools.

Battle for analytical talent. The shift to knowledge-intensive industries puts greater demand on a
scarcity of well-trained talent with advanced analytical skills.

Computing Power and Speed. Lower cost data collection, better visualization tools, more
computational power, more and faster integration of data, and real-time access to knowledge are
now manager expectations…not wistful visions of a distant future.

New Perspectives on Established Research Methodologies. Older tools and methodologies,

once limited to exploratory research, are gaining wider acceptance in dealing with a wider range of
managerial problems.

Sources of Information
Information leads to competitive advantage and better performance.

1) Decision support system (DSS): Numerous elements of data organized for retrieval and
use in business decision making (intranet and extranet).

An intranet is a private network that is contained within an enterprise and is not available to
the public at large. It may consist of many interlinked local area networks. It typically includes
connections through one or more computers to the Internet. The main purpose of an intranet
is to share company information and computing resources among internal audiences.

An extranet is a private network that uses the Internet protocols and the public
telecommunication system to share an organization’s information, data, or operations with
external suppliers, vendors, or customers. An extranet can be viewed as the external portion
of a company’s intranet.

2) Business intelligence system (BIS): is a system designed to provide manages with ongoing
information about events and trends in technological, economic, politic, government and
legal, demographic, cultural, social, and competitive.

Information value chain

If we need to collect information about specific characteristics the inspection process follows the
following chain: data collection, data management, decision support system, data interpretation and
model.

Strategy: research also contributes significantly to the strategies, which are those general approach
an organization will follow to achieve its goals.

Tactics: research also contributes significantly to the design tactics, which are those specific timed
activities that execute a strategy.
Hierarchy of information-based decision makers

The research process:

Clarifying the research question (Chapters 2-5)

Research porposal

Research design strategy (Chapters 6-14)

Data collection and preperation (Chapter 15)

Data analysis and interpretation (Chapter 16-18)

Research reporting

Management desicion (Chapter 19-20)

Characteristics of good research
1. Cleary defined purpose
The purpose of the business research—the problem involved or the decision to
be made should be clearly defined and sharply delineated in terms as
unambiguous as possible.
2. Detailed research process
The research procedures used should be described in sufficient detail to permit
another researcher to repeat the research
3. Thoroughly planned design
The procedural design of the research, and its choice among competing designs,
should be clearly described and carefully planned to yield results that are as
objective as possible.
4. High ethical standards
Ethical issues in research reflect important moral concerns about the practice of
responsible behavior in society.
5. Limitation addressed
The researcher should report, with complete frankness, flaws in procedural design
and estimate their effect on the findings.
6. Adequate analysis
Analysis of the data should be extensive enough to reveal its significance, what
managers call insights. The methods of analysis used should be appropriate. The
extent to which this criterion is met is frequently a good measure of the
competence of the researcher.
7. Unambiguous presentation
Some evidence of the competence and integrity of the researcher may be found
in the report itself. For example, language that is restrained, clear, and precise;
assertions that are carefully drawn and hedged with appropriate reservations; and
an apparent effort to achieve maximum objectivity tend to leave a favorable
impression.
8. Conclusions justified
Conclusions should be limited to those for which the data provide an adequate
basis. Good researchers always specify the conditions under which their
conclusions seem to be valid.
9. Credentials
Greater confidence in the research is warranted if the researcher is experienced,
has a good reputation in research, and is a person of integrity.
Types of research
Reporting studies provide a summation of data, often recasting data to achieve a
deeper understanding or to generate statistics for comparison.

A descriptive study tries to discover answers to the questions who, what, when, where,
and, sometimes, how.

An explanatory study attempts to explain the reasons for the phenomenon that the
descriptive study only observed

A predictive study attempts to predict when and in what situations an event will occur.
Studies may also be described as applied research or basic research.
 Chapter 2: Ethics in Business Research
WHAT ARE RESEARCH ETHICS?
Ethics are norms or standards of behavior that guide moral choices about our behavior
and our relationships with others.

The goal of ethics in research is to ensure that no one is harmed or suffers adverse
consequences from research activities.

 Unethical activities are pervasive and include such things as:

– Violating nondisclosure agreements

– Breaking respondent confidentiality

– Misrepresenting results

– Deceiving people

– Invoicing irregularities

– Avoiding legal liability

 A study showed that:

 80 percent of the responding organizations had adopted an ethical

code.
 There was limited success for codes of conduct.

 There is no single approach to ethics.

 Advocating strict adherence to a set of laws is difficult because of the

constraint put on researchers.
 Because of their war history, Germany’s government forbids many
types of medical research.
 Sometimes, an individual’s personal sense of morality is relied upon
Exhibit 2-1 relates each ethical issue under discussion to the research
process.
ETHICAL TREATMENT OF PARTICIPANTS
 In general, research must be designed so that a respondent does not suffer
physical harm, discomfort, pain, embarrassment, or loss of privacy.
 To safeguard against these, the researcher should follow three guidelines:
 Explain study benefits.
 Explain participant rights and protections.
 Obtain informed consent.
Benefits

 Whenever direct contact is made with a participant, the researcher should discuss
the study’s benefits, without over- or understating the benefits.
 An interviewer should begin an introduction with:
 His or her name.
 The name of the research organization.
 A brief description of the purpose and benefit of the
research.

 Knowing why one is being asked questions improves cooperation.

 Inducements to participate, financial or otherwise, should not be

disproportionate to the task or presented in a fashion that results in coercion.

 Sometimes, the purpose and benefits of the study or experiment must be

concealed from respondents in order to avoid introducing bias.

 The need for concealing objectives leads directly to the problem of deception.
Deception

 Deception occurs when the participants are told only part of the truth, or when
the truth is fully compromised.

 There are two reasons for deception:

 To prevent biasing the participants

 To protect the confidentiality of a third party

 Deception should not be used to improve response rates.

 When possible, an experiment or interview should be redesigned to reduce

 reliance on deception.

 Participants’ rights and well-being must be adequately protected.

 Where deception in an experiment could produce anxiety, a subject’s

medical condition should be checked to ensure that no adverse
physical harm follows.
 The American Psychological Association’s ethics code states that the
use of deception is inappropriate unless deceptive techniques are
justified by the study’s expected value and equally effective alternatives
that do not use deception are not feasible.
 Participants must have given their informed consent before participating in the
research.
Informed Consent

 Securing informed consent from respondents is a matter of fully disclosing the

procedures of the proposed study or other research design before requesting
permission to proceed.

 It is always wise to get a signed consent form when:

 Dealing with children

 Doing research with medical or psychological ramifications
 There is a chance the data could harm the participant
 If the researchers offer only limited protection of confidentiality

 For most business research, oral consent is sufficient.

 Exhibit 2-2 presents an example of how informed-consent procedures are

implemented.

 In situations where respondents are intentionally or accidentally deceived, they

should be debriefed once the research is complete.
Debriefing Participants

 Debriefing involves several activities following the collection of data:

 Explanation of any deception.

 Description of the hypothesis, goal, or purpose of the study.
 Post-study sharing of results.
 Post-study follow-up medical or psychological attention.

 It explains the reasons for using deception in the context of the study’s goals.
  Where severe reactions occur, follow-up attention should be provided to ensure
that the participants remain unharmed.

 Even when research does not deceive the participants, it is good practice to offer
them follow-up information.

 This retains the goodwill of the participant and provides an incentive

to participate in future projects.

 Follow-up information can be provided in a number of ways:

 With a brief report of the findings.

 With descriptive charts or data tables

 For experiments, all participants should be debriefed in order to put the

experiment into context.

 Debriefing usually includes a description of the hypothesis being tested

and the purpose of the study.
 Debriefing allows participants to understand why the experiment was
created.
 Researchers also gain insight into what the participants thought about
during and after the experiment, which can lead to research design
modifications.

 The majority of participants do not resent temporary deception, and debriefed

participants may have more positive feelings about the value of the research
than those who didn’t participate in the study.

 Nevertheless, deception is an ethically thorny issue and should be addressed

with sensitivity and concern for research participants.
Rights to Privacy

 Privacy laws in the United States are taken seriously.

 All individuals have a right to privacy, and researchers must respect that
right.

 Desire for privacy can affect research results.

  The privacy guarantee is important not only to retain validity of the research but also to
protect respondents.

 Once the guarantee of confidentiality is given, protecting that confidentiality is essential.

 Obtain signed nondisclosure documents.

 Restrict access to participant identification.
 Reveal participant information only with written consent.
 Restrict access to data instruments where the participant is identified.

 Researchers should restrict access to information that reveals names, telephone numbers,
addresses, or other identifying features.

 Only researchers who have signed nondisclosure, confidentiality forms should be

allowed access to the data.
 Links between the data or database and the identifying information file should be
weakened.
 Interview response sheets should be accessible only to the editors and data entry
personnel.
 Occasionally, data collection instruments should be destroyed once the data are
in a data file.

 Data files that make it easy to reconstruct the profiles or identification of individual
participants should be carefully controlled.

 For very small groups, data should not be made available because it is often easy
to pinpoint a person within the group.
 This is especially important in human resources research.

 Privacy is more than confidentially.

 A right to privacy means one has the right to refuse to be interviewed or to refuse
to answer any question in an interview.
 Potential participants have a right to privacy in their own homes, including not
admitting researchers and not answering telephones.
 They have the right to engage in private behavior in private places, without fear of
observation.

 To address these rights, ethical researchers:

 Inform participants of their right to refuse to answer any questions or participate

in the study.
 Obtain permission to interview participants.
 Schedule field and phone interviews.
 Limit the time required for participation.
 Restrict observation to public behavior only.
ETHICS AND THE SPONSOR
 Whether undertaking product, market, personnel, financial, or other research, a sponsor has
the right to receive ethically conducted research.
Confidentiality

 Some sponsors wish to undertake research without revealing themselves.

 Types of confidentiality include:

– Sponsor nondisclosure
– Purpose nondisclosure
– Findings nondisclosure

 Companies have a right to dissociate themselves from the sponsorship of a research project.
This is called sponsor nondisclosure.

 This is often done when a company:

– Is testing a new product idea, to avoid having the company’s current image or
industry standing influence potential consumers.
– Is contemplating entering a new market, to keep from tipping off competitors.
 In such cases, it is the responsibility of the researcher to devise a plan that
safeguards the identity of the sponsor.

 Purpose nondisclosure involves protecting the purpose of the study or its details.

 Even if a sponsor feels no need to hide its identity or the study’s purpose, most sponsors
want the research data and findings to be confidential, at least until the management decision
is made.
 Thus, sponsors usually demand and receive findings nondisclosure between themselves or
their researchers and any interested but unapproved parties.

Sponsor-Researcher Relationship
 The obligations of managers include:
 Specify their problems as decision choices.
 Provide adequate background information.
 Provide access to company information gatekeepers.
 The obligations of researchers include:
 Develop a creative research design that will provide answers to manager’s questions.
 Provide data analyzed in terms of problems/decision choices specified.
 Point out limitations of research that affect results.
 Make choices between what manager wants and what research thinks should be
provided.
 Manager-Researcher conflict arises due to:
 Knowledge gap between researchers and the manager.
 Job Status and internal political coalitions to preserve status.
 Unneeded or inappropriate research.
  The right to quality research.

Knowledge Gap
 Managers have limited exposure to research and often have limited formal training in
research methodology.
 Explosive growth in research technology has led to a widening of this gap in expertise.

Job Status and Internal Coalitions

 Researchers challenge a manager’s intuitive decision making skill.
 Managers feel requesting research is equivalent to indicating their decision making skills are
lacking.
 One research function—to challenge old ideas—as well as to challenge new ideas
 Threatens insecure managers by inviting a critical evaluation of a manager’s ideas by others
who may be seen as rivals.
Unneeded or Inappropriate Research

 Research has inherent value only to the extent that it helps management make better
decisions.

 Not all decisions require research.

 Decisions requiring research are those that have potential for helping management select
more efficient, less risky, or more profitable alternatives than would otherwise be chosen
without research.

Right to Quality Research

 An important ethical consideration for the researcher and the sponsor is the sponsor’s right
to quality research. This right entails:

 Providing a research design appropriate for the research question.

 Maximizing the sponsor’s value for the resources expended.
 Providing data-handling and –reporting techniques appropriate for the data
collected.

 From the proposal to final reporting, the researcher guides the sponsor on the proper
techniques and interpretations.

 The researcher should propose the design most suitable for the problem.
 A researcher should not propose activities designed to maximize researcher
revenue or minimize researcher effort at the sponsor’s expense.

 We’ve all heard “You can lie with statistics.” It is the researcher’s responsibility to prevent
that from occurring.

 The ethical researcher reports findings in ways that minimize the drawing of false
conclusions.
  The ethical researcher also uses charts, graphs, and tables to show data objectively, despite
the sponsor’s preferred outcomes.
Sponsor’s Ethics

 Occasionally, research specialists may be asked by sponsors to participate in unethical

behavior.

 Compliance by the researcher would be a breach of ethical standards.

 Examples of things to avoid:
– Violating participant confidentiality.
– Changing data or creating false data to meet a desired objective.
– Changing data presentations or interpretations.
 Interpreting data from a biased perspective.
 Omitting sections of data analysis and conclusions.
 Making recommendations beyond the scope of the data collected.
RESEARCHERS AND TEAM MEMBERS
 Researchers are responsible for their team’s safety, as well as their own.

 Responsibility for ethical behavior rests with the researcher who, along with assistants, is
charged with protecting the anonymity of both the sponsor and the participant.
Safety

 Researchers must design a project so that the safety of all interviewers, surveyors,
experimenters, or observers is protected.

 Factors that may be important when ensuring a researcher’s right to safety:

 Some urban and undeveloped rural areas may be unsafe for researchers.
 If persons must be interviewed in a high-crime district, it may be necessary to
provide a second team member to protect the researcher.
 It is unethical to require staff members to enter an environment where they feel
physically threatened.
 Researchers who are insensitive to these concerns face both research and legal risks.
Ethical Behavior of Assistants

 Researchers should require ethical compliance from team members.

 Assistants are expected to:

 Carry out the sampling plan

 Interview or observe respondents without bias
 Accurately record all necessary data

 The behavior of the assistance is under the direct control of the responsible researcher or
field supervisor.
  If an assistant behaves improperly in an interview, or shares a respondent’s
interview sheet with an unauthorized person, it is the researcher’s responsibility.
 Consequently, all assistants should be well trained and supervised.
Protection of Anonymity

 Each researcher handling data should be required to sign a confidentiality and

nondisclosure statement.
 Chapter 3: Thinking like a Researcher
The Language of Research
When we do research, we seek to know what is in order to understand, explain, and predict
phenomena. We might want to answer the question

 “What will be the department’s reaction to the new flexible work schedule?” or
 “Why did the stock market price surge higher when all normal indicators suggested it would
go down?”

When dealing with such questions, we must agree on definitions.

 Which members of the department: clerical or professional?

 What kind of reaction?
 What are normal indicators?

These questions require the use of concepts, constructs, and definitions.

Concepts

Concepts – a generally accepted collection of meanings or characteristics associated with certain

events, objects, conditions, situations and behaviors. They are created by classifying and categorizing
objects or events that have common characteristics beyond any single observation.

Sources of concepts: Frequently used concepts have been developed over time through shared
usage, and we acquire them through personal experience.

When dealing with uncommon concepts or newly advanced ideas, sometimes we need to borrow
from other languages, areas or fields.

Sometimes it’s not enough and we need to adopt new meanings for words or develop new labels
and words for concepts.

It leads to developing new jargons or terminologies. New jargon contributes to the efficiency of
communication among specialists, but it excludes everyone else.

The importance of concepts: They are basic to all thought and communication. We design
hypotheses using concepts. We devise measurement concepts by which to test these hypothetical
statements. The success of research depends on:

 How clearly we conceptualize, and

 How well others understand the concepts we use

Developing concepts that others clearly understand can be challenging, therefore we have to restrict
or narrow the concept.

Problems in concept use: Main problem is that people differ in the meanings they include under
any particular label.

As levels of abstraction progress, it is more and more difficult to visualize and understand concepts.
Abstract concepts are called constructs.

Constructs
Constructs – an image or an idea specifically invented for a given research and/or theory-building
purpose. They are built by combining simpler concepts, especially when the idea or image is not
directly subject to observation.

They can be easily confused with concepts. If research shows the concepts and constructs to be
interrelated, and if the propositions that specify the connections can be supported, it will be
beginnings of a conceptual scheme. It describes the relationships among the knowledge and skill
requirements necessary to clarify the job redesign effort.

Definitions
Definitions – They are providing a way of understanding and measuring concepts. Having a
mutually acceptable set of definitions is a way to reduce the danger of destroying a research study’s
value due to confusion about the meaning of concepts. There are two types of definitions:

Dictionary definitions – a concept is defined with a synonym. This type of circular definition is not
adequate for research. In research, we must measure concepts and constructs, which require more
rigorous defining.

Operational definitions – they are stated in terms of specific testing or measurement criteria, which
must have empirical references. The definition must specify characteristics and how the objects are
to be observed. The specifications and procedures must be clear that any competent person using
them would classify the objects in the same way. Depending on the purpose and the way chosen for
measuring, same concepts may require different definitions. A concept and its operational definition
are not the same thing.

Variables
Variables – In practice, variable is used as a synonym for construct or the property being studied.
It’s a symbol to which we assign a numeral or value.

Dichotomous variables – they have only two values, reflecting the presence or absence of a
property. (Example gender female/male – value is 0 or 1)

Continuous variables – variables that may take values within a given range, or sometimes, infinite
set (temperature, score on exam)
Independent and dependent variables – Researchers are most interested in relationships among
variables. In each relationship there is at least one independent variable (IV) and one dependent
variable (DV).

It is normally hypothesized that in some way the IV causes DV to occur.

It is easy to establish relationship whether IV influences a DV, it is much harder to show that the
relationship is between the two is a causal relationship.

Moderating variable (MV) – a type of explanatory variable, a moderating or interaction variable is

a second independent variable that is included because it is believed to have a significant
contributory or contingent effect on the original IV-DV relationship.

Extraneous variables (EVs) – There are an almost infinite number of extraneous variables that
might conceivably affect a given relationship.

Some can be treated as IVs or MVs, but most can safely be excluded from the study, while others
might influence the DV, but their effect is not at the core of the problem we investigate.

Still, we want to check whether our results are influenced by them, and we include them as control
variables (CVs) in our investigation to ensure that our results are not biased by not including them.

Extraneous variables are also called confounding variables (CFVs) if they affect a relation between
an IV and the DV or between a moderator (MV) and the DV.

Intervening variables – The variables mentioned with regard to causal relationships are concrete
and clearly measurable (they can be seen, counted or observed in some way), but sometimes we
can’t be completely satisfied by the explanations they give.

An intervening variable (IVV) is a conceptual mechanism through which the IV and MV might
affect the DV.

The IVV can be defined as a factor that theoretically affects the DV but cannot be observed or has
not been measured; its effect must be inferred from the effects of the independent and moderator
variables on the observed phenomenon.

Propositions and Hypotheses

Proposition – is a statement about concepts that may be judged as true or false if it refers to
observable phenomena.

When a proposition is formulated for empirical testing, we call it a hypothesis.

Hypothesis – as a declarative statement is of a tentative and abstract nature.

Hypotheses have also been described as statements in which we assign variables to cases.

A case is defined in this sense as the entity or thing that the hypothesis talks about.
The variable is the characteristic, trait or attribute that is ascribed to the case.

 Descriptive hypotheses – are propositions that typically state the existence, size, form or
distribution of some variable. Researchers often use a research question rather than a
descriptive hypothesis.

 Relational hypotheses – these are statements that describe a relationship between two
variables with respect to a particular case.

 Correlational hypotheses – state merely that the variables occur together in some
specified manner without implying that one causes the other.

Such weak claims are often made when we believe that there are more basic causal forces
that affect both variables or when we have not developed enough evidence to claim a
stronger linkage.

 Explanatory (causal) hypotheses – there is an implication that the existence of, or a

change in one variable causes or leads to a change in the other.

‘Cause’ here means ‘to help make happen’, so the IV doesn’t have to be the only reason for
the existence of, or a change in the DV.
The role of the hypothesis

In research, a hypothesis serves several important functions:

 It guides the direction of the study;

 It identifies those facts that are relevant and those that are not;
 It suggests which form of research design is likely to be most appropriate;
 It provides a framework for organizing the conclusions.

A good hypothesis should fulfil three conditions. It should be:

 Adequate for its purpose,

 Testable,
 Better than its rivals

For a descriptive hypothesis, adequacy for its purpose means that it clearly states the condition,
size or distribution of some variable in terms of values that are meaningful to the research task.

If it is an explanatory hypothesis, it must explain the facts that gave rise to the need for explanation.
Using the hypothesis plus other known and accepted generalizations, researcher should be able to
deduce the original problem condition. A hypothesis is testable if it meets the following conditions:

 It does not require techniques that are currently unavailable;

 It does not require an explanation that defies known laws;
 There are consequences or derivatives that can be deduced for testing purposes.

A hypothesis is better than its rivals (parsimonious) if it:

  Has a greater range than its rivals,
 Explains more facts than its rivals,
 Explains a greater variety of facts than its rivals,
 Is simple, requiring few conditions or assumptions.

Theory
Hypotheses play an important role in the development of theory. Theory development is gradually
becoming more influential aspect of business research.

Theory isn’t the opposite of fact, but actually, fact and theory are each necessary for the other to be
of value.

Theories are generalizations we make about variables and the relationships among them. We use
these generalizations to make decisions and predict outcomes.

A theory is a set of systematically interrelated concepts, definitions and propositions that are advanced
to explain and predict phenomena (facts). We have many theories and use them continually to explain
or predict what goes on around us.

Theories tend to be complex, abstract and involve multiple variables.

Hypotheses, on the other hand, tend to be simple, limited-variable propositions involving concrete
instances.

Theory serves us in many useful ways, it:

 Narrows the range of facts we need to study,

 Suggests which research approaches are likely to yield the greatest meaning,
 Suggests a system for the researcher to impose on data in order to classify them in the most
meaningful way observation,
 Can be used to predict any further facts that may be found.

Models
Models represent phenomena through the use of analogy.

A model may be defined for our purposes as the representation of a system that is constructed to
study some aspect of that system or system as a whole.

Model’s role is representation, while theory’s role is explanation.

Models may be used for applied or highly theoretical purposes.

Modelling has three major functions, and each of these is appropriate to applied research or theory
building;
  Descriptive model – describes the behaviour of elements in a system where theory is
inadequate or non-existent,

 Explicative model – extend the application of well-developed theories or improve our

understanding of their key concepts,

 Simulation model – clarify the structural relationships of concepts and attempt to reveal
the process relationships among them. They can be:

 Static (i.e. represent a system at one point in time)

 Dynamic (i.e. represent the evolution of a system over time)

Research and Scientific Methods

If the tools of thinking are the mind of science, then the scientific attitude is the spirit. The scientific
attitude unleashes the creative drive that makes discovery possible.

The scientific method, as practiced in business research, guides our approach to problem solving.

The essential principles of the scientific method are:

 Direct observation of phenomena.

 Clearly defined variables, methods, and procedures.
 Empirically testable hypotheses.
 The ability to rule out rival hypotheses.
 Statistical rather than linguistic justification of conclusions.
 The self-correcting process.

Good business research is based on sound reasoning. Competent researchers and astute managers
alike practice thinking habits that reflect sound reasoning. Two types of argument of great
importance to research are deduction and induction.

Deduction
Deduction is the process by which we arrive at a reasoned conclusion by logical generalization of a
known fact.
For example, we know that all high performers are highly proficient in their jobs.

Induction
Induction is a process where we observe certain phenomena and on this basis arrive at conclusions.

In other words, in induction we logically establish a general proposition based on observed facts.

For instance, we see that the production processes are the prime features of factories or
manufacturing plants. We therefore conclude that factories exist for production purposes.
Both the deductive and the inductive processes are applied in scientific investigations.

Theories based on deduction and induction help us to understand, explain, and/or predict business
phenomena.

1 You push the light switch and find no light

2 You ask the question, Why no light? (induction)
3 You infer a conclusion (hypotheses) to answer the question and explain the fact
that the bulb is burned out. (deduction)

You use this hypothesis to conclude (deduce) that the light will not go on when we push the switch.
We know from experience that burned-out bulb will not light.
 Chapter 4: The Business Research Process: An Overview
The research process begins when a management dilemma triggers the need for a decision.

The origin, selection, statement, exploration, and refinement of the management question is the
most critical part of the research process.

Regardless of the type of research, a thorough understanding of the original question is

fundamental to success.

STAGE 1: CLARIFYING THE RESEARCH QUESTION

The management-research question hierarchy process of sequential question formulation leads a
manager or researcher from management dilemma to investigative questions.

 The process begins with the management dilemma—the problem or opportunity that requires a
business decision.

The management dilemma is usually a symptom of an actual problem, such as:

 Rising costs.
 The discovery of an expensive chemical compound that would increase the usefulness
of a drug.
 Increasing tenant move-outs from an apartment complex.
 Declining sales.
 A larger number of product defects during the manufacture of an automobile.
 An increasing number of letters and phone complaints about post purchase.
The management dilemma can also be triggered by an early signal of an opportunity or growing
evidence that a trend may be gaining staying power.
 Identifying management dilemmas is rarely difficult.
 Choosing one dilemma on which to focus may be difficult.
 Choosing incorrectly may result in a waste of time and resources.

Subsequent stages of the hierarchy take the decision maker and his/ her research assistant
through various brainstorming and exploratory research exercises to define the following:
 Management question—the management dilemma restated in question format.
Research question(s)—the hypothesis that best states the objective of the research; the
 question(s) that focuses the researcher’s attention.
 Investigative questions—questions the researcher must answer to satisfactorily answer
the research question; what the decision marker feels he/she needs to know to arrive at
a conclusion about the management dilemma.

 Management questions—the questions asked of the participants or the observations

that must be recorded.

 The definition of the management question sets the research task.

STAGE 2: PROPOSING RESEARCH

Resource Allocation and Budgets.
Once the research question is defined, the manager must propose research in order to allocate
resources to the project.

A guide might be that (a) project planning, (b) data gathering, and (c) analysis, interpretation, and
reporting each share about equally in the budget.

Without budgetary approval, many research efforts are rejected for lack of resources.
Types of budgets in organizations where research is purchased and cost containment is crucial
include:
 Rule-of-thumb budgeting—taking a fixed percentage of some criteria.
 Departmental or functional-area budgeting—allocates a portion of total expenditures
in the unit to research activities.

 Task budgeting—selects specific research projects to support on an ad hoc (unplanned)

basis.
Valuing Research Information.
There is a great deal of interplay between budgeting and value assessment in any management
 decision to conduct research.

In profit-making concerns, business managers are increasingly faced with proving that the
research they initiate or purchase meets return-on-investment (ROI) objectives.

 Whether research is conducted by for-profit or not-for-profit organizations, the value of the

research decision with research—however it is measured—must exceed the value of the decision
without research.

Evaluation Methods
Ex Post Facto Evaluation
If there is any measurement of the value of research, it is usually an after-the-fact event.
 While the post-research effort at cost-benefit comes too late to guide a current research decision,
such analysis may sharpen the manager’s ability to make judgments about future research
proposals.

Prior or Interim Evaluation

Some research projects are sufficiently unique that managerial experience provides little aid in
evaluating the research proposal.

Option Analysis
Managers can conduct a formal analysis with each alternative research project judged in terms of
estimated costs and associated benefits and with managerial judgment playing a major role.

The critical task is to quantify the benefits from the research.

The evaluation of alternatives requires that:
 Each alternative is explicitly stated.
 A decision variable is defined by an outcome that may be measured.
 A decision rule is determined by which outcomes may be compared.
The Research Proposal
A written proposal is often required when a study is being suggested.
 This is especially true if an outside research supplier will be contracted to conduct the
research.
 A research proposal may be oral.
 Research proposal contains: research question, research purpose, research methods,
research timing, research budget, legal contracts and legal obligations.
STAGE 3: DESIGNING THE RESEARCH PROJECT
Research Design
 The research design is the outline for fulfilling objectives and providing the insight to answer
management’s dilemma.

Sampling Design
Another step in planning the research project is to identify the target population (those people,
events, or records that have the desired information and can answer the measurement questions)
and then determine whether a sample or a census is desired.
 Who and how many people will be interviewed?
 What events will be observed, and how?
 Which, and how many, records will be inspected?
A census is a count of all elements in a population.

A sample is a group of cases, participants, events, or records constituting a portion of the target
population, carefully selected to represent that population.

Probability sampling (every person within the target population get a nonzero chance of selection)
and nonprobability sampling may be used to construct the sample.
Pilot testing
A pilot test is conducted to detect weaknesses in research methodology and the data collection
instrument, as well as provide proxy data for selection of a probability sample.
 The pilot test should approximate the anticipated actual research situation (test) as
closely as possible.
 A pilot test may have from 25 to 100 subjects and these subjects do not have to be
statistically selected.
Pilot testing has saved countless survey studies from disaster by using the suggestions of the
participants to identify and change confusing, awkward, or offensive questions and techniques.

The last step in a research design is often a pilot test.

 To condense the project time frame, this step can be skipped.
STAGE 4: DATA COLLECTION AND PREPARATION
The gathering of data includes a variety of data gathering alternatives.
 Questionnaires, standardized tests, and observational forms (called checklists) are
among the devices used to record raw data.

 What are data?

– Data can be the facts presented to the researcher from the study’s environment.
– Data can be characterized by their abstractness, verifiability, elusiveness, and
closeness to phenomenon.

 Data reflect their truthfulness by closeness to the phenomena.

– Secondary data are data originally collected to address a problem other than the
one which requires the manager’s attention at the moment. Collected from
published data.

– Primary data are data the researcher collects to address the specific problem at
hand—the research question. Created by the researcher through questionnaires
(observation method)

 Data are edited to ensure consistency across respondents and to locate omissions.
– In the case of a survey, editing reduces errors in the recording, improves legibility,
and clarifies unclear and inappropriate responses.

STAGE 5: DATA ANALYSIS AND INTERPRETATION

Managers need information and insights, not raw data, to make appropriate business decisions.
 Researchers generate information and insights by analyzing data after its collection.
 Data analysis is the editing, reducing, summarizing, looking for patterns, and applying
statistical techniques to data.

 Increasingly, managers are asking research specialists to make recommendations

based on their interpretation of the data.

STAGE 6: REPORTING THE RESULTS

As the business research process draws to a close it is necessary to prepare a report and transmit
the findings, insights, and recommendations to the manager for the intended purpose of decision
making.
 The researcher adjusts the style and organization of the report according to the target
audience, the occasion, and the purpose of the research.

– The report should be manager-friendly and avoid technical jargon.

– Reports should be developed from the manager’s or information user’s perspective.
  The researcher must accurately assess the manager’s needs throughout the research
process and incorporate this understanding into the final product, the research report.

 To avoid having the research report shelved with no action taken, the researcher should
strive for:
– Insightful adaptation of the information to the client’s needs.
– Careful choice of words in crafting interpretations, conclusions, and
recommendations.
 At a minimum, a research report should contain:
 An executive summary consisting of a synopsis of the problem, findings, and
recommendations.
 An overview of the research: the problem’s background, a summary of exploratory
findings drawn from secondary data sources, the actual research design and
procedures, and conclusions.

 A section on implementation strategies for the recommendations.

 A technical appendix with all the materials necessary to replicate the project.
Unsearchable Questions
Not all management questions are researchable, and not all research questions are answerable.
 To be researchable, a question must be one for which observable or other data
collection can provide the answer.

 Many questions cannot be answered on the basis of information alone.

