business research methods chapter 3. theory … business research methods chapter 3. theory building...

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Business Research Methods

Chapter 3. Theory Building

Dr. Werner R. Murhadihttp://www.wernermurhadi.wordpress.com/

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After studying this chapter, you should be able to

1. Define the meaning of theory

2. Understand the goals of theory

3. Understand the terms concepts, propositions,variables, and hypotheses

4. Understand the scientific method



Theory

• Students sometimes think their classes or coursematerial are “too theoretical” or lacking “practicalapplication.”

• Theories are simply generalizations that help usbetter understand reality. If a theory does nothold true in practice, then that theory holds novalue.

• A theory is a formal, testable explanation ofsome events that includes explanations ofhow things relate to one another.



Two Purposes Of Theory

• Understanding, to gain an understandingof the relationship among variousphenomena.

• Prediction, a theory enables us to predictthe behavior or characteristics of onephenomenon from the knowledge ofanother phenomenon.



Concept (or Construct)

• A generalized idea about a class ofobjects, attributes, occurrences, orprocesses that has been given a name

• Concept are abstraction of reality• “leadership,” “productivity,” and “morale”• “asset” and “inflation”



VegetationVegetation

FruitFruit

BananaBanana

RealityRealityIncreasinglymoreabstract

A Ladder Of AbstractionFor Concepts

AssetAsset

Plant MachineryPlant Machinery

Punch PressPunch Press

RealityReality



CONCEPTSCONCEPTS

OBSERVATION OF OBJECTSAND EVENTS (REALITY)

EmpiricalLevel

AbstractLevel

Concepts are Abstractions of Reality



Scientific Business ResearchersOperate at Two Levels

• Abstract level– concepts– Propositions (are statements concerned with the

relationships among concepts. A proposition explains thelogical linkage among certain concepts by asserting auniversal connection between concepts, but is quitegeneral and not really testable)

• Empirical level– variables– hypotheses



Definitions

• Abstract level -In theory development, thelevel of knowledge expressing a conceptthat exists only as an idea or a qualityapart from an object.

• Empirical level -Level of knowledgereflecting that which is verifiable byexperience or observation.



Abstract Level

• Concepts abstract reality.• Propositions are statements concerned

with the relationships among concepts.



Always makesfour sales calls

a day

Dollar bonus forsales volume

over quota

Concept B(Habits)

Hypothesis at Empirical Level

Concept A(Reinforcement)

Proposition at Abstract Level



• A hypothesis is a proposition that isempirically testable. It is an empiricalstatement concerned with the relationshipamong variables.

• A variable is anything that may assumedifferent numerical values.



Theory Building A Process OfIncreasing Abstraction

TheoriesTheories

PropositionsPropositions

ConceptsConcepts

Observation of objectsObservation of objectsand events (reality )and events (reality ) Inc

reasinglymoreabstract

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Deductive Reasoning

• The logical process of deriving aconclusion from a known premise orsomething 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. D

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Inductive Reasoning

• The logical process of establishing ageneral proposition on the basis ofobservation of particular facts.– All managers that have ever been seen are

human beings;– therefore all managers are human beings.

I



Scientific Method

The use of a set of prescribed proceduresfor establishing and connecting theoreticalstatements about events and for predictingevents yet unknown.



AssessAssessrelevantrelevantexistingexistingknowledgeknowledge

FormulateFormulateconcepts &concepts &PropositionsPropositions

StatementStatementofofHypothesesHypotheses

DesignDesignresearchresearch

AcquireAcquireempiricalempiricaldatadata

Analyze &Analyze &evaluateevaluatedatadata

ProvideProvideexplanationexplanation--state newstate newproblemproblem

The Scientific Method:An Overview



Theory and Poems

A fact without a theoryIs like a ship without a sail,Is like a boat without a rudder,Is like a kite without a tail.A fact without a figure is a tragic final act,But one thing worse in this universeIs a theory without a fact.



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