BusinessResearch Methods

Chapter 1: The Role of Business Research

Business research is defined as the systematic and objective process of generating information for aid in making business decisions.

Characteristics of Business Research:Critical, Systematic, Database, Objective, Organized, Scientific and Investigative

Business Research Defined

Definition of Business Research

It is an organized, systematic, data-based, critical, objective, scientific inquiry into a specific problem, undertaken with the purpose of finding answers or solutions to it.

Scope of Business Research

• Business Research is limited• But scope may be large as non-business

organization do need business skills• All research techniques are implemented in

business research

Business Research

• Research information is neither intuitive nor haphazardly gathered.

• Literally, research (re-search) -“search again” • Business research must be objective• Detached and impersonal rather than biased• It facilitates the managerial decision process

for all aspects of a business.

Information

Reduces

Uncertainty

I don’t knowif we

shouldoffer on-sitechild care?

Basic research

Applied research

Business Research Types

Basic Research

• Attempts to expand the limits of knowledge.• Not directly involved in the solution to a

pragmatic problem.

Basic Research Example

• Is executive success correlated with high need for achievement?

• Are members of highly cohesive work groups more satisfied than members of less cohesive work groups?

• Do consumers experience cognitive dissonance in low-involvement situations?

Applied Research

• Conducted when a decision must be made about a specific real-life problem

Applied Research Examples

• Should McDonalds add Italian pasta dinners to its menu?

• Business research told McDonald’s it should not?

• Should Procter & Gamble add a high-priced home teeth bleaching kit to its product line?

• Research showed Crest Whitestrips would sell well at a retail price of $44

Scientific Method

• The analysis and interpretation of empirical evidence (facts from observation or experimentation) to confirm or disprove prior conceptions.

Definition of Scientific Research

Scientific Research focusing on solving problems and pursues a step by step logical, organized and rigorous method to identify the problems, gather data, analyze them and draw valid conclusions there from.

Why Scientific Research?

• This research is not based on hunches, experience and intuition.

• It is purposive and rigorous.• Enables all those who are interested in

researching and knowing about the same or similar issues to come up with comparable findings when data are analyzed.

• Findings are accurate and confident. • Apply solutions to similar problems.• It is more objective.

Cont.

• Highlights the most critical factors at the work place that need specific attention to solve or minimize problems.

• Scientific Investigation and Managerial Decision Making are integral part of effective problem solving.

• It can be applied to both basic and applied research.

The characteristic of Scientific Research

1. Purposiveness2. Rigor3. Testability4. Replicability5. Precision and Confidence6. Objectivity7. Generalizability8. Parsimony

The hallmarks or main distinguishing characteristics of scientific research may be listed as follows:

Hallmarks of Scientific Research

1. Purposiveness– It has to start with a definite aim or purpose.– The focus is on increasing employee

commitment.– Increase employee commitment will

translate into less turnover, less absenteeism and increased performance levels.

– Thus it has a purposive focus.

2. Rigor (Thoroughness)

• A good theoretical base and sound methodological design would add rigor to the purposive study.

• Rigor adds carefulness and the degree of accuracy in research.

Example: A manager asks 10-12 employees how to increase the level

of commitment. If solely on the basis of their responses the manager reaches several conclusions on how employee commitment can be increases, the whole approach to the investigation would be unscientific. It would lack rigor for the following reasons:

1. Based on few employees2. Bias and incorrectness3. There might be other influences on commitment

which are ignored and are important for a researcher to know

Thus, Rigorous involves good theoretical base and thought out methodology.

• These factors enable the researcher to collect the right kind of information from an appropriate sample with the minimum degree of bias and facilitate suitable analysis of the data gathered.

• This supports the other six too.

3. Testability

The researcher might hypothesize that those employees who perceive greater opportunities for participation in decision making would have a higher level of commitment.

HypothesisStatistical tools to test the hypothesisAfter random selection manager and researcher develops certain

hypothesis on how manager employee commitment can be enhanced, then these can be tested by applying certain statistical tests to the data collected for the purpose.

4. ReplicabilityIt means that it can be used again if similar circumstances prevails.

Example: The study concludes that participation in decision

making is one of the most important factors that influences the commitment, we will place more faith and credence in these finding and apply in similar situations. To the extent that this does happen, we will gain confidence in the scientific nature of our research.

Precision– Precision refers to the closeness of the findings to

“reality” based on a sample.– It reflects the degree of accuracy and exactitude

of the results of the sample.Example: If a supervisor estimated the number of production days lost during the year due to absenteeism at between 30 and 40, as against the actual of 35, the precision of my estimation more favorably than if he has indicated that the loss of production days was somewhere between 20 and 50.

5. Precision and Confidence

Confidence– Confidence refers to the probability that our

estimations are correct. – That is, it is not merely enough to be precise,

but it is also important that we can confidently claim that 95% of the time our results would be true and there is only a 5% chance of our being wrong.

– This is also known as confidence level.

6. Objectivity

The conclusions drawn through the interpretation of the results of data analysis should be objective; that is, they should be based on the facts of the findings derived from actual data, and not on our subjective or emotional values.

Example: If we had a hypothesis that stated that greater participation in decision making will increase organizational commitment and this was not supported by the results, it makes no sense if the researcher continues to argue that increased opportunities for employee participation would still help!

7. GeneralizabilityIt refers to the scope of applicability of the research findings in one organization setting to other settings.

Example: If a researcher’s findings that participation in decision making enhances organizational commitment are found to be true in a variety of manufacturing, industrial and service organizations, and not merely in the particular organization studied by the researcher, then the generalizability of the findings to other organizational settings in enhanced. The more generalizable the research, the greater its usefulness and value.

8. ParsimonySimplicity in explaining the phenomenon or problems that occur, and in generating solutions for the problems, is always preferred to complex research frameworks that consider an unmanageable number of factors.

For instance, if 2-3 specific variables in the work situation are identified, which when changed would raise the organizational commitment of the employees by 45%, that would be more useful be more useful and valuable to the manager than if it were recommended that he should change 10 different variables to increase organizational commitment by 48%.

The Hypothetico-Deductive Method

Observation

–Observation is the first stage, in which one senses that certain changes are occurring or that some new behaviors, attitudes and feelings are surfacing in one’s environment (i.e., the work place).

–How does one observe phenomena and changes in the environment?

Preliminary Information Gathering:

– It involves the seeking of information in depth, of what is observed.

– This could be done by talking informally to several people in the work setting or to clients or to other relevant sources, thereby gathering information on what is happening and why. (Unstructured interviews)

– Then it is followed by structured interviews.– Additionally by doing library research or obtaining

information through other sources, the investigator would identify how such issues have been tackled in other situations.

Theory Formulation– It is an attempt to integrate all the information

in a logical manners, so that the factors responsible for the problem can be on conceptualized and tested.

– The theoretical framework formulated is often guided by experience and intuition.

– In this step the critical variables are identified and examined as to their contribution or influence in explaining why the problem occurs and how it can be solved.

Hypothesizing – It is the next logical step after theory formulation.– From the theorized network of associations

among the variables, certain testable hypotheses or educated conjectures can be generated.

– Hypothesis testing is called deductive research. Sometimes, hypotheses that were not originally formulated do get generated through the process of induction.

Further Specific Data Collection

–After the development of the hypotheses, data with respect to each variable in the hypotheses need to be obtained.

–Further data are collected to test the hypotheses that are generated in the study.

Data Analysis

–Data gathered are statistically analyzed to see if the hypotheses that were generated have been supported.

–Co relational method will be used to analyze and determine the relation ship of two or more factors in the hypotheses for example: stock availability and customer satisfaction.

The Building Blocks of Science in Research

Deduction and InductionsAnswers to issues can be found either by the process of induction or the process of deduction, or by a combination of the two.

Deduction• Deduction is the process by which we arrive at a

reasoned conclusion by logical generalization of a known fact.

Example: we know that all high performers are highly proficient in their jobs. If John is a high performer, we then conclude that he is highly proficient in his job

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.

The Decision-making Process Associated with the Development and Implementation of a Strategy

• Identifying problems and opportunities• Diagnosis and assessment• Selecting and implementing a course of action• Evaluating the course of action

Evaluation Research

• Evaluation research is the formal, objective measurement and appraisal of the extent to which a given activity, project, or program has achieved its objectives.

Performance-monitoring Research

• Research that regularly provides feedback for evaluation and control

• Indicates things are or are not going as planned

• Research may be required to explain why something “went wrong”

Determining When to Conduct Business Research

• Time constraints• Availability of data• Nature of the decision• Benefits versus costs

Is sufficient time available before

a managerial decision

must be made?

Is the infor-mation already

on handinadequate for making

the decision?

Is the decision of considerable

strategicor tactical

importance?

Does the value of the research

informationexceed the cost of conducting

research?

ConductingBusinessResearch

Do Not Conduct Business Research

Time ConstraintsAvailability of

Data Nature of the DecisionBenefits vs. Costs

Yes YesYesYes

No No No No

Determining When to Conduct Business Research

Value versus Costs

• Potential Value of a Business Research Effort Should Exceed Its Estimated Costs

Value• Decreased

uncertainty• Increased likelihood

of a correct decision

• Improved business performance and resulting higher profits

Costs• Research

expenditures• Delay of business

decision and possible disclosure of information to rivals

• Possible erroneous research results

Value Should Exceed Estimated Costs

Major Topics for Research in Business

• General Business Conditions and Corporate Research• Financial and Accounting Research• Management and Organizational Behavior Research• Sales and Marketing Research• Information Systems Research• Corporate Responsibility Research

Business Research in the 21st Century

• Increased globalization• Growth of the Internet and other information

technologies

Global Business Research• General information about country - economic

conditions and political climate• Cultural and consumer factors• Market and competitive conditions - demand

estimation

The Internet Is Transforming Society

• Time is collapsing. • Distance is no longer an obstacle. • Crossing oceans is only a mouse click away. • People are connected 24 hours a day, seven

days a week. • "Instantaneous" has a new meaning.

Internet Research

• Seeking facts and figures about an issue • Surveys on Web sites

Internal Consultants/Researcher

• Advantages:– Better chance of being accepted by the employee– Team needs less time to understand the structure, culture and

practices of the organization– Team is always available even when the research results are

implemented– Low cost

• Disadvantages– Stereotyping– Powerful coalition may influence the team– May not be considered as experts by management/employees– Management biasness make teams work less objective

External Consultants/Researchers• Advantages

– Wide range of experience– Extensive Problem Solving Experience– Equipped with latest practices and methodologies in research

because of continuous trainings and studies• Disadvantages

– High cost– More time to understand the organization– May charge additional fee for assisting in

implementation and evaluation phase