1. The Business Research Process: An Overview
Research Methods in Management
The Business Research Process: An Overview
Causality in research

2. Causal Research
Research conducted to identify cause and effect relationships (inferences).
Cause
Effect

3. Causal Research
Cause 1
Problem
Cause 2
Cause 3

4. (Unidirectional relationship) A B
(1)
A causes B
(Unidirectional relationship) A B
(2)
B causes A
 (Unidirectional relationship) A B
(3)
A and B cause each other
(Bidirectional relationship) A B
(4)
A and B just correlate
(The direction of causality cannot be implied) A B

5. Reverse causation
Reverse causality means that the direction of causality between two factors may be opposite from what we expect OR

6. Having money allows people to gain access to better healthcare service
Reverse causation
Example: Considered the relationship between “Income” and “Health”
..which one is the cause? ..which one is the effect?
Having money allows people to gain access to better healthcare service
Income
Health
Having good health allows people to be more productive to earn more money

7. Companies need loan to grow their business
Reverse causation
Example: Considered the relationship between
“the amount of bank loan” and “business growth”
..which one is the cause? ..which one is the effect?
Companies need loan to grow their business
Loan amount
Business growth
As business is growing, companies can obtain higher amount of loan from the bank

8. Job satisfaction makes employees have better job performance
Reverse causation
Job satisfaction
Job performance
Job satisfaction makes employees have better job performance
Job satisfaction
Job performance
Having good job performance will make an employee satisfied more with a job

9. Reverse causation Job satisfaction Job performance
Reverse causality makes it difficult for researchers to infer the direction of causality between job satisfaction and job performance

10. Evidence of causality Temporal sequence Concomitant variation
Nonspurious association

11. Evidence of causality
Temporal sequence—the appropriate causal order of events.
Cause
Effect
Happened at Time t
(e.g. year 2000)
Happened at Time t+1
(e.g. year 2001)
Cause
Effect
Happened at Time t-1
(e.g. year 2001)
Happened at Time t
(e.g. year 2000)

12. Evidence of causality
Concomitant variation—two phenomena vary together.
Occur when two events “covary” or “correlate”

13. Evidence of causality
Nonspurious association—an absence of alternative plausible explanations.
For example:
There is a positive relationship between “ice cream sales” and “murder cases”.
When ice cream sales increase, murder cases increase.
When ice cream sales drop, murder cases reduce.

14. EXHIBIT 4.2 The Spurious Effect of Ice Cream

15. Association does not imply causation
a correlation between two variables does not necessarily imply that one causes the other.

16. Different types of effect
Main effect
Moderating (interacting) effect
Mediating effect

17. Main Effect
The influence of a single independent variable on a dependent variable.
Independent
Variable (X)
Dependent
Variable (Y)
Main effect

18. Moderating effect Moderating effect
The effect of the independent variable (cause) on the dependent variable (effect) is contingent on the third factor which can either enhance or suppress the effect.
The third factor that influences the relationship is called a “moderator”.

19. Interaction (Moderating) effect
Moderator
Moderating effect
Independent
Variable (X)
Dependent
Variable (Y)
Main effect

20. Number of training sessions
Moderating effect
Does a training program increase sale performance?
Number of training sessions
Sale performance

21. Moderating effect
Young employees
Old employees

22. Moderating effect
Young employees
Old employees

23. Interaction (Moderating) effect
Age of employee “moderates” the effect of training program on sale performance.
Only “young employees” who “received more training” tend to have higher sale performance
Age of employee
Number of training sessions
Sale performance

24. Does using social media at work affect job performance?
Social media use at work
Job performance

26. Social media use at work
Do employees who have higher job stress benefit more from using social media during work than employees who have lower job stress?
Job demands
Social media use at work
Job performance

28. Access from PC or Mobile gadgets Social media use at work
Do employees who access to social media from PC benefit from using social media during work more than employees who access from mobile gadgets?
Access from PC or Mobile gadgets
Social media use at work
Job performance

30. Social media is prohibited at work Social media use at work
Do employees who work for a firm that allow social media at work obtain more benefit than employee who work for a firm that prohibit social media at work?
Social media is prohibited at work
Social media use at work
Job performance

32. Access from PC or Mobile gadgets Social media is prohibited at work
Social media use at work
Job performance
Job demands

33. Mediating effect X does not influence Y directly.
But it can influence Y indirectly through a third variable called a “Mediator”
M mediates the relationship between X and Y
Mediator
Independent
Variable (X)
Dependent
Variable (Y)

34. Mediating effect Full mediation
occurs when the direct relationship between the independent variable and the dependent variable disappear when the mediator is included.
Partial mediation
occurs when the direct relationship between the independent variable and the dependent variable is still strong even when the mediator is included.

35. Full mediation Strong Strong relationship relationship
Mediator
Strong
relationship
Strong
relationship
Independent
Variable (X)
Dependent
Variable (Y)
Weak relationship
or no relationship
Full mediation

36. Partial mediation Strong Strong relationship relationship
Mediator
Strong
relationship
Strong
relationship
Independent
Variable (X)
Dependent
Variable (Y)
Strong relationship
Partial mediation

37. Example of mediating effect 1
The level of knowledge does not directly explain career success
Level of knowledge
Career success
Positive but weak

38. Example of mediating effect 1
Conclusion: Ability to apply knowledge is the mechanism that explains why
a person with high level of knowledge can be successful in their career.
Ability to apply knowledge
Level of knowledge
Career success
Positive but weak
Ability to apply knowledge “fully mediates”
the link between Level of knowledge and Career success

39. Example of mediating effect 2
Perceived product quality
Buying decision
Positive and strong

40. Example of mediating effect 2
Conclusion: Perceived product quality can influence buying decision directly
and indirectly through product satisfaction
Product satisfaction
Perceived product quality
Buying decision
Positive and strong
Product satisfaction “partially mediates”
the link between Perceived product quality and buying decision