1. Business Research Methods William G. Zikmund
Chapter 3:
Theory Building

2. Scientific Method
The use of a set of prescribed procedures for establishing and connecting theoretical statements about events and for predicting events yet unknown.

3. Two Purposes Of Theory
Prediction
Understanding

4. Theory
A coherent set of general propositions used as principles of explanation of the apparent relationships of certain observed phenomena.

5. Concept (or Construct)
A generalized idea about a class of objects, attributes, occurrences, or processes that has been given a name.
Shared meanings developed over time (e.g., “leadership,” “productivity,” and “morale”).
Building blocks for theory development that abstract reality

6. A Ladder Of Abstraction For Concepts
Vegetation
Fruit
Increasingly more abstract
Banana
Reality

7. Scientific Business Researchers Operate at Two Levels
Abstract level
concept: generalized idea
propositions: relationships among concepts
Empirical level
variable: anything that may assume different numerical values
hypothesis: educated guess

8. Theory Building A Process Of Increasing Abstraction
Theories
Propositions
Increasingly more abstract
Concepts
Observation of objects
and events (reality )

9. Proposition at Abstract Level
Concept A
(Reinforcement)
Concept B
(Habits)
Hypothesis at Empirical Level
Variable A
Dollar bonus for
sales volume
over quota
Variable B
Always makes
four sales calls
a day

10. A hypothesis is a proposition that is empirically testable
A hypothesis is a proposition that is empirically testable. It is an empirical statement concerned with the relationship among variables.

11. Deductive Reasoning
The logical process of deriving a conclusion from a known premise or something 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.

12. Inductive Reasoning
The logical process of establishing a general proposition on the basis of observation of particular facts.
All managers that have ever been seen are human beings;
therefore all managers are human beings.

13. The Scientific Method: An Overview
Assess
relevant
existing
knowledge
Formulate
concepts &
Propositions
Statement of
Hypotheses
Design
research
Acquire
empirical
data
Analyze &
evaluate
data
Provide
explanation-
state new
problem