1. THEORETICAL FRAMEWORK and Hypothesis Development
Business Research Methods
MGMT 381

2. Theory
An interrelated set of statements of relationships whose purpose is to explain or predict
Device for interpreting, criticizing established laws, modifying them, guiding to discovery of new theories/generalizations
Purpose of theory: to a) explain or b) predict of occurrences of certain phenomena and to c) highlight the important concepts and relationships in a problem situation

3. How are theories generated?
Deductive reasoning (conclusion derives from something known to be true) 1.Identify problem Define purpose
3.Develop research questions Conduct review of literature Develop hypotheses
6. Determine measures
7. Collect data
8. Analyze data
9. Interpret data

4. How are theories generated?
Science is accomplished by deduction

5. How are theories generated?
Inductive reasoning (conclusion derives on the basis of observation of phenomena or facts)
We observe cars on a street and note that 10 cars in a raw are white. But this does not mean 11th car will be white
Why does this happen? Develop hypothesis. Test hypothesis.

6. Where do original ideas come from?
Intensive case study investigation
Rules of thumb
Hypotheses testing

7. Good Theory Guides the study Limits what the study wants to achieve
Suggests the most appropriate research design
Provides a framework for the study

8. Theoretical Framework
A conceptual framework of how a researcher theorizes the relationships among different phenomena and explains these phenomena and why they are associated with each other
Identifies several factors and variables that are important to the problem at hand

9. Theoretical Framework
It is a logically developed, described and elaborated network of associations among variables identified through interviews, observations and literature review

10. Theoretical Framework
Identifies the relationships among the variables considered important to the study of a problem
Explains the theory underlying these relationships, describes the nature and direction of these relationships
Foundation of the entire research project

11. The process of building theoretical framework
Introducing definitions of the concepts examined or variables
Developing a conceptual model that provides a descriptive representation of the theory developed
Introducing a theory that provides an explanation of relationships between the variables in the model

12. Components of the Theoretical Framework
Variables relevant to the study
Relationships among variables
Nature and direction of the relationship based on previous research. Positive ? Negative?
Explanation of why we would expect these relationships to exist
A schematic diagram of the theoretical framework to visualize the theorized relationships (visual model)

13. Main types of variables
A variable is anything that can take on differing or varying values
Dependent (criterion) (DV)
Independent (predictor) (IV)
Moderating or explanatory - has a strong influence on the IV-DV relationship, modifies this relationship
Intervening or mediating- temporarily influences the DV and IV relationship
Extraneous

14. The relationships between independent and dependent variables
Cultural Values
Behavior IV DV
Number of Books
Reading Ability IV DV

15. The relationships between IV, DV and moderating variables
Number of Books
Reading Ability DV
Parents’ Literacy
Moderating variable

16. The relationships between IV, DV and moderating variables
Quality of
Products
Purchases IV DV
Consumers’ Needs
Moderating variable

17. The relationships between IV, DV, intervening and moderating variables
Intervening variable
Quality of
Products
Purchases
WEATHER IV DV
Consumers’ Needs
Moderating variable

18. Model Formalized (visual) representation of a theoretical framework
Designed through the use of symbols or physical analogues
Represents theory so that theory can be tested, examined and analyzed
Simplified versions of phenomena under study

19. Example of a Model Cost Competitor’s price Price Setting Target profitIV
Competitor’s price IV
Price Setting DV
Target profit IV
Target market IV

20. Example of a Model Instructor Student Effort Student Performance
IVs IV
Instructor DV
Student Effort MV IV
Student Performance
Technology
Study
Time IV
Student Abilities IV

21. Propositions and Hypotheses
Statements about concepts which may be judged as true or false if it refers to observable phenomena
When a proposition is formulated for empirical testing it is called a hypothesis
A concrete statement of an abstract relationship described in a theory (e.g. sales and economic hardship are related)
Relational (relationships between two or more variables)
Explanatory or causal (one concept explains or causes the other one)

22. Hypotheses Guide the direction of the study Limit what we study
Suggest the most appropriate research design
Provide a framework to organize the conclusions
Play an important role in the development of theory
Can be developed from the theoretical framework

23. Definition of Hypothesis
A hypothesis is an educated guess about a problem’s solution
Example: If the pilots are given adequate training to handle a plane, air safety violations will be reduced

24. Directional Hypotheses
If in stating the relationships between two variables or comparing two groups terms, such as ‘positive’, ‘negative’, ‘more than’, ‘less than’ and ‘the like’ are used then these hypotheses are directional.
Examples:
Employees who are more healthy take sick leave less frequently
The greater the stress on the job, the lower the job satisfaction

25. Non-directional Hypotheses
If there is no indication of the direction of the relationships or differences then these hypotheses are non-directional
Examples: There is a relationships between age and job satisfaction There is a difference between the work ethic values of American and Asian employees.

26. Null Hypothesis
Null Hypothesis (Ho)–the statement expressed as no (significant) relationships between the 2 variables or no (significant) differences between 2 groups exist
Null hypothesis is set up to be rejected in order to support an alternative hypothesis

27. Alternative Hypothesis
Alternative Hypothesis (H1) –is the opposite of the null: statement expressing a relationship between 2 variables or indicating differences between 2 groups
Ho is rejected if the results do not meet the p<0.05 level of significance

28. Examples of Hypotheses
Null Hypothesis: There is no relationship between stress experienced on the job and the job satisfaction of employees.
Alternative Hypothesis: There is a relationships between stress experienced on the job and the job satisfaction of employees.

29. Why do we develop hypotheses?
Suggest variables to be included in the research design
Provide possible answers to the research questions
Allow researchers to speculate about possible research question answers
Example: Housing sales decrease because the level of competition is extremely high
Imply problem (decreased housing sales)

30. How to develop hypotheses?
Depends on information available:
1) Information from previous research
2) Information from economics, marketing, social, psychological impacts of pricing on…, etc.
3) Manager’s experience with a problem

31. When developing hypotheses
Need to look at three elements: a) Research question(s) b) Hypothesis c) Boundaries of study
Example: Research question: “Will our TV ad attract clients? Hypothesis: “Yes, it will attract”
Example: Boundaries limit the research process, e g. research is limited to only female and male, a specific geographical region, a certain product.
Boundaries depend on the research purpose and influence the value of the answer.