Business

Research Methods

Chapter 1:
The Role of Business Research

Business Research Defined

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

Definition of Business Research

It is an organized, systematic, databased, 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 nonbusiness 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.

Informatio
n
Reduces
Uncertaint
y

I dont know
if we
should
offer on-site
child care?

Business Research Types

Basic research
Applied research

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 McDonalds it
should not?
Should Procter & Gamble add a highpriced 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

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

The hallmarks or main distinguishing

characteristics of scientific research may be
listed as follows:
1.
2.
3.
4.
5.

Purposiveness
Rigor
Testability
Replicability
Precision and
Confidence
6. Objectivity
7. Generalizability
8. Parsimony

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

1. Based on few employees

2. Bias and incorrectness
3. 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
Hypothesis
Statistical tools to test the hypothesis
After 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.

The researcher might hypothesize

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

4.

Replicability
It 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.

5. Precision

and Confidence

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

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

7. Generalizability
It refers to the scope of applicability of
the research findings in one organization
setting to other settings.
Example: If a researchers 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. Parsimony
Simplicity 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 ones
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

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

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
Inductions
Answers to issues can be
found either by the
process of induction or
the process of
deduction, or by a

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

Determining When to Conduct

Business Research
Availability of
Benefits
Time Constraints
Data Nature of the Decision vs. Costs
Is sufficient time
available before
a managerial
decision
must be made?

No

Yes

Is the information already

on hand
inadequate
for making
the decision?

No

Yes

Is the decision
Yes
of considerable
strategic
or tactical
importance?

Does the value

of the research Yes
information
exceed the cost
of conducting
research?

No

Do Not Conduct Business Research

No

Conducting
Business
Research

Value versus Costs

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

Value Should Exceed

Estimated Costs
Costs
Value
Decreased
uncertainty
Increased likelihood
of a correct
decision
Improved business
performance and
resulting higher
profits

Research
expenditures
Delay of business
decision and
possible
disclosure of
information to
rivals
Possible erroneous
research results

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