3

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Theory Building

Business Research Methods 9eZikmundBabinCarrGriffin

Chapter 3Theory Building

LEARNINGOUTCOMESLEARNINGOUTCOMES

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1. Define the meaning of theory

2. Understand the goals of theory

3. Understand the terms concepts, propositions, variables, and hypotheses

4. Discuss how theories are developed

5. Understand the scientific method

3-2

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Theory and Practice

3-3

• What if the lights didn’t come on when you flipped the switch?

• You would seek a logical explanation.

• Past experience would guide your thoughts.

• Attribution theory is one framework that helps explain the world.

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What is a Theory?• Theory

• A formal, logical explanation of some events that includes predictions or how things relate to one another.

• Goals of Theory• Understanding• Predicting

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Research Concepts• Concept (or construct)

• A generalized idea about a class of objects, attributes, occurrences or process that has been given a name.◗ Examples:

leadershipmoralegross domestic productassetscustomer satisfactionmarket share

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Social Network Theory

3-6

• Researchers have developed theories about the links and structures of social networks, complete with constructs and propositions about how linkages are formed and the social capital they yield.

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• Ladder of Abstraction• Organization of concepts in sequence from the most concrete and

individual to the most general.

• Abstract Level• The level of knowledge expressing a concept that exists only as an

idea or a quality apart from an object.

• Empirical Level• The level of knowledge that is verifiable by experience or

observation.

• Latent Construct• A concept that is not directly observable or measurable, but can

be estimated through proxy measures.

Ladder of Abstraction

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EXHIBIT 3.1 A Ladder of Abstraction for Concepts

3–8

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EXHIBIT 3.2 Concepts are Abstractions of Reality

3–9

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Research Propositions and Hypotheses

• Propositions• Statements explaining the logical linkage

among certain concepts by asserting a universal connection between concepts.◗ Example: Treating employees better will make

them more loyal employees.

• Hypothesis• Formal statement of an unproven proposition

that is empirically testable.◗ Example: Giving employees one Friday off each

month will result in lower employee turnover.

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Empirical Testing• Empirical Testing

• Examining a research hypothesis against reality using data.

• Variables• Anything that may assume different numerical

values.• The empirical assessment of a concept.

• Operationalizing• The process of identifying the actual

measurement scales to asses the variables of interest.

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EXHIBIT 3.3 Hypotheses Are the Empirical Counterparts of Propositions

3–12

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EXHIBIT 3.4 A Basic Theory Explaining Voluntary Job Turnover

3–13

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Theory Building• Deductive Reasoning

• The logical process of deriving a conclusion about a specific instance based on a known general premise or something known to be true.

• Inductive Reasoning• The logical process of establishing a general

proposition on the basis of observation of particular facts.

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The Scientific Method

• Scientific Method• A set of prescribed

procedures for establishing and connecting theoretical statements about events, for analyzing empirical evidence, and for predicting events yet unknown.

• Techniques or procedures used to analyze empirical evidence in an attempt to confirm or disprove prior conceptions.

• Suggested steps:1. Assess relevant existing

knowledge of phenomenon2. Formulate concepts and

propositions3. State hypotheses4. Design research to test the

hypotheses5. Acquire empirical data6. Analyze and evaluate data7. Propose an explanation of

the phenomenon and state new problems raised by the research