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Business Research Methods

William G. Zikmund

Chapter 3: Theory Building

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Theories
Theories are nets cast to catch what we call the world: to rationalize, to explain, and to master it. We endeavor to make the mesh ever finer and finer.
Karl R. Popper

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TWO PURPOSES OF THEORY


Prediction Understanding

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

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CONCEPT (OR CONSTRUCT)


A generalized idea about a class of objects, attributes, occurrences, or processes that has been given a name Building blocks that abstract reality leadership, productivity, and morale gross national product, asset, and inflation
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A LADDER OF ABSTRACTION FOR CONCEPTS


Increasingly more abstract
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Vegetation Fruit Banana Reality

Scientific business researchers operate at two levels


Abstract level
concepts propositions

Empirical level
variables hypotheses

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DEFINITIONS
Abstract level -In theory development, the level of knowledge expressing a concept that exists only as an idea or a quality apart from an object. Empirical level -Level of knowledge reflecting that which is verifiable by experience or observation.
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THEORY BUILDING A PROCESS OF INCREASING ABSTRACTION

Theories Propositions Concepts Observation of objects and events (reality )

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Increasingly more abstract

CONCEPTS ARE ABSTRACTIONS OF REALITY


Abstract Level CONCEPTS

Empirical Level

OBSERVATION OF OBJECTS AND EVENTS (REALITY)

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SCIENTIFIC METHOD
The use of a set of prescribed procedures for establishing and connecting theoretical statements about events and for predicting events yet unknown.

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ABSTRACT LEVEL
Concepts abstract reality. Propositions are statements concerned with the relationships among concepts.

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Proposition at abstract level


Concept A
(Reinforcement)

Concept B
(Habits)

Hypothesis at Empirical level

Dollar bonus for sales volume over quota

Always makes four sales calls a day


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A hypothesis is a proposition that is empirically testable. It is an empirical statement concerned with the relationship among variables. A variable is anything that may assume different numerical values.

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THEORY AND SONG


A fact without a theory Is like a ship without a sail, Is like a boat without a rudder, Is like a kite without a tail. A fact without a figure is a tragic final act, But one thing worse in this universe Is a theory without a fact.
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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.

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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.

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OVERVIEW OF THE SCIENTIFIC METHOD

Assess relevant existing knowledge

Formulate concepts & Propositions

Statement of Hypotheses

Design research

Acquire empirical data

Analyze & evaluate data

Provide explanationstate new problem


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