BHMS4479 Business

Research Methods
Topic 5
Theoretical Framework and Hypothesis
Development
 Learning Objectives
After completing this topic, you should understand

 Language of research

 Nature and types of variables

 Nature of hypothesis and hypothesis development

 Theoretical framework in the research process

 Relation between literature review and theoretical

framework, and components of theoretical
framework
 Readings

Sekaran & Bougie (2016)

Ch. 5

Cooper & Schindler (2019)

Ch. 3, 4
 Language of Research
 Research proposals / reports are
written in language with
meanings more than daily life
understanding in order to
communicate ideas amongst
researchers in an efficient way.
 The terms in the following slide

are well discussed in Cooper &

Schindler (2019) Ch. 3
 Language of Research
 Concepts
 Constructs
 Definitions / Operational
Definitions
 Variables
 Hypotheses
 Theories
 Models
 Language of Research
 Concepts
◦ Generally accepted collection of meanings or
characteristics associated with certain events,
objects, conditions, situations, and behavior.

 Constructs
◦ An image or abstract idea specifically
invented for a given research and/or theory-
building purpose.
 Language of Research
 Definitions

◦ An (operational) definition is a definition stated in

terms of specific criteria for testing or measurement.
These terms must refer to empirical standards (i.e. we
must be able to count, measure, or in some other way
gather the information through our senses)
◦ To provide an understanding and measurement of
concepts

 Variables(discussed more in detail in

subsequent slides)

 Hypotheses (discussed more in detail in

subsequent slides)
 Language of Research
 Theories
◦ A theory is a set of systematically
interrelated concepts, definitions, and
propositions that are advanced to explain
and predict phenomena (facts).

 Models
◦ A model is a representation of a system that is
constructed to study some aspect of that system or
the system as a whole.
◦ Models are developed through the use of inductive
and deductive reasoning and important to advance
theories and aiding decision making.
 Concepts & Theories
The success of research hinges on:
 how clearly we conceptualize
 how well others understand the concepts we

use

Theories
 Narrows the range of facts we need to study
◦ Literature review is performed
 Suggests which research approaches will yield the
greatest meaning
 Suggests a data classification system
 Summarizes what is known about an object of study
 Predicts further facts that should be found
A Variable: Property Being Studied

Event Act

Variable
Variable

Characteristic Trait

Attribute

3-10
 Variables
 Any concept or construct that varies or changes
in value. The values can differ at various times for
the same object or person, or at the same time
for different objects or persons

 Main types of variables:

◦ Dichotomous / discrete / continuous
◦ Dependent variable (criterion variable)
◦ Independent variable (predictor variable)
◦ Moderating variable
◦ Mediating variable
 Types of Variables

Male/Female
Dichotomous
Dichotomous
Male/Female
Employed/
Employed/Unemployed
Unemployed

Ethnic
Ethnicbackground
background
Discrete
Discrete Educational
Educationallevel
level
Religious
Religiousaffiliation
affiliation

Income
Income
Continuous
Continuous
Temperature
Temperature
Age
Age

3-12
Independent and Dependent Variable
Synonyms

Independent Dependent Variable

Variable (IV) (DV)
 Predictor  Criterion

 Presumed cause  Presumed effect

 Stimulus  Response

 Predicted from…  Predicted to….

 Antecedent  Consequence

 Manipulated  Measured

outcome
3-13
 Dependent Variables
Dependent variable (DV)
 Is of primary interest to the researcher. The
goal of the research project is to
understand, predict or explain the
variability of this variable.
 Through the analysis of the dependent
variable (i.e. finding what variables
influence it), it is possible to find answers
or solutions to a problem.
 The researcher will be interested in
quantifying and measuring the dependent
variable, as well as the other variables that
influence this variable.
 Independent Variables
Independent variable (IV)
◦ Influences the DV in either positive or
negative way. The variance in the DV is
accounted for by the IV.
◦ That is, when the independent variable
is present, the dependent variable is
also present, and with each unit of
increase in the independent variable,
there is an increase or decrease in the
dependent variable.
 Examples of IV & DV
Try to identify with reason the IV and DV in
the following statements:

 An investor believes that more

information increases the accuracy of his
forecasts in stock price.

 A marketing manager believes that

selecting physically attractive
spokespersons and models to endorse
their products increases the
persuasiveness of a message.
Casual Relation between
Independent & Dependent
Variables
ALL Four conditions must be met:

1. The independent and the dependent

variable should covary
2. The independent variable (the presumed
casual factor) should precede the
dependent variable
3. No other factor should be a possible cause
of the change in the dependent variable
4. A logical explanation (a theory) is needed
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 Moderating Variables
Moderating variable
 The moderating variable is one that
has a strong contingent effect on the
independent-dependent variable
relationship.
 The presence of the moderating
variable modifies the original
relationship between the independent
and dependent variables.
Example – Independent, Dependent
& Moderating Variables
It has been found that there is a relationship between the
availability of reference manuals that manufacturing employees
have access to and the product rejects. That is, when workers
follow the procedures laid down in the manual, they are able to
manufacture products that are flawless. This relationship is
illustrated in Figure 5.3(a). Although this relationship can be said to
hold true generally for all workers, it is nevertheless contingent on
the inclination or urge of the employees to look in the manual every
time a new procedure is to be adopted. In other words, only those
who have the interest and urge to refer to the manual every time a
new process is adopted will produce flawless products. Others who
do not consult the manual will not benefit and will continue to
produce defective products. This influence of the attributes of the
worker on the relationship between the independent and the
dependent variables can be illustrated as shown in Figure 5.3(b).
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Example - Figure 5.3(a)

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Example - Figure 5.3(b)

 Moderating variable
◦ Moderator is qualitative (e.g., gender, race, class)
or quantitative (e.g., level of reward) variable that
affects the direction and/or strength of relation
between independent and dependent variable.

 Example

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 Mediating Variable

Mediating (intervening) variable

 Surfaces between the time the independent variables
start operating to influence the dependent variable
and the time their impact is felt on it.

 The mediating variable surfaces as a function of the

independent variable(s) operating in any situation,
and helps to conceptualize and explain the influence
of the independent variable(s) on the dependent
variable.
Example – Mediating Variable
Where the independent variable (workforce diversity) influences
the dependent variable (organizational effectiveness), the
mediating variable that surfaces as a function of the diversity in
the workforce is “creative synergy.” This creative synergy results
from a multiethnic, multiracial, and multinational (i.e., diverse)
workforce interacting and bringing together their multifaceted
expertise in problem solving. This helps us to understand how
organizational effectiveness can result from having diversity in the
workforce. Note that creative synergy, the mediating variable,
surfaces at time t2, as a function of workforce diversity, which was
in place at time t1, to bring about organizational effectiveness in
time t3. The mediating variable of creative synergy helps us to
conceptualize and understand how workforce diversity brings
about organizational effectiveness. The relationship among the
independent, mediating, and dependent variables are shown in the
next slide.
Mediating Variable
 Hypothesis

Proposition
 A proposition is a statement about
observable phenomena (concepts) that may
be judged as true or false.
 Examples
All animals have four legs.

Women are more motivated than men

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 Hypothesis
Hypotheses
 When a proposition is formulated for
empirical testing, it is a hypothesis. A
hypothesis is a tentative, yet testable,
statement which predicts what you expect to
find in your empirical data.
 Hypotheses are derived from the theory on
which your conceptual model is based and
are often relational in nature.
 Hypotheses are logically conjectured
relationships between two or more variables
expressed in the form of testable
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 Hypothesis
Role of hypothesis in research study:
 It guides the direction of the study.
 It identifies facts that are relevant and those
that are not.
 It suggests which form of research design is
likely to be most appropriate.
 It provides a framework for organizing the
conclusions that result.
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 Hypothesis
 Strong hypothesis:
◦ Must be adequate for its purpose
◦ Must be testable
◦ Must be better than its rivals

 Can be:
◦ Directional
◦ Non-directional

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Hypothesis
Statement of Hypothesis

Formats
Either in the form of Propositions OR If-then statements

Example:
Proposition
Young women will be more likely to express
dissatisfaction with their body weight, when they are
more frequently exposed to images of thin models in
advertisements.

If – then statement
If young women are more frequently exposed to
images of thin models in advertisements, then they
will be more likely to express dissatisfaction with
their body weight.
 Directional Hypotheses
If, in stating the relationship between two variables or
comparing two groups, terms such as positive,
negative, more than, less than, and the like are used,
then these are directional hypotheses because the
direction of the relationship between the variables
(positive/negative) is indicated, as in the first example
below, or the nature of the difference between two
groups on a variable (more than/less than) is
postulated, as in the second example
First example
The greater the stress experienced in the job, the lower
the job satisfaction of employees
Second example
Women are more motivated than men
Nondirectional Hypotheses
Nondirectional hypotheses are those that do postulate a
relationship or difference, but offer no indication of the
direction of these relationships or differences. In other
words, though it may be conjectured that there is a
significant relationship between two variables, we may not
be able to say whether the relationship is positive or
negative, as in the first example below. Likewise, even if we
can conjecture that there will be differences between two
groups on a particular variable, we may not be able to say
which group will be more and which less on that variable, as
in the second example.
First example
There is a relation between arousal-seeking tendency and
consumer preferences for complex product designs
Second example
There is a difference between the work ethics values of
American and Asian employees
Null & Alternate Hypotheses
 The hypothetico-deductive method requires
that hypotheses are falsifiable: they must be
written in such a way that other researchers
can show them to be false. For this reason,
hypotheses are sometimes accompanied by
null hypotheses.
 A null hypothesis (H0) is a hypothesis set up

to be rejected in order to support an alternate

hypothesis, labeled HA.
 When used, the null hypothesis is presumed

true until statistical evidence, in the form of a

hypothesis test, indicates otherwise.
Null & Alternate Hypotheses

 Typically, the null statement is expressed in

terms of there being no (significant)
relationship between two variables or no
(significant) difference between two groups.

 The alternate hypothesis, which is the

opposite of the null, is a statement
expressing a relationship between two
variables or indicating differences between
groups.
Null & Alternate Hypotheses
Example: Women are more motivated
than men

 H0: μM=μW or H0: μM – μW = 0

 HA: μM<μW

Where
μM is the mean motivational level of the men,
and μW is the mean motivational level of the
women.
Null & Alternate Hypotheses
Example: There is a difference between
the work ethic values of American and
Asian employees

 H0: μAM=μAS or H0: μAM – μAS = 0

 HA: μAM ≠ μAS

Where
μAM is the mean work ethic values of
Americans, and μAS is the mean work ethic
values of Asians.
Steps in Hypothesis Testing
1. State the null and the alternate hypotheses.

2. Choose the appropriate statistical test

depending on whether the data collected are
parametric or nonparametric.

3. Determine the level of significance desired.

4. Run the statistical test (now can be done by

computer) and see if the output results
indicate that the significance level is met.
(Or use the method of negative case analysis in
Qualitative Research.)
The Research Process
The Research Process
1. Observation
2. Preliminary data gathering
3. Problem definition
4. Critical literature review
5. Theoretical framework
6. …...(when you apply some theory to
investigate your research problem, refer to
the process diagram the Deduction steps…)
 Theoretical Framework
 A theoretical framework represents your
beliefs on how certain phenomena (or
variables or concepts) are related to each
other (a model) and an explanation on why
you believe that these variables are
associated to each other (a theory).

 Foundation of hypothetico-deductive
research as it is the basis to develop
hypotheses
 Theoretical Framework
 Crucial in deductive, theory-testing, casual
research (but not in exploratory or descriptive
research where one does not develop a
theoretical framework to develop and test
hypotheses) BUT a descriptive research is very
difficult to get a good grade. Note the
assessment criteria in Capstone Project.

 Deductive research: moving from the general

(a theory) to the specific (observations).
 Theoretical Framework
Basic steps in building a theoretical framework:

1. Identify and label the variables

correctly
2. State the relationships among the
variables: formulate hypotheses
3. Explain how or why you expect
these relationships (and whether
your theory is valid or not)
Relation between Literature Review and
Theoretical Framework
 Literature review provides a solid foundation
for developing theoretical framework

 Literature review identifies the variables that

might be important, as determined by
previous research findings.

 In addition to other logical connections that

can be conceptualized, forms the basis for
the “theoretical model”.
Relation between Literature Review and
Theoretical Framework
 Theoretical framework represents and
elaborates the relationships among the
variables, explains the theory underlying
these relations, and describes the nature and
direction of the relationships.

 Theoretical framework provides the logical

base for developing testable hypotheses.
Components of Theoretical Framework

 A good theoretical framework identifies and

defines the important variables in the situation
that are relevant to the problem and
subsequent describes and explains the
interconnections among these variables.
 3 basic components:
1. The variables considered relevant to the study
should be clearly defined.
2. A conceptual model that describes the relationships
between the variables in the model should be given.
3. There should be a clear explanation of why we
expect these relationships to exist.
Relation among Theoretical Framework,
Hypothesis and Theory
 From the theoretical framework, a theory
attempts to explain relationships between the
variables in the model, testable hypotheses can
be developed to examine whether the theory
formulated is valid or not.
 Note that you do not necessarily have to
‘invent’ a new theory every time you are
undertaking a research project.
 In an applied research context you apply
existing theories to a specific context. The
arguments can be drawn from previous
research (again, from literature review!!!)
 The Hypothetical-Deductive Method

7 steps:
1. Identify a broad problem area
2. Define the problem statement
3. Develop hypotheses (it may also include
develop the theoretical framework)
4. Determine measures
5. Data collection
6. Data analysis
7. Interpretation of data
Tutorial Question 5.1

“Because literature survey is a time-consuming

exercise, a good, in-depth interview should
suffice to develop a theoretical framework.”

Discuss this statement.

Tutorial Question 5.2

“Academic researchers usually develop more

complex and elaborate models than applied
researchers because in an applied research
context you do not need to explain the
relationships between the variables in your
conceptual model.”
Discuss this statement.
Tutorial Question 5.3

In setting hypothesis, why do we need to state

the hypothesis both in the null and the
alternate?

“It is advantageous to develop a directional

hypothesis whenever we are sure of the
predicted direction.” How will you justify this
statement?
Tutorial Question 5.4
In recent decades, many service markets have been liberalized. For
this reason, incumbent service firms are facing new competitors
and must address customer switching. You are discussing the
determinants of customer switching with a service firm manager.
She believes that product quality, relationship quality, and
switching costs are important determinants of customer switching.

You agree with the contention that product quality and relationship
quality are important determinants of switching. However, you
believe that switching costs moderates the relationships between
product quality, relationship quality and customer switching.

Provide arguments for this contention and try to show in a diagram

the relationship amongst the variables involved in this contention.