After studying this chapter, you should be able to 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

Chapter Vignette: Theory and Practice
What if you went home tonight and turned on the light switch and nothing happened? Most of us would immediately start seeking a logical explanation: “Is the bulb burnt out?” “Did my roommate forget to pay the electric bill?” “Is the electricity out?” “Did a fuse blow?” These are common thoughts that would race through our minds. The order would probably depend on our past experience and we would try to determine the cause through a logical thought sequence. Attribution theory is one framework that helps us explain the world and determine the cause of an event (the light bulb not working) or behavior (why my girlfriend is mad at me). Simply put, this theory helps us make sense of events by providing a systematic method to assess and evaluate why things occur. Attribution theory is just one of many theoretical models that are useful to business researchers.












” However. Thus a theory enables us to predict the behavior or characteristics of one phenomenon from the knowledge of another phenomenon. This may lead to the specific prediction that blue is the most effective background color for a Web site. at times so broadly as to include almost all descriptive statements about a class of phenomena. TOTHEPOINT What Are the Goals of Theory? Suppose a researcher investigating business phenomena wants to know what caused the financial crisis. Without this type of explanation. and to master it. This chapter will provide a fundamental knowledge of theory. These two issues—understanding and predicting—are the two purposes of theory. once verified. For example. Put another way. Popper. a financial advisor may believe.3 Accomplishing the first goal allows the theorist to gain an understanding of the relationship among various phenomena. and at other times so narrowly as to exclude everything but a series of terms and their relationships that satisfies certain logical requirements. the researcher must be able to describe the business situation in some coherent way. TOTHEPOINT There is nothing so practical as a good theory. this should certainly not be the case. —Kurt Lewin What Is a Theory? Like all abstractions. Before setting research objectives. Theories are simply generalizations that help us better understand reality. we must have an explanation of why variables behave as they do. The Research Snapshot on page 41 illustrates how theory and practice come together in marketing research. the word “theory” has been used in many different ways. To predict phenomena. theories allow us to understand the logic behind things we observe. if a Web designer is trying to decide what color background is most effective in increasing online sales. to be able to say that if we take a particular course of action we can expect a specific outcome to occur. theory development. or theorize. of course. Students sometimes think their classes or course material are “too theoretical” or lacking “practical application. Theories provide these explanations. The Logic of Scientific Discovery . Both of these individuals want to gain a better understanding of the environment and be able to predict behavior. Another person wants to know if organizational structure influences leadership style. This theory. he may first consult previous studies examining the effects of color on package design and retail store design. A theory can be built through a process of reviewing previous findings of similar studies. would then allow her to predict the importance of expected dividend yield based on the age of her customer.Chapter 3: Theory Building 39 Introduction The purpose of science concerns the expansion of knowledge and the search for truth. understanding and prediction go hand in hand. theory plays a role in understanding practical research as well. Furthermore. We endeavour to make the mesh ever finer and finer. in many different contexts. For example. affective response to colors. If a theory does not hold true in practice.1 A theory consists of a coherent set of general propositions that offer an explanation of some phenomena by describing the way other things correspond to this phenomena. and some terminology regarding theory necessary for business researchers. a theory is a formal. then that theory holds no value. the researcher would have little idea of where to start. testable explanation of some events that includes explanations of how things relate to one another.2 While it may seem that theory is only relevant to academic or basic business research. simple logical deduction. Theory building is the means by which basic researchers hope to achieve this purpose. theory A formal. Ultimately. logical explanation of some events that includes predictions of how things relate to one another. In most situations. that older investors tend to be more interested in investment income than younger investors. the logical explanation helps the researcher know what variables need to be included in the study and how they may relate to one another. He may also find theories that deal with the wavelength of different colors. Theories are nets cast to catch what we call “the world”: to rationalize. or those that explain retail atmospherics. —Karl R. to explain. and/or knowledge of applicable theoretical areas. The value of understanding and anticipating future conditions in the environment or in an organization should be obvious.

For example.1 indicates that it is possible to discuss concepts at various levels of abstraction. you should have a solid foundation on n in understanding theory development and the importance of theory in business research. To understand theory and the business research process. and morale are concepts. The basic or scientific business researcher operates at two levels: on the abstract level of concepts (and propositions) and on the empirical level of variables (and hypotheses). in the concrete world of reality. as an organizational theorist. we need to be able to think of things in a very abstract manner. In marketing. including a specific punch press machine in a production shop. the level of knowledge expressing a concept that exists only as an idea or a quality apart from an object. ladder of abstraction Organization of concepts in sequence from the most concrete and individual to the most general. If you. How do you think the responses to these questions should relate? Why? Provide a theoretical explanation for the relationships you are proposing. empirical level Level of knowledge that is verifiable by experience or observation. concepts express in words various events or objects. and loyalty are important concepts. productivity. may vary in degree of abstraction. an abstraction of reality that is the basic unit for theory development. In other words. or processes that has been given a name. That is. and Hypotheses Theory development is essentially a process of describing phenomena at increasingly higher levels of abstraction. Moving up the ladder of abstraction. it will be useful to know different terminology and how these terms relate. abstract level In theory development. 40 A concept or construct is a generalized idea about a class of objects. market share. however. the basic concept becomes more general. and inflation are frequently used concepts. Please go back and review all the questions included on the survey. In organizational theory. occurrences. you would categorize empirical events or real things into concepts. The abstraction ladder in Exhibit 3. were to describe phenomena such as supervisory behavior or risk aversion. or manipulate objects or events. customer satisfaction. Constructs. risk aversion. as business researchers. COURTESY OF QUALTRICS. Accounting concepts include assets. Research Concepts and Constructs concept (or construct) A generalized idea about a class of objects that has been given a name. For example. build a theory about the relationship among at l least f four questions. To move to the empirical © GEORGE DOYLE . Considering the e questions asked in the survey. and depreciation. measure. gross national product. Concepts abstract reality. we observe.COM Research Concepts. liabilities. we commonly use the term job performance. wider in scope. but this is an abstract term that can mean different things to different people or in different situations. attributes. Variables. In the theory of finance. Propositions. refer to a wide variety of things. and less amenable to measurement. At the empirical level. the concept of an asset is an abstract term that may. leadership. but eventually link these abstract concepts to observable reality.S U R V E Y T H I S ! Go online to the Internet survey you completed for the Chapter 1 assignment. we “experience” reality—that is. Following our discussion of theory y in this chapter. Concepts are the building blocks of theory. Concepts.

“Theory. Practice Both Have Key MR Roles. students learn theory in toge education. customer satisfaction. D. but can be estimated through proxy measures. we use the term latent construct to refer to a concept that is not directly observable or measurable. 6. © GEORGE DOYLE & CIARAN GRIFFIN EXHIBIT 3. 26–29. and risk aversion are just three examples of the many latent constructs in business research. Business professors contheir formal e sider it good practice to blend theory and practice teaching. First.. Don. and social psychology all offer relevant theories that can help explain business problems. 2004).” Marketing News 39 (October 15. In research. Stewart. Sources: Green. but can be estimated through proxy measures. structuration theory has been proposed as a way of explaining business communication outcomes. Business professionals use these theories to in their teach aching. Schultz. Paul E. 2005). 40–44.4 Job performance. T. psychobiol ology psychobiology. “Traditional Ad Research Overlooks Interactions. about different business situations. Studies using a theory like this may assist electronic communication design in better placements of pop-up ads and hyperlinks and can also assist face-toface sales exchanges in better predicting when a consumer is actually ready to buy. then the outcome of the interaction can be predicted. Recently.” Marketing News 38 (September 15.” Marketing News 39 (November 15.1 Assets A Ladder of Abstraction for Concepts Plant Machinery Punch Press Reality level. we must more clearly define this construct and identify actual measures that we can assess and measure to represent job performance as shown in Exhibit 3. EXHIBIT 3. The theory suggests that more focus should be placed on the communication exchanges between buyers and sellers and that if one can understand the goals of the buyer and seller involved in a communication interaction.2 Abstract Level Salesperson Job Performance Concepts Are Abstractions of Reality Empirical Level Number of Sales Calls Number of Sales Dollar Value of Sales 41 © MICHAEL NEWMAN/PHOTOEDIT . anthropology.2. While we cannot directly latent construct A concept that is not directly observable or measurable. “Accepted Industry Truths Not Always Acceptable. economics.R E S E A R C H S N A P S H O T Not Nothing So Practical as Theory? Busi Business theory and practice do come together. 2005). help shape their thinking a Neurology..

theory deals with abstraction. age 62—along with other workers—may be questioned about their preferences for salary. variables Anything that may assume different numerical values. we say the hypothesis is supported. Propositions are statements concerned with the relationships among concepts. This step is known as operationalizing our variables—the process of identifying . Because variables are at the empirical level. For example. We are often tempted to say that we prove a hypothesis when the data conform to the prediction. we say the hypothesis is not supported. using the color of the background for a Web site discussed previously.g. we might propose that treating our employees better will make them more loyal employees. and doing so is one of the greatest challenges for business researchers. there is always the possibility that our conclusion is wrong. retirement plans. the actual percentage change in matching retirement funds). In other words. A sales manager may hypothesize that the salespeople who are highest in product knowledge will be the most productive. However. Now. For example. In this example. but is quite general and not really testable in its current form. Thus. The abstract proposition “Treating our employees better will make them more loyal employees” may be tested empirically with a hypothesis. we can measure them.. ideas are. An advertising manager may hypothesize that if consumers’ attitudes toward a product change in a positive direction. This is certainly a logical link between managerial actions and employee reactions. If an organizational researcher says “Older workers prefer different rewards than younger workers. but from an absolute perspective. concepts are the basic units of theory development. and so forth. Exhibit 3. To construct a theory we must explain how concepts relate to other concepts as discussed below. variables can be measured. theories require an understanding of the relationship among concepts. Theorists translate their conceptualization of reality into abstract ideas. we can see that researchers have a much easier time assessing and measuring age than the latent construct of reward preference. age 19. We often apply statistics to data to empirically test hypotheses. when one states a hypothesis. If the researcher wishes to test this relationship. it should be written in a manner that can be supported or shown to be wrong through an empirical test. A human resource manager may hypothesize that job candidates with certain majors will be more successful employees. —Albert Einstein see these latent constructs. intrinsic job satisfaction. A proposition explains the logical linkage among certain concepts by asserting a universal connection between concepts. hypothesis Formal statement of an unproven proposition that is empirically testable. empirical testing Examining a research hypothesis against reality using data. a researcher is interested in the relationship among these concepts. Chuck. Because our result is based on statistics. statistics cannot prove a hypothesis is true.5 Concepts in isolation are not theories.42 Part 1: Introduction TOTHEPOINT Reality is merely an illusion. In this case. the empirical assessment of a concept. Recording their ages and assessing their reward preferences are activities that occur at the empirical level. at times we can be very. Things are not the essence of theory. or what we shall loosely term reality. very confident in our conclusion. John. A hypothesis is a proposition that is empirically testable. Research Propositions and Hypotheses As we just mentioned. retirement benefits might be measured quite easily and precisely (e. but this isn’t really true. When the data are inconsistent with a hypothesis. A hypothesis is a formal statement explaining some outcome. there will be an increase in consumption of the product. propositions Statements explaining the logical linkage among certain concepts by asserting a universal connection between concepts. Retirement benefits and intention to leave are variables.3 shows that the hypothesis “Increasing retirement benefits will reduce intention to leave the organization” is an empirical counterpart of this proposition. reflecting the concepts of employee treatment and employee loyalty. operationalizing The process of identifying the actual measurement scales to assess the variables of interest. age 45.” two concepts—age of worker and reward preference—are the subjects of this abstract statement. researchers are concerned with the observable world. When the data are consistent with a hypothesis. while the latent construct of intention to leave would be more challenging for the researcher. albeit a very persistent one. Empirical testing means that something has been examined against reality using data. once the concepts of interest have been identified. a hypothesis is a guess. In its simplest form. the researcher may use theoretical reasoning to develop the following hypothesis: H1: A web site with a blue background will generate more sales than an otherwise identical Web site with a red background. and Mary. In the end. Thus.

consists in a serious attempt to understand the facts of the science. job complexity. system. and participation in decision making. This is a proposition. Moreover. this example should help you understand the terminology used by theory builders.4 on the next page is a simplified portrayal of a theory to explain voluntary job turnover—the movement of employees to other organizations.3 Proposition Hypotheses Are the Empirical Counterparts of Propositions Abstract Level Treat Employees Better More Loyal Employees Hypothesis Empirical Level Increase Retirement Benefits 5% Reduce Annual Turnover the actual measurement scales to assess the variables of interest.. a logical. which suggests that unconscious. Two concepts—(1) the perceived desirability of movement to another organization and (2) the perceived ease of movement from the present job—are expected to be the primary determinants of intention to quit. Perceived desirability of movement is influenced by concepts such as equity of pay. directly or indirectly. the concept intention to quit is expected to be a necessary condition for the actual voluntary job turnover behavior to occur.Chapter 3: Theory Building 43 EXHIBIT 3. The abstract or theoretical aspect. To determine which is the better theory. Maslow’s hierarchical theory of motivation offers one explanation of human behavior. job performance is another concept considered to be the primary determinant influencing both perceived ease of movement and perceived desirability of movement. . Further. Maslow theorizes that individuals will attempt to satisfy physiological needs before self-esteem needs. The empirical aspect is primarily concerned with the facts of the science as revealed by observation and experiments. A complete explanation of this theory is not possible. number of organizations visible to the individual. In the more elaborate theory. and to integrate them into a coherent. however. . perceived ease of movement is related to other concepts such as labor market conditions. the scientific inquiry has two basic levels: . One task of science is . An alternative view of motivation is provided by Freudian (psychoanalytic) theory. either the theory must be changed or the facts. emotional impulses are the basic influences on behavior. From these observations and integrations are derived. TOTHEPOINT If facts conflict with a theory. i.e.6 Understanding Theory Exhibit 3. and personal characteristics. researchers make observations or gather empirical data to verify the theories. the basic laws of the science. We will discussion operationalization in more detail in Chapter 13. Thus. on the other hand. the empirical and the abstract. conceptual. This is a second proposition that links concepts together in this theory. —Benedict Spinoza Verifying Theory In most scientific situations there are alternative theories to explain certain phenomena.

all business professors are human beings. Why “false” rather than “true”? Technically. we know that all business professors are human beings. For example. job complexity. Inductive reasoning is the logical process of establishing a general proposition on the basis of observation of particular facts. conceptual level and at the empirical level. In this chapter.. we will explore this topic briefly. . 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. Just as records are made to be broken.” If the possibility of proving an idea false or wrong is not inherent in our test of an idea. The scientist can only say. there may be other untested theories which could account for the results we obtained in our study of a proposition. “I have a theory which I have objectively tested with data and the data are consistent with my theory. All business professors that have ever been seen are human beings. Deductive reasoning is the logical process of deriving a conclusion about a specific instance based on a known general premise or something known to be true. Thus. a theory may be developed with deductive reasoning by going from a general statement to a specific assertion.44 Part 1: Introduction EXHIBIT 3. At the abstract. then we cannot put much faith in the evidence that suggests it to be true. At the very least. This may at first glance appear strange. personal characteristics. therefore. expectation of finding alternatives. Theory generation may occur at either level. or to refute it.g. At the empirical level.. conceptual level. while you might occasionally have doubts. theory has been explained at the abstract. job satisfaction) Intention to quit Voluntary job turnover (individual volition) Equity of pay. inductive reasoning The logical process of establishing a general proposition on the basis of observation of particular facts.9 Every genuine test of a theory is an attempt to falsify it. and other partial determinants of ease of movement Perceived ease of movement (e. a theory may be developed with inductive reasoning.g. and other partial determinants of desirability of movement TOTHEPOINT to determine if a given theoretical proposition is false or if there are inconsistencies between competing theories. It must be possible to demonstrate that a given proposition or theory is false. we can never be certain that our proposition or theory is the correct one. number of organizations. If we also know that Barry Babin is a business professor. there may be a competing explanation which could be the “real” explanation for a given set of research findings. theories are made to be tested.8 —Karl Popper Theory Building You may be wondering “Where do theories come from?” Although this is not an easy question to answer in a short chapter on theory in business research. participation in decision making. No other evidence was allowed to manifest itself.4 A Basic Theory Explaining Voluntary Job Turnover7 Labor market conditions. unsolicited opportunities) Job performance Perceived desirability of movement (e. then we can deduce that Barry Babin is a human being.

7. It is common knowledge that the behavioral sciences are not as advanced as the physical sciences. What this means. terrorist bombing. or military skirmish.” The stockbroker has constructed a basic theory. how to measure it or what to consider relevant about it. The stockbroker may induce from these empirical observations the more general situation that the price of gold is related to political stability. 3. Over the course of time. techniques or procedures used to analyze empirical evidence in an attempt to confirm or disprove prior conceptions. and for predicting events yet unknown.R E S E A R C H S N A P S H O T Bal Ballistic Theory Balli Ballistic theory is a theory because it deals dea with measurable factors. © NASA © GEORGE DOYLE & CIARAN GRIFFIN Suppose a stockbroker with 15 years’ experience trading on the New York Stock Exchange repeatedly notices that the price of gold and the price of gold stocks rise whenever there is a hijacking. 45 © TOMISLAV FORGO/SHUTTERSTOCK . Noting a link between changes in gold prices and political instability could be the foundation for a basic theory. Assessment of relevant existing knowledge of a phenomenon Formulation of concepts and propositions Statement of hypotheses Design of research to test the hypotheses Acquisition of meaningful empirical data Analysis and evaluation of data Proposal of an explanation of the phenomenon and statement of new problems raised by the research11 scientific method A set of prescribed procedures for establishing and connecting theoretical statements about events. 6. Again. because it states their relationships in detail. we suggest seven operations may be viewed as the steps involved in the application of the scientific method: 1. an example may help explain the dilemma. It is not relevant to ballistic theory that the gunner’s father once carried an M-1. theory construction is often the result of a combination of deductive and inductive reasoning. In other words. no one has really done a very good job of determining what an event is. 2. That is. 5. and for predicting events yet unknown.10 Given all of the factors except by a knowledge of all the o wled projectile. in effect. While there is not complete consensus concerning exact procedures for the scientific method. It may not be irrelevant to consumer behavior theory that he is standing beside the person who selects a necktie. It is useful to look at the analytic process of scientific theory building as a series of stages. for analyzing empirical evidence. It is irrelevant to ballistic theory that John Gingrich is standing beside the 155 mm rifle when it is fired. the stockbroker states a proposition based on his or her experience or specific observations: “Gold prices will increase during times of political instability. similar patterns occur whenever a certain type of event occurs. Our experiences lead us to draw conclusions that we then try to verify empirically by using the scientific method. Thus. It may be relevant to consumer behavior theory that the automobile purchaser’s grandfather once owned a Ford. an engineer can determine the initial speed of the pro what that speed was. and because factor any one facto can be fairly completely determined knowledge others. he Asked h t can suggest several ways in which this can be accomplished—all of which will work. In fact. for analyzing empirical evidence. is that no one has yet defined all of the factors in human behavior or determined the influence that each has on events. 4. The Scientific Method The scientific method is a set of prescribed procedures for establishing and connecting theoretical statements about events. Aske to change the point of impact.

The logical statements entered into the notebook are broken down into six categories: (1) statement of the problem. who honks the horn to see if the battery works is informally conducting a true scientific experiment. In cycle maintenance things are not that involved. That’s the main reason why so much scientific and mechanical information sounds so dull and so cautious. For this you keep a lab notebook. . formally. five times as long. It takes twice as long. tried everything. and (6) conclusions from the results of the experiments. There’s not a mechanic or scientist or technician alive who hasn’t suffered from that one so much that he’s not instinctively on guard. When I think of formal scientific method an image sometimes comes to mind of an enormous juggernaut. When you’ve hit a really tough one. Nature will soon make a complete fool out of you. A motorcycle mechanic .” and you crank up the formal scientific method. — Robert M. If you get careless or go romanticizing scientific information. (4) predicted results of the experiments. maybe a dozen times as long as informal mechanic’s techniques. One false deduction about the machine and you can get hung up indefinitely. but you know in the end you’re going to get it. where you’re going and where you want to get. (2) hypotheses as to the cause of the problem. lumbering. The purpose now is precise guidance of thoughts that will fail if they are not accurate. (3) experiments designed to test each hypothesis. . laborious. that’s the end of the nice guy. “Okay. There’s no fault isolation problem in motorcycle maintenance that can stand up to it. He is testing a hypothesis by putting the question to nature. (5) observed results of the experiments. and you know that this time Nature has really decided to be difficult. where you’ve been. Repair problems are not that hard. It is much better to enter a statement “Solve Problem: Why doesn’t cycle work?” which sounds dumb but is correct. It does it often enough anyway even when you don’t give it opportunities. What you should state is “Solve Problem: What is wrong with cycle?” and then state as the first entry of Part Two: “Hypothesis Number One: The trouble is in the electrical system. so that you know at all times where you are. In scientific work and electronics technology this is necessary because otherwise the problems get so complex you get lost in them and confused and forget what you know and what you don’t know and have to give up. Pirsig © DBIMAGES/ALAMY . One must be extremely careful and rigidly logical when dealing with Nature: one logical slip and an entire scientific edifice comes tumbling down. The real purpose of scientific method is to make sure Nature hasn’t misled you into thinking you know something you don’t actually know. tedious. which is the statement of the problem. a huge bulldozer—slow. but invincible. than it is to enter a statement “Solve Problem: What is wrong with the electrical system?” when you don’t absolutely know the trouble is in the electrical system. you say. In Part One of formal scientific method. then you design experiments to test them to see which are true and which are false. giving it a flourish here and there. but when confusion starts it’s a good idea to hold it down by making everything formal and exact. the main skill is in stating absolutely no more than you are positive you know. This is not different from the formal arrangement of many college and highschool lab notebooks but the purpose here is no longer just busywork. Everything gets written down.46 Part 1: Introduction An excellent overview of the scientific method is presented in Robert Pirsig’s book Zen and the Art of Motorcycle Maintenance: Actually I’ve never seen a cycle-maintenance problem complex enough really to require full-scale formal scientific method. Sometimes just the act of writing down the problems straightens out your head as to what they really are. racked your brain and nothing works. Nature.” You think of as many hypotheses as you can.

This you know from the hierarchy. A man conducting a gee-whiz science show with fifty thousand dollars’ worth of Frankenstein equipment is not doing anything scientific if he knows beforehand what the results of his efforts are going to be. nothing more. If there isn’t any he can conclude one of two things: (a) there is an electrical failure or (b) his experiment is sloppy. the scientific knowledge gained from theory development may have practical value. If the horn honks. The point at which the electrical system directly causes the engine to fire is at the spark plugs. They are looking at underlying form. Scientific questions often have a surface appearance of dumbness for this reason. that part of formal scientific method called experimentation. conclusions. and the mechanic concludes that the whole electrical system is working. and the experiment is over. Theories provide a framework that can guide managerial strategy by providing insights into general rules of behavior. we have failed to achieve what we had hoped for. and then he changes them so that they no longer cause the failure.” is suffering mainly from a bad scriptwriter. By far the greatest part of his work is careful observation and precise thinking. hierarchies. To test properly the mechanic removes the plug and lays it against the engine so that the base around the plug is electrically grounded. except in a very indirect way. A good theory allows us to generalize beyond individual facts so that general patterns may be understood and predicted. Actually the physical labor is the smallest and easiest part of what the mechanic does. When different incidents may be theoretically comparable in some way. trying every way he can think of to get that plug to fire. But he does know that the motorcycle isn’t going to run until the electrical system is working and he sets up the next formal question: “Solve problem: What is wrong with the electrical system?” He then sets up hypotheses for these and tests them. and not really looking at you or the physical motorcycle at all. That is why mechanics sometimes seem so taciturn and withdrawn when performing tests. They do not see the experiment as part of a larger intellectual process and so they often confuse experiments with demonstrations. To design an experiment properly he has to think very rigidly in terms of what directly causes what. They are asked in order to prevent dumb mistakes later on. which look the same. He is testing a hypothesis by putting the question to nature. “The experiment is a failure. he is in deep trouble. They don’t like it when you talk to them because they are concentrating on mental images. The TV scientist who mutters sadly.12 Practical Value of Theories As the above excerpt makes evident. There may be other things wrong. Then. A motorcycle mechanic. you will never really know whether the failure is electrical or not. at the output of the electrical system. In the final category. An untrained observer will see only physical labor and often get the idea that physical labor is mainly what the mechanic does. An experiment is never a failure solely because it fails to achieve predicted results. By asking the right questions and choosing the right tests and drawing the right conclusions the mechanic works his way down the echelons of the motorcycle hierarchy until he has found the exact specific cause or causes of the engine failure. For this reason it is often said there is nothing so practical as a good theory. nothing less. when the data it produces don’t prove anything one way or another. They see lots of test tubes and bizarre equipment and people running around making discoveries. there’s an electrical failure. It hasn’t proved that when he fixes the electrical system the motorcycle will start. theories allow us to generalize beyond individual facts or isolated situations. Part Three. An experiment is a failure only when it also fails adequately to test the hypothesis in question. on the other hand. They are using the experiment as part of a program to expand their hierarchy of knowledge of the faulty motorcycle and compare it to the correct hierarchy in their mind. Skill at this point consists of using experiments that test only the hypothesis in question. He has reached an illogical conclusion. he finally concludes that (a) is correct.Chapter 3: Theory Building 47 This careful approach to the beginning questions keeps you from taking a major wrong turn which might cause you weeks of extra work or can even hang you up completely. If he is experienced he will try it a few more times. who honks the horn to see if the battery works is informally conducting a true scientific experiment. if he can’t get it to fire. He has proved that his hypothesis is correct. Neither does the battery. skill comes in stating no more than the experiment has proved. The honking horn only tells him that the battery and horn are working. The horn doesn’t make the cycle go. checking connections. . and if you don’t test here. kicks the starter lever and watches the spark-plug gap for a blue spark. is sometimes thought of by romantics as all of science itself because that’s the only part with much visual surface.

A theory may be developed with deductive reasoning by going from a general statement to a specific assertion. In that sense. and to the testing and verification of theory. concepts and propositions are at the abstract level. Managerial business strategy then becomes mes guided by the theories that are verified through research.T I P S O F T H E T R A D E ● Theories are only relevant to research because they are useful. Theories are simply models designed to help us better understand reality and to understand the logic behind things we observe. ● All theories stand to be further tested. The second goal is to predict. and customer satisfaction are all concepts. employee turnover.” A hypothesis is a formal statement explaining some outcome regarding variables of interest. 3. for analyzing empirical evidence. 2. and showing how these things should relate. and hypotheses. variables. ● Theories become corroborated over time through testing the explanations they offer. 48 © GEORGE DOYLE & CIARAN GRIFFIN OYLE The scientific method provides a way of testing theoretical propositions. or proved to be incorrect. and for predicting events yet unknown. A theory provides a picture of the linkages among different concepts. Discuss how theories are developed. Leadership style. we can then predict what will happen if we change one factor. – . (3) statement of hypotheses. A theory is a formal. Understand the goals of theory. logical explanation of some events that includes predictions of how things relate to one another. modified. indicating what things should be observed. attributes. A proposition explains the logical linkage among certain concepts by asserting a universal connection between concepts: “Leadership style is related to employee turnover. and (7) proposal of an explanation of the phenomenon and statement of new problems raised by the research. Propositions are statements concerned with the relationships among concepts. A concept or construct is a generalized idea about a class of objects. Define the meaning of theory. Concepts express in words various events or objects. There are two primary goals of theory. (4) design of research to test the hypotheses. Understand the terms concepts. 5. occurrences. Understand the scientific method. We mentioned seven operations may be viewed as the steps involved in the application of the scientific method: (1) Assessment of relevant existing knowledge of a phenomenon. (2) formulation of concepts and propositions. The first is to understand the relationships among various phenomena. allowing us to better comprehend how they affect one another. The more that the explanations offered match reality the more the theory becomes verified. Variables are the empirical reflection of a concept and a hypothesis is a proposition stated in a testable format. Deductive reasoning is the logical process of deriving a conclusion about a specific instance based on a known general premise or something known to be true. propositions. 4. if we understand the relationship between advertising expenditures and retail sales. A theory can be built through a process of reviewing previous findings of similar studies or knowledge of applicable theoretical areas. (5) acquisition of meaningful empirical data. we can then predict the impact of decreasing or increasing our advertising expenditures. while variables and hypotheses are at the empirical level. confirmed. So. ● Summary 1. nothing could be “too theoretical. For example. the scientific method guides us from the abstract nature of concepts and propositions. It is useful to look at the analytic process of scientific theory building as a series of stages.” ● Theories often guide research by providing a starting place. to the empirical variables and hypotheses. (6) analysis and evaluation of data. In sum. – An empirical test means the theory must be compared to reality. d. Inductive reasoning is the logical process of establishing a general proposition on the basis of observation of particular facts. Once we have an understanding of the relationships among concepts. or processes that has been given a name. The scientific method is a set of prescribed procedures for establishing and connecting theoretical statements about events.

What is the definition of theory given at this site? How does it compare to the definition given in this chapter? 3. 40 empirical testing. 41 operationalizing.eeng.dcu. How do propositions and hypotheses differ? 3. Find another definition of theory. ’NET The Logic of Scientific Discovery is an important theoretical work.merriam-webster. Compare and contrast deductive logic with inductive logic. 42 hypothesis. Give an example of both. How do concepts differ from variables? 4. ie/~tkpw/ to learn about its author and his work. ’NET The Chapter Vignette briefly introduced Attribution Theory. 40 deductive reasoning. 42 inductive reasoning. 2. . 42 scientific method. 42 propositions. How is the definition you found similar to this book’s definition? How is it different? Research Activities 1. 39 variables. either the theory must be changed or the facts. What does the statement “There is nothing so practical as a good theory” mean? Do you agree with this statement? 5. “If the facts conflict with a theory. 40 concept (or construct). 44 ladder of abstraction. 40 latent construct.Chapter 3: Theory Building 49 Key Terms and Concepts abstract level. 42 Questions for Review and Critical Thinking 1. What are some theories offered to explain aspects of your field of business? 2. 45 theory. ’NET The Merriam-Webster dictionary definition of theory can be found at http://www. 7.” What is the practical meaning of this statement? 6. Do a Web search regarding Attribution Theory and identify the key characteristics of this theory. 44 empirical level. Visit The Karl Popper Web site at The seventeenth-century Dutch philosopher Benedict Spinoza said.

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