GROUP 4 PRESENTS

The Role of
Theory
Business Research Methods: Chapter 5
What We'll
Discuss What is the meaning of theory?
TOPIC OUTLINE Understand the role of theory
Concepts, constructs, variables and hypotheses
Research using hypothesis tesing
Four Frameworks
Practical Value of Theories

CHAPTER 5 | THE ROLE OF THEORY

Before we begin
THEORY AND PRACTICE
What if the lights did not 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 and determine the
cause of events or behavior.
CHAPTER 5 | THE ROLE OF THEORY
 THEORY
A formal, logical explanation of some events that
includes predictions or how things relate to one
What is a another.
Theory? GOALS OF THEORY
•Understanding
•Predicting
UNDE R S T A N DING
THEO R Y
A theory can be built through
a process of reviewing
previous findings of similar
studies, through simple
logical deduction and/or
thorough knowledge of
applicable areas
 RESEARCH
CONCEPTS,
CONSTRUCTS,
VARIABLES AND
HYPOTHESES
CONCEPT/CONSTRUCT:
A generalized idea about a class of
objects that has been given a name.
Examples:
o Organizational Theory (Leadership, productivity,
and morale)
o Finance Theory (Gross National Product, Risk
Aversion, and Inflation)

An abstraction of reality that is the

basic unit for theory development.
Every discipline and theory is made
up of concepts.
 SOCIAL
NETWORK
THEORY

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.
 Weak Network
Unintergrated individuals, individuals
held to network by only one
relationship, network overreliant on
star figures.
Strong Network
All individuals integrated, many
individuals held to network by multiple
relationships, reliance on star figures
dimished by relationships unrelated to
star figures.
CHAPTER 5 | THE ROLE OF THEORY
 Ladder of
Abstraction
Organization of concepts
in sequence from the most
concrete and individual to
the most general.

Concepts by itself is not a

theory.

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A LADDER OF ABSTRACTION FOR CONCEPTS
Assets

Plant Machinery

Punch Press

Reality
 TWO LEVELS AT WHICH BUSINESS
RESEARCHER OPERATES
ABSTRACT LEVEL EMPIRICAL LEVEL
The level of knowledge expressing The level of knowledge that is
a concept that exists only as an verifiable by experience or
idea or a quality apart from an observation.
object.
Concepts are Abstractions of
Reality
Abstract Level: Salesperson
Job Performance

Empirical Level:
Number of Sales Calls
Number of Sales
Monetary Value of Sales
 Latent Construct
A concept that is not directly
observable or measurable, but
can be estimated through proxy
measures.
To measure a latent construct,
researchers capture indicators
that represent the underlying
construct.
FROM THEORY TO PRACTICE:
HOW DO WE FORM RELATIONSHIPS
BETWEEN CONCPETS?

Research
Propositions and
Hypotheses

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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.

CHAPTER 5 | THE ROLE OF THEORY

 EMPIRICAL TESTING

EMPIRICAL VARIABLES OPERATIONALIZING

TESTING Anything that may assume The process of identifying
Examining a research different numerical values. the actual measurement
hypothesis against reality scales to asses the
using data. The empirical assessment variables of interest.
of a concept.

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Hypotheses are the empirical counter parts of propositions.

PROPOSITIONS
Treat Employees More Loyal
Abstract Better Customers
Level:

HYPOTHESIS
Empirical Increase Reduce Annual
Level: Retirement
Benefits 5% Turnover
 A Basic Theory Explaining Voluntary Job Turnover
Labour market conditions, number of
organizations, personal
characteristics, and other partial
determinants of ease of movement.

Perceived ease of movement (e.g.

expectation of finding alternatives, Voluntary job
unsolicited oppurtunities)
Job Performance Intention to quit turnover
(individual
violation)
Perceived desirability of movement
(e.g. job satisfaction)

Equity of pay, job complexity,

participation in decision making, and
other partial determinants of
desirability of movement.
 DEDUCTIVE REASONING
The logical process of deriving a conclusion about a
specific instance based on a known general
Theory premise or something known to be true.
Building INDUCTIVE REASONING
The logical process of establishing a general
proposition on the basis of observation of particular
facts.

CHAPTER 5 | THE ROLE OF THEORY

Scientific A set of prescribed procedures for
Method 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 2 3 4 5

Assess relevant Formulate State Design research Acquire empirical

existing concepts and hypotheses to test the data
knowledge of propositions hypotheses
phenomenon

CHAPTER 5 | THE ROLE OF THEORY

Suggested Steps

6 7

Analyze and Propose an

evaluate data explanation of
the phenomenon
and state new
problems raised
by the research
CHAPTER 5 | THE ROLE OF THEORY
 THE FOUR FRAMEWORKS

CONCEPTUAL THEORETICAL METHODOLOGICAL

FRAMEWORK ANALYTICAL
FRAMEWORK FRAMEWORK FRAMEWORK

CHAPTER 5 | THE ROLE OF THEORY

 PRACTICAL VALUE OF
THEORIES

Theories allows us to Theories provide Incidents may be

generalize beyond framework that can theoretically
individual facts or guide strategy. comparable and the
isolated situations scientific knowledge
gained from theory
development may
have practical value

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