RBUS2900 

– Business Research Methods

WHAT ARE WE ACHIEVING TODAY?

 The building blocks of scientific research

 Common statistical misconceptions

 Review of descriptive statistics

RBUS2900 Lecture 2
BUSINESS RESEARCH METHODS The Research Process

THE BUILDING BLOCKS OF RESEARCH

 Theory: “thinking” about a problem

 Concepts and constructs: building blocks of our theories

 Variables: measures of our concepts or constructs

 Hypotheses: relationships among variables

Lecture 2
SCIENTIFIC THINKING
The Research Process
 Models: representations of our theories

THEORY AND CONCEPTS THEORY

 The term theory is often used erroneously to express

the opposite of fact. This is an incorrect picture of the
relationship between fact and theory.

 When you are too theoretical, it means that your basis

of explanation is not sufficiently attuned to specific
empirical conditions.

Theory is thinking!

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 A theory is a set of systematically interrelated concepts, definitions,

and propositions that are advanced to explain and predict
phenomena (facts).
 In this sense, we have many theories and use them continually to
explain or predict what goes on around us.
THEORETICAL FRAMEWORKS
 A theoretical framework represents how certain phenomena (or
variables or concepts) are related to each other (a model) and an
explanation of why you believe that these variables are associated
with each other (a theory).

A theory:
osummarises what is known about an object of study;
onarrows the range of facts we need to study;
omay suggest a system for the researcher to impose on data in order to
classify them meaningfully; and
ocan also be used to predict further facts which should be found

Why are concepts important?

CONCEPTS
oWe design hypotheses using concepts.
 A concept is a bundle of meanings or characteristics associated
with certain events, objects, conditions, and situations.
oWe devise measurement concepts by which to test these hypothetical
statements.
 Concepts are created by classifying and categorizing objects or
events that have common characteristics beyond the single oWe gather data using these measurement concepts.
observation.
oWe change or invent new concepts to express ideas.

 A concept is an idea. For example, dog is a concept. What is

doginess? What are the defining features of a dog, as opposed to a
cat, horse or some other mammal?

Some common concepts in business: We can combine concept to create other concepts:

Employee Customer
Performance Satisfaction Brand awareness

Gender Brand associations

Brand equity
GDP Perceived quality

Brand loyalty
ROI Corporate
Strategy

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An example of a conceptual definition from the literature:

CONCEPTUAL DEFINITIONS

 A conceptual definition is a statement in words of
the meaning of a concept.
 Definitions should not be too narrow or too broad.
 Definitions should not contain ambiguous,
obscure or figurative language.
Brand credibility is defined as the believability of the product
information contained in a brand, which requires that consumers
perceive that the brand have the ability (i.e., expertise) and
willingness (i.e., trustworthiness) to continuously deliver what has been
promised (Erdem and Swait 2004, p192).

 The goal is to eliminate vagueness (e.g. how many

metres exactly is a "tall" person?) and ambiguity
(e.g. "I purchased a bat" could have many
meanings).

SO HOW HARD CAN IT BE? VARIABLES

 Long ago, members of a Greek scientific gathering defined a
chicken as “a two legged animal adorned with feathers”
 One of the members disagreed with this definition.
 He attended the next meeting, wearing feathers.
 He was a two legged animal. He was adorned with feathers.
 A variable is an attribute (characteristics/property) of an
object/person that can change from person to person or from an
object to object (e.g. length, height, sex and weight).
 A variable can be observed and measured.
 A person/object/organization can be described by a number of
variables.

 They decided to look for a new definition!  We are interested in understanding the relationship between and
among variables.

INDEPENDENT VS. DEPENDENT VARIABLES MODERATING VS. MEDIATING VARIABLES

Independent Variables Dependent Variables Moderating Variables Mediating Variables

 An explanatory variable or
independent variable (IV) is one
that is thought to influence or
explain variance in a dependent
variable.
 The IV is can be measured or
systematically manipulated to
reveal its effect on the DV.
 A dependent variable or criterion
variable represents the outcome in
which a researcher is interested.
 Named as such because its value is
‘dependent’ to some extent on the
independent variables.
 Therefore, the DV is expected to
change systematically in response to
changes in the IV.
 A moderating variable has a
strong contingent effect on an
IV-DV relationship.
 Changes the form, direction or
strength of the original
relationship.
 A mediating variable or an
intervening variable is one through
which an independent variable might
influence a dependent variable.
 This variable surfaces as a function of
the IV operating in a situation, and
helps conceptualise and explain the
influence of the IV on the DV.

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An example of all variable types:
HYPOTHESES AND MODELS
Proposition
 A proposition is a statement about concepts which may be judged
as true or false if it refers to observable phenomena.
When a proposition is formulated for empirical testing, it is called a
hypothesis.
DESCRIPTIVE VS. RELATIONAL HYPOTHESES
Descriptive Hypotheses
 These are statements that
typically state the existence, size,
form, or distribution of some
variable.
“The current unemployment rate
in Queensland exceeds 6% of the
labour force.”
“Women and non-whites receive
25% less pay than their
counterparts”
RBUS2900 – Business Research Methods
x y
satisfaction
Relational Hypotheses
 These are statements that describe
a relationship between two
variables with respect to some case.
“There is a positive relationship
between trust and commitment in
business relationships.”
“There is a negative relationship
between job satisfaction and
employee turnover.”
RELATIONSHIPS
Causal Relationships Correlational Relationships
 With explanatory or “causal”  Correlational relationships state
relationships, there is an merely that the variables occur
implication that the existence of, together in some specified manner
or a change in, one variable without implying that one causes the
causes or leads to an effect on other.
the other variable.
Job Employee Rainfall in Australian
turnover Germany GDP
Hypotheses
A hypothesis is of a tentative and conjectural nature, and is a
declarative statement. A hypothesis is a claim.
Hypotheses can be constructed from:
odeduction (from theory); or
oinduction (from a set of observations).
A good hypothesis should:
opredict;
obe stated clearly and unambiguously; and
obe testable.
MODELS
 A model is a representation of a system which is constructed for the
purpose of studying an aspect of the system or the system as a
whole.
 Models differ from theories in that a theory’s role is explanation
whereas a model’s role is representation.
 A model might represent a diagram of a theory, linking concepts
together.
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A model may be a visual representation of theory: Models can also be in the form of equations.

E = mc2

y= b1x1 + b2x2 + e

U=V+e

KEY POINTS

 Theory is thinking!

 Concepts help us express our ideas and direct our measurement.

 Variables come in the form of independent variables, dependent

variables, moderating variables and mediating variables.

 Hypotheses can be expressed in terms of causal relationships or

correlational relationships between variables.

How average are you?

5 WAYS STATISTICS ARE USED TO LIE TO YOU
1. What we call “average” is not common
2. 99% accurate can be both true and meaningless
3. “Fastest growing” can be trivial
4. Patterns can be random chance
5. Correlation is not causation
http://www.abc.net.au/news/2017-08-03/census-2016-ordinary-
australia-probably-isnt-where-you-think/8680052
The tragic story of 99% accurate
https://www.huffingtonpost.in/rahul-tongia/how-a-99-accurate-
medical_b_6982784.html
Almond milk – the “fastest growing” category of milk
https://www.weeklytimesnow.com.au/agribusiness/dairy/rise-in-
alternative-milks/news-story/754255d36ebbeab63e80f8b99b6d9d9a

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Even Google makes the mistake of seeing patterns in randomness

https://www.wired.com/2015/10/can-learn-epic-failure-google-flu-
trends/

How to lie with graphs…

https://www.businessinsider.com.au/fox-news-charts-tricks-data-
2012-11?r=US&IR=T
And lots of things correlate….
http://www.tylervigen.com/spurious-correlations

Lecture 2
DESCRIPTIVE STATISTICS RECAP
The Research Process

DESCRIPTIVE STATISTICS FREQUENCY DISTRIBUTIONS

 An elementary transformation of raw data in a way that describes
the basic characteristics of the variable.
 Descriptive statistics are used to summarise and describe each
variable included in the summary.
 A frequency distribution is a mathematical distribution containing a
count of the number of responses associated with different values of
one variable, expressed as a percentage.
 Score value is any possible value on a scale of numbers, ordered
from the lowest to the highest.

 Gives number of (frequency) subjects for each score value.

Can be presented as a table. Can be presented as a histogram.

Cumulative 70

Response Score Frequency Percentage 60

Percentage
50
David Jones 1 23 9% 9%
40
Myer 2 59 24% 33%
30

Target 3 75 31% 64%

20

Kmart 4 53 21% 85% 10

Others 5 28 15% 100% 0

TOTAL 241 100% 100%

1 2 3 4 5 6 7

Rating of Satisfaction

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The normal curve.

LOCATION, SHAPE AND VARIABILITY

 Descriptive statistics are used to describe the distribution of scores in

the data.

 Three types of numerical measures used to describe a continuous

distribution:
oMeasures of location (mean, mode, and median);
oMeasures shape (skewness and kurtosis); and
oMeasures of variability (range, inter-quartile range, and standard
deviation).

Median
MEASURES OF LOCATION
 The median is the middle value when the data are arranged in
 Measures of central tendency characterise the middle of the ascending or descending order.
distribution.
 If the number of data points is even, the median is estimated at the
Mean midpoint between the two middle values. The median is the 50th
percentile.
 The mean, or average value, is the most commonly used measure
of central tendency.

 It is used to estimate the mean when the data have been collected
using an interval or ratio scale.

 Most of the responses should be distributed around the mean.

Mode An illustration…

 The mode is the value that occurs most frequently.

 It represents the highest peak of the distribution.

 The mode is a good measure of location when the variable is

inherently categorical (non-metric) or has otherwise been grouped
into categories.

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MEASURES OF SHAPE

 The frequency distribution expressed in graphical form has a variety

of shapes.

 It is symmetric when each half mirrors the other.

 Most statistical techniques assume that the distribution of the data is

normal

 These measures are calculated on interval or ratio data (metric

data).

Skewness Positive Skewness Negatively Skewness

 Skewness is the tendency of the deviations from the mean to be  If there are extreme values
larger in one direction (positive or negative) than in the other. towards the positive end of a
distribution, the distribution is said
 Skewness values are not very reliable estimates unless the sample to be positively skewed. In this
size is sufficiently large (e.g. > 50). distribution, the mean is greater
than the mode.
 A negatively skewed distribution,
has a mean which is less than the
mode because of the presence
of extreme values at the
negative end of the distribution.

Kurtosis
 Kurtosis (K) is a measure of the peakedness or flatness of the curve
defined by the frequency of distribution.
 A positive value means that the distribution is more peaked than a
normal distribution.
 A negative value means that the distribution is flatter than a normal
distribution.
MEASURES OF VARIABILITY
 The measures of dispersion tell us how far each score is from the
other.
 These measures are calculated on interval or ratio data
 Measures include range, interquartile range, variance and standard
deviation.

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Range Variance

 The range measures the spread of the data. It is simply the
difference between the largest and smallest values in the sample.
As such, the range is directly affected by outliers.
 The difference between the mean and an observed value is called
the deviation from the mean.
 Variance is the mean squared deviation from the mean. The
variance can never be negative.

Interquartile Range  When the data points are clustered around the mean, the variance
is small.
 The interquartile range is the difference between the 75th and 25th
percentile.

Standard Deviation
KEY POINTS
 The standard deviation is the square root of the variance. Thus, the
standard deviation is expressed in the same units as the data, rather You must examine the descriptive statistics before conducting
than in squared units. further analysis of the data.

Three types of numerical measures used to describe a continuous

distribution:
oMeasures of location (mean, mode, and median);
oMeasures shape (skewness and kurtosis); and
oMeasures of variability (range, inter-quartile range, and standard
deviation).

THE END