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Business Research Methods

Takele Fufa, Ph.D


College of Business and Economics
Addis Ababa University
October 2023
1.1 Concept and Definition of
Research
WHAT IS SCIENCE?
 The term science, imported through middle French,
derives from a Latin word Scientia.It means, to know
justification for assertion.
 It encompasses both the method use in the
generation of knowledge, and the body of knowledge
itself.

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SPECTRUMS OF SCIENCES

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SCIENTIFIC METHOD
It refers to principles that guide the researcher
f rom developing research question, to
collecting empirical evidence, to answering
the research questions.
It i s a method of inquiry that involves
systematic, unbiased, critical and accurate
investigation about a phenomenon, obtained
by examination of the best available evidence
and a lways su b j e c t t o co r r e c t i on a n d
improvement upon discovery of better
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WHY SCIENTIFIC RESEARCH?
 Compared with empirical or trial and error methods,
the scientific method is more objective,
1. . Is not based on hunches, experience
and intuition,
2. Is findings are accurate and confident, and
3. Could also apply solutions to similar problems.
 It lends itself to more purposive, rigorous, and
meticulous analysis (carefully gathered data leads to
conclusions)of the problem (Different people could
come up with comparable findings when data are
analyzed).

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SALIENT FEATURES of Scientific
Research
1. SYSTEMATIC: It is methodical
a well planned step-by-step procedure in
conducting an inquiry to achieve desirable
results.
It has high regard for careful planning and
strategizing.
It is organized: a comprehensible form, orderly
and organized arrangement

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2. EMPIRICAL EVIDENCE
I n v e s t i g a t i o n i m p l i e s a c t u a l
observation or experimentation
guided by practical experience, and
e x i s t i n g k n o w l e d g e . I t i s data
ba s e d . Data are th o s e that we
directly secured from field
observation
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3. UNBIASED.
It denotes impartiality, non prejudicial, and
absence (recognition) of personal beliefs,
preference, or inclination.
4. Accurate.
Accur
Accur
Accuracy is an effert to eliminate errors in the
investigation. It is a delibrate attempt to be
precise( repeatability) and exact.
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5. CRITICAL AND ANALYTICAL
Critical: exhibiting meticulous or thoroug
evaluation, extra caution, keen observation,
being able to detect and describe observable
differences.
Analytical: The application of logical and
judicious procedures in examining closely the
object of study.
6. CRITICAL AND ANALYTICAL

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OBJECTIVES OF SCIENCE

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1.2. Nature and scope of Business
Research
 Research in common parlance refers to a search for
knowledge.
 A scientific and systematic search for pertinent
information on a specific topic.
 Careful investigation or inquiry specially through
search for new facts in any branch of knowledge.
 Provide knowledge regarding the organization, the
market, the economy, or another area of uncertainty

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Business Research defined
 Business research is the application of the scientific method in
searching for the truth about business phenomena.
 These activities include defining business opportunities and
problems, generating and evaluating alternative courses of
action, and monitoring employee and organizational
performance.
 Business research is more than conducting surveys. This
process includes idea and theory development, problem
definition, searching for and collecting information, analyzing
data, and communicating the findings and their implications.

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1.3. Purposes of Research
 To gain familiarity with a phenomenon or to achieve
new insights into it (studies with this object in view
are termed as exploratory or formulative research
studies);
 To portray accurately the characteristics of a
particular individual, situation or a group (studies with
this object in view are known as descriptive research
studies);
To determine the frequency with which something
occurs or with which it is associated with something
else (studies with this object in view are known as
diagnostic research studies);
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 To test a hypothesis of a causal relationship
between variables (such studies are known as
hypothesis testing research studies)

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1.4. Significance of Research
 Research provides the basis for nearly all government policies in an
economic system.
 Research has its special significance in solving various operational and
planning problems of business and industry.
 Research is equally important for social scientists in studying social
relationships and in seeking answers to various social problems.
 Research may mean a careerism or a way to attain a high position in the
social structure;
 To professionals in research methodology, research may mean a source of
livelihood;
 To philosophers and thinkers, research may mean the outlet for new ideas
and insights;
 To literary men and women, research may mean the development of new
styles and creative work;
 To analysts and intellectuals, research may mean the generalisations of
new theories.

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1.5. Types of Research

 Descriptive vs. Analytical


 Applied vs. Fundamental
 Quantitative vs. Qualitative
 Conceptual vs. Empirical
 Some Other Types of Research

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Descriptive vs. Analytical
Descriptive research
 Includes surveys and fact-finding enquiries of different kinds.
 The major purpose of descriptive research is description of the state of
affairs as it exists at present.
 In social science and business research we quite often use the term ex
post facto research for descriptive research studies.
As the name implies, the major purpose of descriptive research is to
describe characteristics of objects, people, groups, organizations, or
environments. In other words, descriptive research tries to “paint a
picture” of a given situation by addressing who, what, when, where,
and how questions.
 Unlike exploratory research, descriptive studies are conducted after
the researcher has gained a firm grasp of the situation being studied.

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Analytical research,
 The researcher has to use facts or information
already available, and analyze these to make a
critical evaluation of the material.
 Time serious analysis or forecasting determine
analytic research.
 The base for this study is availability of quantitative
data collected by the subject of the study

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Applied vs. Fundamental:(On the basis of
the outcome of the research)

Applied research (action research)


 Aims at finding a solution for an immediate problem facing a
society or an industrial/business organization, whereas. Is
conducted to address a specific business decision for a
specific firm or organization.
 Research studies, concerning human behavior carried on
with a view to make generalizations about human behavior
discover a solution for some pressing practical problem
 Social impact analysis,Evaluative research(Formative and
Summative)
 Applied research, being impact analysis or evaluation
research uses two tools namely; need assessment and cost
benefit analysis.
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Example of applied research

• Should McDonalds add Italian pasta dinners to its


menu?
o Business research told McDonald’s it should/ not.
o “Why have profitability decreased during the last
quarter”? Applied research has a practical
problem-solving emphasis.

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Fundamental (Pure/Basic research)
 Is mainly concerned with generalizations and with
the formulation of a theory.
 Gathering knowledge for knowledge’s sake.
 Directed towards finding information that has a
broad base of applications and thus, adds to the
already existing organized body of scientific
knowledge.
 Basic business research (sometimes referred to as
pure research) is conducted without a specific
decision in mind, and it usually does not address the
needs of a specific organization.
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 It attempts to expand the limits of knowledge in
general, and as such it is not aimed at solving a
particular pragmatic problem.
 Basic research can be used to test the validity of a
general business theory (one that applies to all
businesses) or to learn more about a particular
business phenomenon.
 Examples: Is executive success correlated with high need for
achievement? Are members of highly cohesive work groups more
satisfied than members of less cohesive work groups? Do consumers
experience cognitive dissonance in low-involvement situations?

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Quantitative vs. Qualitative(On the basis of
the process of research)

QUANTITATIVE RESEARCH
 Is based on the measurement of quantity or
amount. Phenomena that can be expressed in
terms of quantity.
 Having complete face of this type of study in social
research is difficult. But using analysis of raw data
to meaningful form using percentage, mean or
standard deviation can considered as quantitative
study.

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QUALITATIVE RESEARCH
 Is concerned with qualitative phenomenon, i.e.,
phenomena relating to or involving quality or kind.
 Motivation Research’, an important type of
qualitative research.
 This type of research aims at discovering the
underlying motives and desires, using in depth
interviews for the purpose.
 Attitude or opinion research i.e., research designed
 to find out how people feel or what they think
 about a particular subject or institution is also
qualitative research
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Difference between quantitative and
qualitative

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Conceptual vs. Empirical
CONCEPTUAL RESEARCH
 Conceptual research is that related to some abstract
idea(s) or theory used by philosophers and thinkers to
develop new concepts or to reinterpret existing ones.
Empirical research
 E m p i r i c a l r e s e a r c h rel i es on e x p e r i e n c e o r
observation alone, often without due regard for
system and theory. It is data_x0002_based research,
coming up with conclusions which are capable of
obervation or experiment.We can also call it as
experimental type of research.

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Exploratory Research( On the basis Of Purpose)
 Exploratory research is conducted to clarify
ambiguous situations or discover potential business
opportunities.
 As the name implies, exploratory research is not
intended to provide conclusive evidence from which
to determine a particular course of action.
 In this sense, exploratory research is not an end
unto itself. Usually exploratory research is a first
step, conducted with the expectation that additional
research will be needed to provide more conclusive
evidence
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 In our university example, it could be that exploratory
research is needed to help identify concerns about
nontraditional course delivery for business classes. This
exploratory research should include open-ended interviews
with faculty, students, and alumni. By doing so specific
hypotheses can be developed that test the relative
attractiveness of alternative curricula to students, the effect of
online instruction on job satisfaction and on alumni quality
perceptions. These hypotheses may be tested by either, or
both, of the remaining two research types.
 Exploratory research is broad in focus and rarely provides
definite answers to specific research issues.

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Descriptive Research
 In social science and business research we often
use the term ex-post facto research for descriptive
research.
 The main characteristic of such research is that the
researcher has no control over the variables; he/she
can only report what has happened or what is
happening. Examples:
 What is the absentee rate in a particular office?
 Who are the main consumers of organic foods?
 How many students read the prescribed course literature?
 Where do most holiday-makers travelling overseas go?
 When do petrol stations tend to raise their prices?

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Causal Research(explanatory)
Research
 If a decision maker knows what causes important
outcomes like sales, stock price, and employee
satisfaction, then he or she can shape firm decisions
in a positive way.
 Causal inferences are very powerful because they
lead to greater control. Causal research seeks to
identify cause and-effect relationships.
 When something causes an effect, it means it
brings it about or makes it happen. The effect is the
outcome. Rain causes grass to get wet. Rain is the
cause and wet grass is the effect.

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 Explanatory research seeks explanations of observed
phenomena, problems, or behaviours.
 While descriptive research examines the what, where, and
when of a phenomenon, explanatory research seeks
answers to why and how types of questions.
 Examples include understanding the reasons behind
adolescent crime or gang violence, with the goal of
prescribing strategies to overcome such societal ailments.
 Most academic or doctoral research belongs to the
explanation category, though some amount of exploratory
and/or descriptive research may also be needed during initial
phases of academic research.
 Zikmund (1984) suggests that the degree of uncertainty
about the research problem determines the research
methodology, as illustrated in the Table below.

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Factors Exploratory .Descriptive Explanatory
research research research
Degree of Problem Key variables not Key variables are Key variables and
Definition defined defined key relationships
are
defined
Amount of Highly ambiguous Partially defined Clearly defined
Uncertainty
Key Research Research questions Research questions Research
Statement hypothesis

merger rate for


Possible “Quality of service is “What have been
Situations declining and we the
don’t know why.” trends in
organisational
“Would people be downsizing over the
interested in our past ten years?”
new “Did last year’s
product idea?” product recall have
an impact on our
“How important is company’s share
business process price?”
reengineering as a “Has the average
strategy?”
know thecurrent
“Which
dividends and
of two
growth rates of
training
dividends?”
progra
“Do buyers prefer
ms is 44
our product in a
more
new
effectiv
e for
reducin
g
labour
turnove
r?”
“Can I
predict
the
value
of
energy
stocks
if I
Case study
 Case study is a type of analytical research in which a
researcher examines many features of a very few
elements in-depth over duration of time. A case can
be individual, group, organization, movement,
events, or geographic units. The data in case study
are usually more detailed, varied and extensive.
 Mostly, data involved are qualitative data about a
few cases. In a case study a researcher may
intensively investigate one or two cases or compare
a limited set of cases focusing on a several factors.

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Tracer Study
 Tracer study is also known as follow up study. It is a
type of explanatory research that aims at
investigating the subsequent development of
individuals after a specified treatment or condition.
• Example:Whether all of the graduates are employed
or absorbed by the labor market.
Predictive research
 Such research goes beyond explaining why and how things
happened. It predicts (forecasts) the possible (probability of
happening similar situation in other places). It tries to explain
about the probability of happening similar things in the future.
 Example:How would an increase in interest rate affect our
profit. margin?
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On the basis of the environment in
which the research is carried out;
 Field-setting research: Non-participant direct
observation,Participant observation,Mass
observation,Mail questionnaire,interview,case study
and life history
 Laboratory research: Small group study of random
behaviour, play and role analysis.
 Simulation research

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On the basis of the time required to
complete the research
 Cross-sectional (One –time) Research; it is a
research limited to a single time period.
 Many cross-sectional studies are exploratory or
descriptive in purpose.
 They are designed to look at how things are now,
without any sense of whether there is a history or
trend at work.
 One-shot or cross-sectional studies are those in
which data is gathered once, during a period of days,
weeks or months.

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Longitudinal Research
 Research carried out longitudinally involves data collection at
multiple points in time. Longitudinal studies may take the form of:
a) Trend study – looks at population characteristics over time,
e.g. organisational absenteeism rates during the course of a
year;
b) Cohort study – traces a sub-population over time, e.g.
absenteeism rates for the sales department;
c) Panel study – traces the same sample over time, e.g.
graduate career tracks over the period 1990 - 2000 for the
same starting cohort.
• While longitudinal studies will often be more time consuming
and expensive than cross-sectional studies, they are more
likely to identify causal relationships between variables.

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Other Research types.
 Clinical or diagnostic research:such research follow
case-study methods or indepth approaches to
reach the basic causal relations and usually go deep
into the causes of things or events that interest us,
using very small samples and very deep probing data
gathering devices.
 Historical research:which utilizes historical sources
like documents, remains, etc. to study events or
ideas of the past, including the philosophy of
persons and groups at any remote point of time.
 Library research: (i) Analysis of historical Recording
of notes, (ii) analysis of documents.
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Philosophical issues in Research
 Ontological ( what can we know)considerations,concerning
( Realism)versus constructionism(Relativism ).
 Epistemological(how can we know) considerations loom large
in considerations of research strategy. To a large extent,
these revolve around the desirability of employing a natural
science model ( and in particular positivism ) versus
interpretivism.
 Research Methodology( how can we find out). Quantitative vs
Qualitative contrast( Deductive vs Inductive).
 Research Methods( what tool to use).
Experiments, surveys vs Interviews, diaries etc
 Structure. Literature review then to develop a model vs
Research aims( objectives,research methodolgy, literature
review to validation.
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Philosophical Foundations( The
Research Paradigms)

 Positivism
 Normativism
 Pragmatism
 Blending the Philosophies
 Empiricism in Research
 The Scientific Approach

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A Framework for Design—The Interconnection of Worldviews,
Strategies of Inquiry,and Research Methods

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 Different philosophies of research are introduced to
illustrate how they contribute to economic research.
“One’s philosophical beliefs affect one’s choice of
‘legitimate questions’ … as well as one’s choice of
research methods”(George Ladd).
 Each philosophical position has advantages, yet
each has problems. In practice, researchers tend to
use a combination,stressing different positions for
different problems. These philosophies stress
confirmation rather than discovery

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POSITIVISM/ INTERPRETIVISM
 Positivism and Interpretivism are the two basic
approaches to research methods in Sociology.
 POSITIVISM:Contends that only “factual” knowledge
from observation (the senses) is trustworthy. Eg.
Stresses measurement. Logical positivism expands
this to include reasoning and theory as valid means
to achieve reliable knowledge.
Positivist prefer scientific quantitative methods, while
Interpretivists prefer humanistic qualitative methods.

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 Logical positivists do not believe in the scientific
validity of prescriptive or descriptive knowledge
about values.
 Only things which can be directly observed or
measured are considered by positivists as valid for
scientific attention.
 Logical positivism holds that theoretical concepts are
only valid if theory can be quantified.
 Both facts and theories are seen as sources of
hypotheses –economists embrace this component of
positivism.
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 But a problem with positivism is that many things
that are not visible or “concrete” are still real. eg.
demand relationships can’t be “seen” but are very
real – their characteristics can be estimated.
 Logical posi tivi sm is not accep ted by many
economists, but has had a profound effect on
economic thinking and research.
 It has served to place more emphasis on
measurement and quantification in economics. eg.
new methods in statistics and econometrics.

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 Positivism has also highlighted the importance of
objectivity. In emphasizing the importance of
providing evidence, personal judgments and
perceptions are not accepted as “ scientific”
information.
 In summary, positivism has had important and
lasting effects on science and economic research.
But it is too limiting a philosophy to be the dominant
philosophy of science

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Interpretivism
 An Interpretivist approach to social research would
be much more qualitative, using methods such as
unstructured interviews or participant observation.
 Interpretivists, or anti- positivists argue that
individuals are not just puppets who react to external
social forces as Positivists believe. According to
Interpretivists individuals are intricate and complex
and different people experience and understand the
same ‘objective reality’ in very different ways and
have their own, often very different, reasons for
acting in the world, thus scientific methods are not
appropriate.

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Interpretivism
 Intepretivist research methods derive from ‘social
action theory‘. Intereptivists actually criticise
‘scientific sociology’ (Positivism) because many of
the statistics it relies on are themselves socially
constructed.
 Interpretivists argue that in order to understand
human action we need to achieve ‘Verstehen’-
empathic understanding of human behavior‘, or
empathetic understanding – we need to see the
world through the eyes of the actors doing the
acting.

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Normativism
 A collection of philosophies – emphasizes that
knowledge of the goodness or badness of
conditions, situations, and actions is necessary to
produce prescriptive knowledge (what “ought“ to be
done).
 Normativistic knowledge in economic research
emphasizes people’s values – efficiency, welfare,
income, standard of living, quality of life. Intrinsic
values (good and bad) are considered knowable.
 Ho w e v e r , N o r m a t i v i s m in ec o n o m i c s i s not
concerned with moral questions of right and wrong
(but rather good or bad, which is different).
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 Economic choices (the “right choice”) may entail
selecting between several “bad” or unfavorable
alternatives.
 Personal or private values should not be considered,
but rather public knowledge of values. Emphasis is
on objectivity.
 Objective Normativism refers to the position that the
desirability of a result or outcome can be known,
based on experience or logic.
 Objective normativism accepts that value knowledge
is sometimes essential for statements about what
should be done to accomplish specific goals or
objectives.
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Pragmatism
 Mainly focused on prescriptive knowledge (what
ought to be) and emphasize problem solving.
 Believes that positivistic value-free knowledge and
Normativistic value knowledge to be interdependent.
 “Workability” (appropriateness for the problem at
hand) is the central pragmatic criterion for judgment.
 Pragmatism became a prominent philosophical force
in economics research in the 1920s.
 Institutional economics (i.e of society’s institutions)
pragmatically focuses on problem solving.

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How the Philosophies Blend
 Most disciplines have adopted the philosophies of
logical positivism, objective Normativism and
pragmatism in some combination.
 Economics is a problem-solving, decision-oriented
discipline by nature.
 Many different kinds of problems are addressed,
ranging from simple everyday activities to complex
theoretical problems of cause-effect relationships.
 The three philosophies – positivism, normativism,
and pragmatism – may all be more or less important
depending on the type of research.

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Empiricism in Research Methodology
 The influence of logical positivism fostered interest in
measurement or quantification, as applied to
economics.
 E m p i r i c i s m goes be y o n d th i s i n s u b j e c t i n g
measurement results to testing. Collecting of social
and economic data led to statistical methods of
analysis, including estimation techniques.
 The integration of mathematics with economic theory
led to the development of econometrics.

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 Econometrics originated in the early 1900’s and was
augmented tremendously by the advent of electronic
computers.
 Since it emphasizes empirical data and
measurements it is both positivistic and pragmatic.

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The Scientific Method
 All research, whether basic or applied, involves the scientific
method. The scientific method is the way researchers go about
using knowledge and evidence to reach objective conclusions
about the real world.
 The scientific method is the same in social sciences, such as
business, as in physical sciences, such as physics. In thiscase,
it is the way we come to understand business phenomena.
 In the scientific method, there are multiple routes to developing
ideas. When the ideas can be stated in researchable terms, we
reach the hypothesis stage.
 The next step involves testing the hypothesis against empirical
evidence (facts from observation or experimentation). The
results either support a hypothesis or do not support a
hypothesis. From these results, new knowledge is generated.
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 In basic research, testing these prior conceptions or
hypotheses and then making inferences and conclusions
about the phenomena leads to the establishment of general
laws about the phenomena.
 Use of the scientific method in applied research ensures
objectivity in gathering facts and testing creative ideas for
alternative business strategies.
 The essence of research, whether basic or applied, lies in the
scientific method. Much of this book deals with scientific
methodology. Thus, the techniques of basic and applied
research differ largely in degree rather than in substance.

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DEDUCTION AND INDUCTION IN THE
SCIENTIFIC APPROACH(Theory and research)

 Induction is involved in developing theory and


Deduction is used in validating or evaluating the
applicability of the theory through empirical testing.
Here we are concerned with how deduction and
induction are used, rather than their relative merits
as forms of logic
 Deductive reasoning starts with premises –
assumptions . If the individual premises are true and
c o m p l e t e and the re a s o n i n g i s c o r r e c t , the
conclusion is reliable.
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 Disciplinary research often involves developing or
modifying theories, leading to hypothesized
outcomes. Theoretical reasoning can include:
newly developed theories,new conceptual elements
added to theories and modification of existing
theories
 In applied research, the reasoning involves the
application of existing theory and evaluation of
expected outcomes.

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The process of Deduction

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1.6. Research process

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 Business research, like other forms of scientific
inquiry, involves a sequence of highly interrelated
activities. The stages of the research process
overlap continuously, and it is clearly an
oversimplification to state that every research
project has exactly the same ordered sequence of
activities. Nevertheless, business research often
follows a general pattern. We offer the following
research business stages:
1. Defining the research objectives
2. Planning a research design 3. Planning a sample
4. Collecting the data and 5. Analyzing the data
6. Formulating the conclusions and preparing the report
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1.7. Ethics and Business Research
• All professions are guided by a code of ethics that
has evolved over the years to accommodate the
changing ethos, values, and expectations of those
who hold a stake in the profession.
• Most professions have an over all code of conduct
that also governs the way they carry out research.
• In doing any research there is an ethical
responsibility to do the work honestly and with
integrity.

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• Research ethics is particularly important for
Business research specifically accounting and
finance research because financial data are
mostly competitive and often confidential.
• Therefore, researcher need to exercise utmost
due care in unanimously using financial data only
for his/her research.
• Thus, researchers must ensure the r ights,
privacy, and welfare of the people and
communities that form the focus of their studies.

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• There are many stakeholders in a research activity
so it is important to look the ethical issues for each
of the stakeholders.
1. The Participants or subjects
2. The researcher
3.The funding body
• Participants: In social science and business research
participants include individuals, groups, households,
communities, firms and consumers and provide information
to help the re s e a r c h e r to gain un d e r s t a n d i n g of a
phenomenon, situation, issue or interaction.
• There are many ethical issues concerning research
participants: These are:
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1) Seeking consent
• In every research it is considered unethical to
collect information with out the knowledge of
participants and their expressed willingness and
informed consent.
• All informed consent procedures must meet three
criteria:
 Participants must be competent to give consent,
 Sufficient information must be provided to allow
for a reasoned decision and
 Consent must be voluntary and unforced
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2. Privacy of participants
• Information sought can pose an ethical dilemma in
research.
• Certain types of information can be regarded as
sensitive or confidential by some people and thus an
invasion of privacy.
• Asking information on sexual behaviour, drug use,
marital status, income and age may be considered to
be an invasion of privacy by some.
• It is not unethical to ask these questions provided
that you tell your respondents the type of information
you are going to ask clearly and frankly and give
them sufficient t ime to decide i f they want to
participate
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3) Must not harm the participants
• Is the research going to harm participants in any
way? Like discomfort, anxiety, harassment etc
• The researcher must make sure that the risk is
minimal –not greater than an ordinarily encountered
in daily life
4) Maintaining confidentiality
• Sharing information about a respondent with others
for purposes other than research is unethical.

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Ethical issues relating researcher
1) Avoiding bias:
• Bias on the part of the researcher is unethical
• Bias is a deliberate attempt either to hide what has
been found in the study or to highlight something
disproportionately to its true existence
2) Using appropriate research methods:
• A researcher has an obligation to use appropriate
methodology in conducting a study
• Example: Selecting a highly biased sample, using an
invalid instrument or drawing a wrong conclusions

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3) Appropriate and correct reporting
• Using appropriate methodology but failing to
correctly report the findings is unethical
4) Appropriate use of information
• How will the information obtained from
respondent be used by the researcher? The use
of information in a way that directly or indirectly
adversely affects respondents is unethical.

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Ethical Issues regarding sponsors
 Most research in business is carried out using funds
provided by sponsoring organizations for specific
purpose.
 They shall not influence the methodology to be
used by researcher.
 They shall not prohibit the publication of the findings
 In general misuse of information, unfair impositions,
controls and restriction by funding organization are
unethical in research.
END OF CHAPTER ONE

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