Research Methods for Business

A Skill-Building Approach
Uma Sekaran and Roger Bougie
Chapter 15 Quantitative Data Analysis:
Hypothesis Testing

Edited by Dr. Hadeel Al-Maaitah

hadeel@hu.edu.jo

Research Methods © 2012 John Wiley & Sons Ltd.

for Business www.wiley.com/college/sekaran
 Steps of Hypothesis Development
&Testing
1. State the null and the alternate hypotheses.
2. Determine the level of significance desired (p 0.05, or more,
or less).
3. Choose the appropriate statistical test depending on the type
of scales used (nominal, ordinal, interval, or ratio) and whether
data collected are parametric or
nonparametric.
4. See if the output results from computer analysis indicate that
the significance level is met. When the resultant value is larger
than the critical value, the null hypothesis is rejected, and the
alternate accepted. If the calculated value is less than the
critical value, the null hypothesis is accepted and the alternate
hypothesis rejected.
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 Steps of Hypothesis Development and Testing… cont.

• Nonparametric test: A hypothesis test that does not require

certain assumptions about the population’s distribution, such
as that the population follows a normal distribution.

• The hypothetic‐deductive method requires hypotheses to be

falsifiable. For this reason, null hypotheses are developed.
A null hypothesis (H ) is a hypothesis set up to be rejected in
0

order to support an alternate hypothesis, labeled H . When A

used, the null hypothesis is presumed true until statistical

evidence, in the form of a hypothesis test, indicates otherwise.
(Chapter 5: Theoretical Framework & Hypothesis Development)

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 Type I Errors, Type II Errors & Statistical Power
• Type I error (): known as the significance level is the
probability of rejecting the null hypothesis when it is actually
true. Typical significance levels in business research are 5%
(<0.05) and 1% (<0.01).
• Type II error (): the probability of failing to reject the null
hypothesis given that the alternative hypothesis is actually
true.
The probability of type II error is inversely related to the
probability of type I error: the smaller the risk of one of these
types of error, the higher the risk of the other type of error.
• Statistical power (1 - ): the probability of correctly rejecting
the null hypothesis.
In other words, power is the probability that statistical
significance will be indicated if it is present.
Research Methods © 2012 John Wiley & Sons Ltd.
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 Type I Errors, Type II Errors and Statistical Power

Statistical power depends on:

1. Alpha (α): the statistical significance criterion used in

the test. The relationship between alpha and the
higher probability of finding an effect the power is
positive.
2. Effect size: the effect size is the size of a difference
or the strength of a relationship in the population: a
large difference (or a strong relationship) in the
population is more likely to be found than a small
difference (similarity, relationship).
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 Statistical power depends on

3. The size of the sample: at a given level of alpha,

increased sample sizes produce more power, because
increased sample sizes lead to more accurate
parameter estimates. Thus, increased sample sizes
lead to a higher probability of finding what we were
looking for. However, increasing the sample size can
also lead to too much power, because even very small
effects will be found to be statistically significant.

Along these lines, there are four interrelated components

that affect the inferences you might draw from a
statistical test in a research project: the power of the test,
the alpha, the effect size, and the sample size.
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 Choosing the Appropriate Statistical
Technique

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for Business n
 Univariate techniques
Testing a hypothesis on a single mean:
• Metric data: One sample t-test
Statistical technique that is used to test the hypothesis
that the mean of the population from which a sample is
drawn is equal to a comparison standard.
• Nonmetric data: Chi-square
A nonparametric test that establishes the independence
or otherwise. It tells you how much difference exists
between your observations and the expected if there
were no relationship at all in the population
Research Methods © 2012 John Wiley & Sons Ltd.
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 Univariate techniques

Testing hypotheses about two related means

Case 1: Independent samples
• Metric data: Independent samples t-test
An Independent samples t-test compares the means for two
groups.
• Nonmetric data:
- Chi-square
- Mann−Whitney U-test : the nonparametric equivalent to
the independent t-test and the appropriate analysis to
compare differences that come from the same population
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 Univariate techniques

Testing hypotheses about two related means

Case 2: Related samples
• Paired samples t-test: examines differences in same group
before and after a treatment.
• The Wilcoxon signed-rank test: a non-parametric test for
examining significant differences between two related
samples or repeated measurements on a single sample.
Used as an alternative for a paired samples t-test when the
population cannot be assumed to be normally distributed.
• McNemar's test

Research Methods © 2012 John Wiley & Sons Ltd.

for Business www.wiley.com/college/sekaran
 Univariate techniques

Testing Hypotheses about Two Unrelated

Means
• Metric data: One-way analysis of variance
• Nonmetric data: Chi-square

Research Methods © 2012 John Wiley & Sons Ltd.

for Business www.wiley.com/college/sekaran
 Multivariate techniques
One metric dependent variable
• Analysis of variance and covariance
• Multiple regression analysis
• Conjoint analysis
One nonmetric dependent variable
• Discriminant analysis
• Logistic regression
More than one metric dependent variable
• Multivariate analysis of variance
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