Course Title:

Research Methods in
Accounting and Finance

Code: AcFn2131

Cr: 3
2017/18
Chapter 1: Concepts of Scientific Research
Concept and Definition of Research
• Research is a careful, systematic, patient study and
investigation in some field of knowledge, undertaken to
establish facts or principles.
• ……a careful investigation or inquiry especially through
search for new facts in any branch of knowledge.
• Research is a structured inquiry that utilizes acceptable
scientific methodology to solve problems and creates new
knowledge that is generally applicable.
• Research comprises defining and redefining problems,
formulating hypothesis or suggested solutions; collecting,
organizing and evaluating data; making deduction and
reaching conclusions; and last carefully testing the
conclusions to determine whether they fit the formulating
Concept …….
• Research is the manipulation of things, concepts or
symbols for the purpose of generalizing to extend,
correct or verify knowledge, whether that knowledge
aids in construction of theory or in the practice of an art.
• Research is the pursuit of truth with the help of study,
observation, comparison and experiment.
• Research is a systematic, controlled, empirical and
critical method consisting of enumerating the problem,
formulating a hypothesis, collecting the facts or data,
analyzing the facts and reaching certain conclusions
either in the form of solutions toward the concerned
problem or in certain generalizations for some
theoretical formulation.
Motivations in Research

What makes people to undertake research?

• Desire to get a research degree along with its
consequential benefits;
• Desire to face the challenges in solving the
unresolved problems, i.e., concern over practical
problems initiates research;
• Desire to get intellectual joy of doing some
creative work;
• Desire to be of service to society;
• Desire to get respectability.
 Nature and Scope of Business Research

• Business research covers a wide range of phenomena. For

managers, the purpose of research is to provide knowledge
regarding the organization, the market, the economy, or another
area of uncertainty.
• A financial manager may ask, “Will the environment for long-
term financing be better two years from now?”
• A personnel manager may ask, “What kind of training is
necessary for production employees?” or “What is the reason
for the company’s high employee turnover?”
• A marketing manager may ask, “How can I monitor my retail
sales and retail trade activities?”
 Nature.....
• Each of these questions requires information about how the
environment, employees, customers, or the economy will respond
to executives’ decisions.
• Research is one of the principal tools for answering these practical
questions.
• Within an organization, a business researcher may be referred to as
a marketing/organizational/director of financial and economic
researcher.
• Researchers in different functional areas share similar research
methods.
• The ultimate goal of research is to supply accurate information that
reduces the uncertainty in managerial decision making.
• Business research helps decision makers shift from intuitive
information gathering to systematic and objective investigation.
Characteristics of Research
To qualify as a research, a process must have certain
characteristics as listed below:
• Controlled: In exploring the causality relation to two
variables, the study must be set in a way that minimizes
the effects of other factors affecting relationship. In social
science research, however, since controlling is almost
impossible, the effect of the other variable must be
quantified rather.
• Rigorous: One must be very careful (scrupulous) in
ensuring that the procedures followed to find answers to
questions are relevant, appropriate and justified.
• Valid and verifiable: This concept implies that
whatever you conclude on the basis of your findings is
correct and can be verified by you and others.
• Empirical: This means that any conclusions drawn are
based upon hard evidence gathered from information
collected from real life experiences or observations.
• Critical: The methods employed and procedures used
should be critically scrutinized. The process of
investigation must be foolproof and free from any
drawbacks. The process adopted and the procedures
used must be able to withstand critical scrutiny.
• Systematic;- it follow logical sequences necessary and
sufficient conditions
 Purposes of Research

• To investigate some existing situation or

problem.
• To provide solutions to a problem.
• To explore and analyse more general issues.
• To construct or create a new procedure or
system.
• To explain a new phenomenon.
• To generate new knowledge.
• A combination of two or more of any of the
above.
(Hussey and Hussey 1997)
 Significance of Research
• Research inculcates scientific and inductive thinking and it
promotes the development of logical habits of thinking and
organization.
• Research becomes an important aid in solving operational problems.
This is due to the increasingly complex nature of business and
government.
• Research is helpful aid in economic policy. It provides the basis for
nearly all government policies in our 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 careerism or a way to attain a high
position in the social structure particularly for those
students of Masters or PhD.
• Research may mean a source of livelihood for those
professionals in research methodology.
• Outlet for new ideas & insights for philosophers and
thinkers.
• The development of new styles and creative work to
literary person.
• The generalization of new theories to analysts and
intellectuals.
 Research Methods and Methodology
• Research methods may be understood as all those methods/
techniques that are used for conducting research.
• It refer to the methods that the researcher use in performing research
operation.
• A research method is a way of conducting and implementing
research.
• Research methods can be put into the following three groups:
1. Methods which are concerned with the collection of data. These methods will
be used where the data already available are not sufficient to arrive at the
required solution;
2. Statistical techniques which are used for establishing relationships between
the data and the unknowns;
3. Methods which are used to evaluate the accuracy of the results obtained.
 Research Methods and Methodology
• Research Methodology is a way to systematically solve the
research problem.
• It may be understood as a science of studying how research
is done scientifically.
• Consists of the various steps generally adopted by a
researcher in studying a research problem
• Has wider scope than research methods.
• Decision of research methodology addresses the research
methods to be used and the logic behind the methods we
use in the context of the research study and explain why we
are using a particular method and why we are not using
others.
 Types of Research

Types of Research From the View point of

Application Objectives Type of information sought

Exploratory Quantitative
Research Research
Pure Research
Descriptive
Research Qualitative
Applied Research
Research

Correlational
Research

Explanatory
Research

The distinction among the types of research are not as clear as they are outlined here
Exploratory research
 Takes place where there is little or no prior knowledge of a
phenomenon.
 This type of research attempts to gain some familiarity with
the appropriate concepts and looks for patterns or ideas
without any preconceived ideas or explanation.
 Useful if you wish to clarify your understanding of a problem,
such as if you are unsure of the precise nature of the problem.
 There are three principal ways of conducting exploratory
research:
 a search of the literature;
 interviewing ‘experts’ in the subject;
 conducting focus group interviews.

E.g: What are the critical success factors of a profitable company?

Descriptive research
 Describes a particular phenomenon, focusing upon the issue of
what is happening, or how much of it has happened, rather
than why it is happening.
 Includes surveys and fact finding enquires of different kinds.
Its major purpose is description of the state of affairs as it
exists at present.
 In social science and business research the researcher has no
control over the variables; he can only report what has
happened or what is happening.
 Also includes attempts by the researcher to discover causes
even when they cannot control the variables.

E.g: How many people died of AIDS in Ethiopia last year?

Correlational research
 It examines two factors are naturally associated. (Co-relation: the degree
to which one variable is related to another)
 It talks about the link between different things.  It does not tell us that
variable A caused Variable B, but rather that they are somehow related.

Explanatory research
E.g. Is there a correlation between parental support and scholastic achievement?
 This type of research is involved in explaining why something happens,
and assessing causal relationships between variables.
 Describes phenomena and attempts to explain why behavior is the way it
is. It enables us to understand the very nature of what we are actually
looking at.
 When the research question demands that the researcher explains the
relationship between variables and demonstrates that change in one
variable causes change in another variable.

Eg.: Is smoking the main cause of lung cancer?

Pure and Applied Research
 Pure/basic research involves developing and testing theories and
hypothesis that are intellectually challenging to the researcher but
may or may not have practical application at the present time or in
the future.
 It is also concerned with the development, examination,
verification and refinement of research methods, procedures,
techniques and tools that form the body of research methodology.
 The knowledge produced through it is sought in order to add to the
existing body of knowledge of research methods.
 Applied/action research is undertaken to solve a specific problem
or provide a solution to a practical question.
Theoretical and Empirical Research

 Theoretical research generally uses the findings

from existing works to develop new ideas through
analysing existing theory and explanations. These
new ideas are not tested through collecting evidence
in the form of primary data.
 Empirical research supports the development of
new ideas through the collection of data (empirical
= observation or measurement rather than
theoretical reasoning).
 Quantitative Vs. qualitative Research
Based on the nature of the research problem and the
questions that will be asked to address the problem (and
accompanying review of the literature that establishes the
importance of the problem), the researcher chooses either
the quantitative or qualitative research track.
These, in turn, inform the specific research design to be used
and the procedures involved in them, such as sampling, data
collection instruments or protocols, the procedures, the data
analysis, and the final interpretation of results.

Creswell (2009)
 Quantitative Research
 Describing a research problem through a description of trends or a
need for an explanation of the relationship among variables
 Providing a major role for the literature through suggesting the
research questions to be asked and justifying the research problem and
creating a need for the direction of the study
 Creating purpose statements, research questions, and hypotheses that
are specific, narrow, measurable, and observable
 Collecting numeric data from a large number of people using
instruments with preset questions and responses
 Analyzing trends, comparing groups, or relating variables using
statistical analysis, and interpreting results by comparing them with
prior predictions and past research
 Quantitative Research
Writing the research report using standard, fixed structures
and evaluation criteria, and taking an objective, unbiased
approach.
Some quantitative research problems require that you
explain how one variable affects another. Variables are an
attribute or characteristic of individuals that researchers
study.
By explaining a relation among variables, you are interested
in determining whether one or more variables might
influence another variable.
 Qualitative Research
 Exploring a problem and developing a detailed understanding of a central
phenomenon.
A central phenomenon is the key concept, idea, or process studied in
qualitative research.
 Having the literature review play a minor role but justify the problem.
 Stating the purpose and research questions in a general and broad way so
as to the participants’ experiences.
 Collecting data based on words from a small number of individuals so
that the participants’ views are obtained.
 Analyzing the data for description and themes using text analysis and
interpreting the larger meaning of the findings.
 Writing the report using flexible, emerging structures and evaluative
criteria, and including the researchers’ subjective reflexivity and bias.
 Research Process
Research process consists of series of actions or steps
necessary to effectively carry out research and the desired
sequencing of these steps.
Research is an extremely cyclic process.
Later stages might necessitate a review of earlier work.

This isn’t a weakness of the process but is part of the

built-in error correction machinery.
Because of the cyclic nature of research, it can be difficult
to determine where to start and when to stop.
The activities overlap continuously rather than following
a strictly prescribed sequence
 The Research
Process

Review
concepts
Define and theories Formulate Design Collect data Analyze data Interpret
Research (test and report
hypothesis Research (Execution)
problem hypothesis if
Review (including any)
previous sample
research
findings
design)
 Step 1: Formulating the Research Problem
 Research problems are the issues, controversies, or concerns that guide
the need for conducting a study.
 There are two types of research problems, viz., those which relate to
states of nature and those which relate to relationships between
variables.
 Formulation of a problem involves the following steps:
Statement of the problem in a general way
Understanding the nature of the problem
Surveying the available literature
Developing the idea through discussion
Rephrasing the research problem into a working proposition.
 The way you formulate your research problem determines almost every step
that follows: the type of study design that can be used; the type of sampling
strategy that can be employed; the research instrument that can be used; and
the type of analysis that can be undertaken.
 At the very outset the researcher must single out the problem he wants to
study, i.e., he must decide the general area of interest or aspect of a subject-
matter that he would like to inquire into. Initially the problem may be stated in
a broad general way and then the ambiguities, if any, relating to the problem
be resolved.
 The formulation of a general topic into a specific research problem constitutes
the first step in a scientific enquiry.
 Considerations in selecting a research problem

 Interest  Availability of data

 Magnitude  Ethical issues
 Measurement of concepts
 Level of expertise
 Relevance
 Step 2: Extensive Literature Review
 Once the problem is formulated, a brief summery of it should be
written down.
 Literature review has three functions:
Bringing clarity and focus to the research problem
Improving the methodology
Broadening the researcher knowledge in the research area.
  Reviewing a literature is a continuous process.
 There are four steps involved in conducting a literature review:
Search for existing literature in your area of study
Review the literature selected
Develop a theoretical framework
Develop a conceptual framework.
 Step 3: Development of Working Hypothesis
 Working hypotheses is tentative assumption made in order to draw out
and test its logical or empirical consequences. Hypotheses affect the
manner in which tests must be conducted in the analysis of data and
indirectly the quality of data which is required for the analysis.
Hypotheses should be very specific and limited to the piece of
research in hand because it has to be tested.
 It sharpens the researcher’s thinking and focuses attention on the more
important facets of the problem. It also indicates the type of data and
the type of methods of data analysis to be used.
 Sometimes, particularly in case of exploratory researches, we do not
need hypotheses.
 4. Research Design
A research design is the arrangement of conditions for collecting
and analysis of data in a manner that aims to combine relevance to
the research purpose with economy in procedure.
Research design is the conceptual structure within which research is
conducted; it constitutes the blueprint for collection, measurement
and analysis of data.
Research design is a plan, structure and strategy of investigation so
conceived as to obtain answers to research questions or problems.
It includes outline of what the investigator will do from writing the
hypothesis and their operational implications to the final analysis of
data.
Research design is defined as a blueprint or detailed plan for
how a research studies is to be completed, operationalizing
variables so they can be measured, selecting a sample of
interest to study, collecting data to be used as a basis for
testing hypothesis and analyzing the results.
 A research design should include the following:
The study design per se and the logistical arrangements that
you propose to undertake
The measurement procedures
The sampling strategy
The frame of analysis
Time frame
A research design appropriate for a particular
research problem, usually involves consideration of
the following factors:
the means of obtaining information
the availability and skills of the researcher
the objective of the problem to be studied
The availability of time and money for the
research work.
 Step 5: Determining Sampling Design:
All the items under consideration in any field of inquiry
constitute a universe or population.
A complete enumeration of all the items in the population is
known as a census inquiry.
Because of the difficulty, relative inaccuracy and biasness
related to census study determining sample, few elements from
the population, becomes mandatory.
In such cases, the researcher must decide the way of selecting
a sample or what is popularly known as the sample design.
Sample design is a definite plan determined before any data
are actually collected for obtaining a sample from a given
population.
Samples can be either probability samples or non-probability
samples.
 Step 6: Collecting the data
The researcher now begins to gather data relating to the
research problem.
The means of data acquisition will often change based on the type
of the research problem.
This might entail only data gathering, but it could also require the
creation of new measurement instruments.
In dealing with any real life problem it is often found that
data at hand are inadequate, and hence, it becomes necessary
to collect data that are appropriate.
The researcher should select one of the methods of
collecting data taking in to consideration the nature of
investigation, objective and scope of the inquiry, financial
resources, available time and the desired degree of accuracy.
 Step 7: Analysis of Data
After the data have been collected, the researcher turns to the
task of analyzing them.
The data that were gathered in the previous step are analyzed as
a first step in ascertaining their meaning.
The analysis of data requires a number of closely related
operations such as establishment of categories, the application
of these categories to raw data through coding, tabulation and
then drawing statistical inferences.
The unwieldy data should be condensed in to a few manageable
groups and tables for further analysis.
 Step 8: Hypothesis Testing
After analyzing the data, the researcher is in a position to
test the hypothesis, if any.
The data will either support the hypotheses or they won’t.
This may lead the researcher to cycle back to an earlier
step in the process and begin again with a new
hypothesis.
This is one of the self-correcting mechanisms associated
with the scientific method.
 Step 9: Generalization and Interpretation

If a hypotheses is tested and upheld several times, it may

be possible for the researcher to arrive at generalization,
i.e., to build a theory.
As a matter of fact, the real value of research lies in its
ability to arrive at certain generalizations.
If the researcher had no hypotheses to start with, he might
seek to explain his findings on the basis of some theory -
interpretation.
 Step 10: Preparation of the Research Report
or the thesis
Finally, the researcher has to prepare the report of what has
been done by him following the appropriate formats and
appropriate language.
 Ethics in Business Research

What are Research Ethics?

Ethics are norms or standards of behavior that guide moral

choices about our behavior and our relationships with others
The goal is to ensure that no one is harmed or suffers adverse
consequences from research activities
Ethical Treatment of Participants

Begin data collection by explaining to the participant the

benefits expected from the research
Explain to the participants that their rights and well-being will
be adequately protected, and say how this will be done
Be certain that interviewers obtain the informed consent of the
participant
 Benefits

In direct contact with the participant, the researcher

should discuss the study’s benefits after his/her
introduction;
Neither overstate nor understate the benefits;
Sometimes, the actual purpose and benefits of the
study must be concealed from the participants to avoid
introducing bias;
But concealing the objectives of the research leads
directly to the problem of deception.
 Deception

Deception occurs when the participants are told only part of

the truth or when the truth is fully compromised. Two
reasons suggested for deception are:
To prevent biasing the participants before the survey or
experiment; and
To protect the confidentiality of a third party (e.g., the sponsor)
 Issues Related to Protecting Participants

Informed consent
Debriefing
Right to Privacy/Confidentiality
Data Collection in Cyberspace
 Informed Consent

Securing informed consent from participants is a matter

of fully disclosing the procedures of the proposed
survey or other research design before requesting
permission to proceed with the study.
If there is a chance the data could harm the participant,
offering only limited confidentiality, a signed form
detailing the types of limits should be obtained.
For most business research, oral consent is sufficient.
Informed Consent Procedures for Surveys
 Introduce yourself.
 Brief description of the survey topic.
 Geographical area of the respondents and target sample.
 Sponsor’s name.
 Describe purpose of research.
 Time estimate for completing the interview
 Promise anonymity and confidentiality (when appropriate).
 Tell the interviewee that participation is voluntary.
 Tell the participant that item non-response is acceptable.
 Ask permission to begin.
Debriefing Participants

Debriefing involves several activities following the

collection of data:
Explanation of any deception.
Description of the hypothesis, goal, or purpose of the study.
Post study sharing of results.
Post study follow-up medical or psychological attention.
The use of deception is questionable; when it is used, debrief
any participant who has been deceived.
 Ethical Issues related to the Client/Rights to Privacy

All individuals have a right to privacy, and researchers

must respect that right.
The privacy guarantee is important not only to retain
validity of the research but also to protect participants.
The researcher protects participant’s confidentiality in
several ways:
Obtaining signed nondisclosure documents.
Restricting access to participant identification.
Revealing participant information only with written consent.
Restricting access to data instruments where the participant is
identified.
Not disclosing data subset.
 Rights to Privacy
Privacy is more than confidentiality.
A right to privacy means one has the right to refuse to be
interviewed or to refuse to answer any question in an
interview.
To address these rights, ethical researchers do the
following:
Inform participants of their right to refuse to answer any question
or participate in the study.
Obtain permission to interview participants.
Schedule field and phone interviews.
Limit the time required for participation.
Restrict observation to public behavior only.