Theory building lecture-3

AdvanceResearch one

Muhammad Shafiq

THEORY BUILDING

An Economist investigation

What produces inflation

If org structure influences leadership style◦ Both want to able to

Understand predict

What is then they want to say

“If we do such and such then so and so will happen”

Understand predict

What Theories then “Help to better understand reality”

“General proposition to explain the relationship among the general phenomena”

Play role in understanding practical res

What Theories then

“theories allow generalization beyond individual fact or

situation”

What Theories then

“if facts conflict with a theory, either the theory must be

changed or the fact”

Theories Theories are nets cast to catch what we call “the world”: to rationalize, to explain, and to master it. We endeavor to make the mesh ever finer and finer.

Karl R. Popper

Theory A coherent set of general propositions used as principles of explanation of the apparent relationships of certain observed phenomena.

Previous studies and finding theories

Two Purposes Of Theory

Prediction

Understanding

Theory building

Two major stages:◦ Descriptive ◦ Normative

Theory building steps Three steps

◦ Observation-describe-measure◦ Categorization-frameworks & typology◦ Association-Model

Theory building steps Three steps

◦ Observation-describe-measure◦ Categorization-frameworks & typology◦ Association-Model

Theory building steps “Observation”

Researcher observe the happening

Carefully describe

Measure Construct is developed◦ E-g Utility or satisfaction

Theory building steps “categorization”

Researcher categorize the phenomena on the basis of attributes

Frame work is developed◦ E-g will consumer rely on objective attributes of product or on other factors

in product development

Theory building steps “defining relationship”

Researcher explore the interrelationship in classified attribute

Model is developed◦ Several statistical techniques are available

Example

Consu buy beh

Interrelationship Buy need, avail of goods, price, motiv

What and how

Concept Generalized idea about a class of:

◦ Object◦ Attribute◦ Occurrences ◦ Processes

You would categorize empirical events or real things into concept

Concept is basic unit of theory development

That has been given a nameGNP, INTEREST RATE etc

Example:Behavior of teacher

Concepts; examples Concept are building blocks:

◦ E-g leadership, productivity, moral

In finance: ◦ GNP, risk aversion, interest rate, inflation

Accounting:◦ Assets, liabilities, depreciation

Marketing◦ Customer satis, market share, cus loyalty

concept Abstract reality

Concept (or Construct) A generalized idea about a class of objects, attributes, occurrences, or processes that has been given a name

Building blocks that abstract reality

“leadership,” “productivity,” and “morale”

“gross national product,” “asset,” and “inflation”

Ladder of abstraction for concept

Asset

Plant machine

Punch press

Reality

Researcher operates at two level

Abstract or proposition level◦ Knowledge and concepts

Empirical level◦ We experience reality-that is, we observe, measure or manipulate the

objects or event

Sales person

job performance

Abstract level

Empirical level

No. of sales callsNo. of salesRs value of sales

Latent construct A concept that is not directly observable or measurable but can be measure through proxy measure

Abstract statements Older workers prefer different reward than younger worker

Treat employees better, get more loyal employees

Inflation in the increase as corruption increase

Research proposition and hypotheses

Proposition is:

Statement explaining the logical linkage among certain concepts by asserting a universal connection between concepts

◦ Treat employees better will make them more loyal .

Research proposition and hypotheses

Hypothesis is:

Formal statement that explain the outcome

Empirically testable: Simply a guess◦ More knowledge of product will bring more sales revenue.◦ Consumer attitude change will decrease the revenue (examining res hypo

against reality by using data).

Should be written as true or false

Treat employee better

More loyal employee

Increase retirement benefits 10%

Reduce employee turnover

Scientific Business Researchers Operate at Two Levels

Abstract level ◦ concepts ◦ propositions

Empirical level◦ variables◦ hypotheses

Definitions Abstract level -In theory development, the level of knowledge expressing a concept that exists only as an idea or a quality apart from an object.

Empirical level -Level of knowledge reflecting that which is verifiable by experience or observation.

Theory Building A Process Of Increasing Abstraction

Theories Theories

Propositions Propositions

Concepts Concepts

Observation of objectsObservation of objectsand events (reality ) and events (reality ) In

crea

sing

ly m

ore

abst

ract

CONCEPTS

OBSERVATION OF OBJECTS AND EVENTS (REALITY)

EmpiricalLevel

AbstractLevel

Concepts are Abstractions of Reality

Scientific Method The use of a set of prescribed procedures for establishing and connecting theoretical statements about events and for predicting events yet unknown.

Abstract Level Concepts abstract reality.

Propositions are statements concerned with the relationships among concepts.

Always makes four sales calls

a day

Dollar bonus for sales volume

over quota

Concept B(Habits)

Hypothesis at Empirical Level

Concept A(Reinforcement)

Proposition at Abstract Level

A hypothesis is a proposition that is empirically testable. It is an empirical statement concerned with the relationship among variables.

A variable is anything that may assume different numerical values.

Theory and SongA fact without a theory

Is like a ship without a sail,

Is like a boat without a rudder,

Is like a kite without a tail.

A fact without a figure is a tragic final act,

But one thing worse in this universe

Is a theory without a fact.

Deductive Reasoning The logical process of deriving a conclusion from a known premise or something known to be true.

◦ We know that all managers are human beings.

◦ If we also know that John Smith is a manager,

◦ then we can deduce that John Smith is a human being.

Inductive Reasoning The logical process of establishing a general proposition on the basis of observation of particular facts.

◦ All managers that have ever been seen are human beings;◦ therefore all managers are human beings.

Wonder you may be Where theories come from

Easy!

At abstract , conceptual level

Theories developed by deductive reasoning

E-g????

At empirical level Inductive reasoning

How?

AssessAssessrelevant relevant existingexistingknowledgeknowledge

FormulateFormulateconcepts &concepts &PropositionsPropositions

StatementStatementof of HypothesesHypotheses

Design Design researchresearch

Acquire Acquire empiricalempiricaldatadata

Analyze &Analyze &evaluate evaluate datadata

Provide Provide explanation-explanation-state newstate newproblemproblem

The Scientific Method: An Overview

bye bye…