This document provides an overview of key concepts in theory building according to William G. Zikmund's book. It discusses the purposes of theory as prediction and understanding. A theory is defined as a set of general propositions used to explain relationships between observed phenomena. For a theory to be good, it must be valid, have generalization ability, and be replicable. Concepts abstract reality and are building blocks of theories, while propositions propose linkages between concepts. Hypotheses, which are empirically testable propositions, are developed from concepts and propositions. The scientific method involves both deductive and inductive reasoning to move from theories to hypotheses to empirical testing.

1. Business
Research Methods
William G. Zikmund
Chapter 3:
Theory Building

2. 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).

3. Two Purposes Of Theory
• Prediction
• Understanding

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

5. What makes a good theory?
• Validity: It fits the facts
• Generalization: Makes predictions about
future or other events
• Replication: It can be repeated with similar
findings
Theories must be: Objective, Verifiable (i.e. within the
accepted margins of error), Falsifiable / disprovable
Good theories must understand, explain and predict

6. 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 …..
• In management we often use concepts or
constructs as variables
• Examples: Leadership, Productivity, Morale, Gross
National Product, Asset, Inflation, Social
Responsibility, GNP, Agency, Honesty, Efficiency

7. Example of a Theory: Voluntary Job Turnover
Labour market conditions, number of organizations, personal characteristics,
And other partial determinants of ease of movement
Perceived ease of movement (e.g.
Expectation of finding alternatives,
unsolicited opportunities)
Perceived desirability of movement
(e.g. job satisfaction)
Equity of pay, job complexity, participation in
decision-making, and other partial determinants
of desirability of movement
Zikmund, pp. 44 - 45

8. Abstraction
• Concepts abstract reality
– Concepts are expressed in words that refer to
various events or objects
– Concepts vary in degree of abstraction
• Ladder of abstraction
• Research operates at abstract and empirical
level linking concepts together as we begin
the journey to construct theory.

9. VegetationVegetation
FruitFruit
BananaBanana
RealityReality
Increasinglymoreabstract
A Ladder Of Abstraction
For Concepts

10. Scientific Business Researchers
Operate at Two Levels
• Abstract level
– concepts
– propositions
• Empirical level
– variables
– hypotheses

11. 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.

12. Theory Building A Process Of
Increasing Abstraction
TheoriesTheories
PropositionsPropositions
ConceptsConcepts
Observation of objectsObservation of objects
and events (reality )and events (reality )
Increasinglymoreabstract

13. Propositions
• Concepts are the basic building blocks
• Propositions propose the linkages between
these concepts
theory
propositions
concepts
Levelofabstraction

14. CONCEPTS
OBSERVATION OF OBJECTS AND EVENTS (REALITY)
Empirical
Level
Abstract
Level
Concepts are Abstractions of Reality

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

16. Abstract Level
• Concepts abstract reality.
• Propositions are statements concerned with
the relationships among concepts.

17. From proposition to hypothesis
Concept A:
Punishment Or
Reinforcement
Concept B:
Attendance Or
Habits
Yelling at students
Or
Dollar bonus for
sales volume
over quota
Increases
attendance by
50% Or
Always makes
four sales calls
a day
Abstract
Level
Empirical
Level
Proposition
Hypoth-
esis
Proposition at Abstract Level
Hypothesis at Empirical Level

18. • 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 i.e. that varies
• Make sure that you define, or operationalize all
your variables… an operational definition
• Null hypothesis

19. The Origin of the Hypothesis
• Is said to date from the time of Plato
(428-347BC), a Greek philosopher.
• Plato believed one should develop a
belief and then test it by observation.

20. The earth is flat!
• The medieval church depicted the earth as
flat.
• This was linked to religious and other beliefs
in a limited world. They used deductive
reasoning based not on fact but on their own
beliefs.
• Copernicus, Galileo and others helped prove
the earth was anything other than flat.
• The faulty hypothesis did not fit the facts, but
it held sway over generations till it was shown
to be false.

21. What makes a good hypothesis?
• precise
• specifies variables to measure
• specifies relationships between
variables

22. A poor hypothesis
• Students spend too much money on fast food.
Students with incomes of less than 10,000 per year
spend a higher proportion of their income in fast
food restaurants than the established mean for the
general population.
A better hypothesis

23. Theory and Song
A 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.

24. Research questions
• Are often used when you are not sure of a
specific hypothesis, you need to generalise
• Helps focus on the problem and identifies
what can be measured
• Whereas there is normally a single
hypothesis, there are normally multiple
research questions

25. Theory Formulation
Deductive VS Inductive Reasoning

26. 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.

27. Deductive Reasoning
Theory
Hypotheses
Observation
Confirmation
Using deductive reasoning one
starts with a given theory as the
basis for which we develop
hypotheses and then confirm
these with specific data acquired
using observation or
experimentation
(Is our theory valid or not?)

28. 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.

29. Inductive Reasoning
Observation
Pattern
Tentative Hypothesis
Theory
Using inductive reasoning, one
starts with a specific observation
as the basis for which we develop
a general pattern and tentative
hypothesis as the foundation
of a theory

30. Double Movement of reflexive thought
• Induction occurs when we observe a fact and ask
“why” … Tahir is laughing (why)
• To answer this we develop a tentative hypothesis
as the explanation … Tahir laughed because he
read a funny message(answer)
• Deduction is the process whereby we test the
hypothesis … (if funny message is read one will
laugh … send a message to one and get the
result .. Interpret result .. conclude)

31. The Scientific Method
The “scientific method” is basically an overarching
perspective on how scientific investigations should be
undertaken. It can, in effect, be considered as a complete set of
principles and methods that help researchers in all scientific
disciplines obtain valid results for their research studies, and
which includes the provision of clear and universally accepted
guidelines for acquiring, evaluating and communicating
information in the context of a research study
The goals of scientific research are, broadly speaking, to
understand, explain and predict

32. AssessAssess
relevantrelevant
existingexisting
knowledgeknowledge
FormulateFormulate
concepts &concepts &
PropositionsPropositions
Statement ofStatement of
HypothesesHypotheses
DesignDesign
researchresearch
AcquireAcquire
empiricalempirical
datadata
Analyze &Analyze &
evaluateevaluate
datadata
ProvideProvide
explanation-explanation-
state newstate new
problemproblem
The Scientific Method: An Overview

33. Elements of the Scientific Method
 Empirical Approach
 Observation
 Questions
 Hypotheses
 Experiments
 Analysis
 Conclusion
 Replication

34. Elements of the Scientific Method
(Empirical Approach)
Evidence-based approach. The guiding principle
behind all research conducted in accordance with the
scientific method
Data derived from direct, systematic and careful
observation and experimentation (as opposed to
speculation, intuition, opinions, hunches, gut feeling)

35. 35
Elements of the Scientific Method
(Observation)
Awareness of the real / physical / social world in which we
exist. This, in turn, gives rise to questions as the basis for
research studies or investigations
Operational Definitions – Ensures consistency when
researchers talk about or are interested in undertaking or
replicating research on the same phenomenon. Example: What
is “exercise”?
What is consistency?

36. Elements of the Scientific Method
(Questions)
Making an answerable question out of a research idea. The
question must be answered using available and established
scientific research techniques and procedures. Scientific
Analysis should not be attempted on questions which cannot
be answered
Example of an answerable question: Can regular exercising
reduce an individual’s cholesterol level?
Example of a (currently) unanswerable question: Is time travel
possible?

37. Elements of the Scientific Method
(Hypotheses)
Hypotheses attempt to explain phenomena of interest. A hypothesis is a
proposition which is empirically testable (proposition ?). It usually seeks
to explain relationships between variables, and predict, and must be
falsifiable
Typical hypotheses structures:
Conditional - If Condition X is fulfilled, then Outcome Y will result
Correlational - The value of Variable B is observed to be related with
changes in the value of Variable A
Causal – The value of Variable Z determines the value of Variable Q
what is variable?

38. 38
Elements of the Scientific Method
(Experiments)
Experiments are basically about measuring phenomena and
collecting accurate and reliable data which are used for
analysis and evaluation
Accuracy – Correctness of the Measurement
Reliability – Consistency of the Measurement
What is (i) validity (ii) reliability?

39. Elements of the Scientific Method (Analysis)
Analysis is about the use of qualitative or quantitative tools and
techniques to process data
Quantitative tools and techniques are considered more desirable
(objective) than qualitative tools and techniques … (remember
there are experts who will strongly object to this)
Statistical analysis is typically used to quantitatively analyze data
acquired in research studies
What is (i) procedure (ii) method (iii) methodology (iv) technique
(v) tool (vi) farmula

40. Elements of the Scientific Method
(Conclusions)
Based on the results of the analysis conducted, and used to
support or refute a hypothesis
When undertaking research, conclusions should only be based
on the available data and not broadened to include statements
which are not supported by the data
Example: If the research analysis shows that two variables are
correlated (related), do not assert also that a causal
relationship exists between them

41. Elements of the Scientific Method (Replication)
The purpose of replication is to ensure that if the same research
study is conducted with different participants (i.e. researchers,
research subjects), then the same results are achieved
Replication establishes the reliability of a research study’s
conclusions
Conclusions are often based on the results of one research study
(aberration effect … oddness, peculiarity) which may not be
accurate

42. Falsificationist
• You cannot prove the theory that it is
correct, but you can disprove it.

43. Zen and the Art of Motorcycle
Maintenance