Quantitative Methods : 1Module 1

Business Research

Research is one of the ways to find answers to questions. Literally, it is re-search. re means again, anew and search means to examine closely and carefully, to test and try or to probe. Together they mean a careful, systematic, patient study and investigation in some field of knowledge, undertaken to establish facts or principles.

Research study implies that the process:• Is being undertaken within a framework of set philosophies and

academic discipline.• Uses procedures, methods and techniques that have been tested

for their validity and reliability.• Is designed to be unbiased and objective.

Research Defined

Business ResearchBusiness research is defined as the systematic and objective process of generating information for aid in making business decisions. The definition suggest that:

– Research information is neither intuitive nor haphazardly gathered.

– Business research must be objective Detached and impersonal rather than biased

– It facilitates the managerial decision process for all aspects of a business.

Business research- Definition

• A process of determining, acquiring, analyzing, synthesizing, and disseminating relevant business data, information, and insights to decision makers in ways that mobilize the organization to take appropriate business actions that, in turn, maximize business performance.

Information Reduces Uncertainty

“It ain’t the things we don’t know that gets us in trouble. It’s the things we know that ain’t so.”

Artemus Ward

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Characteristics of Good Research

Clearly defined purposeClearly defined purpose

Detailed research processDetailed research process

Thoroughly planned designThoroughly planned design

High ethical standardsHigh ethical standards

Limitations addressedLimitations addressed

Adequate analysisAdequate analysis

Unambiguous presentationUnambiguous presentation

Conclusions justifiedConclusions justified

CredentialsCredentials

Application of Research in Business

• General Business Conditions and Corporate Research• Financial and Accounting Research• Management and Organizational Behavior Research• Sales and Marketing Research• Information Systems Research• Corporate Responsibility Research

"The secret of success is to know something nobody else knows. "

Aristotle Onassis

Stages of the Research Process

Problem Discoveryand Definition

ResearchDesign

Sampling

DataGathering

Data Processingand Analysis

Conclusions andReport

Discovery andDefinition

and so on

Research Stages• Cyclical process - conclusions generate new

ideas• Stages can overlap chronologically• Stages are functionally interrelated

– Forward linkages– Backward linkages

Problemdiscovery

Problem definition(statement of

research objectives)

Secondary(historical)

data

Experiencesurvey

Pilotstudy

Casestudy

Selection ofexploratory research

technique

Selection ofbasic research

method

Experiment SurveyObservation Secondary

Data StudyLaboratory Field Interview Questionnaire

Selection ofexploratory research

techniqueSampling

Probability Nonprobability

Collection ofdata

(fieldwork)

Editing andcodingdata

Dataprocessing

Interpretationof

findings

Report

DataGathering

DataProcessingandAnalysis

Conclusionsand Report

Research Design

Problem Discoveryand Definition

The Business Research Process

Problem Discovery

Exploratory Research

Selection of the Basic Research Method

Selection of Sample Design

Collection of the Data

The Research Process (cont.)

Editing and Coding

Data Processing

Interpretation of the Findings

Report

Stages In The Research Process

• Problem Discovery and Problem Definition• Research Design• Sampling• Data Gathering• Data Processing and Analysis• Conclusions And Report

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Defining the research problemA research problem, in general, refers to some difficulty which a researcher experiences in the context of either a theoretical or practical situation and wants to obtain a solution for the same.

Research Problem Statement: is a clear, precise and succinct statement of the question or issue that is to be investigated with the goal of finding an answer or solution

• Three key criteria to assess the quality of the problem statement are

– relevant, feasible, and interesting.

Basic Questions - Problem Definition

• What is the purpose of the study?• How much is already known?• Is additional background information necessary?• What is to be measured? How?• Can the data be made available?• Should research be conducted?• Can a hypothesis be formulated?

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Deriving Research problem and Management decision problem

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Ensure that symptoms of problems are not defined as the real problem

The Process ofProblem Definition

Ascertain the decision maker’s objectives

Understand background of the problem

Isolate/identify the problem, not the symptoms

Determine unit of analysis

Determine relevant variables

State research questions and objectives

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Literature review

The literature review helps the researcher to

– identify the gaps in previous research studies

– ensure that no important variable is overlooked

– develop a problem statement with precision & clarity

– develop sound theoretical Framework

– developing testable hypothesis

– ensure that the problem selected for the study is relevant &

significant

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Conducting the literature review Data sources: text books, journals, theses, conference proceedings, unpublished

manuscripts, reports, newspapers, the internet.

Searching for literature by

– Visiting Libraries

– In past -Bibliographical indexes

– Now - computer online systems

– Internet online searching directories (subject, title, geographical location, trade opportunities, industrial plants, foreign traders, data bases)

Documenting the literature review: Is important to convince the reader that–The researcher has knowledgeable about the problem area –has done the preliminary homework that is necessary to conduct the research (The theoretical framework will be structured on work already done and will add to the solid foundation of existing knowledge)

Research design: Meaning and definition

• A RD is a plan, structure and strategy of investigation so conceived as to

obtain answers to research questions or problems. The plan is the

complete program and scheme of the research. It includes an outline of

what the investigator will do from writing the hypothesis and their

operational implications to the final analysis of data.

Kerlinger, 1986

• A RD is a blueprint or detailed plan for how a research study 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.

Thyer, 1993

Functions of Research design

•

Types of ResearchBusiness research can be classified on the basis of technique or function.

Experiments, surveys, and observational studies are few common research

techniques. Classifying BR on the basis of purpose or function allows us to

understand how the nature of the problem influences the choice of research

methods. The nature of problem will determine whether the research is:

– Exploratory Research.

– Descriptive Research

– Causal Research

Uncertainty Influences the Type Of Research

Exploratory Research Descriptive Research Causal Research(Unaware of Problem)(Aware of Problem) (Problem Clearly Defined)

“Our sales are declining and “What kind of people are buying “Will buyers purchase more of we don’t know why.”our product? Who buys our our products in a new package?

competitor’s product?” “Would people be interested “Which of two advertising in our new product idea?” “What features do buyers prefer campaigns is more effective?”

in our product?”poss

ible

situ

atio

n

Degree of Problem Definition

Exploratory Research• Initial research conducted to clarify and define the

nature of a problem• Subsequent research will be required to provide

conclusive evidence• Majority of exploratory researches provide qualitative

data: words and observations• Any source of information may be informally

investigated to clarify which qualities or characteristics are associated with an object, situation or issue.

• It may be a single research investigation or a series of informal studies.

• Diagnose a situation• Screening of alternatives

• Concept Testing: Exploratory research procedure that tests some sort of stimulus as a proxy for an idea about a new, revised, or repositioned product

• Discover new ideas

Why Conduct Exploratory Research?

Categories of Exploratory Research

1. Experience surveys2. Secondary data analysis3. Case studies4. Pilot studies

1. Experience Surveys

• Informal discussions with knowledgeable and experienced individuals about a particular research problem (issues and ideas) - most are quite willing

• Purpose is to formulate the problem and clarify concepts rather than develop conclusive evidence.

“If you wish to know the road up themountain, you must ask the man who goes back and forth on it.”

- Zenrinkusi

2. Secondary Data Analysis

• Investigating data collected for a purpose other than the project at hand

• Economical• Quick source for background information

3. Case Study Method• Intensely investigates one or a few situations

similar to the researcher’s problem situation• Investigation in depth and with meticulous

attention to detail• May require cooperation of person whose history

is being studied.• Success is dependent on the alertness, creativity,

intelligence, and motivations of the individual performing the case analysis.

• Generalizing from few cases can be dangerous.

4. Pilot Study• A collective term• Any small scale exploratory study that uses

sampling and generate primary data usually for qualitative analysis.

• But does not apply rigorous standards used to obtain precise, quantitative estimates from large samples.

• Major categories are focus group interviews, projective techniques, and depth interviews.

Descriptive Research

• Describes characteristics of a population such as –customers, organisations, markets etc.

• It provides association between two variables like income and place of shopping, age and preferences etc.

•It requires a clear specification of “ what , why, when, how , where and who ” of the research

6 W’s of the Descriptive research

• Who: who should be considered?

• Where: where should the respondents be contacted to obtain the

required information?

• When: when should the information be obtained from the respondents?

• What: what information should be obtained from the respondents?

• Why: why are we obtaining information from the respondents?

• Way: the way in which we are going to obtain information from the

respondents.

When to use Descriptive Study• To determine the characteristics of market such as :a) Size of the marketb) Buying power of the consumerc) Product usage patternd) Market share for the producte) To track the performance of a brand• To determine the association of two variables such as Ad and

sales• To make predictions such as sale forecasting• To estimate proportion of people willing to buy a product

Types of Descriptive Studies

1. Longitudinal Study ( Time Series Study): The studies in which an event is measured again and again over a period of time. It is useful to know how the market changes over time.

2. Cross- Sectional Study: The study which is carried out once and represent a snapshot of one point in time.

Causal Research or Experimental Research

• Conducted to identify cause and effect relationships among variables when the research problem has already been narrowly defined.

• Causal research should do the following:– The appropriate causal order of events– Concomitant variation--two phenomena vary together– An absence of alternative plausible explanations

• A causal relationship is impossible to prove even when these criteria for causation are present.

Examples of Causal Research

• Impact of retail price on sales• Effect of advertising on sales• Effect of improved packing on sales• Effect of increase in income on demand of cars

Exploratory Research Descriptive Research

1. It is concerned with the why aspect of consumer behaviour i.e. it tries to understand the problem and not measure the result

It is concerned with the ‘what, ‘when’, or ‘how often’ on the consumer behaviour.

2. This does not require large samples This requires large samples of respondents.

3. Sample need not represent the population

Sample must be representative of population

4. Characteristics of interest to be measured is not clear

Characteristics of interest to be measured is clear

5. Statement of problem is not precise, therefore the data collection is not easy

Statement is precise, so the data collection is easy

6. There is no need of a questionnaire A properly designed questionnaire is required

• Pure/ Basic vs. Applied • Quantitative vs. Qualitative• Descriptive vs. Analytical• Conceptual vs. Empirical

Business Research Types

Pure Research• Attempts to expand the limits of knowledge or to

verify the acceptability of a given theory.• Not directly involved in the solution to a immediate

or pragmatic problem.• 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?

Applied Research

• Research undertaken to answer questions about specific problems or to make decisions about a particular course of action or policy decision.

• Examples:– Should McDonalds add Italian pasta dinners to its menu?– Should Procter & Gamble add a high-priced home teeth

bleaching kit to its product line?

Qualitative vs. Quantitative

Quantitative research includes designs, techniques and measures that produce discrete numerical or quantifiable data. Data analysis is mainly statistical (deductive process). It is characterized by: causal-comparative, correlational, experimental and descriptive research.

Qualitative research deals with designs techniques and measure that do not produce discrete numerical data. It involves extensive narrative data in order to gain insights into phenomena. Data analysis includes the coding of the data and production of verbal synthesis (inductive process). Examples include historical research, ethnographic research, participant observational research and the case study.

Descriptive vs. Analytical

• Descriptive research is used to describe the state of affairs as it exists at present. The researcher reports what has happened or what is happening.

• In analytical research, the researcher has to use facts or information already available, and analyse these to make a critical evaluation of the material.

Scientific Method• The scientific method is the result of recognizing that personal and

cultural beliefs influence our perceptions and interpretations of natural phenomena. Through the use of standard procedures and criteria, it is possible to minimize those influences when developing a theory. The term scientific method denotes the principles that guide scientific research and experimentation, and the philosophical bases of those principles.

• Scientific methods involve techniques and procedures used to analyze empirical evidence (facts from observation or experimentation) to confirm or disprove prior conceptions.

• Both pure and applied research employ scientific method to answer questions. Use of SM in applied research assures objectivity in research.

• The difference in techniques of basic and applied research is largely a matter of degree rather than substance.

Scientific MethodThe scientific method of inquiry is characterized by the following convictions:

• that the process must be logical and objective to reduce bias in methods and interpretation of results.

• that the process should be systematic in that it ought to involve certain standard procedures.

• enquiry should be conducted through a process of systematic observation that can be verified by experience (empiricism).

• There should be careful recording, documenting, archival and sharing of all data and methodology (full disclosure) to make it available for scrutiny by other researchers, thereby allowing them to verify results by attempting to reproduce them.

• It aims at generalizing findings to larger groups by discovering general principles that will be helpful in predicting future occurrences. This calls for careful sampling procedures to ensure that the sample is representative of the larger group.

• Parsimony: Extreme care in use of resources and efforts.

Assessrelevant existingknowledge

Formulateconcepts &Propositions

Statementof Hypotheses

Design research

Acquire empiricaldata

Analyze &evaluate data

Provide explanation-state newproblem

The Scientific Method: An Overview

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.

Managerial value of Research

The prime managerial value of business research is that it reduces uncertainty by providing information that improves the decision making process.Decision making process involves following interrelated stages.

– Identifying problems and opportunities– Diagnosis and assessment– Selecting and implementing a course of action– Evaluating the course of action: includes Evaluation

research and Performance monitoring research

Managerial value of Research

• Evaluation Research: is the formal, objective measurement and appraisal of the extent to which a given activity, project, or program has achieved its objectives.

• Performance-monitoring Research: Research that regularly provides feedback for evaluation and control; Indicates things are or are not going as planned; Research may be required to explain why something “went wrong”

When to Conduct Business Research

A manager faced with two or more possible courses of action faces the initial decision of whether or not to conduct research. The determination of need for research centers on:

– Time constraints– Availability of data– Nature of the decision– Benefits versus costs

Is sufficient time available before

a managerial decision

must be made?

Is the infor-mation already

on handinadequate for making

the decision?

Is the decision of considerable

strategicor tactical

importance?

Does the value of the research

informationexceed the cost of conducting

research?

ConductingBusinessResearch

Do Not Conduct Business Research

Time ConstraintsAvailability of

Data Nature of the DecisionBenefits vs. Costs

Yes YesYesYes

No No No No

Determining When to Conduct Business Research

Value versus Costs

• Potential Value of a Business Research Effort Should Exceed Its Estimated Costs

Value

• Decreased certainty• Increased likelihood

of a correct decision

• Improved business performance and resulting higher profits

Costs• Research

expenditures• Delay of business

decision and possible disclosure of information to rivals

• Possible erroneous research results

Value Should Exceed Estimated Costs

Problems encountered by researchers in India

• Lack of a scientific training (expertise) in research methodology

• Insufficient interaction between the researchers/ research institutions like university research departments on one side and the users like business establishments, government departments on the other side.

• Lack of trust between research agencies and users.• Lack of coordination and sharing of research between

different agencies. • There does not exist a code of conduct for researchers • Difficulty of adequate and timely secretarial assistance.• Unsatisfactory Library management, functioning and

inadequate / un-timely availability of published resources.