978-1111826925 Chapter 4 Lecture Note

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Chapter 4

The Business Research Process: An Overview

AT-A-GLANCE

I. Decision Making

A. Certainty

B. Uncertainty

C. Ambiguity

Problems and opportunities

II. Types of Business Research

A. Exploratory research

B. Descriptive research

C. Causal research

Causality

Temporal sequence

Concomitant variance

Nonspurious association

Degrees of causality

Experiments

D. Uncertainty influences the type of research

III. Stages in the Research Process

A. Alternatives in the research process

B. Defining the research objectives

Defining the managerial decision situation

Exploratory research

Previous research

Pilot studies

Stating research objectives

Linking decision statements, objective, and hypotheses

C. Planning the research design

Selection of the basic research method

The “best” research design

D. Sampling

E. Gathering data

F. Processing and analyzing data

Editing and coding

Data analysis

G. Drawing conclusions and preparing a report

IV. The Research Program Strategy

LEARNING OUTCOMES

1. Define decision making and understand the role research plays in making decisions

2. Classify business research as either exploratory research, descriptive research, or causal research

3. List the major phases of the research process and the steps within each

4. Explain the difference between a research project and a research program

CHAPTER VIGNETTE: Getting (and Keeping) Up to Speed: Hoover’s

Helps HP

Like most global companies, Hewlett-Packard (HP) must continue to innovate in a continuously changing

environment. How can HP help their sales staff with data and analyses to keep them up to speed with

new companies, new territories, and new technologies? Hoovers, a division of the Dun & Bradstreet

Corporation, is an integral part of HP’s customer relationship management (CRM) strategy, with data

“plug-in” capabilities that give sales reps real-time information to assist them in their decision-making.

SURVEY THIS!

Based on the data that the survey gathers, students are asked what business problems or opportunities they

feel can be addressed from the information. They are asked to specify at least three research questions

that can be answered by the information gathered by this survey. Is this survey most representative of an

exploratory research, descriptive research, or causal research design?

RESEARCH SNAPSHOTS

Cute, Funny, or Sexy? What Makes a Mascot Tick?

Research is used to help determine in mascots need to be changed (e.g., Pillsbury Doughboy,

Brawny paper towel man, etc.). It often begins with exploratory research, such as focus groups.

Exploratory research found that women wanted a sexy Brawny man, Mr. Peanut was perceived

positively (but not with Bermuda shorts on!), and that the M&M characters were called by their

color, so names were not necessary.

Taking a Swing at Business Success

Greg Norman is a well-known professional golfer, but he is also a successful vintner. Norman

Estates gained fame in the wine trade with Australian wines that offered considerable quality at a

fair price. This company is expanding its portfolio by purchasing vineyard properties and

production capacity in California. Descriptive research can be vital in making key decisions

when considering diversifying beyond a company’s traditional boundaries. Descriptive statistics

describe what wine consumers like to drink in terms of where it is from and where they are

located. For example, American consumers are switching increasingly from French wines to

Australian- and American-made wines, especially in the low and moderate price ranges.

Rolling Rock

Rolling Rock beer has its origins as a regional brand, and its signature package was a longneck

green bottle with a white painted label. The brand, now marketed by Labatt USA, expanded

nationally during the 1980s, and a number of line extensions proved ineffective. Executives

decided to conduct a massive consumer study, basically running an experiment. They learned

that the new packages met with consumers’ strong approval, and consumers consistently

indicated that they would be willing to pay more for the brand in those packages.

OUTLINE

I. DECISION MAKING

A business opportunity is a situation that makes some potential competitive advantage

possible.

A business problem is a situation that makes some significant negative consequence more

likely.

Problems are inferred from observable symptoms, which are observable cues that serve as a

signal of a problem because they are caused by that problem.

Research may help identify what is causing this symptom so that decision makers can

actually attack the problem, not just the symptom.

Decision making is the process of developing and deciding among alternative ways of

resolving a problem or choosing from among alternative opportunities.

Every decision making situation can be classified based on whether it best represents a

problem or an opportunity and on whether it represents a situation characterized by complete

certainty or absolute ambiguity.

Certainty

Complete certainty means that the decision maker has all information needed to make an

optimal decision.

Perfect certainty, especially about the future, is rare.

Uncertainty

Uncertainty means that the manager grasps the general nature of desired objectives, but

the information about alternatives is incomplete.

Predictions about forces that shape future events are educated guesses.

Effective managers recognize that spending additional time to gather data that clarify the

nature of a decision is needed.

Business decisions generally involve uncertainty, particularly when seeking different

opportunities.

Ambiguity

Ambiguity means that the nature of the problem itself is unclear.

Objectives are vague and decision alternatives are difficult to define.

The most difficult decision situation, but perhaps the most common.

Problems and Opportunities

Decision situations can be characterized by the nature of the decision and the degree

of ambiguity.

Under problem focused decision making, as ambiguity is lessened, the symptoms are

clearer and are better indicators of a problem.

In opportunity oriented research, as trends become larger and clearer, they are more

diagnostic and point more clearly to a single opportunity.

II. TYPES OF BUSINESS RESEARCH

Business research can be classified on the basis of technique (e.g. experiments, surveys, or

observation studies) or purpose.

Classifying research on the basis of its purpose, it can be broken into three categories: (1)

exploratory, (2) descriptive, and (3) causal.

Exploratory research

Conducted to clarify ambiguous situations or discover ideas that may be potential

business opportunities.

Not intended to provide conclusive evidence from which to determine a particular course

of action.

Not an end unto itself – usually it is conducted with the expectation that more research

will be needed to provide more conclusive evidence.

Particularly useful in new product development.

Descriptive research

Describes characteristics of objects, people, groups, organizations or environments.

Addresses who, what, when, where, and how questions.

Unlike exploratory research, it is conducted after the researcher has gained a firm grasp

of the situation being studied.

Often helps describe market segments.

Accuracy is critically important.

Survey research typifies a descriptive study.

Diagnostic analysis seeks to diagnose reasons for business outcomes and focuses

specifically on the beliefs and feelings consumers have about and toward competing

products.

Sometimes provides an explanation by diagnosing differences among competitors, but it

does not provide direct evidence of causality.

Causal research

Allows causal inferences to be made.

Seeks to identify cause-and-effect relationships.

When something causes an effect, it means it brings it about or makes it happen; the

effect is the outcome.

Usually follows exploratory and descriptive research and, therefore, the researchers are

quite knowledgeable about the subject.

Can take a long time to implement and often involves intricate designs that can be very

expensive.

Causality

Causal research attempts to establish that when we do one thing, another thing will

follow – a causal inference is just such a conclusion.

 A causal inference can only be supported when very specific causal evidence exists,

and the three critical pieces of causal evidence are:

1. Temporal Sequence – deals with the time order of events; having an appropriate

causal order of events means the cause must occur before the effect.

2. Concomitant Variation – occurs when two events “covary” or “correlate,”

meaning they vary systematically and a when a change in the cause occurs, a

change in the outcome also is observed.

A correlation coefficient is often used to represent this.

3. Nonspurious Association – any covariation between a cause and an effect is true

and not simply due to some other variable.

Even though the previous two conditions exist, a causal inference cannot be

made because both the cause and effect have some common cause.

Establishing evidence of nonspuriousness can be difficult.

Researchers must use theory to identify the most likely “third” variables that

would relate significantly to both the cause and effect.

Once identified, the researcher must control for these variables.

Degrees of Causality

Absolute causality means the cause is necessary and sufficient to bring about the

effect. Impractical to establish in the behavioral sciences.

Conditional causality means that a cause is necessary but not sufficient to bring

about an effect.

Contributory causality may be the weakest form of causality and means a cause

need not be necessary nor sufficient to bring about an effect.

There may be multiple causes.

As long as the introduction of the other possible causes does not eliminate

the correlation between it and the effect, an event can be a contributory

cause.

Experiments

A carefully controlled study in which the researcher manipulates a proposed cause

and observes any corresponding change in the proposed effect.

An experimental variable represents the proposed cause and is controlled by the

researcher by manipulating it.

Manipulation means that the researcher alters the level of the variable in specific

increments.

A test-market is an experiment that is conducted within actual market conditions.

Uncertainty Influences the Type of Research

Exhibit 4.4 contrasts the types of research with respect to these characteristics and

provides examples:

amount of uncertainty characterizing the decision situation

key research statement (i.e., research questions or research hypothesis)

when conducted

usual research approach

nature of results

III. STAGES IN THE RESEARCH PROCESS

Business research often follows a general pattern of stages:

1. Defining the research objectives

2. Planning a research design

3. Planning a sample

4. Collecting the data

5. Analyzing the data

6. Formulating the conclusions and preparing the report

Conceptualized as a cyclical or circular-flow process (see Exhibit 4.5) because conclusions

from research studies can generate new ideas and knowledge that can lead to further

investigation.

Management is at the center of the process.

Stages overlap somewhat from a timing perspective, and later stages sometimes can be

completed before earlier ones.

Forward linkage implies that the earlier stages influence the later stages.

Backward linkage implies that later stages influence earlier stages of the research process.

Alternatives in the Research Process

The researcher must choose among a number of alternatives during each stage of the

research process.

Defining the Research Objectives

Beginning of the research process.

Research objectives are the goals to be achieved by conducting research.

In consulting, the term deliverables is often used to describe the objectives to a research

client.

In applied business research, the objectives cannot be listed until there is an

understanding of the decision situation, which must be shared between the actual decision

maker and the lead researcher.

This understanding is often described as a problem statement.

This is a process of discovery rather than confirmation or justification.

Defining the Managerial Decision Situation

An orderly definition of the research problem lends a sense of direction to the

investigation.

Properly defining a problem can be more difficult than solving it.

Defining the decision situation must precede the research objectives.

Best place to begin a research project is at the end; that is, knowing what is to be

accomplished determines the research process.

Exploratory Research

Can be used to help identify the decisions that need to be made.

Once done, the researcher should know exactly which data to collect during formal

phases of the project and how to conduct the project.

This stage is optional.

Can employ techniques from four basic categories to obtain insights and gain a

clearer idea of the problem: previous research, pilot studies, case studies, and

experience surveys (discussed more thoroughly in later chapters).

Previous Research

Should first investigate previous research to see whether or not others may have

addressed the same research problems.

May also exist in the public domain.

Literature review is a directed search of published works, including periodicals

and books, that discusses theory and presents empirical results that are relevant to

the topic at hand.

An economical starting point for most research.

Pilot Studies

Pilot studies are small-scale research projects that collect data from respondents

similar to those that will be used in the full study.

Critical in refining measures and reducing the risk that the full study will be

fatally flawed.

Often useful in fine-tuning research objectives.

A pretest is a very descriptive term indicating that the results obtained in the

study are only preliminary and intended to assist in design of a subsequent study.

A focus group interview brings together six to twelve people in a loosely

structured format.

Stating Research Objectives

After identifying and clarifying the problem, the researcher must formally state the

research objectives.

This statement delineates the type of research that is needed and what intelligence

may result that would allow the decision maker to make informed choices.

Represents a contract of sorts that commits the researcher to producing the needed

research.

Linking Decision Statements, Objectives, and Hypotheses

Hypotheses should be logically derived from and linked to the research objectives.

Planning the Research Design

A research design is a master plan that specifies the methods and procedures for

collecting and analyzing the needed information; it is a framework for the research plan

of action.

The researcher also must determine the sources of information, the design technique (e.g.,

survey, experiment, etc.), the sampling methodology, and the schedule and cost of the

research.

Selection of the Basic Research Method

Exhibit 4.6 shows four basic design techniques for descriptive and causal research:

surveys, experiments, secondary data, and observation.

Determination of which method should be chosen depends on:

objectives of the study

available data sources

urgency of the decision

cost of obtaining data

Most common method is the survey.

A survey is a research technique in which a sample is interviewed in some form or

their behavior is observed and described in some way.

A researcher’s task is to find the most appropriate way to collect the needed

information (i.e., by telephone, mail, Internet, or in person).

Observations can be mechanically recorded or observed by humans.

One advantage of the observation technique is that it records behavior

without relying on reports from respondents.

Several things of interest (i.e., attitudes, opinions, motivations) cannot be

observed.

The “Best” Research Design

There is no single best research design.

Several alternatives can accomplish the stated research objectives.

Ability to select the most appropriate design develops with experience.

Sampling

Sampling involves any procedure that draws conclusions based on measurements of a

portion of the population (i.e., a subset from a larger population).

Certain statistical procedures must be followed.

When errors are made (e.g., not using a representative sample), samples do not give reliable

estimates of the population.

Sampling decisions include:

1. Who is to be sampled?  Identification of a target population.

2. How big should the sample be?  Concerns sample size.

3. How to select the sampling units?  Concerns procedure for selecting sample

(i.e., simple random sampling, cluster sampling, etc.).

Gathering Data

The process of gathering or collecting information.

May be gathered by human observers or interviewers or may be recorded by machines (e.g.,

scanner data, web-based surveys).

An unobtrusive method is one in which the subjects do not have to be disturbed for data to

be collected.

However the data are collected, it is important to minimize errors in the process.

Processing and Analyzing Data

Editing and Coding

The data must be converted into a format that will answer the manager’s questions.

Editing involves checking the data collection forms for omissions, legibility, and

consistency in classification.

The rules for interpreting, categorizing, recording, and transferring the data to the data

storage media are called codes.

Data Analysis

Data analysis is the application of reasoning to understand the data that have been

gathered.

The appropriate analytical technique is determined by:

management’s information requirements

characteristics of the research design

nature of the data gathered

Three general categories of statistical analysis (discussed in later chapters):

univariate analysis

bivariate analysis

multivariate analysis

Drawing Conclusions and Preparing a Report

Consists of interpreting the research results, describing the implications and drawing the

appropriate conclusions for managerial decisions.

Conclusions should fulfill the deliverables promised in the research proposal.

Researcher should consider the varying abilities of people to understand the research results.

Frequently, management is not interested in detailed reporting of the research design and

statistical findings, but wishes only a summary of findings.

IV. THE RESEARCH PROGRAM STRATEGY

Research project – researcher has only one or a small number of research objectives that can

be addressed in a single study.

Research program – numerous related studies come together to address issues about a single

company (e.g., an exploratory study may be followed by a survey).

Because research is a continuous process, management should view business research at a

strategic planning level.