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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.
