978-1111826925 Chapter 5 Lecture Note

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Chapter 5

The Human Side of Business Research:

Organizational and Ethical Issues

AT-A-GLANCE

I. Introduction

II. Organizational Structure of Business Research

A. Business research jobs

Small firms

Mid-sized firms

Large research firms

B. The director of research as a manager

C. Sources of conflict between senior management and research

Research that implies criticism

Money

Time

Intuitive decision making

Future decisions based on past experience

D. Reducing the conflict between management and researchers

E. Cross-functional teams

III. Research Suppliers and Research Contractors

A. Syndicated services

B. Standardized research services

C. Limited research service companies and custom research

D. Largest research organizations

IV. Ethical Issues in Business Research

A. Ethical questions are philosophical questions

B. General rights and obligations of concerned parties

C. Rights and obligations of the research participant

The obligation to be truthful

Participants’ right to privacy

Active research

Passive research

Deception in research designs and the right to be informed

Experimental designs

Descriptive research

Protection from harm

D. Rights and obligations of the researcher

Research that isn’t research

Mixing sales or fund-raising with research

Pseudo-research

Push polls

Service monitoring

Objectivity

Misrepresentation of research

Honesty in presenting results

Honesty in reporting errors

Confidentiality

Dissemination of faulty conclusions

E. Rights and obligations of the client sponsor (user)

Ethical behavior between buyer and seller

An open relationship with research suppliers

An open relationship with interested parties

F. Privacy

G. Privacy on the Internet

H. A final note on ethics

LEARNING OUTCOMES

1. Know when research should be conducted externally and when it should be done internally

2. Be familiar with the types of jobs, job responsibilities and career paths available within the business

research industry

3. Understand the often conflicting relationship between management and researchers

4. Define ethics and understand how it applies to business research

5. Know and appreciate the rights and obligations of a) research respondents – particularly children, b)

business researchers, and c) research clients or sponsors

6. Know how to avoid a conflict of interest in performing business research

CHAPTER VIGNETTE: I Can’t Share This Report!

John Harris has been senior research analyst for Delavan Insurance Group (DIG), a large insurance

company, for the past 10 years. The company had long based their reputation and business model on

developing close personal relationships between the company’s agents and their customers, but the new

CEO was determined to make DIG a “21st century insurance provider” and demanded that the company

push forward with a website and introduce online insurance quotes and sales, hiring his cousin, Doug

Jeckel, to develop and launch the new web system. John’s project was to assess consumer perceptions of

the company’s new website, and his analysis and results were clear—the new website was not viewed as

favorably as the competition on any dimension. In fact, DIG was rated the very lowest. After checking

and rechecking his work, John presented the results to Doug, who was not pleased and told John that he

expected to see a new report with the correct results on his desk the next day, even telling John that his

career is riding on it. What should John do?

SURVEY THIS!

Students are asked the following questions:

1. Were you required to identify yourself by name in completing the survey?

2. Can the results be linked to respondents by name?

3. Do any items need to be tied to a name to be useful to the researcher?

4. What if another instructor wanted the results from the questions show to encourage particular

students to change their study habits? If you were the researcher, should you provide the

information? Why or why not?

RESEARCH SNAPSHOTS

The True Power of Research

J.D. Power rates competing companies’ products and services in many industries. Knowing what

tires make consumers the happiest might be an important thing for retail dealers considering

product lines and for auto manufacturers to know. Results differ by region, though.

When Your Brain “Trips Up”

Do decision makers always listen and use business researchers’ information? Research shows

that regardless of the “facts,” senior executives can make bad judgments, even when they are

seeking to improve their company. Scientists recognize that any decision maker is a victim of

their own mental biases and stereotypes. When making judgments, your brain can “trip you up,”

by causing you to see patterns in the results that are not there, or when you use your past

experiences to see the results you wish to see. Recognizing your own cognitive shortcomings can

be an important step towards avoiding a bad decision.

Finding Haagen-Das in China

Haagen-Das ice cream shops first appeared in Shanghai, China in 1996, and now there are dozens

of shops in coastal China with plans for hundreds more. China is expected to be the world’s

largest consumer market by 2020, but just imagine trying to decide where to put a shop in a huge

unfamiliar country. Fortunately, there are standardized research companies that can synthesize

GIS information with survey research all over the world. Use of an outside research provider

saves time and money and also yields higher quality results than conducting an in-house study.

Other top emerging retail nations include India, Russia, and the Ukraine.

Crazy Good! Have Fun, Play Games (and Buy Pop-Tarts!)

Reaching children over the Internet has reached new levels of sophistication. Online sites contain

“entertainment” that is also designed to communicate a careful message to influence them into

buying food products. Some ethical challenges are the direct inducement to buy products and

privacy protection for children. The effects of these tactics on children are only now being

understood.

Is It Right, or Is It Wrong?

Sometimes research can present significant ethical issues, and that is where a peer review process

can help. A Human Subjects Research Committee consists of a panel of researchers (and

sometimes legal authority) who carefully review the proposed procedures to identify ethical or

legal issues. Any research supported by U.S. federal funds must be subject to a peer review (see

http://grants.nih.gov/grants/peer/peer.htm). While most business research does not cause physical

or psychological trauma, some research (e.g., involving food, dietary supplements, and

pharmaceuticals) do have such possibilities. It isn’t possible to completely eliminate risk from

research, but a human subjects review is a good safety net. Corporate human subjects committees

also are becoming common. Research conducted on animals also needs a critical review.

OUTLINE

I. INTRODUCTION

Research is sometimes performed in-house meaning that employees of the company that will

benefit from the research project actually perform the research.

If it is performed by an outside agency, that means that the company that will benefit from

the research results hires an independent, outside firm to perform a research project.

The following situations favor an outside agency. An outside agency:

1. often can provide a fresh perspective

2. often can be more objective

3. may have special skills

4. often have local expertise

Conditions that make in-house research more attractive:

1. the research project needs to be completed very quickly

2. project will require the close collaboration of many other employees from diverse

areas of the organization

3. in-house research can almost always be done more cheaply than using an outside firm

4. if secrecy is a major concern

II. ORGANIZATIONAL STRUCTURE OF BUSINESS RESEARCH

Placement of business research within a firm’s organizational structure and the structure of

the research department depends on the firm’s:

acceptance of the concept of internal research

stage of research sophistication

Research departments should be placed relatively high in the organizational structure to

ensure that senior management is well informed.

Research departments should also be linked with a broad spectrum of other units within the

organization.

The term “client” or “internal consultant” is used by the research department to refer to line

management for whom services are being performed.

Business Research Jobs

Research organizations themselves consist of layers of employees, each with certain

specific functions to perform based on their areas of expertise and experience.

Small Firms

Less than 100 employees.

VP of marketing may be in charge of all significant research.

Usually have few resources and special competencies to conduct large scale,

sophisticated research projects, and an outside agency will likely be used.

Mid-Sized Firms

Between 100 and 500 employees.

Someone usually holds the position of director of marketing research, who provides

leadership in research efforts and integrates all staff-level research activities.

A research analyst is responsible for client contact, project design, preparation of

proposals, selection of research suppliers, and supervision of data collection,

analysis, and reporting activities.

Research assistants (or associates) provide technical assistance with questionnaire

design, data analysis, etc. Also known as junior analyst.

The manager of decision support systems supervises the collection and analysis of

sales, inventory, and other periodic CRM data and may be assisted by a forecast

analyst when forecasting sales.

Large Research Firms

Firms with over 500 employees.

Exhibit 5.3 illustrates the organization of a major firm’s marketing research

department.

Other positions (not shown in Exhibit 5.3) may include director of data collection

(field supervisor), manager of quantitative research, focus group moderator, and

manager of data processing.

Some projects are outsourced as well.

The Director of Research as a Manager

A director of research plans, executes, and controls the firm’s research function.

Typically serves on company executive committees that identify competitive

opportunities and formulate strategies that involve customers or other organizational

stakeholders.

Problems faced by research directors include:

spends more time in meetings and managing than actually conducting research

role often is not formally recognized

often have trouble delegating responsibility

research is often seen as a hodgepodge of techniques available to answer individual,

unrelated questions, leading to the view that a full-time director is unnecessary

Sources of Conflict between Senior Management and Research

The relationship between the research department and the users of research frequently is

characterized by misunderstanding and conflict.

Research That Implies Criticism

Money

Financial managers often see research as a cost rather than as an investment or a way

of lowering risk.

Managers often want to spend as little as possible on research, and researchers resist

cutting corners on conducting research.

Successful research projects often are those that are based on compromise.

Time

It can take some time to complete a research project.

When studies are rushed, the following sources of error become more prominent than

they would be otherwise:

1. Conducting a study that is not needed – taking more time to perform a

literature search may have provided the needed intelligence without a new

study.

2. Addressing the wrong issue – not taking the time required to make sure the

decision statement is well defined.

3. Sampling difficulties – correctly defining, identifying, and contacting a truly

representative sample is a difficult and time consuming task.

4. Inadequate data analysis – not taking the appropriate time and rigor to

analyze the data.

However, a sudden event can make it necessary to acquire data quickly, and the

researcher is obligated to point out the study’s limitations.

Intuitive Decision Making

Managers are decision makers, and as such they are action-oriented and often rely on

gut-reaction and intuition.

Although research is a valuable decision-making tool, it does not relieve the

executive of the decision-making task.

Many researchers view themselves as technicians and may spend more time on

technical details than on satisfying managerial needs.

Future Decisions Based on Past Experience

Managers wish to predict the future, but researchers measure only current or past

events.

Reducing the Conflict between Management and Researchers

Exhibit 5.4 lists some common areas of conflict between research and management.

Early involvement increases the likelihood that managers will accept and act on the

results.

Researchers’ responsibility should be made explicit by a formal job description.

Effective communication of the research findings and research design is important.

A research generalist can effectively serve as a link between management and the

research specialist.

Cross-Functional Teams

Cross-functional teams are composed of individuals from various functional areas (i.e.,

engineering, production, finance, marketing) who share a common purpose.

Help organizations focus on a core business process (i.e., customer service, new-product

development).

Research directors can be members of cross-functional teams, acting as both consultants

and as providers of technical services.

III. RESEARCH SUPPLIERS AND CONTRACTORS

Research suppliers are commercial providers of research services.

Syndicated Service

A research supplier that provides standardized information for many clients for a fee

(e.g., J.D. Power and Associates sells research about customers’ ratings of automobiles).

Can provide expensive information economically to numerous clients because the

information is not specific to one client but interests many.

Standardized Research Services

These companies develop a unique methodology for investigating a business specialty

area (i.e., Verdict Research provides location services for retail firms).

Conduct studies for multiple, individual clients using the same methods.

May be able to conduct a research project at a lower cost, faster and from a completely

objective perspective compared to an in-house project.

Advisable to seek outside help with research when conducting research in a foreign

country.

Limited Research Service Companies and Custom Research

Specialize in particular research activities (i.e., syndicated service, field interviewing,

data warehousing or data processing).

Full-service research suppliers sometimes contract these companies.

Custom research projects are ones that are tailored specifically to a client’s unique

needs.

Titles of individuals employed by custom research suppliers include account executive or

account group manager, statistician, librarian, director of field services, director of

tabulation and data processing, and interviewer.

Largest Research Organizations

Exhibit 5.6 lists the top 15 suppliers of global research and their statistics from 2010.

Large firms not based their operations in places around the globe.

The exhibit reveals that research is big business.

IV. ETHICAL ISSUES IN BUSINESS RESEARCH

Ethical Questions Are Philosophical Questions

Business ethics is the application of morals to behavior related to the exchange

environment.

Moral standards are principles that reflect beliefs about what is ethical and what is

unethical (e.g., the Golden Rule).

Ethical dilemma refers to a situation in which one chooses from alternative courses of

actions, each with different ethical implications.

Relativism is a term that reflects the degree to which one rejects moral standards in favor

of the acceptability of some action.

Idealism is a term that reflects the degree to which one bases their morality on moral

standards.

Researchers and business stakeholders face ethical dilemmas practically every day.

General Rights and Obligations of Concerned Parties

We can divide those involved in research into three parties:

1. The people actually performing the research, who can also be thought of as the

“doers.”

2. The research client, sponsor, or the management team requesting the research

who can be thought of as “users” of research.

3. The research participants, meaning the actual research respondents or subjects.

Each party has certain rights and obligations toward the other parties (given in Exhibit

5.7).

Rights and Obligations of the Research Participant

Most business research is conducted with the research participant’s consent (i.e., the

participant is active).

Informed consent means that the individual understands what the researcher wants

him/her to do and agrees to in the research study.

Obligation to Be Truthful

In return for being truthful, the subject has the right to expect confidentiality.

Confidentiality means that information involved in the research will not be shared

with others.

Participants’ Right to Privacy

Active Research

The issue involves the participant’s freedom to choose whether to comply.

Be considerate of participants’ time and identify yourself.

Adhere to the principles of the “Do Not Call” policy and respect consumers’

“Internet privacy.”

Do-not-call legislation restricts any telemarketing effort from calling

consumers who either register with a no-call list in their state or who request

not to be called.

While not directly applicable to research in most states, some have

extended this legislation to apply to “those that seek marketing

information” (i.e., California, Louisiana, and Rhode Island).

With respect to the Internet, researchers should make sure that consumers are

given a clear and easy way to either consent to participation in active

research or to easily opt-out, and information consumers send via the Internet

should be secure.

Passive Research

It is generally believed that unobtrusive observation of public behavior is not

an invasion of privacy.

Recording behavior that is not conducted in public would be a violation of

privacy.

Technology allows the passive collection of data based on consumers’ on-line

behavior, and researchers should gain consent before harvesting information.

Spyware is software that is placed on computers without consent or

knowledge of the user while using the Internet, which is illegitimate because

it is done without consent.

Children’s Online Privacy Protection Act (COPPA) is a U.S. federal law that

requires anyone engaging in contact with a child under the age of 13 through

the Internet is obligated to obtain parental consent and notification before any

personal information or identification can be provided by a child.

Deception in Research Designs and the Right to Be Informed

Experimental Designs

Manipulations often involve some degree of deception.

A placebo is a false experimental effect used to create the perception of a

true effect, and experimental subjects often display some placebo effect in

which the mere belief that some treatment has been applied causes some

effect.

Every experiment should include a debriefing session in which research

subjects are fully informed and provided a chance to ask any questions that

they may have about the experiment.

Descriptive Research

Researchers sometimes will even withhold the actual research questions from

respondents in simple descriptive research.

A distinction can be made between deception and discreet silence—

sometimes providing the actual research question to respondents is simply

providing them with more information than they need to give a valid

response.

Protection from Harm

Most types of research do not expose participants to any harm.

Research may involve some potential psychological harm, from stress or some

experimental treatment that questions some strongly held conviction.

Key questions that can determine whether a research participant is being treated

unethically due to experimental procedures:

1. Has the research subject provided consent to participate in an experiment?

2. Is the research subject subjected to substantial physical or psychological trauma?

3. Can the research subject be easily returned to his or her initial state?

Tricky in experiments because the researcher cannot reveal exactly what the research

is about ahead of time or validity is threatened.

Subjects are usually provided some incentive to participate, and it should always be

non-coercive.

Human subjects review committee – carefully reviews a proposed research design

to try to make sure that no harm can come to any research participant (also review

legal issues).

Rights and Obligations of the Researcher

Several professional organizations have written and adopted codes of ethics (see Exhibit

5.8 for the Council of American Survey Research Organization’s (CASRO) online survey

standards).

Researchers have rights, too:

right to cooperation from the sponsoring client

right to be paid as long as the work is done professionally

right to be paid in full and in a timely manner

Research That Isn’t Research

Mixing Sales or Fund-Raising With Research

oSugging is selling under the guise of research.

oFrugging is fund-raising under the guise of research.

oThe FTC has indicated that it is illegal to use any plan, scheme, or ruse that

misrepresents the true status of a person seeking admission to a prospect’s

home, office, or other establishment.

oNo research firm should engage in any sales or fund-raising attempts.

Pseudo-Research

oPseudo-research is conducted not to gather information for decisions but to

bolster a point of view and satisfy other needs.

oMostly performed to justify a decision that has already been made or that

management is already strongly committed to.

oOccasionally, research is requested simply to pass blame for failure to

another area.

Push-Polls

oA push-poll is telemarketing under the guise of research, and its name

derives from the fact that the purpose of the poll is to push consumers into a

preordained response.

Service Monitoring

oResearchers are often asked to design satisfaction surveys.

oThe customer should be asked whether it is okay for someone to follow up in

an effort to improve their satisfaction.

Objectivity

Researchers should maintain high standards to ensure that their data are accurate.

Researchers must not intentionally try to prove a particular point for political

purposes.

Misrepresentation of Research

The statistical accuracy of a test should be stated precisely and the meaning of

findings should not be under or overstated.

oBoth the researcher and the client share this obligation.

Honesty in Presenting Results

oMisrepresentation can also occur in the way results are presented.

oCharts can be created that make a very small difference appear very big or

vise versa.

Honesty in Reporting Errors

oAny major error that has occurred during the course of the study should not

be kept secret from management or the sponsor.

oEvery research design presents some limitations, and the researcher should

point out the key limitations in the research report and presentation.

Confidentiality

The researcher often is obligated to protect the confidentiality of both the research

sponsor and the research participant.

Conflict of interest results if working for two direct competitors.

Dissemination of Faulty Conclusions

Researchers should not knowingly disseminate conclusions that are inconsistent with

or not warranted by the data.

Rights and Obligations of the Client Sponsor (User)

Ethical Behavior between Buyer and Seller

The general business ethics expected between a purchasing agent and a sales

representative should hold in a research situation.

An Open Relationship with Research Suppliers

To encourage objectively, a full and open statement of the decision situation, a full

disclosure of constraints in time and money, and any other insights that assist the

researcher should be provided.

Researcher should be provided adequate access to key decision makers.

An Open Relationship with Interested Parties

Conclusions should be based on data – not conjecture.

Advocacy research – research undertaken to support a specific claim in a legal

action or to represent some advocacy groups.

Researchers often conduct advocacy research in their role as an expert witness.

The ethics of advocacy research present a number of serious issues that can lead to an

ethical dilemma:

oAttorneys’ first responsibility is to represent their clients.

oA researcher should be objective.

oShould the lawyer (in this case a user of research) ask the researcher to take

the stand and present an inaccurate picture of the results?

Attorneys rarely submit advocacy research evidence that does not support their

clients’ positions.

The question of advocacy research is one of objectivity: Can the researcher seek out

the truth when the sponsoring client wishes to support its position at a trial?

Privacy

People believe the collection and distribution of personal information without their

knowledge is a serious violation of their privacy.

The client and the research supplier have the obligation to maintain respondents’ privacy.

Privacy on the Internet

A controversial issue.

Many business researchers argue that their organizations don’t need to know who the user

is because the individual’s name is not important for their purposes, but they do want to

know certain information (i.e., demographic characteristics or product usage) associated

with an anonymous profile.

Research users should not disclose private information without permission from the

consumers who provided that information.

A Final Note on Ethics

Researchers should maintain the highest integrity in their work to protect our industry.

Research participants should also play their role or else the data they provide will not

lead to better products for all consumers.

The research users must also follow good professional ethics in their treatment of

researchers and research results.