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 Scientific Method in Business Research

The scientific method is a systematic method of investigation, evaluation,
experimentation, interpretation and theorizing. It is characterized by critical
discrimination generally and system, and empirical verification, according to
wolfe. Generally speaking, the scientific method is characterized by a systematic
study, based on theory and facts, universality or generality, objectivity of
observation, predictability of results, and verifiability of the phenomenon. It
consists of a number of formalities and procedures, which are time consuming.
Time management is the basic requirement for the success of managerial
decisions. Many management problems require timely solutions and decisions. In
such situations, the management may not have adequate time at its disposal to
make use of scientific studies before arriving at decisions. Laboratory experiments
occupy a prominent place in the scientific method, which may not be useful in
many situations of managerial decision-making. Physical science phenomena may
be subjected to laboratory tests and physical control. Most of the managerial
policies and decisions, however, affect human beings. An individual͛s behavior
differs substantially from that of another from time to time, place to place and
environment to environment and it cannot be placed under absolute control, for
it is very difficult to employ the scientific method is the practice of management.
Despite the development of dynamic methods pf management information
systems, many decision areas, such as those of labor productivity, materials
handling, product planning and consumer behavior, require complex data to be
analyzed as a part of the scientific method which may not be appropriate in quick
managerial decisions. The greater the complexity of the data, the lesser is the
possibility of accuracy and the lesser is its utility in the management process.
Consumer behavior, a trade union͛s behavior, workers͛ behavior, the tastes,
temperaments and fashions of the population at large, the demonstration effect
in the market, technological development, political change, social change,
geographic change, and such other forces influence business policy a great deal.
Many of these forces, especially the human factor, are unpredictable. Despite a
thorough scanning of the environment, a perfect prediction, on the basis of these
variables, is just not possible, as it is in the physical sciences. The scientific
method of research, therefore, has a limited applicability in such managerial
decision areas.
The scientific method is effective in the physical sciences, because physical
phenomena can be verified and evaluated by the senses; but many managerial
factors, like the behavioral aspects in organization, cannot be absolutely tested or
verified physically. As a result, the scope of the scientific method in management
is profoundly affected. Many management problems cannot be empirically
tested, in spite of the extensive use of quantitative techniques in the latter half of
this century. Though servicing, decision-making, marketing and promotional
effectiveness, production planning the complexity of these techniques makes
them unpopular with many practitioners. At the same time, the scientific method
does not find favour with many organizations and functional executives because
of the heavy demand it makes on their time, exposure, resources and manpower.
Even in the science where quantitative, empirical and scientific methods are
extensively employed, the qualitative approach is made simultaneously, thus
limiting the importance of scientific method.
The performance evaluation of the sales force is usually made by combining both
quantitative and qualitative performance, though there is a possibility of making a
quantitative analysis. The experimental method is seldom used in managerial
analysis, unlike in the physical sciences, while the cause-effect relationship cannot
be established beyond doubt in many cases. For example, there is a relationship
between the sales revenue and the advertising budget; but it is not easy to
establish which the actual cause of effect is because both are interlinked. The
exact magnitude of the effect of each on the other cannot be easily determined,
for various other factors-economic variables, market forces, changes in fashion,
tastes, temperaments, and the competitors͛ policies make a substantial impact on
the sales volume. Similarly, business policies, marketing opportunities and
product specifications attain dynamic dimensions in a dynamic economic, social
and business environment. Evidently research, scientific methods and their results
have very little policy implications in such situations; and that is why the recourse
invested on research do not yield any considerable returns. However, the
scientific method that empirically tests a hypothesis has a far-reaching utility
value, not only for theoretical purposes, but also for practical applications and
policy decisions.

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Êi) Hypothesis

ii) Reliability
Reliability has to do with the quality of measurement. In its everyday sense,
reliability is the "consistency" or "repeatability" of your measures. Before we can
define reliability precisely we have to lay the groundwork. First, you have to learn
about the foundation of reliability, the true score theory of measurement. Along
with that, you need to understand the different types of measurement error
because errors in measures play a key role in degrading reliability. With this
foundation, you can consider the basic theory of reliability, including a precise
definition of reliability. There you will find out that we cannot calculate reliability -
- we can only estimate it. Because of this, there a variety of different types of
reliability that each have multiple ways to estimate reliability for that type. In the
end, it's important to integrate the idea of reliability with the other major criteria
for the quality of measurement -- validity -- and develop an understanding of the
relationships between reliability and validity in measurement.
http://www.socialresearchmethods.net/kb/reliable.php

iii) Theory
The word theory, when used by scientists, refers to an explanation of reality that
has been thoroughly tested so that most scientists agree on it. It can be changed
if new information is found. Theory is different from a working hypothesis, which
is a theory that hasn't been fully tested; that is, a hypothesis is an unproven
theory.
http://en.wikipedia.org/wiki/Theory

iv) Practicality
Practicality' means the quality of something in being possible to be done, or being
workable. For example: a plan to prevent piracy that involves military air carriers
to escort every single cargo ship lacks practicality (I guess).
Another case of 'practicality' might be the quality of something in being usable.
'Practicality' of a person can mean the attribute of being sensible, pragmatic in
thinking and doing, getting things done.
The 'practicalities' of something means the concrete circumstances, detailed
characteristics of a situation, e.g.: the practicalities of a life as a seaman.

v) Dependent Variable
Dependent Variable:
A dependent variable is what you measure in the experiment and what is affected
during the experiment. The dependent variable responds to the independent
variable. It is called dependent because it "depends" on the independent variable.
In a scientific experiment, you cannot have a dependent variable without an
independent variable. Example: You are interested in how stress affects heart rate
in humans. Your independent variable would be the stress and the dependent
variable would be the heart rate. You can directly manipulate stress levels in your
human subjects and measure how those stress levels change heart rate.

vi) Parameter
Definition: Parameters are values that are passed into a function or C++ template.
For example, a function to add three numbers might have three parameters.
The parameters that are passed into a template definition define the class that
the template class uses. Eg a vector of payroll records.
Functions that can take a varying number of parameters are called variadic.

vii) Controlled Variable

A control variable is a variable that is held constant or whose impact is removed in
order to analyze the relationship between other variables without interference.
For example, suppose the relationship between age and frequency of delinquent
activity is first investigated for male students, then separately for female
students. The variable sex has been treated as a control variable, its effect being
removed. In short, it is a variable whose effect must be neutralized or controlled.

viii) Standard Error

http://www.linfo.org/standard_error.html

ix) Mapping
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x) Validity
Validity is the extent to which a test measures what it claims to measure. It is vital
for a test to be valid in order for the results to be accurately applied and
interpreted.
Validity isn͛t determined by a single statistic, but by a body of research that
demonstrates the relationship between the test and the behavior it is intended to
measure.

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Êa) Concept and Construct

Concepts and constructs are both abstractions. Man, table, tree, insect, etc are abstractions
and so are ideas of motivation, beauty, attitude, etc. The difference lies in the nature of
"objects" the abstractions are made from: The existence of the objects from which the
abstractions are made may be factual or hypothetical. Where factual, the abstraction is a
concept (e.g., table) and where the object is hypothetical or inferential, the abstraction is a
construct (e.g., motivation).
Read more:
http://wiki.answers.com/Q/What_is_the_difference_between_concepts_and_construct#ixzz19
cP0Xhnq

b) Deduction and Induction

Every person uses reasoning to draw conclusions. In Western European cultures, two major
forms of reasoning are used: induction and deduction. Culturally, both forms are used regularly.
Formally, induction is considered to be a fallacious form of reasoning that leads to conclusions
that cannot be supported.

Deduction Defined
1. Deduction is reasoning from a general principle or statement to a specific example. A famous
example of this would be: If man is mortal and Socrates is a man, then Socrates is mortal.

Induction Defined
2. Induction is reasoning from a specific example to a general principle or statement. An
example of this would be: If Socrates is dead and Socrates was a man, then man can die.

Significance
3. Deduction serves as the basis for the scientific method.
Read more: Difference Between Deduction & Induction | eHow.com
http://www.ehow.com/facts_4781689_difference-between-deduction-
induction.html#ixzz19cPu7xZJ

c) Operational definition and Descriptive Definition

S
 

 
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d) Decision making under certainty and uncertainty
The conditions for making decisions can be divided into two types, certainty and uncertainty.
Decisions made under certainty or uncertainty are based on our feelings and our experiences.
1. Certainty
We experience certainty about a specific question when we have a feeling of complete belief or
complete confidence in a single answer to the question.
Decisions such as deciding on a new carpet for the office or installing a new piece of equipment
or promoting an employee to a supervisory position are made with a high level of certainty.
While there is always some degree of uncertainty about the eventual outcome of such
decisions there is enough clarity about the problem, the situation and the alternatives to
consider the conditions to be certain.
2. Uncertainty
A decision under uncertainty is when there are many unknowns and no possibility of knowing
what could occur in the future to alter the outcome of a decision. We feel uncertainty about a
situation when we can't predict with complete confidence what the outcomes of our actions
will be. We experience uncertainty about a specific question when we can't give a single answer
with complete confidence.
Launching a new product, a major change in marketing strategy or opening your first branch
could be influenced by such factors as the reaction of competitors, new competitors,
technological changes, changes in customer demand, economic shifts, government legislation
and a host of conditions beyond your control.
These are the type of decisions facing the senior executives of large corporations who must
commit huge resources. The small business manager faces, relatively, the same type of
conditions which could cause decisions that result in a disaster from which he or she may not
be able to recover.

e) Decision rule and decision variable

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ÊMeasurement Error

Measurement error is caused by difference between the information desired by the researcher
and the information provided by the measurement process.
Experimental Error
Experiments are designed to measure the impact of one or more independent variables on a
dependent variable. Experimental error occurs when the effect of experimental situation itself
is measured rather than the effect of independent variable. For example , a retail chain may
increase the price of selected items constant in four similar outlets, in an attempt to discover
the best pricing strategy. However, unique weather patterns, traffic conditions, or competitors͛
activities may affect the sales at one set of stores and not the other. Thus, the experimental
result will reflect the impact of variables other than price.

Population Specification Error

Population specification error is caused by selecting an inappropriate universe or population
from which to collect data. This is a potentially serious problem in both industrial and consumer
research. A firm wishing to learn the criteria that are considered most important in the
purchase of certain machine tools might conduct a survey among purchasing agents. Yet, in
many firms the purchasing agents don͛t determine or necessary even know the criteria behind
brand selections. These decisions may be made by the machine operators, by committee or
high level executives. A study that focuses on the purchasing agent as the person who decides
which brands to order may be subject to population specification error.

Frame Error
The sampling frame is the list of population members from which the sample units are selected.
An ideal frame identifies each member of the population once and only once. Frame error is
caused by using inaccurate or incomplete sampling frame. For example, using the telephone
directory as sampling frame for the population of a community contains a potential for frame
error. Those families who don͛t have listed numbers, both voluntarily or involuntarily, are likely
to differ from those with listed numbers in such respects as income, gender and mobility.

Sampling Error
Sampling error is caused by the generation of nonrepresentative sample by means of a
probability sampling method. For example, a random sample of 100 university students could
produce a sample of all families. Such a sample wouldn͛t be representative of the over all
student body. Yet it could occur in classic sampling technique. Sampling error is the focal point
of concern in classical statistics.

Selection Error
Selection error occurs when a nonrepresentative sample is obtained by non probability
sampling methods. For example, one of the authors talked with an interviewer who is afraid of
dogs. In surveys that allowed any freedom of choice, this interviewer avoided home with dogs
present. Obviously such practice may introduce error in to the survey results. Selection error is
a major problem in nonprobablity samples.

Nonresponse Error
Nonresponce error is caused by (1) failure to contact all members of a sample, and /or (2) the
failure of some contacted members of the sample to respond to all or specific parts of the
measurement instrument. Individuals who are difficult to contact or who are reluctant to
cooperate will differ, on at least some characteristics, from those who are relatively easy to
contact or who readily cooperate. If these differences include variable of interest , nonresponse
error has occurred.

For example, people who are more likely to respond to a survey on a topic that interests them.
If a firm were to conduct a mail survey to estimate the incidence͛s foot among adults, non
response error would be of major concern. Why? Those most likely in athlete͛s foot, and thus
more likely to respond to the survey, are current or recent suffers of the problem. If the firm
were to choose the percentage of those responding who report having athlete͛s foot as an
estimate of the total population having athlete͛s foot, the company would probably
overestimate the extent of the problem.

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j &B 1. Probability sample & non-probability sample

http://www.tardis.ed.ac.uk/~kate/qmcweb/s2.htm

2. Simple random sample and cluster sample

Basically in a stratified sampling procedure, the population is first partitioned into disjoint
classes (the strata) which together are exhaustive. Thus each population element should be
within one and only one stratum. Then a simple random sample is taken from each stratum, the
sampling effort may either be a proportional allocation (each simple random sample would
contain an amount of variates from a stratum which is proportional to the size of that stratum)
or according to optimal allocation, where the target is to have a final sample with the minimum
variabilty possible. The main difference between stratified and cluster sampling is that in
stratified sampling all the strata need to be sampled. In cluster sampling one proceeds by first
selecting a number of clusters at random and then sampling each cluster or conduct a census of
each cluster. But usually not all clusters would be included.
Read more:
http://wiki.answers.com/Q/What_is_the_difference_between_stratified_random_sampling_an
d_cluster_sampling#ixzz19fNYYYqT

3. Using the finite population adjustment factor

http://www.usm.maine.edu/~smax/course_material/FinitePopulationCorrectionFactor.pdf

4. A dis-appropriate stratified probability sample

http://free-books-online.org/mathematics/business-mathematics-statistics/research-methods-
business-mathematics-statistics/types-of-probability-sampling-2/

5. Explain in detail with examples where possible.

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