Hypothesis Formulation

Business Research Skills

Chapter :Theoretical Framework and Formulation of Hypothesis

Need of Theoretical Framework

Theoretical Framework is a conceptual model that provides logical relationship between the factors so identified in the research problem.

Need of Theoretical Framework

Improves the understanding of the situation under study.

Identify the variables under study.

Helps to frame hypothesis that are testable.

Variables- Meaning and Types

A variable is anything that can take on differing or varying values.

Values vary for different subjects at same time or for same subject at different times.

Examples of Variables

Production units Absenteeism Motivation

Types of Variables

Dependent Variable (DV) Independent Variable (IV) Moderating Variable (MV) Intervening Variable (IVV)

Dependent Variable (DV)

The variable under study which is monitored

Also referred to as the criterion variable or predicted variable

Examples

Manager is interested in analyzing Debt-Equity Ratio.

Sales is not picking up.

Independent Variable (IV)

The variable that influences the dependent variable in a positive or negative way.

The variance in the dependent variable is caused by IV.

Also referred to as explanatory or predictor variable.

Example:

The success of new product influences the stock price levels.

IV DV

New product success

Stock Market Price

Moderating Variable (MV)

The variable having strong contingent effects on the independent variable.

IV DV

MV

Availability ofReference

No. of Defects

Interest and Inclination

Another Example of MV

Work force diversity impacts OE. IV DV

MV

Workforce DiversityOrganizational Effectiveness

Managerial Expertise

Intervening Variable (IVV)

IVV is the one that starts operating between the time the IV starts operating to influence the DV.

Example of IVV

IV IVV DV

Workforce Diversity

Creative SynergyOrganizational Effectiveness

Extraneous Variable

Infinite number of variables that might affect a given relationship between IV and DV.

Meaning of Hypothesis

It is a proposition that is formulated for empirical testing.

Proposition is a statement about observable phenomena that may be judged as true or false.

Empirical Testing

The relationship or the description so stated are tested scientifically using statistical analysis or other qualititative techniques.

The reliable information is obtained on the relationship under study.

Changes if any may be required.

Formats of Hypotheses

- If -Then Statements

- Directional and Non-Directional Statements

Types of Hypotheses

- Descriptive Hypotheses

- Relational Hypotheses

- Null Hypotheses

- Alternate Hypotheses

Descriptive Hypotheses

Describes the existence, size, form or distribution of some variable.

- 60% of investors favors cash dividend.

- MBA institutes facing problems in placement

Relational Hypotheses

Describes the relationship between two or more variables.

The greater the stress experienced in the job the lower the job-satisfaction.( directional)

Women are better than men There is a relationship between age and job-

satisfaction. (non-directional)

Relational Hypotheses

Correlational Hypotheses

Only shows the correlation between two or more variables but no claims are made that one causes the other.

Explanatory Hypotheses.

Claims are made that one variable causes other to occur.

Null Hypotheses

The definitive statement that explains the relationship.

The null hypothesis relates to the statement being tested,

Alternate Hypotheses

All other permissible relationship refers to the

Alternate Hypotheses.• The alternative hypothesis relates to the

statement to be accepted if / when the null hypothesis is rejected.

Importance of Hypotheses

Guides the direction of study; Identifies the facts relevant for the study; Helps in the selection of Research Design; Helps in providing the framework in which the

results have to be given.

Characteristics of a Good Hypothesis

Adequate for the purpose

i) Should address the original problem

ii) Clearly identifies the variables relevant in the study.

iii) Helps in knowing the research design

iv) Helps in organizing the results of the study.

Characteristics of a Good Hypothesis

Testable

i) Uses acceptable techniques

ii) Simple requiring few conditions

iii) Explanation can be given from the given theoretical framework.

Characteristics of a Good Hypothesis

Better than its rivals

i) Explains more facts than its rivals

ii) Greater variety or scope of facts