Hypothesis Formulation

(1)

Business Research Skills

Chapter : Chapter :

Theoretical Framework

and Formulation of

Hypothesis

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Need of Theoretical Framework



 Theoretical Framework is a conceptual modelTheoretical Framework is a conceptual model

that provides logical relationship between the

factors so identified in the research problem.

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Need of Theoretical Framework



 Improves the understanding of the situationImproves the understanding of the situation

under study.



 Identify the variables under study.Identify the variables under study.



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Variables- Meaning and Types



 A variable is anything that can take onA variable is anything that can take on

differing or varying values.



 Values vary for different subjects at sameValues vary for different subjects at same

time or for same subject at different times.

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Examples of Variables



 Production unitsProduction units 

 AbsenteeismAbsenteeism 

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Types of Variables



 Dependent Dependent Variable Variable (DV)(DV) 

 IndependenIndependent Variable t Variable (IV)(IV) 

 Moderating Variable (MV)Moderating Variable (MV) 

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Dependent

Dependent Variable

Variable

(DV)



 The variable under study which is monitoredThe variable under study which is monitored



 Also referred to as the criterion variable or Also referred to as the criterion variable or

predicted variable

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Examples



 Manager Manager is is interested interested in in analyzing analyzing Debt-

Debt-Equity Ratio.

Equity Ratio.



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Independen

Independent Variable

t Variable (IV)

(IV)



 The variable that influences the dependentThe variable that influences the dependent

variable in a positive or negative way.



 The variance in the dependent variable isThe variance in the dependent variable is

caused by IV.



 Also referred to as explanatory or predictor Also referred to as explanatory or predictor

variable.

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Example:

The success of new product

The success of new product influences theinfluences the

stock price levels.

IV DV

New product New product

success

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Moderating Variable (MV)



 The variable having strong contingent effectsThe variable having strong contingent effects

on the independent variable.

IV DV IV DV MV MV Availability of Availability of Reference

Reference No. of DefectsNo. of Defects

Interest and Interest and Inclination Inclination

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Another Example of MV

Work force diversity impacts OE. Work force diversity impacts OE.

IV DV IV DV MV MV Workforce Diversity Workforce Diversity Organizational Organizational Effectiveness Effectiveness Managerial Expertise Managerial Expertise

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Intervening Variable (IVV)



 IVV is the one that starts operating betweenIVV is the one that starts operating between

the time the IV starts operating to influence

the DV.

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Example of IVV

IV IV IVV IVV DVDV Workforce Workforce Diversity

Diversity Creative SynergyCreative Synergy

Organizational Organizational Effectiveness Effectiveness

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Extraneous Variable



 Infinite Infinite number number of vof variables ariables that that might might affectaffect

a given relationship between IV and DV.

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Meaning of Hypothesis



 It is a proposition that is forIt is a proposition that is formulated for mulated for

empirical testing.



 Proposition is a statement about observableProposition is a statement about observable

phenomen

phenomena that may be a that may be judged as true judged as true or or

false.

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Empirical Testing



 The relationship or the description so statedThe relationship or the description so stated

are tested scientifically using statistical

analysis or other qualititative techniques.



 The reliable information is obtained on The reliable information is obtained on thethe

relationship under study.



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Formats of Hypotheses

-- _{If -Then}_{If -Then}_Statements_Statements

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Types of Hypotheses

-- _{Descriptive Hypotheses}_{Descriptive Hypotheses}

-- _{Relational Hypotheses}_{Relational Hypotheses}

-- _{Null Hypotheses}_{Null Hypotheses}

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Descriptive Hypotheses



 Describes the existence, size, form or Describes the existence, size, form or

distribution of some variable.

- 60% of investors favors cash dividend.

-

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Relational Hypotheses



 Describes the relationship between two or Describes the relationship between two or

more variables.

The greater the stress experienced in the

The greater the stress experienced in the jobjob

the lower the

the lower the job-satisfaction.job-satisfaction.( directional)( directional)

Women are better than men

There is a relationship between age and

job-satisfaction. (non-directional)

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Relational Hypotheses



 Correlational HypothesesCorrelational Hypotheses

Only shows the correlation between two or

more variables but no claims are made that

one causes the other.



 Explanatory Hypotheses.Explanatory Hypotheses.

Claims are made that one

Claims are made that one variable causesvariable causes

other to occur.

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Null Hypotheses



 The The definitive definitive statement statement that that explains explains thethe

relationship.



 The null hypothesis relates to the statementThe null hypothesis relates to the statement

being tested,

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Alternate Hypotheses



 All other permissible relationship refers to theAll other permissible relationship refers to the

Alternate Hypotheses.

•

• _{The alternative hypothesis relates to the}_{The alternative hypothesis relates to the}

statement to be accepted if / when the null

hypothesis is rejected.

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Importance of Hypotheses



 Guides the direction of study;Guides the direction of study; 

 Identifies the facts relevant for the study;Identifies the facts relevant for the study; 

 Helps in the selection Helps in the selection of Research Design;of Research Design; 

 Helps in providing the framework in which theHelps in providing the framework in which the

results have to be given.

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Characteristics of a Good H

ypothesis



 Adequate for the purposeAdequate for the purpose

iii)

iii) Should address the original problemShould address the original problem

iv)

iv) Clearly identifies the variables relevant inClearly identifies the variables relevant in

the study.

v)

v) Helps in knowing the research designHelps in knowing the research design

vi)

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Characteristics of a Good H

ypothesis



 TestableTestable

iii)

iii) Uses acceptable techniquesUses acceptable techniques

iv)

iv) Simple requiring few conditionsSimple requiring few conditions

v)

v) Explanation can be given from the givenExplanation can be given from the given

theoretical framework.

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Characteristics of a Good H

ypothesis



 Better than its rivalsBetter than its rivals

iii)

iii) Explains more facts than its rivalsExplains more facts than its rivals

iv)