Research Methods Chapter 1 Concepts of Scientific Research

AcFn 3111- Research Methods
in Accounting & Finance
Chapter I
Concepts of Scientific Research
Main Contents of the Chapter
1. Defining research
2. Characteristics of research
3. Objectives of research
4. Importance of research
5. Motivation for research
6. Managerial value of research
7. Characteristics of good research
8. Types of research
9. The systematic process of research
Compiled by Andualem 2
(2015/2023)
I. The Meaning of Research
 While research is important in both business and academia,
there is no consensus in the literature on how it should be
defined.
 The main reason for this is that different people can

interpret research differently.
 However, from the many definitions there appears to be

conformity that research:
 is a process of enquiry and investigation;
 is systematic and methodical; and
 increases knowledge.
(2015/2023)
 The ‘process of enquiry and investigation’ suggests that
research is all about having a predetermined set of
questions, and then aim to answer these questions through
the gathering of information and analysis.
 “Systematic and methodical” implies that your research

must be well organized and go through a series of stages.
 i.e. research is done in an organized manner.

 A research project has a well-known structure: a
beginning, a middle, and an end.
(2015/2023)
 “Research increases knowledge” means that:
 Not only your own knowledge about the subject improves as a
result of your research, but so too will that of your audience.
 Hence, research can be defined as

 a systematic and objective a ‘step-by-step process that involves
the collecting, recording, analyzing and interpreting of data (i.e.
pieces of information).
 an organized, systematic, data based, critical, objective, scientific

inquiry or investigation into a specific problem, undertaken with
the purpose of finding answers or solutions to it.
(2015/2023)
The research process: an eight-step model
(2015/2023)
The research process: an eight-step model
(2015/2023)
 Research is about advancing the frontiers of knowledge.
 Research = creation/generation/production/discovery
of [new] knowledge
 It is a systematic and methodological process of enquiry &

investigation to solve problems and increase knowledge.
 Social interrelationship, opinions, customs, habits,
conditions of life can be the focus of a social research.
 Research is a discerning pursuit of the truth-knowing of
the facts.
 To do research, it is necessary to know what the correct
tools are, and how to use them.
(2015/2023)
 And the techniques and range of tools you use to do
research are called Research methods.
 Research methods provide the needed information that

guide policy makers to make informed decisions by
reducing uncertainty.
 With the right sort of methods you should be able to
convince other people that your conclusions have
some validity
(2015/2023)
 The term “Research” consists of two words:
 Research = Re + Search
 “Re” means again and again
 “Search” means to find out something. The process
is:
 Thus, research means to observe the phenomena

again and again from different dimensions. It is the
art of scientific investigation.
(2015/2023)
 Business research
 is the application of the scientific method in searching for
the truth about business phenomena (the activities
include defining business opportunities and problems,
generating and evaluating ideas, monitoring performance,
and understanding the business process).
 is systematic and organized effort to investigate a specific
problem encountered in the work setting that needs a
solution.
 the systematic inquiry that provides information to guide
business decisions.
(2015/2023)
 Steps of business research:

 To know where the problem areas exist in the organization.
 To identify as clearly and specifically as possible the problems

that need to be studied and resolved.
 Gather information, analyze the data, and determine the factors

that are associated with the problem and solve it by taking the
necessary corrective measures.
(2015/2023)
What is Science?
 Science
 Etymologically, the word “science” is derived from the Latin
word scientia meaning knowledge.
 refers to a systematic and organized body of knowledge in any
area of inquiry that is acquired using “the scientific method”
 The purpose of science is to create scientific knowledge.
 Scientific knowledge
 refers to a generalized body of laws and theories to explain a
phenomenon or behavior of interest that are acquired using the
scientific method.
 laws are observed patterns of phenomena or behaviors
 theories are systematic explanations of the underlying
phenomenon or behavior.
(2015/2023)
What is Science?
 Scientific method
 refers to a standardized set of techniques for building scientific
knowledge, such as how to make valid observations, how to interpret
results, and how to generalize those results.
 Science can be grouped into two broad categories:
 Natural science is the science of naturally occurring objects or
phenomena, such as light, objects, matter, earth, celestial bodies, or the
human body.
 Social science is the science of people or collections of people, such
as groups, firms, societies, or economies, and their individual or
collective behaviors.
 The goal of scientific research
 is to discover laws and postulate theories that can explain natural or
social phenomena, or in other words, build scientific knowledge.
(2015/2023)
What is Science?
 We arrive at scientific laws or theories through a process
of logic and evidence.
 Logic (theory) and evidence (observations) are the two, and only
two, pillars upon which scientific knowledge is based.
 In science, theories and observations are interrelated and
cannot exist without each other.
 Theories provide meaning and significance to what we
observe, and observations help validate or refine existing
theory or construct new theory. Any other means of
knowledge acquisition, such as faith or authority cannot be
considered science.
(2015/2023)
II. Characteristics of Research
1. The Research cycle
(2015/2023)
1. Research originates/begins with a question or problem.
E.g. Why does such-and-such a phenomenon occur?
2. Research requires clear articulation of a goal/objective.

 ”What problem do you intend to solve?”
 When you describe your objective in clear, concrete terms, you

have a good idea of what you need to accomplish and can direct
your efforts accordingly.
(2015/2023)
3. Research requires a specific plan for proceeding (How?).

 Research is not a blind excursion into the unknown , instead, it is
a carefully planned itinerary of the route you intend to take in
order to reach your final destination your research goal.
 Depending on the research question, different designs and

methods will be more or less appropriate.
 In the formative stages of a research project, much can be

decided: e.g. data – existence, access, analysis, etc.
(2015/2023)
4. Research usually divides the principal problem into

more manageable sub problems.
 Solving the sub problems help to resolve the main problem.
 E.g. Main problem: How do I get from Town A to Town B?

Sub problems:
a) What is the most direct route?
b) How far do I travel on the highway?
c) Which exit should I take to leave the highway?
(2015/2023)
5. Research is guided by the specific research problem,

question, or hypothesis.
 Research problem,
 Research question,
 Research hypothesis –
 is a logical supposition, a reasonable guess, an educated conjecture,
a tentative explanation for a phenomenon under investigation.
 direct thinking to possible sources of information that will aid in

resolving one or more sub-problems and, in the process, the
principal research problem.
(2015/2023)
5. Research is guided by the specific research problem…
 E.g. a series of reasonable guesses hypotheses to explain the case of
a nonfunctioning table lamp:
1. The bulb has burned out.
2. The lamp is not plugged into the wall outlet.
3. A late afternoon thunderstorm interrupted the electrical service.
4. The wire from the lamp to the wall outlet is defective.
5. You forgot to pay your electric bill.
 Each of these hypotheses hints at a direction you might proceed in
order to acquire information that may resolve the problem of the
malfunctioning lamp.
(2015/2023)
6. Research accepts certain critical assumptions.
 assumptions are equivalent to axioms in geometry self evident
truths, the sine qua non (prerequisite) of research.
 a hypothesis is a prediction that may or may not be supported by
the data whilst an assumption is a condition that is taken for
granted without which the research would be pointless.
 E.g. research on students understanding of IFRS in which both
the students and teachers taking part in the research (i.e. an
assumption - competence to teach and to learn).
7. Research requires the collection and interpretation of
data in an attempt to resolve the problem that initiated
the research.
(2015/2023)
 Research is, by its nature: (two important points related to the
seven-step process)
 iterative
 a researcher sometimes needs to move back and forth
between two or more steps along the way.
 cyclical or, more exactly, helical (i.e. the format).
 Research is rarely conclusive.
 In exploring an area, one comes across additional problems
that need resolving, and so the process must begin anew.
 Research begets more research.
(2015/2023)
III. Objectives of Research
 The purpose of research is to discover answers to
questions through the application of scientific procedures.
 The role of research has increased in modern times b/c
research
 provides the basis for nearly all government policies.
 helps in solving various operational and planning

problems of business and industry.
 reduces uncertainty for policy makers, planners,

business managers, and other stakeholders by
providing information that improves the decision-
making process
(2015/2023)
 In general, research studies may be broadly grouped ( in
terms of their objectives) as to:
 gain familiarity with a phenomenon or to achieve new
insights into it - exploratory research studies
 portray accurately the characteristics of a particular
individual, situation or a group- descriptive research studies
 determine the frequency with which something occurs or
with which it is associated with something else -diagnostic
research studies
 test a hypothesis of a causal relationship between variables-
hypothesis-testing research studies
(2015/2023)
 Research can be used to (What You Can do With Research):
 Categorize - involves forming a typology of objects,
events or concepts and can be useful in explaining
which ‘things’ belong together and how.
 Describe - attempts to examine situations in order to

establish what is the norm- the what question.
 Explain - aims to move beyond ‘just getting the facts’ in

order to make sense of the myriad other elements
involved – the why question.
(2015/2023)
 Evaluate - involves making judgments about the quality of
objects or events.
 Compare - Two or more contrasting cases can be

examined to highlight differences and similarities between
them, leading to a better understanding of phenomena.
 Correlate - relationships between two phenomena are

investigated to see whether they move in the same
direction.
(2015/2023)
 Predictions- if there has been a strong relationship
between characteristics or events in the past, then similar
circumstances should exist in the future, leading to
predictable outcomes.
 Control- Once you understand an event or situation, you

may be able to find ways to control it.
 If the cause and effect relationships are identified you are
able to exert control over the vital ingredients.
(2015/2023)
IV. Importance of Research
 All progress is born of inquiry. All development and

progress in the society is an outcome of a research work.
 The development of logical thinking is promoted by

conducting the research activities.
 Research is the fountain of knowledge and an important

source of providing guidelines for solving different
business, governmental and social problems.
(2015/2023)
IV. Importance of Research
 Research (benefits various entities)
 provides base for the policies formation of the Government related to
agriculture, industries and infrastructural services in the country.
 facilitates the decisions of the policy maker.
 provides for predicting of future prospects of the country.
 solves various problems of business and industries (i.e. market research,
operation research and motivation research are conducted in the business
for various requirements.
 help to analyze the social relationships and seeking explanations to various
social problems.
 help to find out solution to social and political problems of the society.
 may mean careerism or a way to attain a high position in the social
structure (students, professionals, and others).
(2015/2023)
V. Motivation for Research
 The motivation to do research may be due to the desire:
 to get a research degree along with its consequential

benefits
 to face the challenge in solving the unsolved problems,

i.e., concern over practical problems initiates research
 to get intellectual joy of doing some creative work
 to be of service to society
 to get respectability, etc.

(2015/2023)
VI. Managerial value of research
 The prime managerial value of business research is that
it reduces uncertainty by providing information that
improves the decision-making process. The decision
making process associated with the development and
implementation of a strategy involves four interrelated
stages.
 Identifying problems or opportunities
 Diagnosis and assessment of problems or opportunities
 Selecting and implementing a course of action
 Evaluating the course of action
(2015/2023)
VI. Managerial value of research
 When is Business Research Needed?
(2015/2023)
VII. Characteristics/Criteria of good research
 Purpose clearly defined
 Research process detailed
 Describe research procedure in sufficient details to
permit another researcher to repeat the research for
further advancement
 Research design thoroughly planned
 Efforts should be made to minimize the influence of
personal bias in selecting and recording data.
 High ethical standards applied
 Include safeguards against causing mental or
physical harm to participants and makes data
integrity a first priority should be highly valued.
(2015/2023)
VII. Characteristics/Criteria of good research
 Limitations frankly revealed
 report with complete frankness,
flaws in procedural design and estimate their effects
upon the findings.
 Adequate analysis for decision maker’s needs
 check the validity and reliability of the data
 use appropriate descriptive and inferential
techniques
 apply the criteria of statistical significance
 Findings presented unambiguously
 Conclusions justified
 Researcher’s experience reflected
(2015/2023)
…The Hallmarks of Scientific Research
 The Hallmarks of Scientific Research (Scientific method)
 Research produces knowledge which could be used for the
 solution of problems
 the generation of universal theories, principles and laws
 But all knowledge is not science. What is science then?
 Science is the knowledge ascertained by observation and
experiment critically tested, systematized, and brought under
general principles.
 The scientific method is
 is the way researchers go about using knowledge and
evidence to reach objective conclusions about the real world.
 is an impartial, consistent, and systematic process that may
be employed in solving business problems.
(2015/2023)
 Scientific Research…
 is the systematic and empirical analysis and recording of controlled
observation, basic process/concept in research which may lead to the
development of theories, concepts, generalizations and principles,
resulting in prediction and control of those activities that may have
some cause-effect relationship.
 while applying the scientific method to the research problems we:
 ask well-structured and likely truthful questions from the
respondent.
 devise a hypothesis to be tested during the research.
 set the objectives and underlying assumptions.
 draw logical consequences of these assumptions.
 collect data and test the technique for relevance and reliability.
 apply the statistical tests to data and interpret the results.
(2015/2023)
 The main distinguishing characteristics of scientific
research:
1. Purposiveness: started the research with a definite aim or
purpose, purposive focus.
2. Rigor: carefulness, scrupulousness, the degree of exactitude in
research investigations. Good theoretical base and a sound
methodological design.
3. Testability: researcher develops certain hypotheses, then these
can be tested by applying certain statistical tests to the data
collected for the purpose.
4. Replicability: the results of the tests of hypotheses should be
supported again and yet again when the same type of research is
repeated in other similar circumstances.
(2015/2023)
 Main distinguishing characteristics of scientific research:
5. Precision and confidence:
 Precision: the closeness of the findings to “reality” based on a
sample. Reflects the degree of accuracy or exactitude of the

results on the basis of the sample – to what really exist in the
universe
 Confidence: the probability that our estimations are correct
6. Objectivity: the conclusions drawn through the interpretation of
the results of data analysis based on the facts of the findings
derived from actual data and not on our own subjective or
emotional values.
(2015/2023)
 Main distinguishing characteristics of scientific research:
7. Generalizability: the scope of applicability of the research
findings in one organizational setting to other settings. The
research sampling design has to be logically developed and a
number of other details in the data-collection methods need to
be meticulously followed.
8. Parsimony: simplicity in explaining the phenomena or problems
that occur, and in generating solutions for the problems.
Introduced with a good understanding of the problem and the
important factors that influences it; good conceptual theoretical
model.
(2015/2023)
 The scientific method, which is the basis of sound
science, can be characterized as follows:
 It is empirical, meaning that it is compared against reality.
 It is replicable or objective, meaning that the researcher’s
opinion is independent of the results; other researchers
conducting the study would obtain the same results.
 It is analytical, in that empirical facts are chosen, specified, and
measured in a way that will address research questions.
 It is theory driven; it relies on an existing body of knowledge.
 It is logical, meaning conclusions are drawn from the results
based on logic.
 It is rigorous; every effort is made to minimize error.
(2015/2023)
 Building Blocks of Science in Research
 Answers to issues can be found either by the process of induction
or the process of induction, or by a combination of the two.
 Deduction: the process by which we arrive at a reasoned
conclusion by logical generalization of a known fact.
 Induction: a process where we observe certain phenomena and

on this basis arrive at conclusions.
(2015/2023)
 The Hypothetico-deductive Method
 7 steps in the hypothetico-deductive research method:
1. Observation
2. Preliminary information gathering (unstructured literature
review)
3. Theory formulation
4. Hypothesizing
5. Further scientific data collection
6. Data analysis
7. Deduction
(2015/2023)
…Qualities and characteristics of a good researcher
Intellectual
skills
Communication
Motivation
skills
Perseverance
Independence IT skills
Organizational
skills
(2015/2023)
…Qualities/Characteristics of a good researcher
Evaluate your personal qualities and research skills Weak Strong

Intellectual skills (eg ability to learn, analyse, 1 2 3 4 5
synthesise)
Communication skills (written and verbal) 1 2 3 4 5
IT skills (eg Excel, statistics, database searching) 1 2 3 4 5
Organisational skills (eg administration, time mgt) 1 2 3 4 5
Independence (eg work alone with only guidance) 1 2 3 4 5
Motivation (reasons for doing the research) 1 2 3 4 5
Perseverance (eg overcome problems/complete) 1 2 3 4 5

(2015/2023)
VIII. Types of/Classifying research
 Classifying research is a useful way of analysing studies

according to key characteristics
 Four main typologies based on
 Purpose of the research
 Process of the research
 Outcome of the research
 Logic of the research
Compiled by Andualem
(2015/2023) 46
…Classifying research based on purpose
 Exploratory/Formulative research – used to gain an initial
understanding where there is little or no existing knowledge (rarely
provides conclusive answers but offers guidance for future research)
 Eg What motivates a group of employees to increase their
productivity?
 Descriptive research – used to describe phenomena as they exist
identify and obtain information on characteristics of the
problem/issue (also termed ‘ex post facto research’ )
 Eg How are the employees rewarded and how are productivity
levels measured?
 the researcher has no control over the variables; he can only
report what has happened or what is happening
(2015/2023) 47
 Goals of Exploratory Research:
 Become familiar with the basic facts, setting, and concerns;
 Develop well-grounded picture of the situation;
 Develop tentative theories, generate new ideas, conjectures, or
hypotheses;
 Determine the feasibility of conducting the study;
 Formulate questions and refine issues for more systematic
inquiry; and
 Develop techniques and a sense of direction for future research.
 For exploratory research, the researcher may use different sources
for getting information like: Experience surveys, Secondary data
analysis, Case studies, Pilot studies.
(2015/2023) 48
 Goals of Descriptive Research:
 Describe the situation in terms of its characteristics i.e. provide an
accurate profile of a group;
 Give a verbal or numerical picture (%) of the situation;
 Present background information;
 Create a set of categories or classify the information;
 Clarify sequence, set of stages; and
 Focus on ‘who,’ ‘what,’ ‘when,’ ‘where,’ and ‘how’ but not why?
(2015/2023) 49
 Analytical/explanatory research - goes beyond
description to establish relationships that explain how
and why
 Eg Is there a positive association between the
rewards given to employees and productivity level?
 Predictive research - goes even further by generalising

from the analysis to make predictions on the basis of
hypothesised general relationships
 Eg Which rewards predict productivity levels?
(2015/2023) 50
…Classifying research based on process
 Quantitative approach – focus is on measuring

phenomena and analysing quantitative research data
using objective, statistical methods to gain understanding
 Eg What is the absentee rate among a particular group
of employees?
 Qualitative approach – focus is on examining phenomena

and analysing qualitative research data using subjective
interpretive methods
 Eg What are the feelings of employees faced with
redundancy?
(2015/2023) 51
…Classifying research based on outcome
 Applied research - designed to apply its findings to
solving a specific, existing problem
 Eg How can energy be saved in a particular
workplace?
 Basic/Pure/Fundamental research is designed to make

a contribution to general knowledge and theoretical
understanding, rather than solve a specific problem
 Eg How can business travellers be encouraged to
reduce their carbon footprints?
(2015/2023) 52
…Classifying research based on outcome
 Basic vs. Applied research
(2015/2023)
…Classifying research based on logic
 Deductive research - a theoretical framework is
developed and then tested by empirical observation
 From the general to the particular
 Eg Does motivation theory explain productivity levels
among a particular group of employees?
 Inductive research - theory is developed from the
observation of empirical reality
 From the particular to the general
 Eg Productivity levels are lower in the afternoon than
the morning, so you conclude they vary with the
number of hours worked
(2015/2023)
…Classifying research based on logic
(2015/2023)
Exercise 1. Exploratory, descriptive, analytical or predictive studies?
1. Why have the sales of our products in the UK been so

high?
2. What are our sales in the UK compared to France over
the last five years?
3. How can we improve our sales in France?
4. Why are our sales lower in Germany than in the UK or
France?
5. Will a change in packaging improve our sales in France?
6. Is it possible to identify the factors that reduce the sale
of illegal copies of our products?
(2015/2023)
Exercise 2. Classifying research (delete as appropriate)
1. A study to find out what factors made an advertising campaign

for a major client such a success is an example of
 Exploratory/ Descriptive/ Analytical/ Predictive
research
2. Pilot projects are a common type of
 Exploratory/ Descriptive/ Analytical/ Predictive
research
3. A study that tests relationships between variables takes a
 Quantitative/ Qualitative approach
4. A factory manager notes that productivity levels are higher
when the weather is cooler and concludes that employees work
harder in cold weather. This is an example of a
 Deductive/ Inductive process
(2015/2023)
IX. The systematic process of research
 The following order concerning various steps provides a
useful procedural guideline regarding the research
process:
1. Formulating the research problem;
2. Extensive literature survey;
3. Developing the hypothesis;
4. Preparing the research design;
5. Determining sample design;
6. Collecting the data;
7. Data analysis and interpretation, and testing hypothesis if there
is any;
8. Preparation of the report or presentation of the results, i.e.,
formal write-up of conclusions reached.
(2015/2023)
End of Chapter 1
(2015/2023)

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AcFn 3111- Research Methods

in Accounting & Finance

 The main reason for this is that different people can

 However, from the many definitions there appears to be

 “Systematic and methodical” implies that your research

 i.e. research is done in an organized manner.

 Hence, research can be defined as

 an organized, systematic, data based, critical, objective, scientific

 It is a systematic and methodological process of enquiry &

 Research methods provide the needed information that

 Thus, research means to observe the phenomena

 Steps of business research:

 To identify as clearly and specifically as possible the problems

 Gather information, analyze the data, and determine the factors

1. Research originates/begins with a question or problem.

E.g. Why does such-and-such a phenomenon occur?

2. Research requires clear articulation of a goal/objective.

 When you describe your objective in clear, concrete terms, you

3. Research requires a specific plan for proceeding (How?).

 Depending on the research question, different designs and

 In the formative stages of a research project, much can be

4. Research usually divides the principal problem into

 E.g. Main problem: How do I get from Town A to Town B?

a) What is the most direct route?

b) How far do I travel on the highway?

c) Which exit should I take to leave the highway?

5. Research is guided by the specific research problem,

 direct thinking to possible sources of information that will aid in

 helps in solving various operational and planning

 reduces uncertainty for policy makers, planners,

 Describe - attempts to examine situations in order to

 Explain - aims to move beyond ‘just getting the facts’ in

 Compare - Two or more contrasting cases can be

 Correlate - relationships between two phenomena are

 Control- Once you understand an event or situation, you

 All progress is born of inquiry. All development and

 The development of logical thinking is promoted by

 Research is the fountain of knowledge and an important

 The motivation to do research may be due to the desire:

 to get a research degree along with its consequential

 to face the challenge in solving the unsolved problems,

 to get intellectual joy of doing some creative work

 to get respectability, etc.

sample. Reflects the degree of accuracy or exactitude of the

 Induction: a process where we observe certain phenomena and

Evaluate your personal qualities and research skills Weak Strong

IT skills (eg Excel, statistics, database searching) 1 2 3 4 5

Organisational skills (eg administration, time mgt) 1 2 3 4 5

Independence (eg work alone with only guidance) 1 2 3 4 5

Motivation (reasons for doing the research) 1 2 3 4 5

Perseverance (eg overcome problems/complete) 1 2 3 4 5

 Classifying research is a useful way of analysing studies

 Four main typologies based on

 Purpose of the research

 Process of the research

 Outcome of the research

 Logic of the research

 Predictive research - goes even further by generalising

 Quantitative approach – focus is on measuring