Chapter 5

Theoretical Framework &

Hypothesis Development

Slide 5-2
 THEORY
 A set of interrelated constructs (concepts), definitions,
and propositions that presents a systematic view of
phenomena by specifying relations among variables,
with the purpose of explaining and predicting the
phenomena
 It is a statement of relationship between two variables,
one acting as the independent variable, another as the
dependent variable
 Theory is developed by which to explain and predict
complex events, objects or phenomena. An explanation
establishes the substantive meaning of constructs,
variables, and their linkages, while a prediction tests that
substantive meaning by comparing it to empirical
evidence
Slide 14-3
 Theories
 Descriptive theories “describe or classify specific
dimensions or characteristics of individuals, groups,
situations, or events by summarizing the
commonalities found in discrete observations
 Explanatory theories “specify relations among the
dimensions or characteristics of individuals, groups,
situations, or events Explanatory theories are tested
by using correlational research
 Predictive theories are intended to predict “precise
relationships between the dimensions or
characteristics of a phenomenon or differences
between groups
Slide 14-4
 Concept
 Abstractly describes and names an object
and phenomenon, thus providing it with a
separate identity and meaning
 An intellectual representation of some aspect
of reality that is derived from observations
made from phenomenon
 The building block of theory; a word picture or
mental idea of a phenomenon, and a word or
term that symbolizes certain aspect of reality.
Concentrate on the human brain, abstract,
intelligence
Slide 14-5
 Theoretical Framework
 The theoretical framework provides a general
representation of relationships between things
in a given phenomenon, on the other hand,
the conceptual framework, embodies the
specific direction by which the research will
have to be undertaken

 Foundation deductive research project!

 Deductive research: moving from the general
(a theory) to the specific (observations).
Slide 5-6
 Theoretical Framework

 A theoretical framework represents your

beliefs on how certain phenomena (or
variables or concepts) are related to each
other (a model) and an explanation on why
you believe that these variables are
associated to each other (a theory).

Slide 5-7
 Theoretical Framework

 Basic steps:
 Identify and label the variables correctly
 State the relationships among the
variables: formulate hypotheses
 Explain how or why you expect these
relationships

Slide 5-8
 Functions of theoretical framework
 It provides the general framework which can
guide the data analysis
 It identifies the variables to be measured
 It explains why one variable can possibly affect
another or why the independent variable can
possibly influence the dependent variable
 It limits the scope of data relevant to the
framework by focusing on specific variables
 It stipulates…..in analyzing and interpreting data

Slide 5-9
 Example

Slide 14-10
 Variable
 Any concept or construct that varies or
changes in value

Sales advertisement

 Main types of variables:

 Dependent variable
 Independent variable
 Moderating variable
 Mediating variable
Slide 5-11
 (In)dependent Variables
Y = a + bX
Sales = a + bADV
 Dependent variable (DV)
 Is of primary interest to the researcher. The
goal of the research project is to
understand, predict or explain the
variability of this variable.

 Independent variable (IV)

 Influences the DV in either positive or
negative way. The variance in the DV is
accounted for by the IV.
Slide 5-12
 Example

Slide 5-13
 (In)dependent variables
 To establish that a change in the independent
variable causes a change in the dependent variable,
all four of the following conditions should be met:
 1. The independent and the dependent variable should covary:
in other words, a change in the dependent variable should be
associated with a change in the independent variable.
 2. The independent variable (the presumed causal factor)
should precede the dependent variable. cause must occur
before the effect.
 3. No other factor should be a possible cause of the change in
the dependent variable. Hence, the researcher should control
for the effects of other variables.
 4. A logical explanation (a theory) is needed and it must explain
why the independent variable affects the dependent variable.
 dependent variables
 examples
 A manager is concerned that the sales of a new
product, introduced after test marketing it, do not
meet with his expectations.
The dependent variable here is “sales.”
 A basic researcher is interested in investigating the
debt‐to‐equity ratio of manufacturing companies in
southern Germany.
Here, the dependent variable is the ratio of debt to
equity.
 A vice president is concerned that the employees
are not loyal to the organization and, in fact, seem to
switch their loyalty to other institutions.
The dependent variable in this case is “organizational
loyalty.”
 (In)dependent variables
 Examples
 Research studies indicate that successful new
product development has an influence on the stock
market price of the company. That is, the more
successful the new product turns out to be, the
higher will be the stock market price of that firm.

 “stock market price” the dependent variable . And

 “success of the new product” is the independent

variable,

 STM = a + αNPD
 (In)dependent variables
 What is the dependent and independent variables in
these cases:
 An investor believes that more information
increases the accuracy of his forecasts.

AoF = a + b INF

 A marketing manager believes that selecting

physically attractive spokespersons and
models to endorse their products increases
the persuasiveness of a message.
PoM = a + b AS + c Models
 Moderators

 Moderating variable
 Moderator is qualitative (e.g., gender, race, class) or
quantitative (e.g., level of reward) variable that affects
the direction and/or strength of relation between
independent and dependent variable.
 M

X Y

Slide 5-18
 Example
 It has been found that there is a relationship between the
availability of reference manuals that manufacturing
employees have access to and the product rejects.
 When workers follow the procedures laid down in the
manual, they are able to manufacture products that are
flawless.

Slide 14-19
 Moderators
 is one that has a strong contingent effect on the
independent-dependent variable relationship.
 That is, the presence of a third variable (the moderating
variable) modifies the original relationship between the
independent and the dependent variables.

 Whenever the relationship between the independent

variable and the dependent variable becomes
contingent or dependent on another variable, we
say that the third variable has a moderating effect
on the independent variable–dependent variable
relationship.
 Mediating Variable
 Mediating variable
 surfaces between the time the
independent variables start operating to
influence the dependent variable and the
time their impact is felt on it.

 Example

Slide 5-21
 comprehensive example
 A theory says the diversity of the workforce (comprising people
of different ethnic origins, races, and nationalities) contributes
more to organizational effectiveness because each group brings
its own special expertise and skills to the workplace.

 however, This synergy can be exploited, only if managers know

how to harness the special talents of the diverse work group;
otherwise they will remain untapped.

 managerial expertise becomes the moderating variable.

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 comprehensive example
 the mediating variable that surfaces as a function of the
diversity in the workforce is “creative synergy.”
 Workforce diversity will lead to creative synergy through
bringing together their multifaceted expertise in problem
solving.

 And this will increase organizational effectiveness.

 Note that creative synergy, the mediating variable,

surfaces at time t , as a function of workforce diversity,
2

which was in place at time t , to bring about organizational

1

effectiveness in time t .
3

 The mediating variable of creative synergy helps us to

conceptualize and understand how workforce diversity (IV)
brings about organizational effectiveness (DV).
comprehensive example
 example
 Failure to follow accounting principles causes immense
confusion, which in turn creates a number of problems
for the organization. Those with vast experience in
bookkeeping, however, are able to avert the problems
by taking timely corrective action.

 List and label the variables in this situation, explain the

relationships among the variables, and illustrate these
by means of diagrams.

 Make up three different situations in which motivation to

work would be an independent variable, a mediating
variable, and a moderating variable.
 Hypothesis
 A proposition that is empirically testable. It
is an empirical statement concerned with
the relationship among variables.
 Good hypothesis:
 Must be adequate for its purpose
 Must be testable
 Must be better than its rivals

 Can be:
 Directional
 Non-directional
Slide 5-26
 Directional and Non-directional Hypotheses
 If, in stating the relationship between two
variables or comparing two groups, terms such
as positive, negative, more than, less than,
and the like are used, then these hypotheses
are directional because the direction of the
relationship between the variables is indicated.
Example:
 The greater the stress experienced in the job,
the lower the job satisfaction of employee
 Women are more motivated than men
Slide 14-27
 Directional and Non-directional Hypotheses
 Non-directional hypotheses are formulated
either because the relationships or differences
have never been previously explored and hence
there is no basis for indicating the direction, or
because there have been conflicting findings in
previous research studies on the variable.
Example:
 There is a relationship between age and job
satisfaction.
 There is a difference between the work ethic
values of American and Asian employees.
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 Hypothesis
 A hypothesis can be defined as a tentative, yet
testable, statement, which predicts what you
expect to find in your empirical data.

 Hypotheses are derived from the theory on

which your conceptual model is based and are
often relational in nature.
 H0: An increase in workforce diversity will not
lead to increase organizational effectiveness
 H1: An increase in workforce diversity will lead
to increase organizational effectiveness
Slide 14-29
 Types of Hypotheses
 Descriptive hypotheses
1.Null hypothesis – proposition, no relationship
2.Alternate hypothesis – expressing a relationship
 Relational hypotheses
1.Correlational hypotheses
2.Explanatory (causal) hypotheses
 Correlational Hypothesis
–A statement indicating that variables occur together in
a some specified manner WITHOUT that one causes
the other
–Eg: Students in urban areas obtain more favorable
grades in Mathematics than do students in rural areas.
Slide 14-30
 Types of Hypotheses

 Exploratory (Causal) Hypothesis

–A statement that describes a relationship between
two variables in which one variable leads to a
specified effect on the other variable.
–Eg. An increase in family income leads to an
increase in the percentage of income saved.

Slide 14-31
 Examples of Hypotheses
 H1: Attitude towards internet abuse will
contribute to internet abuse in workplace.
 H2: Subjective norms affect internet abuse in
workplace.

 H3: There is a relationship between

Perceived behavioral control and internet
abuse in workplace.

Slide 14-32
 Examples of Hypotheses
 H4: Internet abuse will lead to some
organizational outcomes
 H4A: Internet abuse will lead to work
inefficiency
 H4B: Internet abuse will lead to security threats
 H5: Internet abuse will lead to some
psychological outcomes
 H5A: Internet abuse will lead to depression
 H5B: Internet abuse will lead to loneliness

Slide 14-33
 Examples of Hypotheses

 H1: The effect of Attitude towards internet

abuse can be moderated by age.
 H2: The effect of Subjective norms on internet
abuse in workplace can be moderated by age.

 H3: The relationship between Perceived

behavioral control and internet abuse in
workplace can be moderated by age.

Slide 14-34
 Examples of Hypotheses

 H1: The effect of salary on Job Satisfaction can

be mediated by motivation.
 H2: The effect of leadership styles on job
satisfaction can be mediated by motivation.

 H3: The relationship between working

conditions and job satisfaction can be mediated
by motivation.

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 Exercise
Give the hypotheses for the following framework:

Service Customer
quality switching

Switching
cost
H1: Good service quality decreases customer switching

Slide 5-36
H2: high switching cost will lead to decrease customer switching
 Exercise

Give the hypotheses for the following framework:

Service Customer Customer

quality satisfaction switching

Slide 5-37
 Argumentation

 The expected relationships / hypotheses

are an integration of:
 Exploratory research
 Common sense and logical reasoning

Slide 5-38