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Hypothesis Development in Business Research

Michael Porter, the Guru of Business Research.

Michael Porter, the Guru of Business Research.


From previous: The Research Process

Once it has been decided that a research be conducted to solve the problem, the researcher would develop a plan or a framework. A conceptual or theoretical model would be drawn taking into account various factors which have identified links with the problem. Suppose profitability has gone down for no apparent reasons. There are various reasons for fall in profit such as lower prices, higher costs or lower sales in term of quantity. These factors have a direct bearing on profitability and would be good point to start with.

The theoretical framework helps develop testable hypotheses which in simple words mean probable causes. Afterwards, some hypotheses can be rejected and the research can be narrowed down to a most plausible causes. For example, we may find from actual records that sales, both in quantity and value, have improved over the previous year. If so, we can safely say that price and quantity is not reason for fall in the profit. This leaves cost which we can analyse further in term of raw materials consumed, labor charges and overheads. Our focus would be that under which area the cost increase was significant. The research process would continue till a valid reason for fall in profit is found out.

A framework is necessary to keep the research within necessary bounds else the researcher may wander to irrelevant areas wasting time and money.

In fact, a theoretical framework established boundaries of research: what to look for and what not.



Dictionary meaning of variable is "changing" or "changeable". A variable is anything that can change in its quantum or value. It is opposite is invariable, consistent, constant or fixed like the Rock of Gibraltar. In research, it is an item like sale and profit. Normally, the profit increases with the increase in sales. So both sales and profit could be variables in any study. On the other hand, names, identity numbers, telephone numbers and codes are not variables but non-variable or fixed.

Variables used in business research are classified into four categories:

  1. The dependant variables
  2. The independent variables
  3. The moderating variables
  4. The intervening variables

The first two represent cause and effect relationship. The last two are equally important as they can exert their influences on the effect or results or outcome. Of this, moderating variables can be identified and controlled. Sometimes, these are called secondary independent variables. The last one, intervening variable, is a sort of confounding variable and arises during the course of the research. The examples are motivation, boredom and tiredness. The researchers feel their influence after the experiment. It is like a ‘black box’ which conveys results after the event.



Deductive Method - Sherlock Holmes way

Dependent variable and Independent Variable

As the names imply, a dependent variable is a one which is dependent on another variable. With the increase in temperature, the sales of ice cream may go up. If so, one can say that the sale of ice cream depends upon the temperature. In such case, the sale of ice cream is a dependent variable whereas the temperature is an independent variable.

The dependent variable is of primary interest to the researcher. It is observed as to how it responds to the changes made to the independent variable. If a researcher wants to prove that increase in overhead lights would increase productivity, the researcher would note down changes in the productivity (dependent variable) with every increase of overhead lights by 5% (Independent variable). If per chance, the productivity does not increase with increase in wattage, the productivity would not be dependent upon lights or would not be considered as dependent variable.

In normal circumstances, increase in returns (independent variable) would attract more bank deposits (dependent variable). If an area is known for bank failures or bank frauds, no one would divert his or her savings to a bank simply on the basis of higher returns. In such a case, the depositor would look for a solid bank even if the returns are low.

Take another example that a medical student is interested to find out that how stress affects heart rate in humans. If so, the heart rate would be dependent variable and stress would be independent variable. By increase stress levels in our human subjects by giving false alarms, we can measure how much the heart rate has increased.

An independent variable influences the dependent variable in either a positive or negative way. The independent variable is changed deliberately to establish a correlation or linkage. In any experiment, one independent variable is changed at one time. If there are two are more independent variables, a way is found to neutralize their effect by some technique.

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Suppose a manager believes that (i) good supervision and (ii) good training would increase the production level of workers. For finding out effect these two factors, we would have to carry out two experiments. In one, same workforce would be supervised by different supervisors known to be good or bad. In second experiment, the supervisor would remain the same but the workers would be changed from untrained to trained. If there is a difference in productivity, it would be attributable to good supervision or good training as the case maybe.

Moderating Variables modify or affect the cause and effect relationship. It could be qualitative (gender, race, class) or quantitative (level of rewards or comfort). It changes the direction or strength of correlation between Independent and Dependent Variables.

If we start with a normal cause and effect relationship, it would be linear or perfectly correlative. Let us say that a 10% increase in advertisement would increase sale by 10%. There may be another variable which may alter the strength of causal relationship say incentives or rewards for achieving certain sale target. This may boost the sales to 25%. If incentives are withdrawn, the growth in sales may come down to original level of 10%.

Psychotherapy may work better for reducing depression experienced by men than by women. So we can conclude that gender moderates the causal effect of psychotherapy (X) on depression (Y).

Intervening variable:

A factor which theoretically affects the observation or results but cannot be seen, measured, or manipulated. It is inferred after watching the effects of the independent and moderating variables on dependent variables. It surfaces between start and stop of the experiment. It helps to conceptualize and explain the result of the experiment.

A good speaker can increase understanding of students on a particular topic. Here good speaker is independent variable while understanding is dependent variable. There is a cause and effect relation, the better the speaker the better the understanding. Good environments like air-conditioned room, sound-proof lecture hall and good lights can act as moderating variables. If the speaker was good, environments were excellent yet the students could not recall basics of the lecture when asked the very next day. There must be some intervening variable which blocked minds of the students. Maybe students were worried about their examination and did not think the aforesaid lecture is anything to do with the syllabus. So they paid no attention. This could be inferred or can be stated as possible reason for the poor show.


Theoretical Framework & hypothesis development

After ascertaining the relevant variables and their inter-relationships, the researcher can draw a theoretical framework or conceptual model to start with. To be short, a theoretical framework would require (i) collection of inter-related factors, (ii) picking up the right factors and (iii) determining suitable tests.

Suppose, we want to khow what determines job satisfaction in a certain organization. Is it salary or job freedom? Once we start studying influence of these factors, so many other relevant factors would exert their influences such as physical environments, feedback system, job enrichment and enlargement. In order to measures the contribution of each variable, we would have to go through a process like (i) labeling the variables, (ii) survey of job-satisfaction through in-depth interviews of some random selected employees and (iii) a general survey. Finally we can calculate correlation between various factors and percentages etc. and draw our conclusion.

In this hub, more emphasis has been given on identifying the relevant factors concerning a research problem keeping in view the old wisdom - well began is half done. Once we have drawn a framework, we can develop hypotheses based on the factors included in our conceptual model.

Developing hypotheses requires a technique as discussed in the previous chapter i.e. Null and Alternate. Subsequently, each and every hypothesis would tested in isolation and its behavior recorded. Later, through use of statistical analysis, it would ascertained whether the said factor is of any significance or not. This would be taken up later while discussing research report.

Hypothesis Testing


ali sufair on April 12, 2015:

i am student of MBA and it is very helpful for me bundle of thnks sir ji

babar aziz on July 09, 2014:

i am student of MBA its very helpful for me.

bundle of thanxx

Mohamed on May 10, 2014:

if possible, i'm looking for an example of complete research of Method research For more explanation, follow up the Seven-Step Process in the Hypothetic-Deductive Method:

• Identify a broad problem area

• Define the problem statement

• Develop hypotheses

• Determine measures

• Data collection

• Data analysis

• Interpretation of data

naveed on April 01, 2014:

hypothesis is simply a guess statement.

Wali Rahman on March 21, 2014:

A very useful and informative links. Thanks for your patience and hard work to guide researchers.

godwin on October 30, 2012:

Thanks so much for this piece, really helped to prepare myself for my Pre PhD exam in research method.

hafeezrm (author) from Pakistan on September 26, 2012:

No hard and fast rule. It all depends on the research proposal, its importance, availability of funds, preciseness and confidence desired.

asmahis on September 26, 2012:

in an experimental design, pre-post test, the time frame to test for the effect is play an important role in deciding whether intervention is effective or not. what is the shortest time frame allowed for the post test data collection.

hafeezrm (author) from Pakistan on September 09, 2012:

Developed through experience keeping in view the research question and socio-religion-culture environments.

how we develop hypothisis on September 09, 2012:


hafeezrm (author) from Pakistan on August 22, 2012:

Please consult text book and make use of internet. Also ask your teacher.

Basit raza313 on August 22, 2012:

salam, Sir i m a student of gomal uni & with in 2 to 3 months i have to conduct research on any of the topic relating to business world.its a part of our degree program. can you suggest me some suitable topics for research. i m getting specialization in finance.


basit raza

hafeezrm (author) from Pakistan on August 03, 2012:

@Mike Dan - It is a good topic and a lot of material is available on the internet. Make your outlines and then search one by one.

naseem khan on July 02, 2012:

Research is very touggh but intresting subject.

mike dan on June 16, 2012:


I want to do a research in organizational behavior. Why do employees violate work rules and regulations and how that can be better addressed using non-punitive measures. Where can I find usable resources on line for this research.

my email is

hafeezrm (author) from Pakistan on June 06, 2012:

You can find it easily on the Internet.

suresh on June 06, 2012:


laila on June 03, 2012:

thnx for such an informative..

hafeezrm (author) from Pakistan on May 20, 2012:

Thanks Gopal for your comments.

Gopal on May 20, 2012:

Was looking for material on Hypotheses Dev/testing and found this very useful. Thanks for this educative posting Professor

hafeezrm (author) from Pakistan on April 24, 2012:

Thanks @Conradofontanilla for your comments.

conradofontanilla from Philippines on April 24, 2012:

A hypothesis and a theory have similar components: concepts and relationships among concepts. A hypothesis is a scientific guess, a guide to conduct research. In theory the concepts and relationships had been verified. The volume of data is a different thing. Hans Reichenbach (Reichenbach-Mieses) advocates a large amount of data whereas John Maynard Keynes does not. Determinate data like planets uses only a few.

hafeezrm (author) from Pakistan on April 22, 2012:

@Suresh. Please go to this link and note basics which can be expanded with further studies:

suresh on April 22, 2012:

Hello sir! am pursuing MBA i have a seminar project by some topics can u please send any best link about (CULTURE AND MANAGEMENT)i cant find out about this topic only please help sir.... Thank you...

hafeezrm (author) from Pakistan on April 14, 2012:

@Zain, there are plenty of examples as you go reading further articles. You will find many in

Zain on April 14, 2012:

i am a student of MBA from FUUAST... This topic is more helpful for student... but sir please send me link solved examples of hypothesis..

suresh on April 14, 2012:

thank u very much sir..... :)thanks a lot:)

hafeezrm (author) from Pakistan on April 11, 2012:

Suresh, please go to this link:

suresh on April 11, 2012:

dear sir can u sent me a topic about various sampling methods to this mail id ( or else sent a link sir i cant find it...

hafeezrm (author) from Pakistan on April 04, 2012:

Thanks Sathiswaran for your comments.

sathiswaran on April 04, 2012:

the content is simply super.its also in easy understanding method....i had a good knowledge from this hub....thank you anyway

hafeezrm (author) from Pakistan on March 20, 2012:

Depends upon what courses are offered.

naveen on March 20, 2012:

hafeezrm, can u please help me out, that im doing my PGDm course, and im from engineering background, im poor at accounting, Which specialization is gud to take in this situation in INDIA.

Naveen on March 20, 2012:

Thank you

hafeezrm (author) from Pakistan on March 17, 2012:

Thanks Talib SZABIST for your comments.

Talib SZABIST Karachi on March 17, 2012:

well explained, thank you

hafeezrm (author) from Pakistan on March 08, 2012:

Hypothesis is in essence a statement but follow certain rule. It Null and Alternate. You can say: information given by on-line newspapers are no better than those given printed version.

naveen on March 06, 2012:

"Online news papers gives more information than, printed version"

Is this a hypothesis or statement?

hafeezrm (author) from Pakistan on February 07, 2012:

If you mean wiser in decision-making, the answer is yes.

Business Research is one of the four ingredients. Others are (1) company's rules, (2) industry’s norm and lastly (3) vision. A businessman would look all around before taking a plunge.

A strong Business Research would certainly make him or her wiser than one without research.

Hisham on February 07, 2012:

Dear sir;

i have a question, do business people become wiser when they use business research and how?

thanks in advance

hafeezrm (author) from Pakistan on February 04, 2012:

Thanks Mr. Shahbazi for your comments.

shahbazi on February 04, 2012:

Thanks Dr. Hafeez, appreicate for your clear explanation

really ,your explanation is very very useful and i gain many many things

thank you

hafeezrm (author) from Pakistan on January 29, 2012:

On the top right-hand side, there is a button "contact Hafeezrm". Write to me giving your full background and I shall advise you how to send the diagram.

safronsafron on January 29, 2012:

Thanks Dr. Hafeez, appreicate for your feedback.

I would like to ask you for your comments and suggestons on a framework but I dont think I can 'cut and paste the diagram' here. Can I contact you another way? thanks for your kind assistance.



hafeezrm (author) from Pakistan on January 29, 2012:

Thanks Dr. S. Sakthivel for visiting my page. I feel elevated by your comments.

Prof.Dr.S.Sakthivel on January 28, 2012:

Mr Hafeezrm

Thanks and high regards ,explanations are clearly stated and perfectly placed in an organized way. I hope that , this will certainly help researchers to enhance their work in the areas of complex research while forming Hypothesis.

warm regards

hafeezrm (author) from Pakistan on January 28, 2012:

Thanks for going through my article, Safron.

Demographical Variables are taken care of in the Research Design. The researcher studies the sample and then decides whether Randomization or Matching would be appropriate in selection of Control and Experimental Group. Demographic Variables are likely to be equally distributed in the two groups.

In my opinion, the terms “controllable” and “mediating” are overlapping and pertain to the same situation. Is it Mediating Variable? Is it controllable?

Please go through my article:

Please post your comments or ask questions, if any.

safronsafron on January 28, 2012:

Dr. Hafeezrm, thanks for this clear explainations. I do have some further queries though. For e.g. if there are certain variables(such as demographic variables) in the framework, which are assumed to cause variations in the relationships between the IV and DV, could these be considered as controlled variables or mediating variables? if its one or either, should it need to be stated out explicitly in writing the hypotheses for each of these demographic variables (total of 8 in my study). Thank you for your help.I look forward to hearing your comments/feedbacks.

sincerely, Safron

hafeezrm (author) from Pakistan on January 23, 2012:

Thanks Naeem.

naeem on January 23, 2012:

very good

hafeezrm (author) from Pakistan on January 21, 2012:

Thanks Shawn Basco for your comments. Hypothesis are assumptions stated clearly. These follow a standard format. If you come across any complex one, kindly write it to me. Maybe I could explain it.

Shawn Basco on January 21, 2012:

Dr Hafeezrm,

Your regards on hypothesis is crystal clear and in my opinion perfectly stated. I would like to get your thoughts on more complex hypothesis statements.



hafeezrm (author) from Pakistan on December 21, 2011:

Thanks Melkamu Tamene for your comments.

Melkamu Tamene on December 21, 2011:

I'm a student of MBA in finance. I have read what you have posted. it is really helpful. thank you for posting it. have a ice time!

hafeezrm (author) from Pakistan on October 08, 2011:

Welcome Mr. Irfan Choudhary.

Irfan Choudhary on October 08, 2011:

I am Student of MBA IN BZU it is a Good Practis for me to read ths topic

hafeezrm (author) from Pakistan on November 21, 2010:

Thank you Areej.

Areej - KSA on March 12, 2010:

Useful information and important to me.

I enjoyed very much, and I wish to give us any information about any subject in Business Reseach

Thanks alots

Have a nice Day =)

hafeezrm (author) from Pakistan on January 30, 2010:

Thanks Rufi. I am glad your interest is continued.

Rufi Shahzada from Karachi on January 30, 2010:

Dear Sir,

This whole chain of HUB is marvelous, I learned a lot about RESEARCH. Very impressive approach for explaining Business Research...



hafeezrm (author) from Pakistan on January 29, 2010:

Thanks @Gomet for your comments

Gomet on January 29, 2010:

I believe that Research is very essential in all business decisions ..

Thanks foe posting this hub

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