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.

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 Variables (IVV)

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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.

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Hypothesis Testing

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Comments 62 comments

Gomet profile image

Gomet 7 years ago

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

Thanks foe posting this hub

hafeezrm profile image

hafeezrm 7 years ago from Pakistan Author

Thanks @Gomet for your comments

Rufi Shahzada profile image

Rufi Shahzada 7 years ago from Karachi

Dear Sir,

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



hafeezrm profile image

hafeezrm 7 years ago from Pakistan Author

Thanks Rufi. I am glad your interest is continued.

Areej - KSA 6 years ago

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 profile image

hafeezrm 6 years ago from Pakistan Author

Thank you Areej.

Irfan Choudhary 5 years ago

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

hafeezrm profile image

hafeezrm 5 years ago from Pakistan Author

Welcome Mr. Irfan Choudhary.

Melkamu Tamene 5 years ago

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 profile image

hafeezrm 5 years ago from Pakistan Author

Thanks Melkamu Tamene for your comments.

Shawn Basco 5 years ago

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 profile image

hafeezrm 5 years ago from Pakistan Author

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.

naeem 5 years ago

very good

hafeezrm profile image

hafeezrm 5 years ago from Pakistan Author

Thanks Naeem.

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safronsafron 5 years ago

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 profile image

hafeezrm 5 years ago from Pakistan Author

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: http://hubpages.com/education/EXPERIMENTAL-DESIGN...

Please post your comments or ask questions, if any.

Prof.Dr.S.Sakthivel 5 years ago

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 profile image

hafeezrm 5 years ago from Pakistan Author

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

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safronsafron 5 years ago

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 profile image

hafeezrm 5 years ago from Pakistan Author

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.

shahbazi 5 years ago

Thanks Dr. Hafeez, appreicate for your clear explanation

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

thank you

hafeezrm profile image

hafeezrm 5 years ago from Pakistan Author

Thanks Mr. Shahbazi for your comments.

Hisham 5 years ago

Dear sir;

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

thanks in advance

hafeezrm profile image

hafeezrm 5 years ago from Pakistan Author

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.

naveen 4 years ago

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

Is this a hypothesis or statement?

hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

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.

Talib SZABIST Karachi 4 years ago

well explained, thank you

hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

Thanks Talib SZABIST for your comments.

Naveen 4 years ago

Thank you

naveen 4 years ago

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.

hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

Depends upon what courses are offered.

sathiswaran 4 years ago

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

hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

Thanks Sathiswaran for your comments.

suresh 4 years ago

dear sir can u sent me a topic about various sampling methods to this mail id (sureshkrishnan89@ymail.com) or else sent a link sir i cant find it...

hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

suresh 4 years ago

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

Zain 4 years ago

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..

hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

@Zain, there are plenty of examples as you go reading further articles. You will find many in http://hubpages.com/education/EXPERIMENTAL-DESIGN...

suresh 4 years ago

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 profile image

hafeezrm 4 years ago from Pakistan Author

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


conradofontanilla profile image

conradofontanilla 4 years ago from Philippines

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 profile image

hafeezrm 4 years ago from Pakistan Author

Thanks @Conradofontanilla for your comments.

Gopal 4 years ago

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

hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

Thanks Gopal for your comments.

laila 4 years ago

thnx for such an informative..

suresh 4 years ago


hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

You can find it easily on the Internet.

mike dan 4 years ago


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 mbursagwany@gmail.com

naseem khan 4 years ago

Research is very touggh but intresting subject.

hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

@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.

Basit raza313 4 years ago

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 profile image

hafeezrm 4 years ago from Pakistan Author

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

how we develop hypothisis 4 years ago


hafeezrm profile image

hafeezrm 4 years ago from Pakistan Author

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

asmahis 4 years ago

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 profile image

hafeezrm 4 years ago from Pakistan Author

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

godwin 4 years ago

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

Wali Rahman 2 years ago

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

naveed 2 years ago

hypothesis is simply a guess statement.

Mohamed 2 years ago

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

babar aziz 2 years ago

i am student of MBA its very helpful for me.

bundle of thanxx

ali sufair 22 months ago

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

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