Scientific Methods for Management Science

1. Scientific Methods for Management Science Alexander Settles Higher School of Economics asettles@hse.ru

2. Class Web Site • http://hse.ru/edu/courses/8375505.html • All reading and schedule posted there

3. 1. Introduction to the Class – September 7th 2. From Theory to Research & Introduction to Research Reviews – September 14th 3. Review of Most Citied Corporate Governance Research – September 21st 4. Research Design Choices and Causal Inferences – September 28th 5. Inferences Validity and Reliability – October 5th 6. Experiments & Quasi-experiments – October 12th 7. Review of Most Citied Management Research – October 19th 8. Survey Development & Qualitative Research Methods – October 26th 9. Models and Simulation Analysis & Levels of Analysis – November 2nd Schedule

4. Course Objectives • Learn how to use the scientific method • Discuss your topic with fellow students • Find literature sources on management • Develop scholarly writing skills • Develop critical thinking skills • Instill research ethics

5. Course Objectives • Investigate professors that are potential dissertation advisors • Learn about human subjects issues • Develop bibliographic organization and citation skills • Prepare dissertation proposal

6. Purpose of this Seminar • Introduction to international research practices • Improve results of your dissertation work and encourage you take an entire year to work on your papers • Gain a working knowledge of methods of scientific analysis

7. Common mistakes of HSE students in pursuing research • Making the blanket statement that things in Russia are different so social science practices do not apply • Poor literature reviews • No methods – summaries of work experiences or essay format • No data to support or reject hypotheses • No conclusions

8. Course Requirements • Homework Assignment – Research review • Research Proposal • Exam • Class attendance and participation

9. Overview of Course Structure • Introduction to the Class and Intro to Research Paper Structure • From Theory to Research • Research Design Choices and Causal Inferences • Validity and Reliability • Research Ethics and Content Analysis Research • Experiments • Quasi-experiments • Survey Development • Qualitative Research Methods • Models and Simulation Analysis • Levels of Analysis

10. applied research basic research belief-based explanation circular explanation (or tautology) commonsense explanations confirmation bias deductive reasoning hypothesis pseudoscience rational method research Science scientific method variable Terms

11. Is Management a Science?

12. Falsification and common sense • Falsification is a crucial concept. And the hypothetico-deductive method is the only method for theory verification in all the empirical sciences (Elster, 1983) • It is not incompatible with “common sense” • Theory construction is different from theory verification

13. Methodological ¨naïveté” • Naïve rationalism: the position that the aim of a scientific theory is to ‘explain’ observed phenomena • Naïve empiricism: belief that for a statement to be scientifically meaningful, it must be logically constructible out of terms which refer to immediate experience. • Naïve pragmatism: the idea that scientific knowledge should be immediately ‘useful’, possibly coming directly from experience, and that the sooner it is used, the better

14. Contents of a typical research paper • Title page : abstract, contents • Introduction • Literature Review • Description of work done and methods. • Results and Discussion. • Conclusions and Recommendations. • References and Bibliography. • Appendices.

15. Introduction • Define what the problem is • The questions you are addressing • Outline personal/specific considerations that lead to this investigation • How it differs from previous work • What the report will contain • Perhaps some (hint) of the conclusions

16. Describe the method or approach. Justify that it is appropriate. Establish constraints or assumptions. Enable others to repeat the work and check the conclusions. Link with the research question. Motivate the work - what is its importance? Establish approaches used in previous research - the literature search. Methods

17. Where to Begin: Knowing things • Not so much about what we know, but HOW we know • Most of what we know is matter of belief and agreement • “Everybody knows that…” • But everybody “knew” the world was flat once • Other way of knowing…direct experience, observation • But when experience conflicts with agreement… • There is good chance that we’ll surrender our experience in favor of agreement • Methodology: special approach to inquiry • The science of finding out • How social scientists find out about human social life

18. Errors in inquiry • Inaccurate observations • Most daily observations are casual… not precise • Scientific observation is a conscious activity • Ex: instructor’s clothes; football toss • Overgeneralization • Assuming that a few similar events are evidence of a general pattern • Scientists guard against this by REPLICATION of inquiry • Selective observation • We assume a pattern exists then focus on future events that fit the pattern • Illogical reasoning • “Exception that proves the rule” • WHAT?...how can that be logical?

19. Foundations of social science:logic and observation • Theory, not philosophy or belief • Social theory has to do with what is, not with what should be...not so for many centuries. • Science cannot settle debates about values • Social regularities • Social affairs do exhibit a high degree of regularity, despite exceptions • Aggregates, not individuals • Regularities that social scientists study generally reflect the collective behavior of many individuals • A Variable Language • Attributes: characteristics or qualities that describe an object • Variables: logical groupings of attributes

20. Independent and Dependent Variables • Two concepts are implicit in causal or deterministic models • A dependent variable “depends” on an independent variable • That is, a change in the independent variable will produce a change in the dependent variable

21. Dialectics of Social Research:Inductive and Deductive Theory • Inductive • Reasoning that moves from the particular to the general...from… 1. a set of observations to… 2. the discovery of a pattern that represents some degree of order among all the given events • Deductive • Reasoning that moves from the general to the specific...from… 1. a pattern that might be logically or theoretically expected to… 2. observations that test whether the pattern actually occurs

22. Dialectics of Social Research:Quantitative and Qualitative Data • Most simply put, difference is the distinction between numerical and non-numerical data • Every observation is qualitative at the outset • We quantify it to make it easier to aggregate, compare and summarize the data • Both types of data are useful and legitimate in management research

23. Elements of Social Theory • Law:universal generalization about classes of facts • Ex: law of gravity—bodies are attracted to each other in proportion to their mass and in inverse proportion to their distance • No social scientific laws that claim universal certainty • Theory:a systematic explanation for observations that relate to a particular aspect of social life... • For example someone might offer a theory of strategy, firm competitiveness, organization, etc.

24. Elements of Social Theory, p.2 • Proposition:specific conclusions about the relationships among concepts that are derived from axiomatic groundwork • Hypothesis:a specified testable expectation about empirical reality that follows from a more general proposition • Research is designed to test hypotheses • Null hypothesis suggests that there is NO relationship among the variables under study

25. Traditional model of science • Theory • Operationalization • Specification of the exact operations involved in measuring a variable • For the researcher testing an hypothesis, the meaning of variables is exactly and only what the operational definition specifies • Must be specified with clarity in a way to make observation precise and rigorous • Observation • Systematic and rigorous gathering of data to test the hypothesis

26. Research DesignPurposes of Research • Exploration:typically done for three purposes: • to satisfy the researcher’s curiosity and desire for better understanding • to test the feasibility of undertaking a more extensive study • to develop the methods to be employed in a subsequent study • Description:describe situations and events • Census is good example of descriptive research • Explanation:the “why?” of events, situations, behavior, attitudes, etc.

27. Logic of Nomothetic Explanation • Nomothetic explanation refers to the accounting of many variations in a given phenomenon • In contrast to… • Idiographic explanation that seeks an in-depth understanding of a single case

28. Criteria for Nomothetic Causality • Correlation: the variables must be correlated • Time order: the cause takes place before the effect • Non-spurious: the variables are non-spurious • Spurious relationship: a coincidental statistical correlation between two variables, shown to be caused by some third variable

29. Correlation • Some relationship---or correlation—between the variables must exist before we can consider causality • Correlation:empirical relationship between two variables such that… • Changes in one are associated with changes in the other • Particular attributes of one variable are associated with particular attributes of the other

30. False Criteria for Nomothetic Causality • Complete causation • Causation is incomplete and probabalistic • Exceptional cases • Exceptional cases do not disprove general overall pattern of causation • Majority of cases • Causal relationship may be true even if they don’t apply to the majority of cases

31. Necessary and Sufficient Causes • Necessary cause represents a condition that must be present for the effect to follow • Ex: must be female to become pregnant • Ex: must take college courses to get a degree…but… • Simply taking courses is not a sufficient cause • Must take the right ones

32. Necessary and Sufficient Causes • Sufficient cause represents a condition that, if it is present, guarantees the effect in question • Not saying that sufficient cause is only possible cause for effect • Ex: skipping exam in course would be sufficient cause for failing, but students could fail in other ways, too • So, cause can be sufficient but not necessary

33. Units of Analysis • No limit to what or whom can be studied • Common social science units of analysis: • Individuals • Groups • Organizations • Social artifacts. • Important:what you “call” a given unit of analysis is almost irrelevant—but you must be clear what that unit “is” • Country level effects or the firms that operate in that country? • Firm level strategy or country level strategy? • Efficiency of the hotel or the satisfaction of customers?

34. Reductionism • Tendency to explain everything in terms of a particular, narrow set of concepts • Remember paradigms that predispose researcher to a particular explanation • Definition of order by coercion, shared values, exchange

35. Conceptualization, Operationalization & Measurement • Conceptualization • The refinement and specification of abstract concepts • A specific agreed-upon meaning of the concept under study • Operationalization • The development of specific research procedures (operations) that will result in empirical observations representing those concepts in the real world

36. Indicators and Dimensions • Indicator • An observation that we consider as a reflection of the variable under study • Ex: attending church as an indicator or religiosity • Dimension • A specific aspect of a concept • Ex:action aspects of religiosity (attending church, giving money) and contemplative aspects (prayer, etc)

37. Basic Research Outline* • The Problem • Present a clear, brief statement of the problem, with concepts defined where necessary • Show that the problem is limited to bounds amenable to treatment or test • Describe the significance of the problem with reference to specific criteria Source:Miller, Delbert C. 1991. Handbook of Research Design and Social Measurement, 5th Edition. Newbury Park: Sage Publications, pp. 15-16.

38. Basic Research Outline • The Theoretical Framework • Describe the relationship of the problem to a theoretical framework • Demonstrate the relationship of the problem to previous research • Present alternate hypotheses considered feasible within the framework of the theory.

39. Basic Research Outline • The Research Question/Hypotheses • Clearly state the research questions or the hypotheses selected for test. (Null and alternate) • Indicate the significance of test hypotheses to the advancement of research and theory. • Define concepts or variables (preferably in operational terms). • Describe possible mistakes and their consequences. • Note seriousness of possible mistakes.

40. Basic Research Outline • Design of the Experiment or Inquiry • Describe ideal design or designs with particular attention to the control of interfering variables • Describe selected operational design • Specify statistical tests including dummy variables

41. Basic Research Outline • Sampling Procedures • Describe experimental and control samples • Specify method of drawing or selecting sample

42. Basic Research Outline • Methods of Gathering Data • Describe measures of quantitative variables showing reliability and validity when these are known. Describe means of identifying qualitative variables • Include descriptions of questionnaires or schedules • Describe interview procedure • Describe use made of pilot study, pretest, trial run.

43. Basic Research Outline • Working Guide • Prepare working guide with time and budget estimates • Estimate total person-hours and cost

44. Basic Research Outline • Analysis of Results • Specify methods of analysis

45. Basic Research Outline • Interpretation of Results • Discuss how conclusions will be fed back into theory…OR… • Inform policy/practice.

46. Basic Research Outline • Publication or Reporting Plans...Communication Plans • Monograph, Executive summary • Testimony to policy makers. • Presentations to institutions, non-governmental agencies, media, public. • Journal publication