Essentials of Business Research Methods

Joe F. Hair Jr., Michael Page, Niek Brunsveld

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429515385
• Edition: 4
• Topic: Business
• Subtopic: Business General
• Index: Business

In an era of big data and data analytics, how can managers make decisions based on almost unlimited information, not to mention hiring and retaining individuals with the required data analytics skills? The new fourth edition of Essentials of Business Research Methods explains research methods and analytical techniques for individuals who aren't data scientists.

The authors offer a straightforward, hands-on approach to the vital managerial process of gathering and using data to make relevant and timely business decisions. They include critical topics, such as the increasing role of online research, ethical issues, privacy matters, data analytics, customer relationship management, how to conduct information-gathering activities more effectively in a rapidly changing business environment, and more. This is also the only text that includes a chapter on qualitative data analysis, and the coverage of quantitative data analysis is more extensive as well as much easier to understand than in other texts.

A realistic continuing case used throughout the book, applied research examples, and ethical dilemma mini cases enable upper-level undergraduate and postgraduate students to see how business research information is used in the real world.

This comprehensive textbook is supported by a range of online resources, including instructors' manuals, PowerPoint slides, and test banks.

Part I
Introduction

1
Business Research for the Twenty-First Century

LEARNING OUTCOMES

1. Provide an introduction to modern-day business research.
2. Define business research and the people who use it.
3. Discuss recent business trends and how they affect business research.
4. Examine research-related technologies.
5. Introduce the continuing case used throughout the text.

Research is a discerning pursuit of the truth—of knowing the facts. How do we decide between business opportunity A or B? We need to know the facts, both positive and negative. Those who do research are looking for answers. In our everyday lives, we all play the role of researcher. A trip to the movies is rarely undertaken without some period of discernment, especially since there are so many online alternatives. During this process, prospective movie theater patrons first determine what type of movie would best fit their present desire. They may form a preliminary opinion of several movies based on previous knowledge of the actors and directors involved. Is The Mystery of the Blue Dog Café worth seeing? Media sources, online reviews, previews, and input from personal acquaintances often provide information to answer this question. Thereafter, if prospective theater patrons are reasonably confident about their conclusion, they make a decision about which movie. But then the decision likely moves to another stage, which is whether to view the movie online, such as on Netflix, or to go to a theater. This simple illustration contains some of the basic elements of business research. Good decision making depends on asking questions and conducting research that will result in accurately predicting an outcome of importance, in this case enjoyment of The Mystery of the Blue Dog Café.

Although formal research training is relatively new to the business world, business research is perhaps as old as commerce itself. International commerce expanded rapidly with the rise of Phoenician traders during the early classical period, about 500 B.C.E.¹ Investors in trading expeditions soon realized it was too risky to simply load ships with surplus goods and sail from port to port until a buyer was found. So they began to gather information about how goods might be altered to appeal to specific markets. With this information, merchants made strategic decisions involving product differentiation and market segmentation. Merchants discovered the existence of price and quality segments. Wine from the countries of Thaos and Chios was highly sought after in some markets. Thasian and Chiot wine sold for as much as one drachma per liter compared to one-fourth that for other wines. Winemakers from southern Italy performed research while peddling their own goods on the seas and attempted to capitalize on this new intelligence. While they were unable to match the quality of Thasian or Chiot wines, they appealed to these markets by making imitations of higher-quality wines. Consequently, research may have led to the first product knockoffs.²

Research also proved a key to success in selling crockery (dinnerware or china). Corinthians lost out to the Athenians in serving the early Etruscan market for crockery. The Athenians produced a style known as Tyrrhenian. Tyrrhenian crockery more closely matched Etruscan taste. It was “cheap and gaudy… and often carried mock inscriptions, presumably to impress Etruscans who would not have been able to read.”³ Perhaps Tyrrhenian crockery was the pink flamingo of its time. There seems to be little doubt, therefore, that the products were produced with a specific consumer segment in mind based on information gathered from the market.

Increasing literacy, the Industrial Revolution, continued advances in transportation, the advent of various forms of computing, and the general expansion of commerce worldwide changed the way research is done. Frederick Taylor used early motion picture technology to film workers and demonstrate how they could improve their productivity. Similarly, General Electric was among the first companies to use consumer research to design new products.

Today, there are thousands of companies whose primary activity involves providing research services that help businesses answer key strategic, tactical, and operational questions. Research has become much more formal and technical. Digital environments and social media offer businesses new ways to collect and analyze information. But the purpose of business research remains much the same as inquiries undertaken by those Phoenician merchants. How do I find the answers to improve my performance and make life better for customers, employees, and owners? Business research is designed to answer these questions.

Social media and big data are transforming business at an ever accelerating rate, and business research processes are by no means immune to this transformation. Advances in our understanding of consumer preferences,⁴ increases in our ability to predict product and service demand,⁵ and our capacity to target market segments in a far more surgical manner⁶ are all thanks to advances in social media and our capacity to “scrape” and analyze huge volumes of data incredibly quickly. The unintended impacts of these enhancements have also been featured in the news all too frequently and notably include Microsoft’s Tay tweets racist chatbot fiasco⁷ and Pepsi Sweden’s Cristiano Ronaldo advertisements.⁸

Although the impact of big data cannot be overemphasized, the popular use of the term understates the very nature of the transformation that big data is having on business. Big data has been described as including the five Vs. The first four of these have been described as outlining the parameters of big data—volume, velocity, variety, and veracity—while the fifth—value—has been argued as being able to understand the first four, as well as the dual nature of both prediction and causality as major methodological approaches to harness big data.⁹

Business research methods continue to evolve to meet this challenge. Although exponential increases in processing power make it easier to deal with volume and velocity, business researchers are confronted with the challenge of variety—where data arrives in formats that range from structured to unstructured, or in numerical or text formats—and veracity—where data biases, noise, and abnormality need to be dealt with.¹⁰ Finally, business researchers using big data have to consider whether they are adopting a data-driven or theory-driven approach in their analysis. Data-driven research is exploratory in nature and uses algorithms to search for interesting patterns that may then lend themselves to scientific interpretation. In contrast, theory-driven approaches use big data in a more traditional way by analyzing the data to test predefined hypotheses.¹¹

BUSINESS RESEARCH DEFINED

A TRUTH-SEEKING FUNCTION

We begin with a simple definition of science as systematic truth seeking. Science seeks to explain the world as it really is. Real-world, or physical, scientists seek the truth about the world’s physical realities. Chemists deal with chemical phenomena, biologists with biological phenomena, and so forth. Social scientists, such as psychologists and sociologists, seek to describe and predict the realities of individual human behavior and the interactions of humans in a society. Business researchers are generally social scientists because most business problems and opportunities involve people.

Like all scientists, business researchers pursue the truth about business phenomena.¹² The essence of business is people serving people through participation in a value-creating process with exchange at its core. This includes all the support systems necessary to facilitate the process. Business research seeks to predict and explain phenomena that, taken together, constitute the ever changing business environment. Thus, business research is a truth-seeking, fact-finding function that gathers, analyzes, interprets, and reports information so that business decision makers become more effective.

Like all research, business research needs to be reliable to be of any value to its users. Business decision makers are seldom able to check whether the research indeed led to the findings presented by the researchers. They also need to be able to rely on the research findings presented and on each other’s research results, which they use to develop new hypotheses. One of the primary responsibilities of researchers, therefore, is to conduct one’s research according to the core values of research, that is, objectivity, honesty, openness, accountability, fairness, and stewardship,¹³ and to the specific norms and practices in their field. Fabricating, falsifying and plagiarizing research results are clear breaches of research integrity.¹⁴ In addition, researchers should avoid questionable research practices, such as hypothesizing after results, also known as harking, or massaging research data to better suit conclusions. Ultimately, such practices harm the discipline of research and also the business decision making they are meant to support.

ELEMENTS OF BUSINESS RESEARCH

The scope of business research is broad, and the types of phenomena business researchers study are expanding rapidly. Time and motion studies are relatively infrequent today, although they were essential in the development of scientific business management. Instead, business researchers may study employee productivity as a function of a communication channel’s richness, how purchasing patterns have changed because of digital media, or how they can better predict customer preferences using big data and machine learning techniques. Thus, business research is dynamic in that researchers are constantly studying new issues with new tools. Here is a list of key elements of business research.

1. Business research involves the study of a wide range of phenomena, such as:
   1. People, including employees, customers, supervisors, managers, policy makers, and stakeholders,
   2. Systems or groups of people, including strategic business units, offices, factory labor, management groups, boards of directors, managing directors, market segments, cultures, subcultures, corporate cultures, communities, companies, and industries,
   3. The interaction of people with systems, including accounting or audit systems, legal systems, management practices, compensation systems, supply chain processes, manufacturing systems, customer acquisition approaches, production processes, and financial systems.
2. Business research can be formal. Researchers may undertake systematic and sometimes exhaustive projects aimed at answering very specific questions. As an illustration, Toyota was interested in knowing the effects of one-price retailing, where, in auto purchases, car prices are not subject to negotiation. It tested the idea in several countries. Customers in Montreal, Canada, for example, generally preferred the one-price system by about two to one.¹⁵ But the effects of one-price retailing generally extend beyond customers to Toyota’s dealer network and employees. Thus Toyota could also research the effects of one-price retailing on its dealer network and employees. Carefully researching the impact of the pricing strategy in several countries among customers, dealer networks, and employees results in a fairly comprehensive study. Toyota’s research project is a good example of a one-shot research project. One-shot research projects are performed to address a single issue at a specific time.
3. Business research can be informal. Restaurant owners or managers often spend a portion of each night circulating through the dining room. They stop at each table and ask, “How is everything?” The information they receive helps to identify patterns and improve decision making for enhancing the restaurant experience of their customers. While this sort of research is easy for small ventures, it’s more of a challenge for larger firms. New technologies are creating ways, however, that frontline employee...