RESEARCH METHODS IN BUSINESS

UNIT 2
HYPOTHESIS

A hypothesis is an assumption that is made based on some evidence. This is the initial point of
any investigation that translates the research questions into predictions. It includes components
like variables, population and the relation between the variables. A research hypothesis is a
hypothesis that is used to test the relationship between two or more variables.

CHARACTERISTICS OF RESEARCH HYPOTHESIS

1. Testability: A research hypothesis should be formulated in a way that allows it to be

empirically tested through observation, experimentation, or data analysis. This means that there
must be a feasible method to collect data that can either support or refute the hypothesis.

2. Falsifiability: A good research hypothesis should be capable of being proven false. In other
words, there must be conditions under which the hypothesis could be shown to be incorrect.
This is crucial for the hypothesis to be scientifically meaningful and for the research to be
objective.

3. Specificity: Research hypotheses should be clear and specific in their predictions or

expectations. They should clearly define the variables being studied and the expected
relationship between them. Vague or overly broad hypotheses can be difficult to test and may
lead to inconclusive results.

4. Relevance: Hypotheses should be relevant to the research question or problem being

investigated. They should address an important aspect of the topic under study and have the
potential to contribute to the existing body of knowledge in the field.

5. Empirical basis: Research hypotheses should be based on existing theory, previous research
findings, or observed phenomena. They should not be purely speculative but should be
grounded in evidence or logical reasoning.

6. Parsimony: A good research hypothesis should be as simple and concise as possible while
still capturing the essence of the relationship being proposed. Complex or convoluted
hypotheses can be difficult to test and may lack clarity.

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7. Directionality: Hypotheses can be directional, meaning they predict the direction of the
relationship between variables (e.g., "Increasing X will lead to an increase in Y"), or non-
directional, meaning they simply predict that there will be a relationship without specifying its
direction (e.g., "There will be a relationship between X and Y").

8. Clarity: The hypothesis should be clearly stated, avoiding ambiguity or confusion. It should
be easy to understand and communicate to others involved in the research process.

FORMULATING THE RESEARCH HYPOTHESIS

1. Identify the research question or problem: Clearly define the topic or issue you want to
investigate. Your research hypothesis should directly address this question or problem.

2. Review existing literature: Conduct a thorough review of existing research literature related
to your topic. Identify theories, models, and previous studies that provide insights into the
variables you're interested in and any relationships or patterns that have been observed.

3. Identify variables: Determine the key variables that are relevant to your research question.
Variables are characteristics, attributes, or factors that can vary and are subject to measurement
or manipulation in a research study. Identify both the independent variable (the factor being
manipulated or controlled) and the dependent variable (the outcome being measured).

4. Formulate the hypothesis statement: Based on your research question, identified variables,
and existing literature, formulate a clear and specific hypothesis statement. This statement
should articulate the expected relationship or effect between the independent and dependent
variables.

5. Choose the type of hypothesis: Decide whether your hypothesis will be directional
(predicting the direction of the relationship) or non-directional (predicting the existence of a
relationship without specifying its direction). Additionally, determine whether your hypothesis
will be null (no difference or relationship) or alternative (predicting a difference or
relationship).

6. State the hypothesis: Write down your hypothesis statement in a clear and concise manner.
Ensure that it is specific, testable, and relevant to your research question.

7. Consider potential confounding variables: Anticipate any other variables that could
potentially influence the relationship between your independent and dependent variables. You

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may need to control for these variables in your study design or analysis to ensure the validity
of your hypothesis.

8. Review and refine: Review your formulated hypothesis to ensure it meets the characteristics
discussed earlier, such as testability, specificity, relevance, and clarity. Make any necessary
revisions to improve the quality and coherence of the hypothesis statement.

9. Seek feedback: Before proceeding with your research, seek feedback from colleagues,
mentors, or advisors to validate your hypothesis and ensure it is well-formulated.

10. Test the hypothesis: Once you have formulated your research hypothesis, design a research
study or experiment to test it empirically. Collect data, analyze results, and interpret findings
to determine whether your hypothesis is supported or rejected.

TYPES OF RESEARCH HYPOTHESIS

1. Simple Hypothesis: This type of hypothesis predicts a relationship between two variables.
For example: "Increasing the amount of sunlight will lead to higher plant growth."

2. Complex Hypothesis: Complex hypotheses involve predicting relationships between

multiple variables. For example: "The interaction between sunlight, temperature, and soil
moisture will affect plant growth differently depending on the plant species."

3. Associative Hypothesis: These hypotheses propose a relationship between two variables

without implying causality. For example: "There is a correlation between income level and
health outcomes."

4. Causal Hypothesis: Causal hypotheses propose a cause-and-effect relationship between

variables. For example: "Increased exercise leads to weight loss."

5. Null Hypothesis (H0): The null hypothesis states that there is no significant difference or
relationship between the variables being studied. It serves as a default assumption to be tested
against an alternative hypothesis. For example: "There is no difference in test scores between
students who receive tutoring and those who do not."

6. Alternative Hypothesis (H1): The alternative hypothesis proposes a specific difference or

relationship between variables, contrary to the null hypothesis. It's what the researcher hopes
to support with evidence. For example: "Students who receive tutoring will perform better on
tests than those who do not receive tutoring."

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7. Directional Hypothesis: Directional hypotheses predict the direction of the relationship
between variables. For example: "Increasing the amount of fertilizer will lead to an increase in
crop yield."

8. Non-directional Hypothesis: Non-directional hypotheses predict a relationship between

variables without specifying the direction of the effect. For example: "There is a relationship
between caffeine consumption and reaction time."

TYPE I AND TYPE II ERROR

Type I and Type II errors are subjected to the result of the null hypothesis. In case of type I
or type-1 error, the null hypothesis is rejected though it is true whereas type II or type-2 error,
the null hypothesis is not rejected even when the alternative hypothesis is true. Both the error
type-i and type-ii are also known as “false negative”. A lot of statistical theory rotates around
the reduction of one or both of these errors, still, the total elimination of both is explained as a
statistical impossibility.

Type I Error

A type I error appears when the null hypothesis (H0) of an experiment is true, but still, it is
rejected. It is stating something which is not present or a false hit. A type I error is often called
a false positive (an event that shows that a given condition is present when it is absent). In
words of community tales, a person may see the bear when there is none (raising a false alarm)
where the null hypothesis (H0) contains the statement: “There is no bear”.

The type I error significance level or rate level is the probability of refusing the null hypothesis
given that it is true. It is represented by Greek letter α (alpha) and is also known as alpha level.
Usually, the significance level or the probability of type i error is set to 0.05 (5%), assuming
that it is satisfactory to have a 5% probability of inaccurately rejecting the null hypothesis.

Type II Error

A type II error appears when the null hypothesis is false but mistakenly fails to be refused. It is
losing to state what is present and a miss. A type II error is also known as false negative (where
a real hit was rejected by the test and is observed as a miss), in an experiment checking for a
condition with a final outcome of true or false.

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A type II error is assigned when a true alternative hypothesis is not acknowledged. In other
words, an examiner may miss discovering the bear when in fact a bear is present (hence fails
in raising the alarm). Again, H0, the null hypothesis, consists of the statement that, “There is
no bear”, wherein, if a wolf is indeed present, is a type II error on the part of the investigator.
Here, the bear either exists or does not exist within given circumstances, the question arises
here is if it is correctly identified or not, either missing detecting it when it is present, or
identifying it when it is not present.

The rate level of the type II error is represented by the Greek letter β (beta) and linked to the
power of a test (which equals 1−β).

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SCALES OF MEASUREMENT

In Statistics, the variables or numbers are defined and categorised using different scales of
measurements. Each level of measurement scale has specific properties that determine the
various use of statistical analysis. In this article, we will learn four types of scales such as
nominal, ordinal, interval and ratio scale.

Meaning of Scale: A scale is a device or an object used to measure or quantify any event or
another object.

LEVELS OF MEASUREMENTS

There are four different scales of measurement. The data can be defined as being one of the
four scales. The four types of scales are:

1. Nominal Scale

2. Ordinal Scale

3. Interval Scale

4. Ratio Scale

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I. NOMINAL SCALE
A nominal scale is the 1st level of measurement scale in which the numbers serve as “tags” or
“labels” to classify or identify the objects. A nominal scale usually deals with the non-numeric
variables or the numbers that do not have any value.
Characteristics of Nominal Scale
• A nominal scale variable is classified into two or more categories. In this measurement
mechanism, the answer should fall into either of the classes.
• It is qualitative. The numbers are used here to identify the objects.
• The numbers don’t define the object characteristics. The only permissible aspect of
numbers in the nominal scale is “counting.”
Example:
An example of a nominal scale measurement is given below:
What is your gender?
M- Male
F- Female
Here, the variables are used as tags, and the answer to this question should be either M or F.
II. ORDINAL SCALE
The ordinal scale is the 2nd level of measurement that reports the ordering and ranking of data
without establishing the degree of variation between them. Ordinal represents the “order.”
Ordinal data is known as qualitative data or categorical data. It can be grouped, named and also
ranked.
Characteristics of the Ordinal Scale
• The ordinal scale shows the relative ranking of the variables
• It identifies and describes the magnitude of a variable
• Along with the information provided by the nominal scale, ordinal scales give the
rankings of those variables
• The interval properties are not known
• The surveyors can quickly analyse the degree of agreement concerning the identified
order of variables
Example:
• Ranking of school students – 1st, 2nd, 3rd, etc.
• Ratings in restaurants

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 • Evaluating the frequency of occurrences
• Very often
• Often
• Not often
• Not at all
• Assessing the degree of agreement
• Totally agree
• Agree
• Neutral
• Disagree
• Totally disagree
III. INTERVAL SCALE
The interval scale is the 3rd level of measurement scale. It is defined as a quantitative
measurement scale in which the difference between the two variables is meaningful. In other
words, the variables are measured in an exact manner, not as in a relative way in which the
presence of zero is arbitrary.
Characteristics of Interval Scale:
• The interval scale is quantitative as it can quantify the difference between the values
• It allows calculating the mean and median of the variables
• To understand the difference between the variables, you can subtract the values between
the variables
• The interval scale is the preferred scale in Statistics as it helps to assign any numerical
values to arbitrary assessment such as feelings, calendar types, etc.
Example:
• Likert Scale
• Net Promoter Score (NPS)
• Bipolar Matrix Table
IV. RATIO SCALE
The ratio scale is the 4th level of measurement scale, which is quantitative. It is a type of
variable measurement scale. It allows researchers to compare the differences or intervals. The
ratio scale has a unique feature. It possesses the character of the origin or zero points.
Characteristics of Ratio Scale:
• Ratio scale has a feature of absolute zero
• It doesn’t have negative numbers, because of its zero-point feature
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 • It affords unique opportunities for statistical analysis. The variables can be orderly
added, subtracted, multiplied, divided. Mean, median, and mode can be calculated using
the ratio scale.
• Ratio scale has unique and useful properties. One such feature is that it allows unit
conversions like kilogram – calories, gram – calories, etc.
Example:
An example of a ratio scale is:
What is your weight in Kgs?
• Less than 55 kgs
• 55 – 75 kgs
• 76 – 85 kgs
• 86 – 95 kgs
• More than 95 kgs
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MEANING OF SCALING TECHNIQUES:

Scaling is a technique of generating an endless sequence of values, upon which the measured
objects are placed. Several scaling techniques are employed to review the connection between
the objects.

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 5. COMPARATIVE SCALING TECHNIQUES:

Comparative scaling techniques involve comparing two or more objects, concepts or stimuli
against each other in order to establish their relative magnitude or position. Comparative
scaling techniques can be used to measure attitudes, preferences, or perceptions, and are often
used in market research, psychology, and political science.

TYPES OF COMPARATIVE SCALING TECHNIQUES:

1. Paired comparison scaling: In paired comparison scaling, two stimuli are presented to
participants and they are asked to choose which stimulus they prefer. This technique can be
used to measure preferences, attitudes, or perceptions.

2. Rank order scaling: In rank order scaling, participants are asked to rank a set of stimuli in
order of preference or importance. This technique can be use to measure preferences, attitudes,
or perceptions, and can be used to identify the most importance factors or attributes in a given
context.

3. Constant sum scaling: In constant sum scaling, participants are given a fixed amount of
resources (such as points or dollars) and are asked to allocate them across a set of stimuli based
on their perceived importance or value. This technique can be used to measure preferences,
attitudes, or perceptions, and can be used to identify trade-offs or priorities.

II. NON-COMPARATIVE SCALING TECHNIQUES:

Non-Comparative scaling techniques involve measuring the intensity or strength of a single

stimulus or concept, without comparing it to other stimuli. Non-competitive scaling techniques
can be used to measure attitudes, preferences, or perceptions, and are often used in psychology
and sociology.

TYPES OF NON-COMPARATIVE SCALING TECHNIQUES:

1. Likert Scaling: In Likert scaling, participants are presented with a statement or item and are
asked to rate their level of agreement or disagreement on a scale (Such as “strongly agree” to
“Strongly disagree”). This technique can be used to measure attitudes, opinions, or perceptions.

2. Semantic differential scaling: In semantic differential scaling, participants are presented

with a stimulus or concept and are asked to rate it on a set of bipolar adjectives (such as “good”
Vs. “bad” or “happy” Vs. “sad”). This technique can be used to measure attitudes, opinions, or
perceptions.

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3. Visual analog scaling: In visual analog scaling, participants are presented with a line or
scale and are asked to mark their level of intensity or strength of a given stimulus or concept.
This technique can be used to measure attitudes, emotions, or sensations.

INTRODUCTION TO SAMPLE

A sample is a smaller set of data that a researcher chooses or selects from a larger population
using a pre-defined selection bias method. These elements are known as sample points,
sampling units, or observations.

Creating a sample is an efficient method of conducting research. Researching the whole

population is often impossible, costly, and time-consuming. Hence, examining the sample
provides insights the researcher can apply to the entire population.

For example, if a cell phone manufacturer wants to conduct a feature research study among
students in US Universities. An in-depth research study must be conducted if the researcher is
looking for features that the students use, features they would like to see, and the price they are
willing to pay.

This step is imperative to understand the features that need development, the features that
require an upgrade, the device’s pricing, and the go-to-market strategy.

TYPES OF SAMPLING METHOD

In Statistics, there are different sampling techniques available to get relevant results from the
population. The two different types of sampling methods are::

1. Probability Sampling

2. Non-probability Sampling

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 6. PROBABILITY SAMPLING

The probability sampling method utilizes some form of random selection. In this method, all
the eligible individuals have a chance of selecting the sample from the whole sample space.
This method is more time consuming and expensive than the non-probability sampling method.
The benefit of using probability sampling is that it guarantees the sample that should be the
representative of the population.

7. Simple Random Sampling:

In simple random sampling technique, every item in the population has an equal and likely
chance of being selected in the sample. Since the item selection entirely depends on the chance,
this method is known as “Method of chance Selection”. As the sample size is large, and the
item is chosen randomly, it is known as “Representative Sampling”.

Example: Suppose we want to select a simple random sample of 200 students from a school.
Here, we can assign a number to every student in the school database from 1 to 500 and use a
random number generator to select a sample of 200 numbers.

2. Systematic Sampling:

In the systematic sampling method, the items are selected from the target population by
selecting the random selection point and selecting the other methods after a fixed sample
interval. It is calculated by dividing the total population size by the desired population size.

Example: Suppose the names of 300 students of a school are sorted in the reverse alphabetical
order. To select a sample in a systematic sampling method, we have to choose some 15 students
by randomly selecting a starting number, say 5. From number 5 onwards, will select every 15th

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person from the sorted list. Finally, we can end up with a sample of some students.
3. Stratified Sampling:

In a stratified sampling method, the total population is divided into smaller groups to complete
the sampling process. The small group is formed based on a few characteristics in the
population. After separating the population into a smaller group, the statisticians randomly
select the sample.

Example: there are three bags (A, B and C), each with different balls. Bag A has 50 balls, bag
B has 100 balls, and bag C has 200 balls. We have to choose a sample of balls from each bag
proportionally. Suppose 5 balls from bag A, 10 balls from bag B and 20 balls from bag C.
4. Clustered Sampling

In the clustered sampling method, the cluster or group of people are formed from the population
set. The group has similar significatory characteristics. Also, they have an equal chance of
being a part of the sample. This method uses simple random sampling for the cluster of
population.

Example: An educational institution has ten branches across the country with almost the
number of students. If we want to collect some data regarding facilities and other things, we
can’t travel to every unit to collect the required data. Hence, we can use random sampling to
select three or four branches as clusters.

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II. NON-PROBABILITY SAMPLING:

The non-probability sampling method is a technique in which the researcher selects the sample
based on subjective judgment rather than the random selection. In this method, not all the
members of the population have a chance to participate in the study.

8. Convenience Sampling

In a convenience sampling method, the samples are selected from the population directly
because they are conveniently available for the researcher. The samples are easy to select, and
the researcher did not choose the sample that outlines the entire population.

Example: In researching customer support services in a particular region, we ask your few
customers to complete a survey on the products after the purchase. This is a convenient way to
collect data. Still, as we only surveyed customers taking the same product. At the same time,
the sample is not representative of all the customers in that area.

2. Consecutive Sampling:

Consecutive sampling is similar to convenience sampling with a slight variation. The

researcher picks a single person or a group of people for sampling. Then the researcher
researches for a period of time to analyze the result and move to another group if needed.
3. Quota Sampling

In the quota sampling method, the researcher forms a sample that involves the individuals to
represent the population based on specific traits or qualities. The researcher chooses the sample
subsets that bring the useful collection of data that generalizes the entire population.

4. Purposive or Judgmental Sampling

In purposive sampling, the samples are selected only based on the researcher’s knowledge. As
their knowledge is instrumental in creating the samples, there are the chances of obtaining
highly accurate answers with a minimum marginal error. It is also known as judgmental
sampling or authoritative sampling.

5. Snowball Sampling

Snowball sampling is also known as a chain-referral sampling technique. In this method, the
samples have traits that are difficult to find. So, each identified member of a population is asked

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to find the other sampling units. Those sampling units also belong to the same targeted
population.

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