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INTERNATIONAL BUSINESS ADMINISTRATION SUMMARY IBA
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SHORTER SUMMARY IBRThree of the most common cognitive biases that may affect managers' decisions are:
1. Confirmation bias: Confirmation bias refers to the tendency to only consider information
that agrees with ("confirms") your preexisting beliefs. You cherry-pick the information you consider:
you look for only the evidence that supports what you are already thinking and disregard the rest. As
such, you may become a prisoner of your own prejudices.
2. Availability bias: Availability bias (also known as the availability heuristic) refers to a
cognitive bias in which you make a decision based on readily available information, even though it
may not be the best information to inform your decision. Information that is more easily recalled
(i.e., is more available because it is more vivid or recent) is assumed to reflect more frequent and
more probable events, while information that is more difficult to bring to mind (i.e., less available
because it is less vivid or recent) is assumed to reflect less frequent and less probable events. The
availability bias thus leads you to overestimate events.
3. What-You-See-Is-All-There-Is (WYSIATI) bias: When deciding whether there is a relationship
between an event and an outcome, we tend to notice what is present but we often forget to
consider what is absent. This tendency is referred to as What-You-See-Is-All-There-Is. Because of this
cognitive bias, managers adopt opinions, structure businesses, and make decisions without
examining all the data, which can easily lead to suboptimal decisions.
Deductive and inductive research are two research approaches.
When using an inductive research approach,
researchers first collect data. Next, they try to
find a pattern in these data, after which they
develop a theoretical framework based on
this pattern.
When using a deductive research approach,
researchers first hypothesize relationships
between variables based on theory. These
hypotheses are then tested using data.
Thus, while inductive research aims at
developing a theory, deductive research aims at testing a theory. These two research approaches are
not mutually competing. They are sometimes used in combination, within a single research study.
, 1. Democrat the business problem
The central question or problem statement
The central question that a research study aims to answer is also referred to as the problem
statement. A good problem statement is;
1. an open-ended question
An open-ended question is a question that cannot be answered by a simple yes or no. A problem
statement has to be phrased as an open-ended question to avoid jumping to conclusions before the
research has been conducted.
Three ways of starting an open-ended question are by the use of “what”, “how” and "to what
extent." Examples are:
What is the relationship between X and Y?
How are X and Y associated?
To what extent does X relate to Y?
2. that identifies the study's unit of analysis
A problem statement should be clear about the unit of analysis of the study. The unit of analysis is
the entity that the study wishes to say something about; it is considered the focus of the study. The
entities being studied are typically referred to as the subjects.
Any of the following could be the unit of analysis in a business research study:
individuals, such as consumers, investors, or CEOs
firms, such as publicly listed companies, multinationals, or SMEs
groups, such as boards of directors, alliances, or industries
things, such as products, brands, or shares
geographical units, such as cities, regions, or countries
A study's unit of analysis can be at a lower or a higher level of aggregation. For example:
If a study is based on comparing students' exam grades, then the unit of analysis is the
individual student.
If a study is based on comparing the noise level between twenty different lecture halls full of
students, then the unit of analysis is the lecture hall (that is, the collective group of students
in each hall) rather than the individual student.
If a study compares the average exam grade between several universities, then the unit of
analysis is the university.
The university level is a higher aggregation level than the lecture-hall level, which in turn is a higher
aggregation level than the student level.
3. that is expressed in terms of (i) variables and (ii) relationships.
Variables are the core of every research study. As the word implies, an important characteristic of a
variable is that it varies. This means a variable must have at least two values or levels in a study.
As indicated, an important characteristic of a variable is that it varies. Variables can vary in three
ways:
, across subjects;
over time;
across subjects and over time.
When something that could potentially vary only has one level in the study, it is not a variable but a
constant.
A problem statement expresses the relationship between at least two variables.
As such, a question such as: What percentage of companies pay dividends? does not qualify as a
problem statement, because it only involves one variable (dividend payment).
The most simple problem statement captures how one variable is related to another variable.
- For example: How is package size related to young children's consumption of sweets?
A somewhat more elaborate problem statement captures how multiple variables are related to
another variable. For example:
- How are (i) package size, (ii) package shape, and (iii) package color related to young
children's consumption of sweets?
A problem statement captures everything that will be researched in a single question. Most of the
time, problem statements are not just formulated in terms of the relationship between two
variables, but also include how the relationship between these two variables depends on a third
variable (a so-called moderating effect).
Managers are typically not simply interested in the extent to which a variable X (e.g., social-media
advertising) is related to another variable Y (e.g., brand sales), but they want to know the conditions
under which X is related to Y.
From problem statement to research questions
Unfortunately, when a problem statement includes one or more moderating effects, this makes the
problem statement difficult to read. Instead of formulating a single overly complex question (the
problem statement), researchers formulate multiple subquestions. We refer to these subquestions as
research questions. When all research questions have been answered, the problem statement should
have been answered.
A cautionary note: Use correlational rather than causal language
We advise you to phrase your problem statement and research questions using correlational rather
than causal claims.
Associational/correlational claims include:
- X is related to Y
- X is associated with Y
- Y increases/decreases when X increases.
Causal claims make stronger statements. They go beyond a simple association between variables and
suggest that one variable causes the other. For example:
- X impacts Y
- X affects Y
, - X causes Y
- X enhances Y
- X decreases Y
Many empirical studies cannot support causal claims.
In the third step of the research process, the theoretical framework is developed. This includes:
1. providing a literature review
Each study builds on previous work. The purpose of a literature review is to provide a condensed
overview of the key studies on a particular topic.
NOTE: The “standing on the shoulders of giants” metaphor is often used to acknowledge the work of
others when undertaking research and, in particular, stresses the importance of literature reviews in
scientific inquiry.
2. presenting/visualizing the conceptual model
Whereas a literature review summarizes the existing research on a topic, a conceptual model visually
summarizes the new study. Specifically, the conceptual model explains which variables are included
in a study (and justifies why these are included) and how they relate to each other.
Variables are building blocks:
dependent
independent
mediating
moderating
control
Relationships are arrows:
main effect
direct/indirect effect
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