Business Research Methods

BUSINESS

RESEARCH
METHODS

NINTH EDITION

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BUSINESS

RESEARCH
METHODS

NINTH EDITION

William G. Zikmund
Barry J. Babin

Max P. Watson Professor of Business
Louisiana Tech University

Head, Department of Marketing & Analysis

Jon C. Carr

M.J. Neeley School of Business
Texas Christian University

Department of Management, Entrepreneurship, & Leadership

Mitch Griffin

Professor of Marketing
Bradley University

Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States

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Business Research Methods, Ninth Edition © 2013, 2010 South-Western, Cengage Learning
William G. Zikmund
Barry J. Babin ALL RIGHTS RESERVED. No part of this work covered by the copyright herein
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To our families.

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BRIEF CONTENTS

Preface, xviii

PART ONE Introduction, 1

1 The Role of Business Research, 2
2 Information Systems and Knowledge Management, 17
3 Theory Building, 37
4 The Business Research Process: An Overview, 48
5 The Human Side of Business Research: Organizational and Ethical Issues, 73

PART TWO Beginning Stages of the Research Process, 105

6 Problem Definition: The Foundation of Business Research, 106
7 Qualitative Research Tools, 131
8 Secondary Data Research in a Digital Age, 159

PART THREE Research Methods for Collecting Primary Data, 183

9 Survey Research: An Overview, 184
10 Survey Research: Communicating with Respondents, 205
11 Observation Methods, 235
12 Experimental Research, 253

PART FOUR Measurement Concepts, 287

13 Measurement and Scaling Concepts, 288
14 Attitude Measurement, 310
15 Questionnaire Design, 333

PART FIVE Sampling and Fieldwork, 383

16 Sampling Designs and Sampling Procedures, 384
17 Determination of Sample Size: A Review of Statistical Theory, 409
18 Fieldwork, 441

PART SIX Data Analysis and Presentation, 457

19 Editing and Coding: Transforming Raw Data into Information, 458
20 Basic Data Analysis: Descriptive Statistics, 483
21 Univariate Statistical Analysis, 506
22 Bivariate Statistical Analysis: Differences Between Two Variables, 528
23 Bivariate Statistical Analysis: Measures of Association, 560
24 Multivariate Statistical Analysis, 582
25 Communicating Research Results: Report Generation, Oral Presentation,

and Follow-Up, 610

PART SEVEN Comprehensive Cases with Computerized
Databases, 635

Glossary of Frequently Used Symbols, 645
Glossary, 646
Endnotes, 659
Index, 666

vi

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CONTENTS

Preface, xviii Questions for Review and Critical Thinking, 16
Research Activities, 16
PART ONE
CHAPTER 2 
Introduction Information Systems and
Knowledge Management, 17
CHAPTER 1 
The Role of Business Research, 2 Introduction, 18

Introduction, 3 Information, Data, and Intelligence, 18
Survey This!, 4
The Characteristics of Valuable Information, 19
The Nature of Business Research, 4 Relevance, 19
Business Research Defined, 5
Applied and Basic Business Research, 5 Survey This!, 20
The Scientific Method, 6 Quality, 20
Timeliness, 20
Managerial Value of Business Research, 7 Completeness, 20
Identifying Problems or Opportunities, 8
Diagnosing and Assessing Problems or Opportunities, 8 Research Snapshot  RFID Technology Gets
Selecting and Implementing a Course of Action, 8 Cheaper—Business Knowledge Grows, 21
Evaluating the Course of Action, 9
Knowledge Management, 21
Research Snapshot  Harley-Davidson Goes Abroad, 10
Research Snapshot  Are Businesses Clairvoyant?, 22
When Is Business Research Needed?, 10
Time Constraints, 10 Global Information Systems, 22
Availability of Data, 10
Decision Support Systems, 23
Research Snapshot  Business Class Success?, 11 Databases and Data Warehousing, 24
Nature of the Decision, 11 Input Management, 24
Benefits versus Costs, 11
Research Snapshot  Staying Home at Home Depot, 26
Business Research in the Twenty-First Century, 12 Computerized Data Archives, 27
Communication Technologies, 12 Networks and Electronic Data Interchange, 29

Research Snapshot  “Jacques” Daniels, 13 The Internet and Research, 29
Global Business Research, 13 What Exactly Is the Internet?, 29
How Is the Internet Useful in Research?, 30
Overview, 14 Navigating the Internet, 31
Interactive Media and Environmental Scanning, 31
Summary, 15 Information Technology, 32
Key Terms and Concepts, 16

vii

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viii Contents

Intranets, 33 Research Snapshot  Rolling Rock, 66
Internet2, 33 Sampling, 66
Gathering Data, 67
Summary, 34 Processing and Analyzing Data, 68
Key Terms and Concepts, 35 Drawing Conclusions and Preparing a Report, 68
Questions for Review and Critical Thinking, 35
Research Activities, 35 The Research Program Strategy, 68

CASE 2.1  Harvard Cooperative Society, 36 Summary, 69
Key Terms and Concepts, 70
CHAPTER 3  Questions for Review and Critical Thinking, 70
Theory Building, 37 Research Activities, 71

Introduction, 38 CASE 4.1  A New “Joe” on the Block, 71
What Is a Theory?, 38
What Are the Goals of Theory?, 38 CHAPTER 5 
The Human Side of Business
Survey This!, 39 Research: Organizational
and Ethical Issues, 73
Research Concepts, Constructs, Propositions,
Variables, and Hypotheses, 39 Introduction, 74

Research Concepts and Constructs, 39 Survey This!, 76

Research Snapshot  Social Network Theory, 40 Organizational Structure of Business Research, 76
Research Propositions and Hypotheses, 41 Business Research Jobs, 77
The Director of Research as a Manager, 79
Understanding Theory, 42 Sources of Conflict between Senior Management
Verifying Theory, 43 and Research, 79
Theory Building, 43
Research Snapshot  The True Power of Research, 80
The Scientific Method, 44
Research Snapshot  When Your Brain “Trips Up,” 81
Practical Value of Theories, 46 Reducing the Conflict between Management
and Researchers, 82
Summary, 46 Cross-Functional Teams, 84
Key Terms and Concepts, 47
Questions for Review and Critical Thinking, 47 Research Suppliers and Contractors, 85
Research Activities, 47 Syndicated Service, 85
Standardized Research Services, 85
CHAPTER 4 
The Business Research Research Snapshot  Finding Häagen-Dazs in China, 86
Process: An Overview, 48 Limited Research Service Companies and
Custom Research, 86
Introduction, 49 Largest Research Organizations, 86

Decision Making, 49 Ethical Issues in Business Research, 87
Certainty, 49 Ethical Questions Are Philosophical Questions, 88
General Rights and Obligations of Concerned Parties, 88
Survey This!, 50 Rights and Obligations of the Research Participant, 89
Uncertainty, 50
Ambiguity, 50 Research Snapshot  Crazy Good! Have Fun, Play Games
(and Buy Pop-Tarts)!, 92
Types of Business Research, 51
Rights and Obligations of the Researcher, 93
Research Snapshot  Cute, Funny, or Sexy? What Makes
a Mascot Tick?, 52 Research Snapshot  Is It Right, or Is It Wrong?, 95
Rights and Obligations of the Client Sponsor (User), 99
Exploratory Research, 52 Privacy, 100
Descriptive Research, 53 Privacy on the Internet, 100
A Final Note on Ethics, 100
Research Snapshot  Taking a Swing at Business
Success, 54 Summary, 101
Key Terms and Concepts, 102
Causal Research, 54 Questions for Review and Critical Thinking, 102
Uncertainty Influences the Type of Research, 58 Research Activities, 103

Stages in the Research Process, 59 CASE 5.1  Global Eating, 103
Alternatives in the Research Process, 60 CASE 5.2  Big Brother Is Watching?, 104
Defining the Research Objectives, 60
Planning the Research Design, 64

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Contents ix

PART TWO Qualitative “versus” Quantitative Research, 133

Beginning Stages of the Research Research Snapshot  Discoveries at P&G!, 134
Process Contrasting Qualitative and Quantitative Methods, 134
Contrasting Exploratory and Confirmatory Research, 135
CHAPTER 6 
Problem Definition: Orientations to Qualitative Research, 136
The Foundation of Business Phenomenology, 136
Research, 106
Research Snapshot  “When Will I Ever Learn?,” 137
Introduction, 107 Ethnography, 138
Importance of Starting with a Good Problem Grounded Theory, 139
Definition, 107 Case Studies, 139

Survey This!, 108 Research Snapshot  A Sensory Safari Provides Play Time
Problem Complexity, 108 (and Good Research) for Time Warner Cable, 140

Research Snapshot  Good Answers, Bad Questions?, 109 Common Techniques Used in Qualitative
Research, 140
The Problem-Definition Process, 111
Problems Mean Gaps, 111 What Is a Focus Group Interview?, 141
The Problem-Definition Process Steps, 111 Depth Interviews, 149
Conversations, 150
Research Snapshot  Poor Questions Result in Poor Free-Association/Sentence Completion Method, 151
Research in Japan!, 112 Observation, 152
Collages, 152
Understand the Business Decision, 112 Projective Research Techniques, 152

Research Snapshot  Opportunity Is a “Fleeting” Exploratory Research in Science and in Practice, 153
Thing, 115 Misuses of Exploratory and Qualitative Research, 153

Identifying the Relevant Issues from the Symptoms, 116 Summary, 155
Writing Managerial Decision Statements and Key Terms and Concepts, 156
Questions for Review and Critical Thinking, 157
Corresponding Research Objectives, 116 Research Activities, 157
Determine the Unit of Analysis, 118
Determine Relevant Variables, 118 CASE 7.1  Disaster and Consumer Value, 157
Write Research Objectives and Questions, 120 CASE 7.2  Edward Jones, 158

Research Snapshot  Pricing Turbulence, 121 CHAPTER 8 
Secondary Data Research
Clarity in Research Questions and Hypotheses, 121 in a Digital Age, 159

How Much Time Should Be Spent on Problem Introduction, 160
Definition?, 123 Advantages of Secondary Data, 160
Disadvantages of Secondary Data, 160
The Research Proposal, 123
The Proposal As a Planning Tool, 123 Survey This!, 161
The Proposal as a Contract, 125
Anticipating Outcomes, 126 Typical Objectives for Secondary Data Research
Designs, 162
Summary, 128
Key Terms and Concepts, 128 Fact-Finding, 162
Questions for Review and Critical Thinking, 129
Research Activities, 129 Research Snapshot  Does It Matter?, 165
Model Building, 165
CASE 6.1  E-ZPass, 130 Data Mining, 168
CASE 6.2  Cane’s Goes International, 130
CASE 6.3  Deland Trucking, 130 Research Snapshot  Mining Data from Blogs, 169
Database Marketing and Customer Relationship
CHAPTER 7  Management, 170
Qualitative Research Tools, 131
Sources of Secondary Data, 170
Introduction, 132 Sources of Internal and Proprietary Data, 171
External Data: The Distribution System, 171
What Is Qualitative Research?, 132 Information As a Product and Its Distribution Channels, 171
Uses of Qualitative Research, 132
Research Snapshot  What’s That Buzzing Sound?, 175
Survey This!, 133
Single-Source Data-Integrated Information, 177

Sources for Global Research, 177

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x Contents

Research Snapshot  Around the World of Data, 178 Personal Interviews, 206

Summary, 180 Survey This!, 207
Key Terms and Concepts, 180 Advantages of Personal Interviews, 207
Questions for Review and Critical Thinking, 181
Research Activities, 181 Research Snapshot  The Challenge of Assessing Adult
Literacy, 208
CASE 8.1  Demand for Gas Guzzlers, 182
Disadvantages of Personal Interviews, 209
PART THREE Door-to-Door Interviews and Shopping Mall Intercepts, 210

Research Methods for Collecting Research Snapshot  Being Good Neighbors Means
Primary Data Learning about Them First, 211

CHAPTER 9  Global Considerations, 212
Survey Research: An Overview, 184
Telephone Interviews, 212
Introduction, 185 Mobile Phone Interviews, 213
Phone Interview Characteristics, 213
Using Surveys, 185 Central Location Interviewing, 215

Survey This!, 186 Research Snapshot  Automated Phone Surveys
Advantages of Surveys, 186 of Teens, 216

Research Snapshot  Intuit Gets Answers to Satisfy Computer-Assisted Telephone Interviewing, 216
Customers, 187 Computerized Voice-Activated Telephone Interview, 216
Global Considerations, 217
Errors in Survey Research, 187
Random Sampling Error, 188 Self-Administered Questionnaires, 217
Systematic Error, 188 Mail Questionnaires, 217
Response Rates, 219
Research Snapshot  Overestimating Patient Increasing Response Rates for Mail Surveys, 220
Satisfaction, 189 Global Considerations, 223

Respondent Error, 189 Self-Administered Questionnaires Using Other
Administrative Error, 193 Forms of Distribution, 223
Rule-of-Thumb Estimates for Systematic Error, 194
What Can Be Done to Reduce Survey Error?, 194 Fax Surveys, 223
E-Mail Surveys, 224
Classifying Survey Research Methods, 194 Internet Surveys, 225
Structured/Unstructured and Disguised/Undisguised
Questionnaires, 194 Research Snapshot  Mixed Mode Data Collection:
The Case of Web and Telephone Surveys, 226
Research Snapshot  The “Mere-Measurement” Effect, 195
Temporal Classification, 195 Kiosk Interactive Surveys, 228
Survey Research That Mixes Modes, 229
Total Quality Management and Customer Text-Message Surveys, 229
Satisfaction Surveys, 197
Selecting the Appropriate Survey Research Design, 229
What Is Quality?, 198
Internal and External Customers, 198 Pretesting, 231
Implementing Total Quality Management, 198
Ethical Issues in Survey Research, 231
Summary, 201
Key Terms and Concepts, 202 Summary, 231
Questions for Review and Critical Thinking, 203 Key Terms and Concepts, 232
Research Activities, 203 Questions for Review and Critical Thinking, 232
Research Activities, 233
CASE 9.1  SAT and ACT Writing Tests, 204
CASE 9.2  The Walker Information Group, 204 CASE 10.1  National Do Not Call Registry, 233
CASE 10.2  Royal Bee Electric Fishing Reel, 234
CHAPTER 10 
Survey Research: Communicating CHAPTER 11 
with Respondents, 205 Observation Methods, 235

Introduction, 206 Introduction, 236

Interviews as Interactive Communication, 206 Observation in Business Research, 236
Noninteractive Media, 206 What Can Be Observed?, 236

Survey This!, 237
The Nature of Observation Studies, 237

Research Snapshot  This Trend Brought to You by DDB
SignBank, 238

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Contents xi

Observation of Human Behavior, 238 Issues of Experimental Validity, 271
Complementary Evidence, 239 Internal Validity, 271
Direct Observation, 240 External Validity, 273
Combining Direct Observation and Interviewing, 241 Trade-offs between Internal and External
Ethical Issues in the Observation of Humans, 241 Validity, 274

Observation of Physical Objects, 242 Classification of Experimental Designs, 274
Symbolism for Diagramming Experimental
Content Analysis, 243 Designs, 274
Three Examples of Quasiexperimental Designs, 274
Mechanical Observation, 244 Three Alternative Experimental Designs, 276
Television Monitoring, 244 Time Series Designs, 278
Complex Experimental Designs, 278
Research Snapshot  ATTI, Inc. Shadows the Fleet, 245
Monitoring Website Traffic, 246 Summary, 282
Scanner-Based Research, 246 Key Terms and Concepts , 283
Measuring Physiological Reactions, 247 Questions for Review and Critical Thinking, 284
Research Activities, 284
Research Snapshot  Neuroco Peers into the Consumer’s
Brain, 248 CASE 12.1  Tooheys, 285

Summary, 249 PART FOUR
Key Terms and Concepts, 250
Questions for Review and Critical Thinking, 250 Measurement Concepts
Research Activities, 251
CHAPTER 13 
CASE 11.1  Mazda and Syzygy, 251 Measurement and Scaling
CASE 11.2  Texas Instruments and E-Lab, 252 Concepts, 288

CHAPTER 12  Introduction, 289
Experimental Research, 253
What Do I Measure?, 289
Introduction, 254
Survey This!, 290
Creating an Experiment, 254
An Illustration: Can a Self-Efficacy Intervention Enhance Research Snapshot  Peer Pressure and Investing
Job Attitude?, 254 Behavior, 292

Survey This!, 255 Concepts, 292
Operational Definitions, 292
Designing an Experiment to Minimize
Experimental Error, 257 Levels of Scale Measurement, 293
Nominal Scale, 293
Manipulation of the Independent Variable, 257 Ordinal Scale, 295
Interval Scale, 297
Research Snapshot  Talking While Driving: Are Cell Ratio Scale, 297
Phone Conversations Different from Passenger Mathematical and Statistical Analysis
Conversations?, 259 of Scales, 298

Selection and Measurement of the Dependent Variable, 260 Index Measures, 299
Selection and Assignment of Test Units, 260 Indexes and Composites, 299
Computing Scale Values, 300
Demand Characteristics, 263
What Are Demand Characteristics?, 263 Research Snapshot  Recoding Made Easy, 301
Experimenter Bias and Demand Effects, 263
Hawthorne Effect, 264 Three Criteria for Good Measurement, 301
Reducing Demand Characteristics, 265 Reliability, 301
Validity, 303
Establishing Control, 266 Reliability versus Validity, 305
Problems Controlling Extraneous Variables, 266 Sensitivity, 305

Ethical Issues in Experimentation, 267 Summary, 306
Key Terms and Concepts, 306
Practical Experimental Design Issues, 267 Questions for Review and Critical Thinking, 307
Basic versus Factorial Experimental Designs, 267 Research Activities, 307
Laboratory Experiments, 267
Field Experiments, 268 CASE 13.1  FlyAway Airways, 308

Research Snapshot  The Hidden in Hidden
Valley Ranch, 269

Within-Subjects and Between-Subjects Designs, 270

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xii Contents

CHAPTER 14  Survey This!, 335
Attitude Measurement, 310 Questionnaire Relevancy, 335
Questionnaire Accuracy, 335
Introduction, 311
Wording Questions, 336
Attitudes as Hypothetical Constructs, 311 Open-Ended Response versus Fixed-Alternative
Questions, 336
Survey This!, 312
Importance of Measuring Attitudes, 312 Research Snapshot  Corporate Reputations: Consumers
Put Johnson & Johnson, Microsoft, and Google
Techniques for Measuring Attitudes, 312 on Top, 337

Research Snapshot  Is It Positive Emotionality, or Is It Types of Fixed-Alternative Questions, 338
LOVE?, 313 Phrasing Questions for Self-Administered, Telephone, and

Attitude Rating Scales, 313 Personal Interview Surveys, 340
Simple Attitude Scales, 313
Guidelines for Constructing Questions, 341
Research Snapshot  Students Ask—Are You Responsible?, 314 Avoid Complexity: Use Simple, Conversational
Category Scales, 314 Language, 341
Method of Summated Ratings: The Likert Scale, 315 Avoid Leading and Loaded Questions, 342
Semantic Differential, 317 Avoid Ambiguity: Be as Specific as Possible, 343
Avoid Double-Barreled Items, 344
Research Snapshot  Measuring Website Usability, 319 Avoid Making Assumptions, 345
Numerical Scales, 319 Avoid Burdensome Questions That May Tax the
Stapel Scale, 319 Respondent’s Memory, 345
Constant-Sum Scale, 320 Make Certain Questions Generate Variance, 346
Graphic Rating Scales, 321
What Is the Best Question Sequence?, 347
Research Snapshot  How Much Is a Healthy Home
Worth?, 322 Research Snapshot  What Citizens Think about Climate
Change, 348
Thurstone Interval Scale, 322
What Is the Best Layout?, 350
Measuring Behavioral Intention, 323 Traditional Questionnaires, 350
Behavioral Differential, 324 Internet Questionnaires, 355

Ranking, 324 Research Snapshot  Pretesting the CAHPS Hospital
Paired Comparisons, 324 Survey, 359
Sorting, 325
How Much Pretesting and Revising Are
Other Methods of Attitude Measurement, 325 Necessary?, 360

Selecting a Measurement Scale: Some Practical Designing Questionnaires for Global
Decisions, 326 Markets, 361

Ranking, Sorting, Rating, or Choice Technique?, 326 Summary, 362
Monadic or Comparative Scale?, 326 Key Terms and Concepts, 363
What Type of Category Labels, If Any?, 327 Questions for Review and Critical Thinking, 363
How Many Scale Categories or Response Positions?, 327 Research Activity, 364
Balanced or Unbalanced Rating Scale?, 327
Even or Odd Number of Scale Points?, 328 CASE 15.1  Agency for Healthcare Research
Use a Scale That Forces a Choice among Predetermined and Quality, 364
CASE 15.2  Canterbury Travels, 369
Options?, 328 CASE 15.3  McDonald’s Spanish Language
Single Measure or an Index Measure?, 329 Questionnaire, 371
CASE 15.4  Schönbrunn Palace in
Summary, 329 Vienna, 372
Key Terms and Concepts, 330
Questions for Review and Critical Thinking, 330 APPENDIX 15A 
Research Activity, 331 Question Wording and
Measurement Scales for Commonly
CASE 14.1  Roeder-Johnson Corporation, 331 Researched Topics, 373
CASE 14.2  Attitudes toward Technology and Lifestyle, 331
Questions about Advertising, 373
CHAPTER 15  Awareness, 373
Questionnaire Design, 333 Unaided Recall/ Top of the Mind Recall, 374
Aided Recall, 374
Introduction, 334 Recognition, 374

Questionnaire Quality and Design: Basic
Considerations, 334

What Should Be Asked?, 334

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Contents xiii

Message Communication/Playback (Sales Point Random Sampling and Nonsampling
Playback), 374 Errors, 390

Attitude toward the Advertisement, 375 Random Sampling Error, 391
Attitude toward Advertised Brand (Persuasion), 375 Systematic Sampling Error, 391
Readership/Viewership, 375 Less Than Perfectly Representative Samples, 391

Questions about Ownership and Product Probability versus Nonprobability
Usage, 376 Sampling, 392

Ownership, 376 Nonprobability Sampling, 392
Purchase Behavior, 376 Convenience Sampling, 393
Regular Usage, 376
Research Snapshot  How Much Does Your Prescription
Questions about Goods and Services, 376 Cost? It Depends on Who You Buy It From, 393
Ease of Use, 376
Uniqueness, 377 Judgment Sampling, 393
Attribute Ratings/Importance of Characteristics, 377
Interest, 377 Research Snapshot  American Kennel Club Tries to Keep
Like/Dislike, 378 Pet Owners out of the Doghouse, 394
Preference, 378
Expectations, 378 Quota Sampling, 394
Satisfaction, 378 Snowball Sampling, 395
Quality, 379
Problems, 379 Probability Sampling, 395
Benefits, 379 Simple Random Sampling, 396
Improvements, 379 Systematic Sampling, 396
Buying Intentions for Existing Products, 379 Stratified Sampling, 397
Buying Intentions Based on Product Concept, 380 Proportional versus Disproportional Sampling, 397
Reason for Buying Intention, 380 Cluster Sampling, 398

Questions about Demographics, 380 Research Snapshot  Who’s at Home? Different Ways to
Age, 380 Select Respondents, 399

Education, 381 Multistage Area Sampling, 399

Marital Status, 381 What Is the Appropriate Sample
Design?, 401
Children, 381
Degree of Accuracy, 402
Income, 381 Resources, 402
Occupation, 382
Research Snapshot  New on Campus: Student
PART FIVE Adjustment to College Life, 403

Sampling and Fieldwork Time, 403
Advance Knowledge of the Population, 403
CHAPTER 16  National versus Local Project, 403
Sampling Designs and
Sampling Procedures, 384 Internet Sampling Is Unique, 404
Website Visitors, 404
Introduction, 385 Panel Samples, 404
Recruited Ad Hoc Samples, 405
Sampling Terminology, 385 Opt-in Lists, 405

Why Sample?, 385 Summary, 406
Pragmatic Reasons, 385 Key Terms and Concepts, 406
Questions for Review and Critical Thinking, 407
Survey This!, 386 Research Activities, 407
Accurate and Reliable Results, 386
Destruction of Test Units, 386 CASE 16.1  Who’s Fishing?, 408
CASE 16.2  Scientific Telephone Samples, 408
Research Snapshot  Finding Out about Work Is a
Lot of Work!, 387 CHAPTER 17 
Determination of Sample Size:
Practical Sampling Concepts, 387 A Review of Statistical Theory, 409
Defining the Target Population, 387
The Sampling Frame, 388 Introduction, 410
Sampling Units, 390 Descriptive and Inferential Statistics, 410
Sample Statistics and Population Parameters, 410

Making Data Usable, 411
Frequency Distributions, 411

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xiv Contents

Survey This!, 412 Principles of Good Interviewing, 449
Proportions, 412 The Basics, 449
Required Practices, 450
Research Snapshot  The Well-Chosen Average, 413
Measures of Central Tendency, 413 Fieldwork Management, 451
Measures of Dispersion, 415 Briefing Session for Experienced Interviewers, 451
Training to Avoid Procedural Errors in Sample
The Normal Distribution, 418 Selection, 451

Population Distribution, Sample Distribution, and Research Snapshot  Total Quality Management for
Sampling Distribution, 422 Interviewing, 452

Central-Limit Theorem, 424 Supervision of Fieldworkers, 452
Sampling Verification, 453
Estimation of Parameters, 427 Interviewer Cheating, 453
Point Estimates, 427 Verification by Reinterviewing, 454
Confidence Intervals, 427
Summary, 454
Research Snapshot  Sampling the World, 428 Key Terms and Concepts, 455
Questions for Review and Critical Thinking, 455
Sample Size, 430 Research Activity, 456
Random Error and Sample Size, 430
CASE 18.1  Thomas and Dorothy Leavey
Research Snapshot  Target and Walmart Shoppers Really Library, 456
Are Different, 431 CASE 18.2  Margaret Murphy O’Hara, 456

Factors in Determining Sample Size for Questions Involving PART SIX
Means, 431
Data Analysis and Presentation
Estimating Sample Size for Questions Involving Means, 432
The Influence of Population Size on Sample Size, 433 CHAPTER 19 
Factors in Determining Sample Size for Proportions, 433 Editing and Coding: Transforming
Calculating Sample Size for Sample Proportions, 435 Raw Data into Information, 458
Determining Sample Size on the Basis of Judgment, 436
Determining Sample Size for Stratified and Other Introduction, 459

Probability Samples, 437 Stages of Data Analysis, 459
Determining Level of Precision after Data Collection, 437
Survey This!, 460
A Reminder about Statistics, 437
Editing, 460
Summary, 438 Field Editing, 461
Key Terms and Concepts, 438 In-House Editing, 461
Questions for Review and Critical Thinking, 439
Research Activities, 440 Research Snapshot  Do You Have Integrity?, 462
Editing for Completeness, 463
CASE 17.1  Pointsec Mobile Technologies, 440 Editing Questions Answered Out of Order, 464
Facilitating the Coding Process, 464
CHAPTER 18  Pitfalls of Editing, 465
Fieldwork, 441 Pretesting Edit, 465

Introduction, 442 Coding, 465
Coding Qualitative Responses, 465
The Nature of Fieldwork, 442 The Data File, 468

Who Conducts the Fieldwork?, 442 Research Snapshot  Building a Multipetabyte Data
System, 469
Survey This!, 443
Code Construction, 469
In-House Training for Inexperienced Precoding Fixed-Alternative Questions, 470
Interviewers, 443 More on Coding Open-Ended Questions, 471
Devising the Coding Scheme, 472
Making Initial Contact and Securing the Interview, 443 Code Book, 475
Editing and Coding Combined, 475
Research Snapshot  Interviewing for Horizon Research
Services, 444 Research Snapshot  Coding Data “On-the-Go,” 476

Asking the Questions, 445

Research Snapshot  Why Is “Why” Important?, 446
Probing When No Response Is Given, 446
Recording the Responses, 447

Research Snapshot  Probing for Deeper Meaning at
Olson Zaltman Associates, 448

Terminating the Interview, 449

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Contents xv

Computerized Survey Data Processing, 476 Survey This!, 508
Error Checking, 476
Research Snapshot  The “Freshman 7.8,” 509
Summary, 477 An Example of Hypothesis Testing, 511
Key Terms and Concepts, 478 Type I and Type II Errors, 513
Questions for Review and Critical Thinking, 478
Research Activities, 479 Research Snapshot  The Law and Type I and Type II
Errors, 514
CASE 19.1  U.S. Department of the Interior Heritage
Conservation and Recreation Service, 479 Choosing the Appropriate Statistical
CASE 19.2  Shampoo 9–10, 480 Technique, 515

CHAPTER 20  Type of Question to Be Answered, 515
Basic Data Analysis: Number of Variables, 515
Descriptive Statistics, 483 Level of Scale of Measurement, 515

Introduction, 484 Research Snapshot  Living in a Statistical Web, 516
Parametric versus Nonparametric Hypothesis Tests, 516
The Nature of Descriptive Analysis, 484
The t-Distribution, 517
Survey This!, 485 Calculating a Confidence Interval Estimate Using the
t-Distribution, 519
Tabulation, 486 Univariate Hypothesis Test Using the t-Distribution, 520

Cross-Tabulation, 486 The Chi-Square Test for Goodness of Fit, 521
Contingency Tables, 487
Percentage Cross-Tabulations, 488 Research Snapshot  Interested in Retirement? It Often
Depends on Your Age, 523
Research Snapshot  Our Four-Legged Family Members, 489
Elaboration and Refinement, 490 Hypothesis Test of a Proportion, 524
How Many Cross-Tabulations?, 490
Quadrant Analysis, 491 Additional Applications of Hypothesis
Testing, 525
Data Transformation, 491
Simple Transformations, 491 Summary, 525
Problems with Data Transformations, 493 Key Terms and Concepts, 526
Index Numbers, 494 Questions for Review and Critical Thinking, 526
Research Activities, 526
Calculating Rank Order, 494
CASE 21.1  Premier Motorcars, 527
Research Snapshot  Twitter and the ReTweetability
Index, 495 CHAPTER 22 
Bivariate Statistical Analysis:
Tabular and Graphic Methods of Displaying Differences Between
Data, 496 Two Variables, 528

Computer Programs for Analysis, 497 Introduction, 529
Statistical Packages, 497
Computer Graphics and Computer Mapping, 498 What Is the Appropriate Test of Difference?, 529

Interpretation, 500 Survey This!, 531

Summary, 500 Cross-Tabulation Tables: The x2 Test for
Key Terms and Concepts, 501 Goodness-of-Fit, 531
Questions for Review and Critical Thinking, 501
Research Activities, 503 Research Snapshot  Accurate Information? How About a
Chi-Square Test?, 534
CASE 20.1  Body on Tap, 503
CASE 20.2  Downy-Q Quilt, 503 The t-Test for Comparing Two Means, 534
Independent Samples t-Test, 534
CHAPTER 21 
Univariate Statistical Analysis, 506 Research Snapshot  Expert “T-eeze,” 538
Paired-Samples t-Test, 539
Introduction, 507
The Z-Test for Comparing Two Proportions, 540
Hypothesis Testing, 507
The Hypothesis-Testing Procedure, 507 Analysis of Variance (ANOVA), 542
What Is ANOVA?, 542
Simple Illustration of ANOVA, 542

Research Snapshot  More Than One-Way, 543

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xvi Contents

Partitioning Variance in ANOVA, 544 CHAPTER 24 
The F-Test, 546 Multivariate Statistical
Practically Speaking, 547 Analysis, 582

Summary, 547 Introduction, 583
Key Terms and Concepts, 548 What Is Multivariate Data Analysis?, 583
Questions for Review and Critical Thinking, 548 The “Variate” in Multivariate, 583
Research Activities, 551
Survey This!, 584
CASE 22.1  Old School versus New School
Sports Fans, 551 Classifying Multivariate Techniques, 584
Dependence Techniques, 584
APPENDIX 22A  Interdependence Techniques, 584
Manual Calculation of an Influence of Measurement Scales, 585
F-Statistic, 553
Analysis of Dependence, 586
APPENDIX 22B  Multiple Regression Analysis, 586
ANOVA for Complex
Experimental Designs, 556 Research Snapshot  Too Much of a Good Thing!, 589
ANOVA (n-Way) and MANOVA, 591
Factorial Designs, 558 Discriminant Analysis, 592
ANOVA for a Factorial Experiment, 558
Partitioning the Sum of Squares for a Two-Way ANOVA, 558 Research Snapshot  How to Get MANOVA
Results, 593
CHAPTER 23 
Bivariate Statistical Analysis: Analysis of Interdependence, 595
Measures of Association, 560 Factor Analysis, 595

Introduction, 561 Research Snapshot  Getting Factor Results with
SAS or SPSS, 597
The Basics, 561
Cluster Analysis, 599
Simple Correlation Coefficient, 561 Multidimensional Scaling, 601

Survey This!, 562 Summary, 602
An Example, 563 Key Terms and Concepts, 603
Correlation, Covariance, and Causation, 564 Questions for Review and Critical Thinking, 603
Coefficient of Determination, 564 Research Activities, 604
Correlation Matrix, 565
CASE 24.1  The Utah Jazz, 607
Regression Analysis, 566 CASE 24.2  How Do We Keep Them?, 609

Research Snapshot  What Makes Attractiveness?, 567 CHAPTER 25 
The Regression Equation, 568 Communicating Research
Parameter Estimate Choices, 568 Results: Report Generation,
Visual Estimation of a Simple Regression Model, 569 Oral Presentation, and
Ordinary Least-Squares (OLS) Method of Regression Follow-Up, 610
Analysis, 571
Introduction, 611
Research Snapshot  Size and Weight, 576
Insights from the Communications
Summary, 577 Model, 611
Key Terms and Concepts, 577
Questions for Review and Critical Thinking, 578 Survey This!, 612
Research Activities, 579
The Report in Context, 613
CASE 23.1  International Operations at CarCare Inc., 579
Report Format, 613
APPENDIX 23A  Tailoring the Format to the Project, 614
Arithmetic Behind OLS, 580 The Parts of the Report, 615

Research Snapshot  Research ROI, 617

Research Snapshot  How Do We Stack Up?
The Value of Sba.gov, 618

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Contents xvii

Basic Business Research Report, 619 PART SEVEN

Effective Use of Graphic Aids, 620 Comprehensive Cases with
Tables, 620 Computerized Databases
Charts, 622
CASE 1:  Running the Numbers: Does It Pay?, 636
The Oral Presentation, 628 CASE 2:  Attiring Situation, 637
CASE 3:  Values and the Automobile Market, 638
Research Snapshot  The 10/20/30 Rule of CASE 4:  TABH, INC., Automotive Consulting, 641
PowerPoint, 629 CASE 5:  The Atlanta Braves, 642
CASE 6:  Knowing the Way, 642
Reports on the Internet or Intranet, 629
Glossary of Frequently Used Symbols, 645
The Research Follow-Up, 630 Glossary, 646
Endnotes, 659
Summary, 630 Index, 666
Key Terms and Concepts, 631
Questions for Review and Critical Thinking, 631
Research Activities, 631

CASE 25.1  Annenberg Public Policy Center, 632

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PREFACE

The business world has never been changing faster! Businesses can’t assume that con-
tinuing to operate their functional areas by the same old processes, with the same old
technology, managed in the same old way will continue to produce the same old good
result.The need for intelligence supported by a connection with customers, employees,
and other constituencies is more important than ever. Business researchers are challenged with
the job of producing just this type of intelligence.The ninth edition of Business Research Methods
addresses the dynamic nature of today’s business world while conveying the essential elements of
the business research process.

Most readers understand that managers want answers to business questions. What is not so
obvious is the complexity involved in specifying the correct research questions and determining
the appropriate process for collecting, analyzing, and presenting information. This is the role of
a business researcher, who must develop the skills to clarify the research objectives and possess
the ability to manage the search for information. With the technological capabilities we have
today, that means searching through terabyte after terabyte of existing information to pick out
those elements which best hold the possibility of turning into useful intelligence.This informa-
tion must be complemented by original data gathered by the researcher. All the intelligence
must then be communicated in a way that helps managers make decisions. When it works right,
b­ usiness research is a win-win proposition. The process enables a company to identify its custom-
ers, understand its employees, and design processes, products, and services that maximize value
for all. In return, the company receives value as the customer spends their hard-earned money,
employee engagement increases, and more effective business practices are implemented. As a
result, everyone wins!

Trying to find just the right piece of business information via the Internet can be like searching
for a needle in a haystack. This information may well be hidden beneath piles and piles of irrelevant
stuff ! Or, how about trying to find a key piece of business information that may be hidden in the
mind of a consumer or employee? A customer may not even be consciously aware of all his or
her reasons for some preference or behavior and, consequently, can’t identify or talk about it. An
employee may not even realize that he or she possesses information vital to the organization. How
do you go about uncovering this information that could be so crucial to making a good business
­decision?

That’s where this text comes in: Business Research Methods equips students with the knowledge
and skills needed in their search for business intelligence. The process we describe includes six
steps. Researchers must first work together with decision makers to decide what they are look-
ing for—that metaphorical needle in the haystack. The next two stages plot out the way to go
about finding the needle. Next are two stages that focus on the actual search for the needle.The
process concludes when the business researcher communicates the benefits of finding “pointed”

xviii

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Preface xix

information that can help mend problems or create something really new and special for the deci-
sion maker. Success in this process usually merits the researcher a reward that is a bit more valuable
than that needle!

Enhancements in Business Research Methods

To ensure that students are able to conduct business research with an understanding of all the latest
theories and techniques available to them, the ninth edition is revised and updated. In response to
reader feedback and changes in the research environment, two key enhancements have been made:
(1) the ninth edition provides greater examples, illustrations, and applications of the global nature of
business and (2) focuses more heavily on the role of technology in research. Without a doubt these
issues—globalization and technology—continue to revolutionize business research. The Internet
has affected all phases of research by altering information systems, ways of gathering secondary data,
survey processes, sampling, questionnaire design, primary data collection, qualitative analysis, and
­communication, among other things. In the ninth edition, practically every chapter includes sig-
nificant coverage of technology-related topics, and most chapters also include review questions and
activities that get students involved with the Internet or other applications of technology in a relevant
way. The Survey This! feature gets students and instructors directly involved with one important way
that the Internet has changed research. This particular feature provides first-hand experience with
the process, and illustrates the advantages and disadvantages, of using online questionnaires.

Overall, here is a summary of some of the key improvements and features of the ninth edition
of Business Research Methods.

■■ Increased Coverage of International Business Issues—The text makes greater use of examples
from companies and countries around the globe. Readers of this book from outside North
America will appreciate more familiar examples that are relevant to their daily life. The inter-
national examples will also open up North American students to research issues beyond the
domestic market. For all readers the examples illustrate global dynamics. This is a particularly
important enhancement to the text since cultural and language barriers often present chal-
lenges for the business researcher.

■■ Survey This! Feature—First introduced in the eighth edition, Survey This! allows students
to respond to an online questionnaire hosted with Qualtrics software. The questionnaire
involves students’ opinions, activities, and interests regarding matters related to studying busi-
ness and careers in business fields. In the early chapters, this feature is useful for critiquing the
way questionnaires are constructed and how research hypotheses are addressed in a question-
naire. New to the ninth edition is a populated data set for instructors based on the Survey This!
questionnaire. This data can be used in later chapters as illustration of the statistical techniques
discussed in the text. Students also get access to Qualtrics to design their own questionnaires.

■■ Attention to Qualitative Research—Companies are increasingly realizing the benefits of qual-
itative research. In response to this important phenomenon, Chapter 7, Qualitative Research
Tools, provides a comprehensive overview of qualitative research techniques. The chapter
focuses on various approaches to qualitative research and the corresponding interpretative
techniques that turn qualitative data into business intelligence. Phenomenology, grounded
theory, ethnography, and case study approaches are all covered. Qualitative research is also
integrated into several other chapters. For example, the Internet is not just a way of collecting
quantitative data. Qualitative research is being dramatically changed by the Internet as con-
sumers leave more and more artifactual data behind on social networking websites, company
chat rooms, blogs, microblogs (such as tweets left on Twitter), and more. Thus, qualitative
research tools and approaches are highlighted throughout the text.

■■ Breadth of Business Coverage—The ninth edition further broadens the spectrum of business
activities and touches on practically all areas of business including marketing, management,
finance, business ethics, and accounting. The examples reflect the diversity of today’s business
world. Many of these examples are captured in the Research Snapshot features, which tie busi-
ness research together with current events, ethics, technology, and topics of particular interest
to the business research student.

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xx Preface

■■ Chapter Vignettes—The chapter vignettes were carefully examined and updated. Several are
new to the ninth edition. Each vignette sets the stage for the chapter by introducing topics
taken from both well-known and lesser-known companies, topical areas of interest in the
­current business literature, and slice-of-life business situations. The vignettes help frame the
material included in each chapter and put core course concepts into a real-life and current
context.

■■ Comprehensive Cases—The ninth edition includes online access to comprehensive cases that
allow the student to get real hands-on experience doing research. Selected cases also include
data that can be downloaded from the Instructor’s Resource CD or the companion website
for the text. The data are ready to be analyzed using Excel, SPSS, or SAS, or any other soft-
ware capable of reading data from a spreadsheet. Shorter and more-to-the-point cases are
included at the end of each chapter. Several of these cases involve simple data analyses and are
accompanied by data also available on the instructor resource disk or the book website.

■■ A Simplified Approach and Style—The Research Snapshots, chapter Learning Outcomes, and
end-of-chapter materials are presented in a form that allows greater focus on the truly impor-
tant information. The Learning Outcomes ensure an important coherence and structure to the
chapters that culminate with the end-of-chapter materials.

■■ Tagged End-of-Chapter Exercises—The end-of-chapter materials contain a number of ques-
tions that pertain to either ethical issues in business research or exercises requiring students to
get involved with research via the Internet. These items are each uniquely tagged with a visual
symbol, making these particular exercises stand out with a clear, identifying mark.

Organization of the Book

The organization of the ninth edition of Business Research Methods follows the logic of the business
research process itself.The book is organized into seven parts, with each part presenting the basic
research concepts for one of the stages in the research process. Each part also discusses how these
concepts relate to decisions about conducting specific business research projects.

Part One: Introduction emphasizes the interplay between research and business and how the
importance and scope of research varies with different business situations. Included in this discus-
sion is an overview of computerized data management and information systems, an outline of the
entire business research process, and an explanation of how all of this is changing due to technol-
ogy. Chapter 3 is devoted to theory development and explains why theory is important to effective
research, and how research is a way that theory is tested.

Without high ethical standards, no business is a “good business.” Thus, the introductory mate-
rials also include an emphasis on business ethics and the special ethical problems associated with
business research. Chapter 5 focuses exclusively on business ethics and the interplay between orga-
nizational dynamics and research.

Part Two: Beginning Stages of the Research Process covers the essentials involved in
starting to study business problems. This part emphasizes decision making, problem definition,
and the process of how the business problem must be translated into research questions and/or
research hypotheses. Research proposals are covered in some detail, and the reader is encouraged
to see these as the written agreement that helps put the decision maker and the researcher on the
same page.

Chapter 7 emphasizes qualitative research applications. One role played by qualitative research
is helping to separate problem symptoms from true issues that can be attacked with business
research. However, qualitative research extends far beyond problem definition; it allows greater
potential for discovery as well as deeper and potentially more meaningful explanations in business
research. Part Two concludes with Chapter 8, which provides detailed discussion of secondary data
and emphasizes its increasing importance in a data-rich world.

PartThree: Research Methods for Collecting Primary Data examines the topics involved
in collecting new data for the specific problem at hand. For example, the chapters describe issues
related to planning, conducting, and administering surveys, which remain a mainstay for collecting
consumer and employee opinions, attitudes, and behaviors.

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Preface xxi

Additionally, Chapter 12 focuses specifically on experimental research. Experiments allow the
researcher to establish causal inferences.They can, however, be intricate to design and implement,
and conducting experiments that provide valid results is no simple matter. When done correctly,
experiments can provide extremely important business intelligence.

Part Four: Measurement Concepts describes key concepts of measurement that are funda-
mental to conducting valid business research.This part of the text discusses the foundation of mea-
surement theory. Key topics include descriptions of the different levels of scale measurement and
how this affects analysis and the interpretation of results. Basic ways to measure human attitudes
and practical matters dealing with questionnaire design are also discussed. An increased emphasis
is placed on the use of new technologies for conducting interviews. For instance, how does asking
a question in an electronic format expand the options for respondents and the researcher? Topics
such as these are highlighted in Part Four.

Part Five: Sampling and Fieldwork explains the difference between a population and a
sample.The reasons why sampling is needed and how it can be used to confidently allow predic-
tions about larger numbers of people are covered.The fieldwork process is also discussed, including
the importance of supervision of fieldwork.This section shows how to avoid sloppy sampling and
poor field supervision, which can lead to error in the business research process.

Part Six: Data Analysis and Presentation covers important processes necessary in translat-
ing raw data into business intelligence. Included among these topics are the editing and coding of
the data.The coded data are then ready for analysis, and this section presents the most commonly
used methods for analyzing data.

Basic descriptive statistics are discussed as ways of portraying key results including central ten-
dency and dispersion. Inferential statistics are discussed, including often-used univariate and bivari-
ate approaches such as t-tests. Multivariate statistical approaches are also introduced so that the
reader has an awareness of techniques that can analyze many variables simultaneously. Hands-on
experience with basic multivariate procedures is also provided.The final chapter brings everything
together by including a discussion of how to effectively communicate research results via a report
and/or presentation.

Part Seven: Comprehensive Cases with Computerized Databases make up the last
section of the book. These cases provide materials that challenge students to apply and integrate
the concepts they have learned throughout the course. Instructors will find that these cases pro-
vide flexibility to either expand or simplify the assignment to suit the demands of varying course
assignments.

The cases provide greater variety than earlier editions, including some that involve analysis of
internal organizational problems as well as an opportunity to use qualitative research.When quan-
titative data are included, they can be easily analyzed with basic statistical tools like SPSS. Excel files
are also included with the same data.These files can be read directly by statistical programs like SAS
or other programs.A new comprehensive case has been added to the ninth edition.

Superior Pedagogy

More than other research textbooks, the ninth edition of Business Research Methods addresses stu-
dents’ need to comprehend all aspects of the business research process. The following features
facilitate learning throughout the book:

■■ Learning Outcomes. Each chapter begins with a concise list of learning outcomes that
emphasize the major areas of competency that students should achieve before proceeding to
the next chapter. The key is to avoid labeling everything a major learning outcome and to
provide instructors with flexibility for emphasizing additional material as they see fit.

■■ Headings Keyed to Learning Outcomes. First-level headings, with the exception of
those labeled “Introduction,” are keyed to learning outcomes. This should be an aid in
developing assessment rubrics and makes the book more user friendly in terms of identifying
key material.

■■ Research Snapshots. All of the box materials share a common title, Research Snapshots.
Each chapter contains multiple Research Snapshots. The boxes explore business research

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xxii Preface

processes in a variety of modern businesses situations, ranging from international consider-
ations to research ethics. Some boxes also illustrate research techniques and applications in a
step-by-step fashion. Every attempt is made to make the box material lively and relevant to
the subject matter of the chapters.
■■ Writing Style. An accessible, interesting writing style continues to be a hallmark of this book.
With a careful balance between theory and practice and a sprinkling of interesting examples
and anecdotes, the writing style clarifies and simplifies the business research process. In addi-
tion, the text offers a comprehensive treatment of important and current topics.
■■ Statistical Approach. A review of statistical theory provides students with an overview of
the basic aspects of statistics. However, since this text stresses managerial applications more
than statistical theory, students are given tools to perform the most common business research
data analysis. More sophisticated data analysis approaches are left for further reference. Thus,
the readers can learn how to test simple hypotheses involving differences between means or
relationships among variables. Cross-tabulation, t-tests, ANOVA, and regression are covered
in sufficient depth to allow students to use these techniques. In addition, easy-to-follow, click-
through sequences can walk students through most basic approaches to producing statistical
results.
■■ Key Terms. Learning the vocabulary of business research is essential to understanding the
topic, and Business Research Methods facilitates this with key terms. First, key concepts are
boldfaced and completely defined when they first appear in the textbook. Second, all key
terms and concepts are listed at the end of each chapter, and many terms are highlighted in a
marginal glossary. Third, a glossary summarizing all key terms and definitions appears at the
end of the book for handy reference. A glossary of frequently used symbols is also included.
■■ Ethics Questions. Identified by a special icon, ETHICS, ethics questions are included in most
chapters. Among the compelling issues students are asked to explore is redefining the right
to privacy in light of new technology. The ethical issues also provide a great opportunity for
building critical thinking skills.
■■ Internet Questions. Internet questions also are identified by a special icon, ’NET. Nearly all
chapters include multiple questions and research activities that illustrate advances in Internet
applications common to business research.
■■ Research Activities. The end-of-chapter materials include real-world research activities
intended to provide actual research experience for the student. Most provide an opportunity
for the student to gain experience in multiple content areas. Some involve ethical aspects of
research, and some involve Internet usage.
■■ Cases. Cases, often taken from real-life situations, illustrate business research concepts and
build knowledge and research skills. These cases offer students the opportunity to participate
actively in the decision-making process, one of the most effective forms of learning.

Comprehensive Instructor Resources

We believe it is important for any text to develop comprehensive supplemental materials to sup-
port instructors in their vital teaching function. Because of this pedagogical philosophy, there is an
extensive learning package provided with Business Research Methods.

■■ The Instructor’s Resource CD-ROM (ISBN: 9781133190967) contains valuable instruc-
tor resources on one easy-to-use CD-ROM: the test bank, ExamView testing software, the
instructor’s manual (includes comprehensive lecture outlines, solutions to all assignments, and
case solutions), PowerPoint presentation slides, video instructor’s manual, and data sets for
cases. The IRCD files were prepared by Laurie Babin of The University of Louisiana–Monroe.

■■ Data sets are provided that match several end-of-chapter exercises and different case analyses.
The data are provided both in Excel files, allowing great flexibility for use of the data with
many programs, and in SPSS files, which are ready to use with either the student or full ver-
sion of SPSS. Students may download the data sets at http://login.cengage.com by clicking on
the textbook and then on “Data Sets.” Data sets are also available on the Instructor’s Resource
CD-ROM.

Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Preface xxiii

■■ Web resources at http://login.cengage.com provide the latest information about what’s
new  and  what’s cool in business research. The instructor’s manual, test bank, PowerPoint
slides, and video cases can also be found here. The site also features links to other research-
related sites.

■■ The Qualtrics Research Suite was built for researchers by researchers. Enclosed with each new
copy of Business Research Methods is an access code that provides access to an extremely elegant
tool that makes survey creation easy enough for an intern while at the same time sophisticated
enough for the most demanding academic or corporate researcher. Qualtrics allows students
to create and deploy surveys, and provides data for analysis. A survey included in the book can
be taken by students and they can access the data collected from adopters of Business Research
Methods from around the globe. Qualtrics is also a perfect solution for instructors who have
students conduct a survey project as part of a term project.

■■ Preloaded with content and available free via PIN code when packaged with new texts,
WebTutor ToolBox pairs all the content of the text’s rich companion website with all the
sophisticated course management functionality of a Blackboard or WebCT product. Instruc-
tors can assign materials (including online quizzes) and have the results flow automatically to
their gradebooks.

Resources for Students

To promote learning and competency, it is also important to provide students with well-crafted
resources. In addition to covering the latest information technology (described above), the ninth
edition includes the following student resources:

■■ The student companion site is located at www.cengagebrain.com. At the CengageBrain.com
home page, search for the ISBN of your textbook (from the back cover of your book) using
the search box at the top of the page. This will take you to the product page where you will
find chapter quizzes, flash cards of key terms, the very best online business research resources
available, and much more.

■■ The Qualtrics Research Suite is also available for students. Qualtrics allows students to create
and deploy surveys, and provides data for analysis.

Acknowledgments

Certainly, no list of acknowledgments will be complete. So many people have assisted in this
project. Chief among these would be the late Bill Zikmund, who carried the weight of this proj-
ect for the first seven editions of Business Research Methods. We are privileged to be able to carry
the project along into what we hope will be many more editions as the premier business research
text. Also, thanks go to members of our team—including graduate assistants Kevin James, David
Shows, Melanie Gardner, and Christina Chung—who have helped with research for this text and
helped share some of the workload on other endeavors, freeing up time to spend on this project.
We would be remiss not to mention the support and patience of our families. All have contributed
to the project and our kids are particularly helpful in judging relevance of vignettes and examples,
as well as contributing photographs. Also, thanks go to the great faculty who mentored us during
our days in the PhD program. Most notable among these are Joseph F. Hair, Jr. and the late Wil-
liam R. Darden.

Thanks also go to all the good people at Cengage Learning who helped make this project pos-
sible. A special thanks to our publisher Mike Roche, and to Emily Nesheim and Elizabeth Lowry.
Also thanks to Charles Emmanuel and Karthik Kannan at diacriTech.They provided tremendous
support and guidance through the writing and production process, including assistance with proof-
ing, permissions, photos, and exhibits.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

xxiv Preface

Many colleagues contributed ideas for this book. While they made suggestions that greatly
enhanced this book, any shortcomings are ours alone. For their insightful reviews of the manu-
script for the ninth or previous editions of Business Research Methods, we would like to thank the
following:

Joe Adamo Jim Grimm
Cazenovia College Illinois State University

David W. Ahrend Christopher Groening
St. Joseph’s College University of Pittsburgh

Gerald Albaum Al Gross
University of Oregon Robert Morris College

Jill Attaway Don Heinz
Illinois State University University of Wisconsin

Stephen Batory Nathan Heller
Bloomsburg University Tarleton State University

William Bearden Craig Hollingshead
University of South Carolina Texas A&M University–Kingsville

Joseph A. Bellizzi Victor Howe
Arizona State University–West University of Kentucky

Carol Bienstock Roy Howell
Radford University Texas Tech University

James A. Brunner Michael R. Hyman
University of Toledo New Mexico State University

F. Anthony Bushman Rhea Ingram
San Francisco State University Columbus State University–Georgia

Thomas Buzas Robert Jaross
Eastern Michigan University Florida International University

Roy F. Cabaniss P. K. Kannan
Huston-Tillotson College University of Maryland

Steven V. Cates Susan Kleine
Averett University Arizona State University

Kathy Chudoba David B. Klenosky
Utah State Purdue University

Dr. Edward D. Conrad C. S. Kohli
Henderson State University California State University–Fullerton

Michael d’Amico Jerome L. Langer
University of Akron Assumption College

Ron Eggers Bob Lauman
Barton College Webster University

H. Harry Friedman James H. Leigh
City University of New York–Brooklyn Texas A&M University

Ron Goldsmith Larry Lowe
Florida State University Bryant College

Larry Goldstein Karl Mann
Iona College Tennessee Technological University

Karen Goncalves Charles R. Martin
Nichols College Wichita State University

David Gourley Marlys Mason
Arizona State University Oklahoma State University

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Preface xxv

Tom K. Massey Harlan Spotts
University of Missouri–Kansas City Western New England College

Sanjay Mishra Wilbur W. Stanton
University of Kansas Old Dominion University

Mark Moore Bruce L. Stern
East Carolina University Portland State University

G. M. Naidu James L. Taylor
University of Wisconsin–Whitewater University of Alabama

Stephanie Noble Gail Tom
The University of Mississippi California State University–Sacramento

Mike Parent Deborah Utter
Utah State University Boston College

Terry Paul Haibo Wang
The Ohio State University Texas A&M International University

Charles Prohaska David Wheeler
Central Connecticut State University Suffolk University

Rick Saucier Richard Wilcox
St. John’s University Carthage College

Alan Sawyer Natalie Wood
University of Florida St. Joseph’s University

Robert Schaffer Margaret Wright
California State University–Pomona University of Colorado

Leon G. Schiffman Clifford E. Young
City University of New York–Baruch University of Colorado–Denver

David Shows Jim Zemanek
Louisiana Tech University East Carolina University

K. Sivakumar Xin Zhao
Lehigh University University of Utah

Mark Speece William Lee Ziegler
Central Washington University Bethune-Cookman College

Thanks to all of the students who have inspired us and reinforced the fact that we made a great
career decision about two decades ago. Thanks also to our close colleagues Rob Baer, Jim Boles,
Ed Bond, Tara’ Lopez, and Dave Ortinau for their continued support and insight.

Barry J. Babin
Louisiana Tech University

Mitch Griffin
Bradley University

Jon C. Carr
Texas Christian University
December 2011

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Part ONE

Introduction

CHAPTER 1

The Role of Business Research

CHAPTER 2

Information Systems and
Knowledge Management

CHAPTER 3

Theory Building

CHAPTER 4

The Business Research Process: An Overview

CHAPTER 5

The Human Side of Business Research:
Organizational and Ethical Issues

© Songquan Deng/Shutterstock

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

The Role of Business
Research

1C H A P T E R LEARNING OUTCOMES

After studying this chapter, you should be able to
1. Understand how research contributes to business success
2. Know how to define business research
3. Understand the difference between basic and applied business

research
4. Understand how research activities can be used to address business

decisions
5. Know when business research should and should not be conducted
6. Appreciate the way that technology and internationalization are

changing business research

Chapter Vignette:

ESPN Hits a Home Run by Leveraging the
Power of its Business Research

T o many people, the abbreviation ESPN says it all The answer was a resounding “Yes!” ESPN partnered
when you are thinking about sports program- with Quaero, a business research company that specializes in
ming. The Entertainment and Sports Program- customer intelligence, to integrate their numerous databases
ming Network was launched in 1979, with its and begin to learn more about how fans use their media,
and what specifically they were looking for. They learned that
famous SportsCenter broadcast followed by a presentation of a enhancing the fan’s experience, regardless of the media, had
bottom-line implications for their own revenue, and the revenue
slow pitch softball game. Over time, ESPN has become a media of their advertisers. ESPN realized that based upon their cus-
tomer research, cross-network promotions and individualized
juggernaut, expanding its sports content and programming

globally, and is a media presence in every possible outlet, includ-

ing television, video, and the Internet. In fact, ESPN.com has

long been one of the most visited sites on the World Wide Web.

It is the passionate sports fan that makes ESPN’s success pos-

sible. Over the years, information about the people who watch

and interact with ESPN content had been slowly accumulating

across their different media outlets. This information included

not just web clicks and television viewership, but also purchases

from ESPN and its affiliated advertising partners. Since this

information was located in separate databases and across dif- © Matthew Jacques/Shutterstock

ferent operating units, it had become difficult to know just who

the fan was, and what they were truly interested in. What could

be done with this considerable business information? Could

ESPN become more knowledgeable (and more profitable) by

learning more about the sports fans who use their content?

2

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•CHAPTER 1  The Role of Business Research   3

advertising content could be built for their sports fans, and that It was business research that made this possible. Gaining
seeing the sports fan as a core asset of the company was criti- intelligence on a critical business function, a function that had
cal to success. In fact, the activities associated with the business global implications, helped create a profitable solution for ESPN.
research they conducted on their customers were not viewed The value of this research for ESPN and its millions of sports
as a cost, but in fact served as a revenue driver to their firm’s fans created a “win-win” for all. ESPN had, in fact, hit a “home
profitability. run” through the use of business research.1

Introduction

The recent history of ESPN demonstrates the need for information in making informed decisions
addressing key issues faced by all competitive businesses. Research can provide that information.
Without it, business decisions involving both tactics and strategies are made in the dark.

We open with two examples illustrating how business decisions require intelligence and how
research can provide that intelligence.The following examples focus specifically on how research
can lead to innovation in the form of new products, improvements in existing goods and services,
or enhancements in employee relationships. Imagine yourself in the role of business manager as
you read these examples and think about the information needs you may have in trying to build
success for your company.

The coffee industry, after years of the “daily grind,” has proved quite dynamic over the past
decade. After years of steady decline, research on consumers’ beverage purchases show that coffee
sales began rebounding around 1995. Telephone interviews with American consumers estimated
that there were 80 million occasional coffee drinkers and 7 million daily upscale coffee drinkers in
1995. By 2001, estimates suggested there were 161 million daily or occasional U.S. coffee drinkers
and 27 million daily upscale coffee drinkers.2

Coffee drinking habits have also changed. In 1991 there were fewer than 450 coffeehouses in
the United States.Today, it seems like places such as Starbucks, Second Cup,The Coffee Bean & Tea
Leaf, and Gloria Jean’s are virtually everywhere in the United States and Canada. There are more
than 17,000 Starbucks locations around the world with the majority of these being wholly owned
stores.3 While locating these outlets requires significant formal research, Starbucks also is researching
new concepts aimed at other ways a coffee shop can provide value to consumers. One concept that
has survived testing thus far is the addition of free, in-store high-speed wireless Internet access.Thus,
you can have hot coffee in a hotspot! After Starbucks baristas began reporting that customers were
asking clerks what music was playing in the stores, Starbucks began testing the sales of CDs contain-
ing their in-store music. In 2009, Starbucks began a bundled pricing promotion offering a breakfast
sandwich or pastry and a tall coffee drink for $3.95 in response to the declining economy. The
research that underlies the introduction of these value-added concepts could first include simply ask-
ing a consumer or a small group of consumers for their reaction to the concept. Survey research and
then actual in-store tests may follow. So, the research underlying such decisions can be multilayered.

Often, business research is directed toward an element of an organization’s internal operations.
For example, DuPont utilizes research techniques to better understand their employees’ needs.
DuPont has 94,000 employees worldwide and 54,000 in the United States.4 The company has
conducted four comprehensive work/life needs assessment surveys of its employees since 1985.
This business research provides the company with considerable insight into employee work/life
behavior and allows DuPont to identify trends regarding employee needs.

The most recent survey found that, as the company’s work force is aging, employees’ child
care needs are diminishing, but elder care needs are emerging.The survey found that 88 percent
of respondents identified themselves as baby boomers.About 50 percent of the employees say that
they have—or expect to have—elder care responsibilities in the next three to four years, up from
40 percent in 1995.

The surveys have shown that DuPont employees want to balance work and family responsibili-
ties, feeling deeply committed to both aspects of their lives.The latest research shows that company
efforts to satisfy these desires have been successful. Employee perception of support from manage-
ment for work/life issues improved from the 1995 study and the results indicate employees feel

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

TSUHRVISEY! Courtesy of Qualtrics.com

As a user of this book, you can
take part in a real business research
survey. In each chapter, we’ll refer
back to some aspect of this survey
to illustrate key points about busi-
ness research. For instance, we
can easily illust­rate different types
of survey approaches by referring
back to some question contained
in the survey. In later chapters,
your instructor will provide you
with a way to access not only the
data from your particular class, but
also data from all users. This data
can be used to illustrate some of the analytical approaches discussed in the closing chapt­ers of the book. For now, your
i­nstructor will provide you with instructions to access the questionnaire via the Internet. As a first step in this process,
simply respond to the items in the questionnaire just as you would to any other research survey.

less stress. Support from colleagues is rated high, and women indicated they now have more role
models.The study also reported that the feeling of management support is directly connected to
employees’ efforts to make the company successful. Employees who use the work/life programs
are willing to “go the extra mile.”

These examples illustrate the need for information in making informed business decisions.
The statistics about coffee demonstrate how research can track trends that may lead to new busi-
ness opportunities. Starbucks’s research also illustrates how research can be used to examine new
concepts in progressively more complex stages, setting the stage for a more successful product
introduction. DuPont’s ability to track employee attitudes allows them to adjust employee benefit
packages to maximize satisfaction and reduce employee turnover. These are only the tip of the
iceberg when it comes to the types of business research that are conducted every day. This chapter
introduces basic concepts of business research and describes how research can play a crucial role in
creating and managing a successful business.

The Nature of Business Research

Business research covers a wide range of phenomena. For managers, the purpose of research is
to provide knowledge regarding the organization, the market, the economy, or another area of
uncertainty. A financial manager may ask,“Will the environment for long-term financing be bet-
ter two years from now?” A personnel manager may ask, “What kind of training is necessary
for production employees?” or “What is the reason for the company’s high employee turnover?”
A marketing manager may ask,“How can I monitor my retail sales and retail trade activities?” Each
of these questions requires information about how the environment, employees, customers, or the
economy will respond to executives’ decisions. Research is one of the principal tools for answering
these practical questions.

Within an organization, a business researcher may be referred to as a marketing researcher, an
organizational researcher, a director of financial and economic research, or one of many other titles.
Although business researchers are often specialized, the term business research encompasses all of
these functional specialties.While researchers in different functional areas may investigate different
phenomena, they are similar to one another because they share similar research methods.

It’s been said that “every business issue ultimately boils down to an information problem.”5 Can
the right information be delivered? The ultimate goal of research is to supply accurate information
that reduces the uncertainty in managerial decision making. Very often, decisions are made with

4

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•CHAPTER 1  The Role of Business Research   5

little information for various reasons, including cost considerations, insufficient time to ­conduct
research, or management’s belief that enough is already known. Relying on seat-of-the-pants
d­ ecision making—decision making without research—is like betting on a long shot at the race-
track because the horse’s name is appealing. Occasionally there are successes, but in the long run,
intuition without research leads to losses. Business research helps decision makers shift from intui-
tive information gathering to systematic and objective investigation.

Business Research Defined

Business research is the application of the scientific method in searching for the truth about busi- business research
ness phenomena.These activities include defining business opportunities and problems, generating The application of the scientific
and evaluating alternative courses of action, and monitoring employee and organizational perfor- method in searching for
mance. Business research is more than conducting surveys.6 This process includes idea and theory the truth about business
development, problem definition, searching for and collecting information, analyzing data, and phenomena. These activities
communicating the findings and their implications. include defining business
opportunities and problems,
This definition suggests that business research information is not intuitive or haphazardly gath- generating and evaluating
ered. Literally, research (re-search) means “to search again.” The term connotes patient study and sci- ideas, monitoring performance,
entific investigation wherein the researcher takes another, more careful look at the data to discover and understanding the
all that is known about the subject. Ultimately, all findings are tied back to the underlying theory. business process.

The definition also emphasizes, through reference to the scientific method, that any infor- applied business research
mation generated should be accurate and objective. The nineteenth-century American humorist Research conducted to address
Artemus Ward claimed, “It ain’t the things we don’t know that gets us in trouble. It’s the things we a specific business decision for
know that ain’t so.” In other words, research isn’t performed to support preconceived ideas but to a specific firm or organization.
test them.The researcher must be personally detached and free of bias in attempting to find truth. basic business research
If bias enters into the research process, the value of the research is considerably reduced.We will Research conducted without
discuss this further Chapter 12. a specific decision in mind
that usually does not address
Our definition makes it clear that business research is designed to facilitate the managerial the needs of a specific
decision-making process for all aspects of the business: finance, marketing, human resources, and organization. It attempts to
so on. Business research is an essential tool for management in virtually all problem-solving and expand the limits of knowledge
decision-making activities. By providing the necessary information on which to base business in general and is not aimed at
decisions, research can decrease the risk of making a wrong decision in each area. However, it is solving a particular pragmatic
important to note that research is an aid to managerial decision making, never a substitute for it. problem.

Finally, this definition of business research is limited by one’s definition of business. Certainly,
research regarding production, finance, marketing, and management in for-profit corporations
like DuPont is business research. However, business research also includes efforts that assist non-
profit organizations such as the American Heart Association, the San Diego Zoo, the Boston Pops
Orchestra, or a parochial school. Further, governmental agencies such as the Federal Emergency
Management Agency (FEMA) and the Department of Homeland Security (DHS) perform many
functions that are similar, if not identical, to those of for-profit business organizations. For instance,
the Food and Drug Administration (FDA) is an important user of research, employing it to address
the way people view and use various food and drugs. One such study commissioned and funded
research to address the question of how consumers used the risk summaries that are included with
all drugs sold in the United States.7 Therefore, not-for-profits and governmental agencies can use
research in much the same way as managers at Starbucks or DuPont. While the focus is on for-
profit organizations, this book explores business research as it applies to all institutions.

Applied and Basic Business Research

One useful way to describe research is based on the specificity of its purpose. Applied business
research is conducted to address a specific business decision for a specific firm or organization.The
opening vignette describes a situation in which ESPN used applied research to decide how to best
create knowledge of its sports fans and their preferences.

Basic business research (sometimes referred to as pure research) is conducted without a ­specific
decision in mind, and it usually does not address the needs of a specific organization. It attempts to
expand the limits of knowledge in general, and as such it is not aimed at solving a particular pragmatic

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

•6    PART ONE Introduction

problem. Basic research can be used to test the validity of a general business theory (one that applies
to all businesses) or to learn more about a particular business phenomenon. For instance, a great
deal of basic research addresses employee motivation. How can managers best encourage workers to
dedicate themselves toward the organization’s goals? From such research, we can learn the factors that
are most important to workers and how to create an environment where employees are most highly
motivated. This basic research does not examine the problem from any single organization’s perspec-
tive. However, Starbucks’ or DuPont’s management may become aware of such research and use it to
design applied research studies examining questions about their own employees.Thus, the two types
of research are not completely independent, as basic research often provides the foundation for later
applied research.

While the distinction between basic and applied is useful in describing research, there are very
few aspects of research that apply only to basic or only to applied research.We will use the term
business research more generally to refer to either type of research.The focus of this text is more
on applied research—studies that are undertaken to answer questions about specific problems or to
make decisions about particular courses of action or policies. Applied research is emphasized in this
text because most students will be oriented toward the day-to-day practice of management, and
most students and researchers will be exposed to short-term, problem-solving research conducted
for businesses or nonprofit organizations.

The Scientific Method

the scientific method All research, whether basic or applied, involves the scientific method. The scientific method is
the way researchers go about using knowledge and evidence to reach objective conclusions
The way researchers go about about the real world. The scientific method is the same in social sciences, such as business, as
using knowledge and evidence in physical sciences, such as physics. In this case, it is the way we come to understand business
to reach objective conclusions phenomena.

about the real world. Exhibit 1.1 briefly illustrates the scientific method. In the scientific method, there are mul-
tiple routes to developing ideas.When the ideas can be stated in researchable terms, we reach the
hypothesis stage. The next step involves testing the hypothesis against empirical evidence (facts
from observation or experimentation).The results either support a hypothesis or do not support a
hypothesis. From these results, new knowledge is generated.

EXHIBIT 1.1 Prior Observation
Knowledge
A Summary of the Scientific
Method

Hypotheses © Cengage Learning 2013

Hypothesis Test
(Observation or
Experimentation)

Conclusion
(New Knowledge)

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•CHAPTER 1  The Role of Business Research   7

In basic research, testing these prior conceptions or hypotheses and then making inferences
and conclusions about the phenomena leads to the establishment of general laws about the phe-
nomena. Use of the scientific method in applied research ensures objectivity in gathering facts and
testing creative ideas for alternative business strategies. The essence of research, whether basic or
applied, lies in the scientific method. Much of this book deals with scientific methodology. Thus,
the techniques of basic and applied research differ largely in degree rather than in substance.

Managerial Value of Business Research

In all of business strategy, there are only a few business orientations (see Exhibit 1.2). A firm can be product-oriented
product-oriented. A product-oriented firm prioritizes decision making in a way that emphasizes
technical superiority in the product. Thus, research that gathers information from technicians and Describes a firm that prioritizes
experts in the field is very important in making critical decisions. A firm can be production-oriented. decision making in a way
A production-oriented firm prioritizes the efficiency and effectiveness of production processes in that emphasizes technical
making decisions. Here, research providing input from workers, engineers, finance, and accounting superiority in the product.
becomes important as the firm seeks to drive costs down. Production-oriented firms are usually
very large firms manufacturing products in very large quantities.The third orientation is marketing-­ production-oriented
oriented,which focuses more on how the firm provides value to customers than on the physical prod-
uct or production process.With a marketing-oriented organization the majority of research focuses Describes a firm that prioritizes
on the customer. Research addressing consumer desires, beliefs, and attitudes becomes essential. efficiency and effectiveness of
the production processes in
We have argued that research facilitates effective management. For example,Yoplait Go-Gurt making decisions.
illustrates the benefit of business research.The company’s consumer research about eating regular
yogurt at school showed that moms and kids in their “tweens” wanted convenience and portabil- marketing-oriented
ity. Some brands, like Colombo Spoon in a Snap, offered the convenience of having a utensil as
part of the packaging/delivery system. However, from whatYoplait learned about consumers, they Describes a firm in which all
thought kids would eat more yogurt if they could “lose the spoon” and eat yogurt anywhere, any- decisions are made with a
time. Moms and kids participating in a taste test were invited to sample different types of on-the-go conscious awareness of their
packaging shapes—long tubes, thin tubes, fat tubes, and other shapes—without being told how to effect on the customer.
handle the packaging. One of the company’s researchers said,“It was funny to see the moms fidget
around, then daintily pour the product onto a spoon, then into their mouths. The kids instantly

Product-Oriented Firm Example EXHIBIT 1.2

Business Orientations

Prioritizes decision making that emphasizes The fashion industry makes clothes in styles
physical product design, trendiness, or and sizes that few can adopt.
technical superiority

Research focuses on technicians and experts in the field.

Production-Oriented Firm Example

Prioritizes efficiency and effectiveness of The U.S. auto industry’s assembly-line process
production processes in making decisions is intent on reducing costs of production as
low as possible.

Research focuses on line employees, engineers, accountants, and other efficiency experts.

Marketing-Oriented Firm Example

Focuses on how the firm provides value to Well-known hotel chains are designed to © Cengage Learning 2013
customers address the needs of travelers, particularly
business travelers.

Research focuses on customers.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

•8    PART ONE Introduction

jumped on it.They knew what to do.”8 Squeezing Go-Gurt from the tube was a big plus. The kids
loved the fact that the packaging gave them permission to play with their food, something parents
always tell them not to do. Based on their research,Yoplait introduced Go-Gurt in a three-sided
tube designed to fit in kids’ lunchboxes. The results were spectacular, with more than $100 million
in sales its first year on the market.Yoplait realized that knowledge of consumers’ needs, coupled
with product research and development, leads to successful business strategies.

As the Yoplait example shows, the prime managerial value of business research is that it pro-
vides information that improves the decision-making process. The decision-making process asso-
ciated with the development and implementation of a business strategy involves four interrelated
stages:

1. Identifying problems or opportunities
2. Diagnosing and assessing problems or opportunities
3. Selecting and implementing a course of action
4. Evaluating the course of action

Business research, by supplying managers with pertinent information, may play an important role
by reducing managerial uncertainty in each of these stages.

Identifying Problems or Opportunities

Before any strategy can be developed, an organization must determine where it wants to go and
how it will get there. Business research can help managers plan strategies by determining the nature
of situations or by identifying the existence of problems or opportunities present in the organiza-
tion. Business research may be used as a scanning activity to provide information about what is
occurring within an organization or in its environment. The mere description of some social or
economic activity may familiarize managers with organizational and environmental occurrences
and help them understand a situation. Consider these two examples:

■■ The description of the dividend history of stocks in an industry may point to an attrac-
tive investment opportunity. Information supplied by business research may also indicate
problems.

■■ Employee interviews undertaken to characterize the dimensions of an airline reservation
clerk’s job may reveal that reservation clerks emphasize competence in issuing tickets over
courtesy and friendliness in customer contact.

Once business research indicates a problem or opportunity, managers may feel that the alterna-
tives are clear enough to make a decision based on their experience or intuition. However, often
they decide that more business research is needed to generate additional information for a better
understanding of the situation.

Diagnosing and Assessing Problems or Opportunities

After an organization recognizes a problem or identifies a potential opportunity, business research
can help clarify the situation. Managers need to gain insight about the underlying factors causing
the situation. If there is a problem, they need to specify what happened and why. If an opportunity
exists, they may need to explore, refine, and quantify the opportunity. If multiple opportunities
exist, research may be conducted to set priorities.

Selecting and Implementing a Course of Action

After the alternative courses of action have been clearly identified, business research is often con-
ducted to obtain specific information that will aid in evaluating the alternatives and in selecting
the best course of action. For example, suppose Harley-Davidson is considering establishing a
dealer network in either China or India. In this case, business research can be designed to gather

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•CHAPTER 1  The Role of Business Research   9

the relevant information necessary to determine which, if either, course of action is best for the
organization.

Opportunities may be evaluated through the use of various performance criteria. For example,
estimates of market potential allow managers to evaluate the revenue that will be generated by each
of the possible opportunities. A good forecast supplied by business researchers is among the most
useful pieces of planning information a manager can have. Of course, complete accuracy in fore-
casting the future is not possible, because change is constantly occurring in the business environ-
ment. Nevertheless, objective information generated by business research to forecast environmental
occurrences may be the foundation for selecting a particular course of action.

Even the best plan is likely to fail if it is not properly implemented. Business research may be
conducted to indicate the specific tactics required to implement a course of action.

Evaluating the Course of Action evaluation research
The formal, objective
After a course of action has been implemented, business research may serve as a tool to tell manag- measurement and appraisal
ers whether or not planned activities were properly executed and if they accomplished what they of the extent a given activity,
were expected to accomplish. In other words, managers may use evaluation research to provide project, or program has
feedback for evaluation and control of strategies and tactics. achieved its objectives or
whether continuing programs
Evaluation research is the formal, objective measurement and appraisal of the extent to which are presently performing as
a given activity, project, or program has achieved its objectives or whether continuing programs projected.
are presently performing as projected. Evaluation research may also provide information about the
major factors influencing the observed performance levels. performance-monitoring
research
In addition to business organizations, nonprofit organizations and governmental agencies Refers to research that
frequently conduct evaluation research. Every year thousands of federal evaluation studies are r­ egularly, sometimes
undertaken to systematically assess the effects of public programs. For example, the U.S. General ­routinely, provides feedback
Accounting Office has been responsible for measuring outcomes of the Employment Opportunity for e­ valuation and control of
Act, the Job Corps program, and Occupational and Safety and Health Administration (OSHA) ­business activity.
programs.
Fun in the snow depends on
Performance-monitoring research is a specific type of evaluation research that regularly, per- weather trends, economic
haps routinely, provides feedback for the evaluation and control of recurring business activity. For outlook, equipment, and
example, most firms continuously monitor wholesale and retail activity to ensure early detection of clothing—all subjects for a
sales declines and other anomalies. In the grocery and retail drug industries, sales research may use business researcher.
the Universal Product Code (UPC) for packages, together with computerized cash registers and
electronic scanners at checkout counters, to provide valuable market-share information to store © Agefotostock/SuperStock
and brand managers interested in the retail sales volume of specific products.

United Airlines’ Omnibus in-flight
survey provides a good example of
performance-­monitoring research for
quality management. United routinely
selects sample flights and administers a
questionnaire about in-flight service, food,
and other aspects of air travel. The Omni-
bus survey is conducted quarterly to deter-
mine who is flying and for what reasons.
It enables United to track demographic
changes and to monitor customer ratings
of its services on a continuing basis, allow-
ing the airline to gather vast amounts of
information at low cost. The information
relating to customer reaction to services
can be compared over time. For example,
suppose United decided to change its
menu for in-flight meals. The  results of
the Omnibus survey might indicate that,

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RESEARCH

SNAPSHOT

Harley-Davidson Goes Abroad © Michael Newman/PhotoEdit

Before Harley-Davidson goes overseas, it must perform to budge on t­ariffs although they were willing to give on
c­ onsiderable research on that market. It may find that emission standards. Instead, ­Harley may direct its effort more
consumers in some countries, such as France or Italy, have toward the U.S. women’s market for bikes. Research shows
a strong preference for more economical and practical that motorcycle ownership among U.S. women has nearly
motorbikes. There, people may prefer a Vespa Wasp to a doubled since 1990 to a­ pproximately 10 percent. Product
Harley Hog! Other times, they may find that consumers research suggests that H­ arley may need to design smaller
have a favorable attitude toward Harley-Davidson and that and sportier bikes to satisfy this market’s desires. Perhaps
it could even be a product viewed as very prestigious. Harley these new products would also be easier to market in India.
recently considered doing business in India based on trend Research will tell.
analysis showing a booming economy. Favorable consumer
opinion and a booming economy were insufficient to justify Sources: “Harley Davidson Rules Out India Foray for Near Future,”
distributing Harleys in India. The problem? Luxury imports Asia-Africa Intelligence Wire (September 2, 2005); “Women Kick It into
would be subject to very high duties that would make them Gear,” Akron Beacon Journal (May 22, 2005); “No Duty Cut on Harley
cost-prohibitive to nearly all Indian consumers and India has Davidson Bikes, India to US,” The Financial Express (February 24, 2008),
strict emission rules for motorbikes. Thus, although research www.financialexpress.com/news/No-duty-cut-on-Harley-Davidson-bikes-
on the market was largely positive, Harley’s research on the India-to-US/276635, accessed August 2, 2011.
political operating environment eventually determined its
decision. Even after considerable negotiation, India refused

‘‘The secret of shortly after the menu changed, the customers’ rating of the airline’s food declined. Such informa-
tion about product quality is extremely valuable, as it allows management to quickly spot trends
success is to know among passengers in many aspects of air travel, such as airport lounges, gate-line waits, or cabin
cleanliness.Then managers can rapidly take action to remedy such problems.
’’something nobody
When Is Business Research Needed?
else knows.

—ARISTOTLE ONASSIS

The need to make intelligent, informed decisions ultimately motivates an organization to engage
in business research. Not every decision requires research.Thus, when confronting a key decision,
a manager must initially decide whether or not to conduct business research.The determination
of the need for research centers on (1) time constraints, (2) the availability of data, (3) the nature of
the decision to be made, and (4) the value of the research information in relation to costs.

Time Constraints

Systematic research takes time. In many instances, management believes that a decision must be
made immediately, allowing no time for research. Decisions sometimes are made without adequate
information or thorough understanding of the business situation. Although making decisions
without researching a situation is not ideal, sometimes the urgency of a situation precludes the
use of research.The urgency with which managers usually want to make decisions conflicts with
researchers’ desire for rigor in following the scientific method.

Availability of Data

Often managers already possess enough data, or information, to make sound decisions without
additional research.When they lack adequate information, however, research must be considered.
This means that data need to be collected from an appropriate source. If a potential source of data
exists, managers will want to know how much it will cost to get the data.

10

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RESEARCH

SNAPSHOT

Business Class Success? © Lars Lindblad/Shutterstock

If you’ve ever checked the price of business-class airfare on coach seats! The result is a business-class-only airline with cross-
a flight overseas, you were probably surprised at the price. Atlantic fares ranging between $1,600 and $3,800, less than
A discounted round-trip coach ticket from Atlanta to Paris in half of traditional business-class fares. Taking the concept to an
peak season often costs just over one thousand dollars. That even smaller scale, Eos configured Boeing 757s into 48-seat all-
same business-class ticket would often cost between five and business-class planes.
ten thousand-dollars! Typically, these flights take place in
larger passenger aircraft such as a Boeing 747 or a Boeing 777. Both Maxjet and Eos received positive reviews, along with
A Boeing 777 can seat up to 450 passengers. However, by some criticisms. For example, Maxjet did not provide power
including three dozen business-class seats, the capacity drops to outlets for laptops at their seats, considered by some to be
under 400 passengers. a “fatal flaw” as far as business-class service is considered.
Despite the apparent appeal, both Maxjet (December 2007)
Thus, it is easy to see that a great deal of research must and Eos (April 2008) declared bankruptcy.
assess both the product design (what service and product attri-
butes make up a business-class experience) and pricing (in both Could more effective business research have determined
coach and business class) to determine the best configuration these were not feasible business ventures? Or, could Maxjet’s
of the aircraft. Research shows that business-class travelers pri- “fatal flaw” of a lack of power outlets been identified? Sound
oritize the comfort of the seat and the ability to be able to lie business research may have enhanced the chance of success of
flat during the flight, the quality of food, and the convenience of these airlines.
boarding as attributes that make up the business-class experience.
Sources: McCarnety, Scott, “Start-Up Airlines Fly Only Business Class,”
In the past few years, a few start-up airlines have been The Wall Street Journal (September 20, 2005), D1; Pitock, Todd,
trying to capitalize on this concept by starting “discount” “­Getting There,” Forbes 176 (September 2005), 30–32; Robertson, David,
business-class-only airlines. Maxjet estimated that consumers “Eos Bankruptcy Filing Signals End to Cheap Executive Travel,” The Times
will exchange a little comfort for a reduction in price. They con- (April 28, 2008).
figured Boeing 737s (smaller than typical trans-ocean carriers)
with 102 business-class seats that will not quite lie flat—and no

If the data cannot be obtained, or it cannot be obtained in a timely fashion, this particular 11
research project should not be conducted. For example, many African nations have never con-
ducted a population census. Organizations engaged in international business often find that data
about business activity or population characteristics that are readily available in the United States
are nonexistent or sparse in developing countries. Imagine the problems facing researchers who
wish to investigate market potential in places like Uzbekistan, Macedonia, or Rwanda.

Nature of the Decision

The value of business research will depend on the nature of the managerial decision to be made.
A routine tactical decision that does not require a substantial investment may not seem to warrant
a substantial expenditure for research. For example, a computer company must update its operator’s
instruction manual when it makes minor product modifications. The research cost of determining
the proper wording to use in the updated manual is likely to be too high for such a minor deci-
sion. The nature of the decision is not totally independent of the next issue to be considered: the
benefits versus the costs of the research. In general, however, the more strategically or tactically
important the decision, the more likely it is that research will be conducted.

Benefits versus Costs

Earlier we discussed some of the managerial benefits of business research. Of course, conduct-
ing research to obtain these benefits requires an expenditure of money. In any decision-m­ aking
s­ituation, managers must identify alternative courses of action and then weigh the value of each

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

•12    PART ONE Introduction

alternative against its cost. Business research can be thought of as an investment alternative.
When deciding whether to make a decision without research or to postpone the decision in order
to conduct research, managers should ask three questions:

1. Will the payoff or rate of return be worth the investment?
2. Will the information gained by business research improve the quality of the managerial deci-

sion enough to warrant the expenditure?
3. Is the proposed research expenditure the best use of the available funds?

For example,TV-Cable Week was not test-marketed before its launch.Although the magazine
had articles and stories about television personalities and events, its main feature was program
listings, channel by channel, showing the exact programs a particular subscriber could receive.To
produce a custom magazine for each individual cable television system in the country required
developing a costly computer system. Because that development necessitated a substantial expen-
diture, one that could not be scaled down by research, conducting research was judged to be an
unwise investment. The value of the potential research information was not positive because its
cost exceeded its benefits. Unfortunately, pricing and distribution problems became so compelling
after the magazine was launched that the product was a failure. Nevertheless, without the luxury
of hindsight, managers made a reasonable decision not to conduct research. They analyzed the cost
of the information relative to the potential benefits of the information. Exhibit 1.3 outlines the
criteria for determining when to conduct business research.

EXHIBIT 1.3

Determining When to Conduct Business Research

Time Availability Nature of the Benefits versus
Constraints of Data Decision Costs
Is sufficient time
available before Is it feasible Is the decision Does the value of the Conduct
a decision will to obtain the of considerable research information Business
be made? Yes data? Yes strategic or tactical Yes exceed the cost of Yes Research
→ → importance? → conducting research? © Cengage Learning 2013
No ↓ →
No ↓
No ↓ No ↓

Do Not Conduct Business Research

Business Research in the Twenty-First Century

Business research, like all business activity, continues to change. Changes in communication tech-
nologies and the trend toward an ever more global marketplace have played a large role in many
of these changes.

Communication Technologies

Virtually everyone is “connected” today. Increasingly, many people are “connected” nearly all
the time. Within the lifetime of the typical undergraduate college senior, the way information
is exchanged, stored, and gathered has been revolutionized completely. Today, the amount
of information formally contained in an entire library can rest easily in a single personal
computer.

The speed with which information can be exchanged has also increased tremendously.
­During the 1970s, exchanging information overnight through a courier service from anywhere in

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RESEARCH

SNAPSHOT

“Jacques” Daniels

Sales of U.S. distilled spirits have declined over the last 10 © Susan Van Etten
to 15 years as more Americans turn to wine or beer as their
­beverage of choice. As a result, companies like Bacardi and 3.  British distilled spirit consumers also like mixed drinks, but
Brown-Forman, producers of Jack Daniels, have pursued busi- they usually partake in bars and restaurants.
ness development strategies involving increased efforts to
expand into international markets. The Brown-Forman budget 4.  In China and India, consumers more often choose coun-
for international ventures includes a significant allocation for terfeit or “knock-offs” to save money. Thus, innovative
research. By doing research before launching the product, research approaches have addressed questions related to
Brown-Forman can learn product usage patterns within a par- the way the black market works and how they can better
ticular culture. Some of the findings from this research indicate: educate consumers about the differences between the real
thing and the knock-offs.
1.  Japanese consumers use Jack Daniels (JD) as a dinner bever-
age. A party of four or five consumers in a restaurant will The result is that Jack Daniels is now sold extensively, in various
order and drink a bottle of JD with their meal. forms, and with different promotional campaigns, outside of
the United States.
2.  Australian consumers mostly consume distilled spirits
in their homes. Also in contrast to Japanese consumers, Sources: Swibel, Mathew, “How Distiller Brown-Forman Gets Rich by
­Australians prefer to mix JD with soft drinks or other Exploiting the Greenback’s Fall—and Pushing Its Brands Abroad,”
mixers. As a result of this research, JD launched a mix- Forbes 175, no. 8 (2005), 152–155.
ture called “Jack and Cola” sold in 12-ounce bottles all
around Australia. The product has been very successful.

the continental United States was heralded as a near miracle of modern technology. Today, we can
exchange information from nearly anywhere in the world to nearly anywhere in the world almost
instantly. Internet connections are now wireless, so one doesn’t have to be tethered to a wall to
access the World Wide Web. Our mobile phones and handheld data devices can be used not only
to converse, but also as a means of communication that can even involve business research data.
In many cases, technology also has made it possible to store or collect data at a lower cost than
in the past. Electronic communications are usually less costly than regular mail—and certainly
less costly than a face-to-face interview—and cost about the same amount no matter how far
away a respondent is from a researcher.Thus, the expressions “time is collapsing” and “distance is
disappearing” capture the tremendous revolution in the speed and reach of our communication
technologies.

Changes in computer technology have made for easier data collection and data analysis. As
we discuss in Chapter 10, many consumer household panels now exist and can be accessed via
the Internet. Thus, there is less need for the time and expense associated with regular mail survey
approaches. Furthermore, the computing power necessary to solve complicated statistical prob-
lems is now easily accessible. Again, as recently as the 1970s, such computer applications required
expensive mainframe computers found only in very large corporations, major universities, and
large governmental/military institutions. Researchers could expect to wait hours or even longer to
get results from a statistical program involving 200 respondents.Today, even the most basic laptop
computers can solve complicated statistical problems involving thousands of data points in practi-
cally a nanosecond.

Global Business Research

Like all business activities, business research has become increasingly global as more and more firms
operate with few, if any, geographic boundaries. Some companies have extensive international

13

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•14    PART ONE Introduction

cross-validate research operations. Upjohn conducts research in 160 different countries. ACNielsen International,
known for its television ratings, is the world’s largest research company.Two-thirds of its business
To verify that the empirical comes from outside the United States.9 Starbucks can now be found in nearly every developed
findings from one culture also country on the Earth. ESPN offers its programming on multiple continents. DuPont has a signifi-
cant presence in all regions of the world.
exist and behave similarly in
another culture. Companies that conduct business in foreign countries must understand the nature of those
particular markets and judge whether they require customized business strategies. For example,
although the 15 nations of the European Union share a single formal market, research shows that
Europeans do not share identical tastes for many consumer products. Business researchers have
found no such thing as a “typical” European consumer; language, religion, climate, and centuries of
tradition divide the nations of the European Union. Scantel Research, a British firm that advises
companies on color preferences, found inexplicable differences in Europeans’ preferences in medi-
cines. The French prefer to pop purple pills, but the English and Dutch favor white ones. Consum-
ers in all three countries dislike bright red capsules, which are big sellers in the United States.This
example illustrates that companies that do business in Europe must research throughout Europe to
adapt to local customs and buying habits.10

Even companies that produce brands that are icons in their own country are now doing
research internationally.The Research Snapshot “ ‘ Jacques’ Daniels” discusses how Brown-Forman,
the parent company of Jack Daniels (the classic American “sour mash” or Bourbon whiskey), is
now interviewing consumers in the far corners of the world.11 The internationalization of research
places greater demands on business researchers and heightens the need for research tools that allow
us to cross-validate research results, meaning that the empirical findings from one culture also exist
and behave similarly in another culture. The development and application of these international
research tools are an important topic in basic business research.12

Overview

The business research process is often presented as a linear, sequential process, with one specific
step following another. In reality, this is not the case. For example, the time spent on each step
varies, overlap between steps is common, some stages may be omitted, occasionally we need to
backtrack, and the order sometimes changes. Nonetheless, some structure for the research process
is necessary.

The book is organized to provide this structure, both within each chapter and in the order
of the chapters. Each chapter begins with a set of specific learning objectives. Each chapter then
opens with a Chapter Vignette—a glimpse of a business research situation that provides a basis of
reference for that chapter. Each chapter also contains multiple Research Snapshots—specific busi-
ness research scenarios that illustrate key points. Finally, each chapter concludes with a review of
the learning objectives.

The book is organized into seven parts. Part One is the Introduction, which includes this
chapter and four others. This chapter provided an introduction to business research. The next
three chapters of the book give students a fuller understanding of the business research environ-
ment. Part Two, Beginning Stages of the Research Process, provides the foundation for business
research, discussing problem definition and qualitative and secondary research.The third section
of the book, Research Designs for Collecting Primary Data, introduces survey research, discusses
observation as a research technique, and provides an overview of experimental research. Mea-
surement Concepts, Part Four of the book, discusses the measurement of research constructs
and questionnaire design. Part Five, Sampling and Fieldwork, describes the process involved in
selecting a research sample and collecting data. Part Six, Data Analysis and Presentation, explains
the various approaches to analyzing the data and describes methods of presentation. The book
concludes with Part Seven, Comprehensive Cases with Computerized Databases, which will be
integrated throughout the first six parts. Exhibit 1.4 provides an overview of the book and the
research process.

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PART •CHAPTER 1  The Role of Business Research   15
6
EXHIBIT 1.4
5
An Overview of Business
4 Research
3
Comprehensive Cases with Computerized Databases Sharing the Results 2 Survey This!
1
Chapter 25 © Cengage Learning 2013

Analyzing the Data

Chapters 19–24

Collecting the Data

Chapter 18

Determining the Sample

Chapters 16 & 17

Designing the Data Collection Instrument

Chapter 15

Understanding Measurement of Research Constructs

Chapters 13 & 14

Research Techniques: Observation and Experimentation

Chapters 8, 9, 10, 11, & 12

Problem Definition, Secondary and Qualitative Research

Chapters 5, 6, & 7

Understanding Business Research

Chapters 1, 2, 3, & 4

SUMMARY

There were six learning objectives in this chapter. After reading the chapter, the student should be
competent in each area described by a learning objective.
1.  Understand how research contributes to business success.  W hile many business decisions
are made “by the seat of the pants” or based on a manager’s intuition, this type of decision making
carries with it a large amount of risk. By first researching an issue and gathering the appropriate
information (from employees, customers, competitors, and the market) managers can make a
more informed decision. The result is less risky decision making.

Research is the intelligence-gathering function in business. The intelligence includes infor-
mation about customers, competitors, economic trends, employees, and other factors that affect
business success. This intelligence assists in decisions ranging from long-range planning to near-
term tactical decisions.
2.  Know how to define business research.  Business research is the application of the scientific
method in searching for truth about business phenomena. The research must be conducted sys-
tematically, not haphazardly. It must be objective to avoid the distorting effects of personal bias.
Business research should be rigorous, but the rigor is always traded off against the resource and
time constraints that go with a particular business decision.
3.  Understand the difference between basic and applied business research.  A pplied business
research seeks to facilitate managerial decision making. It is directed toward a specific managerial
decision in a particular organization. Basic or pure research seeks to increase knowledge of theories
and concepts. Both are important, but applied research is more often the topic in this text.
4.  Understand how research activities can be used to address business decisions.  B usinesses
can make more accurate decisions about dealing with problems and/or the opportunities to pursue
and how to best pursue them. The chapter provides examples of studies involving several dimen-
sions of managerial decision making. Thus, business research is useful both in a strategic and in a
tactical sense.

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16 Part 1:  Introduction

5.  Know when business research should and should not be conducted.  Managers determine
whether research should be conducted based on (1) time constraints, (2) availability of data, (3) the
nature of the decision to be made, and (4) the benefit of the research information versus its cost.
6.  Appreciate the way that technology and internationalization are changing business
research.  Technology has changed almost every aspect of business research. Modern computer
and communications technology makes data collection, study design, data analysis, data reporting,
and practically all other aspects of research easier and better. Furthermore, as more companies
do business outside their own borders, companies are conducting research globally. This places
a greater emphasis on research that can assess the degree to which research tools can be applied
and interpreted the same way in different cultures. Thus, research techniques often must cross-
validate results.

KEY TERMS AND CONCEPTS

applied business research,  5 evaluation research,  9 production-oriented,  7
basic business research,  5 marketing-oriented,  7 the scientific method,  6
business research,  5 performance-monitoring research,  9
cross-validate,  14 product-oriented,  7

QUESTIONS FOR REVIEW AND CRITICAL THINKING

1. Is it possible to make sound managerial decisions without busi- 7. Comment on the following statements:
ness research? What advantages does research offer to the deci- a. Managers are paid to take chances with decisions. Research-
sion maker over seat-of-the-pants decision making? ers are paid to reduce the risk of making those decisions.
b. A business strategy can be no better than the information on
2. Define a marketing orientation and a product orientation. which it is formulated.
Under which strategic orientation is there a greater need for c. The purpose of research is to solve business problems.
business research?
8. List the conditions that help a researcher decide when research
3. Name some products that logically might have been developed should or should not be conducted.
with the help of business research.
9. How have technology and internationalization affected business
4. Define business research and describe its task. research?
5. Which of the following organizations are likely to use business
10. ‘NET How do you believe the Internet has facilitated research? Try
research? Why? How? to use the Internet to find the total annual sales for Starbucks
a. Manufacturer of breakfast cereals and for DuPont.
b. Manufacturer of nuts, bolts, and other fasteners
c. The Federal Trade Commission 11. What types of tools does the researcher need to use more given
d. A hospital the ever increasing internationalization of business?
e. A company that publishes business textbooks
6. An automobile manufacturer is conducting research in an
attempt to predict the type of car design consumers will desire
in the year 2020. Is this basic or applied research? Explain.

RESEARCH ACTIVITIES

1. ‘NET Suppose you owned a jewelry store in Denton, Texas. 2. ‘NET Find recent examples of news articles involving the use of
You are considering opening a second store just like your business research in making decisions about different aspects of
­current store. You are undecided on whether to locate the new business.
store in another location in Denton, Texas, or in Birmingham,
Alabama. Why would you decide to have some research done 3. ‘NET Find an article illustrating an example of an applied
before making the decision? Should the research be conducted? research study involving some aspect of technology. How does
Go to http://www.census.gov. Do you think any of this it differ from a basic research study also focusing on a similar
information would be useful in the research? aspect of technology?

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Information Systems and 2C H A P T E R
Knowledge Management

LEARNING OUTCOMES

After studying this chapter, you should be able to
1. Know and distinguish the concepts of data, information, and

intelligence
2. Understand the four characteristics that describe data
3. Know the purpose of research in assisting business operations
4. Know what a decision support system is and does
5. Recognize the major categories of databases

Chapter Vignette:

Delivery, Data, and UPS

W hen it comes to package delivery, United processes. Using a global ground and air network, the company
Parcel Service (UPS) beats them all. UPS is has the only integrated data collection and management system
the largest package delivery company in that incorporates all levels of services, both global and domes­
the world, both in terms of the number tic, in one pickup and delivery system. With 3,200 network
sites across the globe, and a presence in over 220 countries,
of packages it delivers (almost four billion packages per year),

and the revenue that it generates

(almost 45 billion dollars in 2010).

While it may be easy to think about

UPS as a company focused on the U.S.

m­ arket, it is actually a global corpora­

tion that delivers more packages per

day in international markets than in

the U.S. How does a company of this

size c­ ombine both global services with

local delivery? The answer is through

an intense investment in data man­

agement and integration, with the

goal of leveraging data to meet its

core global business goals, namely

timely and accurate package delivery.

With a yearly technology investment © Bill Aron/PhotoEdit

of over one billion dollars a year, UPS

succeeds by making sure data man­

agement is a key driver of its b­ usiness

17

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

•18    PART ONE Introduction

UPS leverages its data intelligence to create real-world, real-time UPS sees information systems as a core component of its
information throughout its global delivery network. business success.

It is important to remember that t­echnology investment in So, the next time you meet the UPS driver dropping off
data and information services never stops for a company such a package to you, realize that there is another “driver” with
as UPS. From information and tracking a­ pplications for comput­ them—the data behind the driver that helps makes sure that
ers and smartphones, to the use of t­elematics (which incorpo­ you got the right package, at the right time.1
rates global positioning systems with package information),

Introduction

UPS’s focus (and investment) in information illustrates the sometimes sophisticated way in which
modern businesses integrate data into their decision processes. Many of the decisions that used to
be made with guesswork are now supplemented with “intelligence” either automatically delivered
by some computer software or drawn from a data warehouse.

Global delivery companies certainly aren’t alone in this effort. Imagine all the information that
passes through a single Home Depot store each day. Every customer transaction, every empty shelf,
every employee’s work schedule—right down to the schedule to clean restrooms—creates poten-
tially valuable information that can be used by researchers and decision makers. Considering that
Home Depot operates thousands of stores, obviously, Home Depot needs a data depot!

While UPS controls its data storage and management, Home Depot has outsourced the
storage and management of data inventories. In this case, IBM manages the data, allowing it to
be integrated into management strategy and tactics. Data from cash registers, time clocks, shelf
counts, and much more are all compiled, analyzed, and either fed automatically into management
systems or supplied in the form of a research report. In a way, this type of business research is
automatic!2

This chapter discusses knowledge management and the role decision support systems play
in helping firms make informed business decisions. The chapter also introduces the concept
of global information systems and sources of data that exist beyond the walls of any business.
Modern data technology allows businesses to more easily integrate research into strategy and
operations.

Information, Data, and Intelligence

data In everyday language, terms like information and data are often used interchangeably. Research-
Facts or recorded measures of ers use these terms in specific ways that emphasize how useful each can be. Data are simply facts
or recorded measures of certain phenomena (things or events). Information is data formatted
certain phenomena (things). (structured) to support decision making or to define the relationship between two facts. ­Business
­intelligence is the subset of data and information that actually has some explanatory power enabling
information effective managerial decisions to be made. So, there is more data than information, and more infor-
Data formatted (structured) mation than intelligence.
to support decision making
Think again about the thousands upon thousands of unsummarized facts recorded by Home
or define the relationship Depot each day. Each time a product is scanned at checkout, that fact is recorded and becomes data.
between two facts. Each customer’s transactions are simultaneously entered into the store’s computerized inventory
system. The inventory system structures the data in such a way that a stock report can be generated
business intelligence and orders for that store can be placed. Thus, the automated inventory system turns data into infor-
The subset of data and mation. Further, the information from each store’s sales and inventory records may be harvested
by analysts. The analysts may analyze the trends and prepare reports that help Home Depot buyers
information that actually has get the right products into each store or even suggest places for new Home Depot locations.Thus,
some explanatory power the analyst has now completed the transformation of data into intelligence. Exhibit 2.1 helps to
illustrate the distinction between data, information, and intelligence.
enabling effective decisions to
be made.

Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

•CHAPTER 2  Information Systems and Knowledge Management   19

• Products purchased are EXHIBIT 2.1
recorded by the scanner
forming data. Data, Information,
Intelligence

• Inventory systems use © Cengage Learning 2013
the data to create
information.

• The information tells
managers what items
need to be stocked.

• The information also
generates and can even
place orders for more
products to be trucked
to the store.

• Analysts analyze the data
statistically and write
research reports
addressing important
questions such as

What types of trends
exist in customer
purchases, and are
there regional
differences?

Where should new
stores be located?

The Characteristics of Valuable Information

Not all data are valuable to decision makers. Useful data become information and help a business
manager make decisions, and can also become intelligence. Four characteristics help determine
how useful data may be: relevance, quality, timeliness, and completeness.

Relevance

Relevance is a characteristic of data reflecting how pertinent these particular facts are to the situ- relevance
ation at hand. Put another way, the facts are logically connected to the situation. Unfortunately,
irrelevant data and information often creep into decision making. One particularly useful way to A characteristic of data
distinguish relevance from irrelevance is to think about how things change. Relevant data are facts reflecting how pertinent these
about things that can be changed, and if they are changed, it will materially alter the situation. So, particular facts are to the
this simple question becomes important: situation at hand.

Will a change in the data coincide with a change in some important outcome?

Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

STUHRVISEY! Courtesy of Qualtrics.com

Go back and review the questionnaire that
you responded to last chapter. Later, you’ll
be asked to analyze data with the hope of
predicting and explaining some important
o­ utcomes with business implications. Now,
which sec­tions do you think would provide
the most value to a head-hunting firm that
matches employers to potential employees?
What kinds of information will this section
of the survey yield and how might it help the
head-hunting firm?

For example, businesses across the globe are changing the amount and degree of information
they need concerning their shipped packages, information trends that are very relevant to UPS. If
companies become more Internet-focused with this information, than UPS must revise its own
service offerings to incorporate these changing preferences in their business model.

Quality

data quality Data quality is the degree to which data represent the true situation. High-quality data are accu-
rate, valid, and reliable, issues we discuss in detail in later chapters. High-quality data represent
The degree to which data reality faithfully. If a consumer were to replace the product UPC from one drill at Home Depot
represent the true situation. with one from a different drill, not only would the consumer be acting unethically, but it would
also mean that the data collected at the checkout counter would be inaccurate.Therefore, to the
extent that the cash register is not actually recording the products that consumers take out of the
stores, its quality is lowered. Sometimes, researchers will try to obtain the same data from multiple
data sources as one check on its quality.3 Data quality is a critical issue in business research, and it
will be discussed throughout this text.

Timeliness

timeliness Business is a dynamic field in which out-of-date information can lead to poor decisions. Busi-
ness information must be timely—that is, provided at the right time. Computerized information
Means that the data are systems can record events and dispense relevant information soon after the event. A great deal of
current enough to still be business information becomes available almost at the moment that a transaction occurs. Timeliness
means that the data are current enough to still be relevant.
relevant.
Computer technology has redefined standards for timely information. For example, if a busi-
ness executive at Home Depot wishes to know the sales volume of any store worldwide, detailed
information about any of thousands of products can be instantly determined. At Home Depot, the
point-of-sale checkout system uses UPC scanners and satellite communications to link individual
stores to the headquarters’ computer system, from which managers can retrieve and analyze up-to-
the-minute sales data on all merchandise in each store.

Completeness

information completeness Information completeness refers to having the right amount of information. Managers must have
sufficient information about all aspects of their decisions. For example, a company considering
Having the right amount of establishing a production facility in Eastern Europe may plan to analyze four former Soviet-bloc
information. countries. Population statistics, GDP, and information on inflation rates may be available on all four

20

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

RESEARCH Courtesy. Division of Public Affairs, United States Marine
Corps, Department of Defense, USA
SNAPSHOT

RFID Technology Gets Cheaper—Business
Knowledge Grows

Radio frequency identification (RFID) tags have been used by customer consumption. However, the costs of RFIDs make them
large organizations for several years now. The U.S. m­ ilitary impractical for many suppliers.
makes great use of RFIDs in tracking the whereabouts of ­virtually
all kinds of products both big and small. Logistics ­officers can Alien Technology Corporation recently announced a drop in
instantly track the whereabouts of Humvees and MREs (Meals the price of RFID tags. Now, when a company orders a m­ illion
Ready to Eat). Information from the tag is transmitted to or more, the unit cost for an RFID is 12.9¢. Although this is
­computer servers and then directly into a GTN (Global Tracking a “basic” RFID tag, it still can store 96 bits of i­nformation.
Network). Equipment and supplies can then be ordered and A­ nalysts predict that the price of RFID tags will continue to
­dispatched to needed locations with ­minimal human contact. drop. By 2011, the cost for a passive RFID tag continues to
Product consumption (a­ mmunition, food, water, computer range from 9¢ to 25¢, which points to the possibility that the
printers, and so forth) can also be tracked in real time. The use of RFID technology in business research and operations
Marines can know in real time if ­personnel in a desert use more should continue to soar.
food and water than personnel in a jungle.
Sources: Clark, Don, “Alien Cuts Radio ID Tag Price to Spur Adoption by
Walmart is pushing suppliers to adopt the technology. Not Retailers,” The Wall Street Journal (September 12, 2005), D4; Fergueson,
only can Walmart use RFIDs in logistical operations, but the R. B., “Marines Deploy RFID,” e-Week 21 (November 15, 2004), 37; >; http://
potential exists to “go into” consumers’ homes and track how rfid.net/best-practices/43-best-practices/135-passive-rfid-smart-label-buyers-
much and the way consumers actually consume products. guide downloaded August 17, 2011.
Potentially, decision support systems (DSS) could tie ordering to

countries. However, information about unemployment levels may be available for only three of
the countries. If information about unemployment or other characteristics cannot be obtained, the
information is incomplete. Often incomplete information leads decision makers to conduct their
own business research.

Knowledge Management

Who has the best pizza in town? The answer to this question requires knowledge. Indeed, you, as knowledge
a consumer, have stored knowledge about many products. You know the best restaurants, best the-
aters, best bars, and so forth. All of this knowledge helps you make decisions as a consumer. Much A blend of previous experience,
of it is based on personal research involving product trials or searches for information. From an insight, and data that forms
individual’s perspective, knowledge is simply what you have stored in memory. It helps you make organizational memory.
decisions about a variety of things in your life.
knowledge management
Organizations can use knowledge in a similar way. Knowledge is accumulated not just from a
single individual, however, but from many sources. Financial managers, human resource managers, The process of creating an
sales managers, customer reports, economic forecasts, and custom-ordered research all contribute inclusive, comprehensive,
to an organization’s knowledge base. All of this data forms the organization’s memory. From a easily accessible organizational
company’s perspective, knowledge is a blend of previous experience, insight, and data that forms memory, which is often called the
organizational memory. It provides a framework that can be thoughtfully applied when assessing organization’s intellectual capital.
a business problem. Business researchers and decision makers use this knowledge to help create
solutions to strategic and tactical problems. Thus, knowledge is a key resource and a potential
competitive advantage.4

Knowledge management is the process of creating an inclusive, comprehensive, easily accessible
organizational memory, which can be called the organization’s intellectual capital.5 The purpose
of knowledge management is to organize the intellectual capital of an organization in a formally
structured way for easy use. Knowledge is presented in a way that helps managers comprehend and

21

Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

RESEARCH

SNAPSHOT

Are Businesses Clairvoyant? © Peter Widmann/Alamy

A business traveler checks into a Wyndham hotel and finds his adapt the technology may have a much harder time serving their
favorite type of pillow, favorite snacks, and one of his favorite customers. The latest technologies even provide ways for cus­
types of wine waiting upon arrival. Another customer daydreams tomers to voluntarily enter data or block certain data from being
of a recent golf vacation to Hawaii and wishes she could do it transmitted to the companies they do business with.
again. Later that day, an e-mail from Travelocity arrives with a
great package deal to visit the same resort. Yet another con­ Sources: Dewey, A., Rudolf, P., Woolfork, M., Berman, R., Bee, S.,
sumer visits BarnesandNoble.com and a pop-up displays a new P­ artridge, P., & Hotchkiss, D., “The Active Data Warehouse: Where Agile
novel by his favorite author. Using a system called active data Retailers Win by Capitalizing on Time,” Teradata Corporation (EB-4923);
warehousing, the companies integrate data with research results Watson, Richard T., “I Am My Own Database,” Harvard Business Review 82
that allow them to predict consumer preferences and even cycli­ (November 2004), 18–19.
cal usage patterns quite accurately. Modern technology gives
these firms a big advantage in the marketplace. Firms that don’t

act on that information and make better decisions in all areas of business. Knowledge management
systems are particularly useful in making data available across the functional areas of the firm. Thus,
marketing, management, and financial knowledge can be integrated. Recent research demonstrates
how knowledge management systems are particularly useful in new product development and
introduction.6

The firm’s sales force plays a particularly useful role in the knowledge management process.
Salespeople are in a key position to have a lot of knowledge about customers and the firm’s
capabilities. Thus, they are tools both for accumulating knowledge and for turning it into useful
information.7 Market-oriented organizations generally provide both formal and informal methods
through which the knowledge gained by salespeople can be entered into a data warehouse to assist
all decision makers, not just the sales force.

Global Information Systems

global information system Increased global competition and technological advances in interactive media have given rise to
global information systems. A global information system is an organized collection of computer
An organized collection hardware, software, data, and personnel designed to capture, store, update, manipulate, analyze, and
of computer hardware, immediately display information about worldwide business activities. It is a tool for providing past,
software, data, and personnel present, and projected information on internal operations and external activity. Using satellite
designed to capture, store, communications, high-speed microcomputers, electronic data interchanges, fiber optics, data stor-
update, manipulate, analyze, age devices, and other technological advances in interactive media, global information systems are
and immediately display changing the nature of business.
information about worldwide
Consider the chapter vignette presented earlier. At any moment, UPS can track the sta-
business activity. tus of any shipment around the world. UPS drivers use handheld electronic clipboards called
delivery information acquisition devices (DIADs) to record appropriate data about each pickup
or delivery. The data are then entered into the company’s main computer for record-keeping
and analysis. A  satellite telecommunications system allows UPS to track any shipment for a
customer.

Also, as noted in the Research Snapshot “RFID Technology Gets Cheaper—Business Knowl-
edge Grows”, RFIDs can be used to track products and greatly assist a company’s global informa-
tion system.8

With so much diverse information available in a global information system, organizations
have found it necessary to determine what data, information, and knowledge are most useful to
particular business units.

22

Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.