TESTING OF HYPOTHESIS Hypotheses are tentative explanations of a principle operating in nature.

Types of hypotheses Research hypotheses Statistical hypotheses Substantive hypotheses Null hypothesis

Alternate hypothesis

GOAL of hypothesis testing: is not to question the computed value of the sample statistic but to make a judgment about the difference between that sample statistic and a hypothesized population parameter. A research hypothesis is a statement of what the researcher believes will be the outcome of an experiment or a study. Before studies are undertaken, business researchers often have some idea or theory based on experience or previous work as to how the study will turnout. However, to formally test research hypothesis, it is generally best to state them as statistical hypothesis. Statistical hypothesis Suppose a business researcher want to prove the research hypothesis that older workers are more loyal to a company. A loyalty survey instrument is either developed or obtained. If this instrument is administered to both older and younger workers , how much higher do older workers have to score on the loyalty instrument than younger workers to prove the research hypothesis ? What is proof threshold? Instead of attempting to prove or disprove research hypothesis directly in this manner , business researchers convert their research hypothesis to statistical hypothesis and then test statistical hypothesis using standard procedures. Generally, the null hypothesis states that the null condition exists ; that is , there is nothing new happening , the old theory is still true , the old standard is correct, and the system is in control. The assumption we wish to test is called the null hypothesis and is symbolized H0 . The term null hypothesis arises from earlier agricultural and medical application of statistics. In order to test the effectiveness of a new fertilizer or drug , the tested hypothesis ( the null hypothesis ) was that it had no effect , that is , there was no difference between treated and untreated samples. The alternate hypothesis, states that the new theory is true, there are new standards , the system is out , the system is out of control , and/or something is happening .

 In hypothesis testing process, it is always assumed that the null hypothesis is true at the beginning of the study. It is assumed that the process is in control(no problem), that the market share has not increased.