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Chapter 3—Theory Building

TRUE/FALSE

1. A theory is an abstract, untestable explanation of some events.

ANS: F
A theory is testable.

PTS: 1 REF: p. 39 NAT: AACSB: Reflective Thinking

2. Understanding and predicting are the two purposes of theory.

ANS: T PTS: 1 REF: p. 39


NAT: AACSB: Reflective Thinking

3. Risk aversion is an example of a construct.

ANS: T PTS: 1 REF: p. 40


NAT: AACSB: Reflective Thinking

4. As concepts become more abstract, the easier it is to measure them.

ANS: F
As concepts become more abstract, they are less amenable to measurement.

PTS: 1 REF: p. 40 NAT: AACSB: Reflective Thinking

5. The basic or scientific business researcher operates at two levels: on the abstract level of concepts
(hypotheses) and on the empirical level of variables (propositions).

ANS: F
The abstract level is represented by propositions, and the empirical level represents hypotheses.

PTS: 1 REF: p. 40 NAT: AACSB: Reflective Thinking

6. The term inherent construct refers to a concept that is not directly observable or measurable.

ANS: F
This is a latent construct.

PTS: 1 REF: p. 41 NAT: AACSB: Reflective Thinking

7. A concept is a formal statement explaining some outcome.

ANS: F
This is a hypothesis.

PTS: 1 REF: p. 42 NAT: AACSB: Reflective Thinking

8. Examining a research hypothesis against reality using data is done through empirical testing.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
ANS: T PTS: 1 REF: p. 42
NAT: AACSB: Reflective Thinking

9. When the data are consistent with a hypothesis, we say the hypothesis is proven to be true.

ANS: F
We say the hypothesis is supported.

PTS: 1 REF: p. 42 NAT: AACSB: Reflective Thinking

10. The process of identifying the actual measurement scales to asses the variables of interest is known as
concretizing.

ANS: F
The process is known as operationalizing.

PTS: 1 REF: p. 42 NAT: AACSB: Reflective Thinking

11. In most scientific situations there are alternative theories to explain certain phenomena.

ANS: T PTS: 1 REF: p. 43


NAT: AACSB: Reflective Thinking

12. Deductive reasoning derives a conclusion about a specific instance based on general knowledge.

ANS: T PTS: 1 REF: p. 44


NAT: AACSB: Reflective Thinking

13. Theories are derived from deductive reasoning and selective reasoning.

ANS: F
Theories are derived from deductive reasoning and inductive reasoning.

PTS: 1 REF: p. 44 NAT: AACSB: Reflective Thinking

14. The scientific method is a set of prescribed procedures for establishing and connecting theoretical
statements about events, for analyzing empirical evidence, and for predicting events yet unknown.

ANS: T PTS: 1 REF: p. 45


NAT: AACSB: Reflective Thinking

15. The first step in the scientific method is to formulate concepts and propositions.

ANS: F
This is the second step. The first step is the assessment of relevant existing knowledge of a
phenomenon.

PTS: 1 REF: p. 45 NAT: AACSB: Reflective Thinking

MULTIPLE CHOICE

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
1. Psychologists explain that humans’ better recall of information that is presented visually compared to
information presented verbally is due to the fact that the information is stored both visually and
verbally. Because it is stored using this dual-coding process, it is easier to retrieve from memory. This
formal logical explanation of this phenomenon is an example of a(n):
a. theory
b. construct
c. operationalization
d. latency
ANS: A PTS: 1 REF: p. 39
NAT: AACSB: Reflective Thinking

2. What are the two goals of theory?


a. speculation and confirmation
b. understanding and predicting
c. deducting and inducting
d. abstraction and concretization
ANS: B PTS: 1 REF: p. 39
NAT: AACSB: Reflective Thinking

3. Leadership, which is a generalized idea about a human trait, is an example of a(n):


a. hypothesis
b. proposition
c. concept
d. abstraction
ANS: C PTS: 1 REF: p. 40
NAT: AACSB: Reflective Thinking

4. The organization of concepts in sequence from the most concrete and individual to the most general is
called the:
a. conceptual hierarchy
b. ladder of abstraction
c. conceptual progression
d. operationalization of constructs
ANS: B PTS: 1 REF: p. 40
NAT: AACSB: Reflective Thinking

5. In theory development, which of the following is the level of knowledge expressing a concept that
exists only as an idea or a quality apart from an object?
a. empirical level
b. primary level
c. conceptual level
d. abstract level
ANS: D PTS: 1 REF: p. 40
NAT: AACSB: Reflective Thinking

6. At what level do we “experience” reality?


a. empirical level
b. abstract level
c. primary level
d. secondary level

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
ANS: A PTS: 1 REF: p. 40
NAT: AACSB: Reflective Thinking

7. Attitude is a concept that is not directly observable or measurable but is measured through proxy
measures. This is an example of a(n):
a. latent construct
b. empirical construct
c. secondary construct
d. higher order construct
ANS: A PTS: 1 REF: p. 41
NAT: AACSB: Reflective Thinking

8. Which of the following is a statement explaining the logical linkage among certain concepts by
asserting a universal connection between concepts?
a. hypothesis
b. proposition
c. construct
d. theory
ANS: B PTS: 1 REF: p. 42
NAT: AACSB: Reflective Thinking

9. “Employees dressed professionally will generate greater sales than those dressed casually” is an
example of a:
a. theory
b. proposition
c. hypothesis
d. variation
ANS: C PTS: 1 REF: p. 42
NAT: AACSB: Reflective Thinking

10. When a researcher collects data to test a theory, what is this testing called?
a. confirmatory testing
b. empirical testing
c. conceptualization
d. deductive testing
ANS: B PTS: 1 REF: p. 42
NAT: AACSB: Reflective Thinking

11. Which of the following is an empirical assessment of a concept?


a. hypothesis
b. variable
c. construct
d. item
ANS: B PTS: 1 REF: p. 42
NAT: AACSB: Reflective Thinking| AACSB: Technology

12. The process of identifying the actual measurement scales to assess the variables of interest is called:
a. operationalizing
b. synthesizing
c. verifying

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
d. conceptualizing
ANS: A PTS: 1 REF: p. 42
NAT: AACSB: Reflective Thinking

13. _____ is the logical process of deriving a conclusion about a specific instance based on a known
general premise or something known to be true.
a. Deductive reasoning
b. Inductive reasoning
c. Latent reasoning
d. Abstract reasoning
ANS: A PTS: 1 REF: p. 44
NAT: AACSB: Reflective Thinking

14. If all the trees a person has seen in his life have been green and therefore he concludes that all trees are
green, which type of reasoning is he using?
a. deductive reasoning
b. inductive reasoning
c. generalized reasoning
d. conceptual reasoning
ANS: B PTS: 1 REF: p. 44
NAT: AACSB: Reflective Thinking

15. A researcher is testing the hypothesis stating a positive relationship between consumers’ attitudes
toward a brand and their intention to purchase that brand. To test this, she uses a set of prescribed
procedures for establishing and connecting theoretical statements about these two constructs, for
analyzing empirical evidence gathered through surveys, and for predicting future purchases. This
researcher is following the:
a. hypothetical method
b. scientific method
c. deductive method
d. inductive method
ANS: B PTS: 1 REF: p. 45
NAT: AACSB: Reflective Thinking

16. Which of the following is a step involved in the application of the scientific method?
a. statement of hypotheses
b. formulation of concepts and propositions
c. analysis and evaluation of data
d. all of the above
ANS: D PTS: 1 REF: p. 45
NAT: AACSB: Reflective Thinking

17. What is the LAST step in the application of the scientific method?
a. assessment of relevant existing knowledge of a phenomenon
b. proposal of an explanation of the phenomenon and statement of new problems raised by
the research
c. design of research to test the hypothesis
d. acquisition of meaningful empirical data
ANS: B PTS: 1 REF: p. 45
NAT: AACSB: Reflective Thinking
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
COMPLETION

1. A formal, logical explanation of some events that includes predictions of how things relate to one
another is known as a(n) ____________________.

ANS: theory

PTS: 1 REF: p. 39 NAT: AACSB: Reflective Thinking

2. The two purpose of theory are understanding and ____________________.

ANS: predicting

PTS: 1 REF: p. 39 NAT: AACSB: Reflective Thinking

3. ____________________ are the building blocks of theory.

ANS: Concepts

PTS: 1 REF: p. 40 NAT: AACSB: Reflective Thinking

4. The organization of concepts in sequence from the most concrete and individual to the most general is
called the ____________________.

ANS: ladder of abstraction

PTS: 1 REF: p. 40 NAT: AACSB: Reflective Thinking

5. In theory development, the level of knowledge expressing a concept that exists only as an idea or a
quality apart from an object is the ____________________ level.

ANS: abstract

PTS: 1 REF: p. 40 NAT: AACSB: Reflective Thinking

6. A concept that is not directly observable or measurable, but can be estimated through a proxy measure
is known as a(n) ____________________ construct.

ANS: latent

PTS: 1 REF: p. 41 NAT: AACSB: Reflective Thinking

7. Statements explaining the logical linkage among certain concepts by asserting a universal connection
between concepts are called ____________________.

ANS: propositions

PTS: 1 REF: p. 42 NAT: AACSB: Reflective Thinking

8. A(n) ____________________ is a formal statement explaining some outcome and is testable.

ANS: hypothesis
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
PTS: 1 REF: p. 42 NAT: AACSB: Reflective Thinking

9. ____________________ involves applying statistics to data to test hypotheses.

ANS: Empirical testing

PTS: 1 REF: p. 42 NAT: AACSB: Reflective Thinking

10. When the data are inconsistent with a hypothesis, we say the hypothesis is ____________________.

ANS: not supported

PTS: 1 REF: p. 42 NAT: AACSB: Reflective Thinking

11. If it is hypothesized that level of compensation influences workers’ intention to stay with a company,
level of compensation and intentions to stay are examples of ____________________.

ANS: variables

PTS: 1 REF: p. 42 NAT: AACSB: Reflective Thinking

12. A researcher is using income, education, and zip code as an indication of social class. This process of
identifying the actual measurement scales to assess social class is called ____________________.

ANS: operationalizing

PTS: 1 REF: p. 42 NAT: AACSB: Reflective Thinking

13. Going from the general to the specific is done in ____________________. reasoning.

ANS: deductive

PTS: 1 REF: p. 44 NAT: AACSB: Reflective Thinking

14. ____________________. reasoning establishes a general proposition on the basis of observation of


particular facts.

ANS: Inductive

PTS: 1 REF: p. 44 NAT: AACSB: Reflective Thinking

15. A set of prescribed procedures for establishing and connecting theoretical statements about events, for
analyzing empirical evidence, and for predicting events yet unknown is called the
____________________.

ANS: scientific method

PTS: 1 REF: p. 45 NAT: AACSB: Reflective Thinking

ESSAY

1. What is a theory, what are its goals, and why is it useful to business researchers?
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
ANS:
A theory is a formal, logical explanation of some events that includes predictions of how things relate
to one another. The two purposes of theory are understanding and predicting. Accomplishing the first
goal allows the theorist to gain an understanding of the relationship among various phenomena. Thus
a theory enables us to predict the behavior or characteristics of one phenomenon from the knowledge
of another phenomenon.

PTS: 1 REF: p. 39
NAT: AACSB: Reflective Thinking| AACSB: Communication

2. Compare and contrast the terms concept and variable and give an example of each.

ANS:
A concept (or construct) is a generalized idea about a class of objects, attributes, occurrences, or
processes that has been given a name. Supervisory behavior or risk aversion are examples of concepts.
A variable is anything that may assume different numerical values and is the empirical assessment of a
concept. For example, supervisory behavior may be assessed through variables such as amount of
time spent training employees, number of employees supervised, and degree to which employees are
involved in decision-making.

PTS: 1 REF: p. 40| p. 42


NAT: AACSB: Reflective Thinking| AACSB: Communication

3. How does a hypothesis differ from a proposition?

ANS:
Propositions are statements explaining the logical linkage among certain concepts by asserting a
universal connection between concepts. A hypothesis is a formal statement of an unproven
proposition that is empirically testable.

PTS: 1 REF: p. 42
NAT: AACSB: Reflective Thinking| AACSB: Communication

4. Discuss how theories are developed.

ANS:
At the abstract, conceptual level, a theory may be developed with deductive reasoning by going from a
general statement to a specific assertion. Deductive reasoning is the logical process of deriving a
conclusion about a specific instance, based on a known general premise or something known to be
true. At the empirical level, a theory may be developed with inductive reasoning, which is the logical
process of establishing a general proposition on the basis of observation of particular facts.

PTS: 1 REF: p. 44
NAT: AACSB: Reflective Thinking| AACSB: Communication

5. List the steps involved in the application of the scientific method.

ANS:
1. Assessment of relevant existing knowledge of a phenomenon
2. Formulation of concepts and propositions
3. Statement of hypotheses
4. Design of research to test the hypotheses
5. Acquisition of meaningful empirical data
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.
6. Analysis and evaluation of data
7. Proposal of an explanation of the phenomenon and statement of new problems raised by the
research

PTS: 1 REF: p. 45
NAT: AACSB: Reflective Thinking| AACSB: Communication

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in
whole or in part.