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Summary Contemporary theories
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Lectures Contemporary Theories (EBB098A05) 2019-2020Lecture 1 – Introduction 14-04-2020
Introduction
Everyone has theories: we see something and then we interpret it and make common sense
out of it and understand what is happening. Why did something happen? You see a lot of
interpretation and theories around you. Everyone has an idea. Common sense is the
interpretation of the reality, so everyone has theories.
However, any good scientist knows that the facts do not speak for themselves. Reality is one
thing, but what it means doesn’t speak for itself. Theoretical structures are critical to
understand reality and the why of the observed reality. This why question is very critical: If
we understand it, we can influence the outcome and we can act on it.
General concept: Abstract or generic idea generalized from particular instances.
So concepts are thoughts, notes, ideas. These ideas lead to theories.
Theory belongs to the family of words that includes guess, speculation, supposition,
conjecture, proposition, hypothesis, conception, explanation, model. Behind every idea you
can see a theory. But, if everything is a theory, what is so specific about theories? What are
we interested in?
Difference common sense and science:
Common sense are simple ideas to interpret reality. Science is trying to interpret reality on
the basis of sound theorethical insides. So science is using good theories to understand the
world.
Four key criteria of good theories:
1. Explicit: clear how relationships are expected
2. Measurable: what are you talking about should be clear, it should be testable
3. Generalizable: It should not be applicable to unique cases, but more general
applicable
4. Falsifiable: It should be testable and in principle it should be possible to reject the
theory.
So everyone is interpreting the world, but in science we try to do it in a more strict way. We
are also interpreting the same reality, but we use existing theories, knowledge or models to
understand what we observe. To do that, we use theories that are explicit, measurable,
generalizable and falsifiable.
Towards theory
A theory: is a system of statements targeted at describing, explaining, and predicting a real
world phenomenon (Bacharach 1989)
• It consists of constructs (i.e., concepts) and propositions (i.e., relationships between
constructs)
• Collectively presents a logical, systematic, and coherent explanation of the real-world
phenomenon within certain boundaries
Example: Transaction cost theory stipulates that high transaction costs encourage firms to
insource. Transaction costs (concept) depend on asset specificity, uncertainty or frequency
(concepts) → proposition
,A theory is about abstraction from the observable. We have to distinct the theoretical plane
from the empirical plane. The empirical plane is more the testing of the theoretical insides.
Empirical plane:
There is a certain consequence or
problem and a cause for this problem or
consequence. This causes has an
effect, this leads to the consequence.
So, there is a relationship between a
cause and a consequence. In theoretical
theory: we call the cause the
independent variable, the consequence
the dependent variable. The effect we
call the hypothesis.
So, scientific thinking uses variables. A
variable is observable (manifest),
measurable and is a representation of
an abstract construct (latent).
There is an hypothesis between the independent an dependent variable. The hypothesis
states the relationships, it is empirically testable and is stated in a falsifiable form.
So, the empirical plane is derived from what we observe in the real world. So, this is more
comparable to common sense.
Theoretical:
We try to understand the relationship between variables. To understand this, we have to
understand the why. Why is something happening? Therefore, we need theories and
constructs. From the constructs we can derive the variables. We first need a theory why the
relationships are happening. The variables of the empirical plane can be measured by some
constructs.
Constructs is an abstract conceptual entity. It is inferred from observable actions or states of
phenomena and it needs an operational definition to become measurable.
So, if you talk about a construct you have to define what it is. You have to do this properly, in
a framework of existing theories. If something isn’t measurable directly, we talk about
constructs.
In theorizing, we use theories and constructs. We derive variables from the construct to
make the theory measurable. But all this is done from the basis of the theorethical plane. By
doing this you can find out the relationships between constructs, which we call propositions.
Different from hypothesis: it is derived from the theorethical plane, the hypothesis is much
more specific.
Proposition is a relationship between constructs, that is stated in a declarative form. It must
be falsifiable and it explicitly delineates construts. Typically, a proposition introduces
causality.
,Article Whetten (1989)
Same model, but more simple.
But, there is more than one meaning for the word theory.
We used positivist research measure. But there are more ways, like box-and-arrow
diagrams, mathematical formulae, symbolic logic, tables and narrative methods. The richer
the description, the less precise and vice versa. However, in the first stage of a field study a
narrative method might be usefull, because it provides more information.
Different representation might also help to mature the theory. Evidence and reasoning will
help any form of theory to become meaningful.
Article Shapira (2011)
In many articles the word theory is used, but it is not actually theory that is used. A theory is
a specific relationship, it is not a set of theories, like management theories.
Next to theories, we also have models and frameworks. A model derives a prediction based
on specified assumption and is precize and falsifiable. A frameworker provides structure to
organize observations and describes this struture in a precise and clear manner. The
difference between a model and a theory is that a model doesn not need to provide an
explanation. It is not true or false, but it rather has a kind of usefullness. The difference
between a framework and a model and theory is that it does not make testable predictions, it
only organizes empirical observations. Framework therefore organizes, a model predicts and
a theory explains. A framework may lead to a model and this in turn might lead to a theory.
, In analyzing we look at relationships, but it is not causal. It does not explain why relationships
occur. With explanation, we want to understand the relationship. We want to understand the
why. Prediction is generally done using a model. A prediction doesn’t address the why. So, in
a model a prediction is important, but not the explanation. In the next step you use a theory
to explain and predict. In design and action you use a model again. It is more making a
framework and design to solve a problem, it doesn’t look at the why.
Design and action
Design science is research that seeks to explore new solution alternatives to solve problems,
that seeks to explain this explorative process and that seeks to improve the problem solving
processes. In design science, the researcher is developing a means to an end; an artifact to
solve a problem.
Design science makes use of existing theories to understand specific situations, in particular
problems in organizations.
In management, theory building and design science are very important. Design science
especially in practice, to solve certain, particular problems. Explanatory theories are used
more to find answers to problems that can be generalized more.
Exploratory research Explanatory research
(design science) (Theoretical science)
Phenomenon Needs to be created by Out there
researcher
Data Created, collected and Collected and analyzed
analyzed
End product Solving problem Explanatory
theory/prediction
Knowledge interest Pragmatic: to improve Cognitive/theoretical
practice
Disciplinary basis Engineering, fundamentally Natural and social sciences,
multidisciplinary unidisciplinary
Table 1. Design science versus theoretical science
Traditional behavioral research: Scientist should not interfere with the setting being studied
and tries not to alter the natural course of events in order to build good explanatory and
predictive theory → explanatory is key
Design and action research: Scientist consciously intervenes into the natural setting and
alters the course of events to study the effect of her/his interventions and creates respective
artifacts → problem-solving/exploratory is key
There are some traditional behavioral researches that claim that what they do is completely
different from design science. They state: if you want to understand problems in businesses,
you have to use theories from traditional research and solve problems trough these theories.
On the other hand, we have the design scientists: ‘In real organizations this will never work,
organizations have unique problems. If you want to solve this, you should not apply general
research, but you have to understand the problem. After that you have to look for unique
solutions. There is a bridge between the two approaches.
Scientific insight can be used as input to build better solutions: theory can be used as an
input to problem solving (traditional) or theories can raise as a result of problem solving
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