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Contemporary Theories on B&M lecture notes
All four lectures are covered in this document. It contains all information form slides, with pictures and some additional notes form during the lecture.
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Contemporary Theories2021-2022
Lecture notes
Table of Contents
LECTURE 1..................................................................................................................................................... 2
LECTURE 2..................................................................................................................................................... 8
LECTURE 3................................................................................................................................................... 14
LECTURE 4................................................................................................................................................... 20
Made by Sanne van Dijk
,LECTURE 1
(1) Introduction
Any good social scientist knows that the facts do not speak for themselves. Theoretical
structures are critical.
Theorize and think about why things are happening.
Theory belongs to the family of words that includes guess, speculation, supposition,
conjecture, proposition, hypothesis, conception, explanation, model. […] If everything from a
“guess” to a general falsifiable explanation has a tinge of theory to it, then it becomes more
difficult to separate what is theory from what isn’t.
Difference between common sense and science:
- Science: theories and scientific knowledge or models from research methods,
modeling techniques
- Common sense: general views and concepts form daily experience
Main things that are needed for what makes a theory – “perceived reality”
- Explicit
- Measurable
- Generalizable
- Falsifiable
(2) Towards theory
What is a theory
- A theory is a system of statements targeted at describing explaining, and predicting a
real-world phenomenon (Bacharach, 1989).
o It consists of constructs (i.e., concepts) and propositions (i.e., relationships
between constructs) that 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 the making of a product or service. Transaction costs depend on
Asset Specificity, Uncertainty or Frequency.
Theory is about abstraction from the observable.
- The cause and consequence are observable (empirical plane) but the effect leading to
the consequence is unobservable.
o Independent variable = cause of an outcome
o Dependent variable = outcome, consequence
o Hypothesis = effect
A variable is …
- Observable directly (manifest)
- Empirically measurable
- A representation of an abstract construct (latent)
IQ score can be used to measure intelligence, so in this case the IQ score is a
(independent) variable. The GPA is the dependent variable.
, A hypothesis …
- States (expected) relationships between variables
- Is empirically testable
- Is stated in a falsifiable form
A hypothesis specifies the expected relationship between IQ score and grade point average
A construct …
- Is an abstract conceptual entity
- Is inferred from observable actions or states of phenomena
- Needs an operational definition to become measurable
A variable is needed to make the construct measurable
A proposition …
- Is a relationship between constructs
- Is stated in a declarative form (it should be mentioned whether there is a positive or
negative relationship)
- Must be falsifiable
- Explicitly delineates constructs
- Typically introduces causality
Theories are nets cast to catch what we call “the world”; to rationalize, to explain and to
master it.
But be advised …
- There is more than one means of representation for theory:
o Box-and-arrow diagrams
o Mathematical formulae
o Symbolic logic
o Tables
o Prototypes
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