Lecture 7

Theoretical Framework,
Conceptual Framework &
Hypotheses Development
 Outline
• Framework Development
• Theoretical Framework & Conceptual Framework
• Variables
• Dependent, Independent, Moderating, Intervening
• Hypotheses Development
• Definitions of Hypothesis
• Theory vs. Hypothesis
• The Role or Importance of Hypothesis
• Types of Hypothesis
• Characteristics of Hypothesis
• Sources of Hypothesis
• Formulating the Hypothesis
• Testing the Hypothesis
 Framework Development
— Framework development refers to
conceptual and theoretical framework.
◦ Both frameworks are important to provide the
direction of research and to ascertain the
compliance to research questions/objectives.

— A framework offers a model of how to

make logical sense of the relationships
among the several factors that have
been identified as important to the
problem.
— Theories are formulated to explain,
predict, and understand phenomena
and, in many cases, to challenge and
extend existing knowledge, within the
limits of the assumptions.

— The theoretical framework is the structure

that can hold or support a theory of a
research study (foundation on which the
entire research is based).

— The theoretical framework introduces and

describes the theory which explains why
the research problem under study exists.
—A theoretical framework consists of concepts,
definitions, and existing theory/theories that are
used for your particular study/research topic.

—The theoretical framework is not something that is

found readily available in the literature.
◦ We must review pertinent literature for theories and
analytic models that are relevant to the research problem
or issues.
◦ The selection of a theory should depend on its
appropriateness, ease of application, and explanatory
power.
—The theoretical framework strengthens the study in
the following ways.
1. The theoretical framework connects the
researcher to existing knowledge.
2. Guided by a relevant theory, researcher able to
formulate hypothesis and choose appropriate
research methods.
3. Articulating the theoretical assumptions of a
research study forces the researcher to address
questions of “why” and “how”
– allows the researcher to move from simply describing a
phenomenon observed to generalizing about various
aspects of that phenomenon.
4. Having a theory helps the researcher to identify
the limits to those generalizations.
– A theoretical framework specifies which key variables
influence a phenomenon of interest.
– It provide guidance to the researcher to examine how
the relationship between the key variables might
differ and under what circumstances.
To stimulate and provide
direction research

To predict and Importance or To test

control situations Purpose theories

To establish orderly To make research findings

connections between meaningful and
observations & facts generalizable
 Strategies for Developing the
Theoretical Framework
1. Developing the Framework

2. The Components of the Theoretical

Framework

3. Purpose of Theoretical Framework

 Examine your research title & research problem ( anchor the entire
study & forms the basis for the construction of the theoretical framework

Brainstorm on what you consider to be the key variables in your research

Review related literature to find answers to your research question

List the constructs and variables that might be relevant to your study.
Group these variables into independent and dependent.

Review the key theories and choose the theory/theories that can best
explain the relationships between the key variables in your study.

Discuss the assumptions or propositions of this theory and point out

their relevance to your research
— There are 3 basic features that should be
incorporated in any theoretical framework:
◦ Key variables considered relevant to the study
should be clearly identified & discussed.
◦ Should state how the variables are related.
◦ Should be an indication as to whether the relationships
would be positive or negative (based on findings from
literature).
◦ There should be clear explanation of why we would
expect the relationships to exist.
◦ A schematic diagram of the theoretical framework
should be given so that the theoretical
relationships can easily seen and understood.
 To stimulate
research

To predict and To test

control situations Purpose theories

To establish orderly
To make research
connections
between findings meaningful
and generalizable
observations & facts
 Conceptual Framework
— After formulating the theoretical framework, the
researcher has to develop the conceptual
framework of the study.
— A concept is an image or symbolic representation
of an abstract idea.
— While the theoretical framework is the theory on
which the study is based, the conceptual
framework is the operationalization of the theory.
— Conceptual framework is a logically developed and
described network of associations among concepts
or variables deemed relevant to the research
problem(identified through literature search).
 Conceptual Framework
— Consists of concepts that are placed within a
logical and sequential design.

— Represents less formal structure and used for

studies in which existing theory is inapplicable or
insufficient.

— Based on specific concepts and propositions

derived from empirical observation and intuition.

— May deduce theories from a conceptual framework.

— Conceptual framework represents:
√ the researcher’s own position on the problem.

√ It allows the researcher to construct their own

terms and to clarify those being used in the
study.

√It gives direction to the study.

√ Able to show the relationships of the different

concepts.

√It may be an adaptation of a model used in a

previous study, with modifications to suit the
specific inquiry.
 Purposes of Conceptual Framework
— To clarify concepts and propose
relationships among the concepts in a
study.

— To provide a context for interpreting the

study findings.

— To explain observations.

— To encourage theory development that is

useful to practice.
— Theoretical Framework and Conceptual Framework
may be represented as models:
◦ A model is a symbolic representation that helps
the researcher to express abstract concepts and
relationships easily, using minimal words.

◦ A model can be represented schematically or

mathematically.
– Schematic model - conveys concepts and
propositions through the use of boxes, arrows or
other symbols.
– Mathematical or statistical model - conveys
concepts and propositions through the use of
letters, number and mathematical symbols.
— How should the conceptual framework
be formulated?
1. Cite your conceptual framework or
paradigm
2. Identify your variables
3. Point out the dependent and
intervening variables
4. Show the direction of the study.
 First theoretical studies – go back to Adam Smith, Stuart
Mill & Torrens, but Ohlin (1933) – first to address the
issue
Hymer (1960) – MNFs behaviour determine the
market structure
Kindleberger (1969) – modify Hymer’s analysis –
market structure determine the conduct of firm
Caves (1971)- similar analysis to Kindleberger analysis
Theories on the
Buckley & Casson (1976 & 1981) – transaction costs
determinants of
internalization
FDI/MNCs
expansion Dunning OLI Framework (1977, 1980, 1988)

Vernon (1966) – product life cycle model

Markusen & Venables (1995) – compared the

importance of MNCs to foreign trade
Graham (1978, 1998, 2000) - production
internationalization
Cantwell (2000) – technological accumulation concept
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Examples of Theoretical/Conceptual
Framework
Concepts to Variables
 Recap Stage 3 in
economic research
Concepts to Variables to Indicators
• Research normally begins at the
theoretical level
• Concepts developed from theory
(inductive method)
• Should have general agreement on
what a concept means – definition.
• Conceptualization is the process of
refining the definition of a concept to
allow for operationalization.
• ***Operationalization of the concept
allows us to observe the real world –
meaning moving from abstract
concepts to variables that can be
observed and measured.
 Variables
— A variable “is a symbol of an event, act,
characteristics, trait or attribute that can
be measured and to which we assign
categorical values” (Cooper & Schindler,
2008, p.61).

— There are four main types of variables:

◦ Dependent variables (√)
◦ Independent variables (√)
◦ Moderating variables/ Interacting variables(√)
◦ Intervening variables
 Variables…..
Dependent variable
— Is the variable of primary interest to the
researcher.
— It measures the effect of the independent
variables.
— It is also the outcome of the change (s)
brought about by changes in an independent
variable.
— Is variable that is the effect or is the result or
outcome of another variable (also referred to
as outcome variable or effect variable).
 Variables…..
Independent variable
— The cause variable, or the one that identifies
forces or conditions that act on something
else.
— Is one that influences the dependent variable
in either positive or negative way.

Economic
FDI
Growth

Independent variable Dependent variable

 Variables…..
Moderating variable/Interacting variable
— is one that has a strong contingent effect on the
independent variable-dependent variable relationship.
— The presence of a third variable (MV) modifies the original
relationship between the independent & dependent variable.
— Example:
— a strong relationship has been observed between the quality
of library facilities (X) and students performance (Y).
— Although this relationship is supposed to be true generally, it
is contingent on the interest of the students.
◦ Meaning that only those students who have the interest to use the
library will show improved performance in their studies.
— In this relationship students’ interest is
moderating/interacting variable, i.e. which moderates the
strength of the association between X and Y variables
 Variables…..
— Moderating/interacting variable:
◦ A variable that influences or moderates, the
relation between two other variables
(independent and independent) and thus
produces an interaction effect.

FDI Economic Growth

Institutional quality

Independent Moderating/ Dependent

variable interacting variable variable
 Variables…..
Intervening variable:
— A basic causal relationship requires only
independent and dependent variable.

— A third type of variable, the intervening variable,

comes between the independent and dependent
variables and shows the link between them.

— Thus, the intervening variable acts as a dependent

variable with respect to independent variable and
acts as an independent variable toward the
dependent variable.
 Variables…..
Intervening Variable: Example 1
— The statistical association between income and
longevity.
— By just having money does not make one live
longer.
— Other variables intervene between income and
long life.
— People with high incomes tend to have better
medical care than those with low incomes.
— Medical care is an intervening variable in the
relationship between income and longevity.

income medical care longevity

 Variables…..
Intervening Variable: Example 2
• Another finding that 5-day work week results in
higher productivity.
• In this work-week hypothesis, one might view the
intervening variable to be the job satisfaction.
• Thus, the statement could be: The introduction of
5-day work week (IV) will increase job satisfaction
(IVV), which will lead to higher productivity (DV).

5-day Job Higher

work satisfaction productivity
 Differences between moderating and
intervening……….

— Intervening variable influence the dependent

variable while moderating variable increase
or decrease the influence on the dependent
variable.
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— Theoretical Framework and Conceptual Framework
may be represented as models:
◦ A model is a symbolic representation that helps
the researcher to express abstract concepts and
relationships easily, using minimal words.

◦ A model can be represented schematically or

mathematically.
– Schematic model - conveys concepts and
propositions through the use of boxes, arrows or
other symbols.
– Mathematical or statistical model - conveys
concepts and propositions through the use of
letters, number and mathematical symbols.
Examples of Theoretical/Conceptual
Framework
Examples of Theoretical/Conceptual
Framework…
Examples of Theoretical/Conceptual Framework…
Examples of Theoretical/Conceptual Framework…
 Hypotheses Development
• Once we have identified the important
variables and established the relationships
among them through theoretical framework,
then we need to test whether the relationships
hold true through appropriate statistical
analysis.

• Formulating such testable statements is called

hypotheses development.
 Definitions of hypothesis
• A hypothesis can be defined as a
logically assumed relationship between
two or more variables expressed in the
form of a testable statement.

• Relationships are assumed on the

basis of the network of associations
established in the theoretical
framework formulated for the research
study.
 Definitions of hypothesis
— “A hypothesis is a conjectural statement of the
relation between two or more variables”(Kerlinger,
1956)
— “Hypothesis is a formal statement that presents the
expected relationship between an independent and
dependent variable.”(Creswell, 1994)
— “A research question is essentially a hypothesis
asked in the form of a question.”
— “An hypothesis is a statement or explanation that is
suggested by knowledge or observation but has
not, yet, been proved or disproved.”(Macleod,Clark
and Hockey,1981).
 Theory and Research
— In the broadest sense, theories are
generalizations about the world.

— Theory provides researcher direction

and guide in research.

— It helps researcher to choose variables

related to the research problem.

— Parts of the theories can be explored

and tested, known as hypotheses.
 Theory and Research…
Roles of Theory in Research
ü Explanation- A good theory helps to explain
why a phenomenon occurred by explaining
the relationship between two or more
concepts.

ü Prediction- Theory helps to predict the

occurrence of a phenomenon in the future.

ü Research Guidance-Theory and research

are mutually dependent. Theory, an
important element in conducting research
often helps in the research process.
 Theory vs. Hypothesis
— The terms theory and hypothesis are often used
interchangeably

— Theory — Hypothesis
— Well-established principle — Specific, testable
that has been developed to prediction about what we
explain some aspect of the expect to happen in the
natural world. research
— Arise from repeated — A hypothesis makes a
observation, extensive specific prediction about a
testing & tested hypotheses specified set of issues.
that are widely accepted — A hypothesis is a
among scholars. speculative guess that
— Predicts events in a general has yet to be tested.
context
 The Importance of Hypotheses
— Hypotheses facilitate the extension of knowledge in
an area. They provide tentative explanations of
facts and phenomena, and can be tested and
validated.

— Hypotheses provide the researcher with rational

statements, consisting of elements expressed in a
logical order of relationships which seek to
describe or to explain conditions or events, that
have not yet been confirmed by facts. (It is a guide
to the thinking process and the process of
discovery)
 The Importance of Hypotheses…

— Hypotheses provide direction to the

research. It defines what is relevant
and what is irrelevant. The hypotheses
tell the researcher specifically what he
needs to do and find out in his study.

— Hypotheses provide the basis for

reporting the conclusions of the study.
It serves as a framework for drawing
conclusions.
 Sources of Hypothesis
— Review of similar studies in the area
(literature).

— Examination of data and records, concerning

the problem for possible trends, peculiarities
and other clues.
 Generation of Research Hypothesis
—Problem statements become research hypotheses
when constructs are operationalized

Theoretical
framework &
conceptual
framework

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 Formulating Hypothesis
How to derive hypothesis:
— Deduction - reasoning from general to specific
(theory, then research)
◦ “Theory indicates that the more countries get
engaged in world economy, the more they tend
to adopt democratic reforms. We will test this
hypothesis using data from Latin American
countries.
— Induction - reasoning from specific to
general (research, then theory)
◦ E.g. “Jane and Rebecca vote for Democratic
candidates” Þ “most women favor Democratic
candidates”
 Formulating Hypothesis…

Inductive
Specific Þ General

Deductive

General Þ specific
 Types of Hypotheses
— Null Hypotheses and Alternative
Hypothesis
Null Hypotheses (H0 or HN)
— The null hypothesis is the one tested.
— In the null form, the researcher makes a
statement that no relationship exists.
— Example: “There is no significant difference
between the academic achievement of high
school athletes and that of non athletes,”
— One can only falsify the null to lend support to
the research hypothesis.
 Types of Hypotheses…….
Alternative Hypotheses (H1or HA)
— Is the research hypothesis which is “claim” made by
the theory.
— Example: “There is significant difference between
the academic achievement of high school athletes
and that of non athletes,”
— Only reached if H0 is rejected.
— Frequently “alternative” is actual desired conclusion
of the researcher.
If we conclude 'do not reject H0', this does not necessarily
mean that the null hypothesis is true. It only suggests that there
is not sufficient evidence against H0 in favor of H1.Rejecting the
null hypothesis then, suggests that the alternative hypothesis
may be true.
 Types of Hypotheses…….
— Directional and Non-directional Hypothesis

— Directional hypothesis:
◦ The hypotheses which specify the direction of the
expected differences or relationships
◦ E.g. the research hypothesis: “There will be a
positive relationship between FDI and economic
growth”.

— Non-directional hypothesis:
◦ A research hypothesis which does not specify the
direction of expected differences or relationships.
◦ E.g. FDI will have a significant impact on the
economic growth
 Example
— Consider the example of a simple association
between two variables, Y and X.
1. Y and X are associated (or, there is an association
between Y and X).
◦ The first hypothesis provides a simple statement of
association between Y and X. Nothing is indicated to
determine which variable, Y or X, would tend to cause the
other variable to change in value.

2. Y is related to X (or, Y is dependent on X).

◦ The second hypothesis is also a simple statement of
association between Y and X, but this time it may be
inferred that values of Y are in some way contingent upon
the condition of the X variable.
 Example…
3. As X increases, Y decreases (or, increases
in values of X appear to effect reduction in
values of Y).
◦ The third hypothesis is the most specific of
the three.
◦ Not only does it say that Y and X are related
and that Y is dependent on X for its value,
but it also reveals something more about
the nature of the association between the
two variables.
 Characteristics of Hypothesis
1. Hypothesis should be clear and precise. If the
hypothesis is not clear and precise, the
inferences drawn on its basis cannot be taken as
reliable.

2. Hypothesis should be capable of being tested.

Some prior study may be done by researcher in
order to make hypothesis a testable one.

3. Hypothesis should state relationship between

variables, if it happens to be a relational
hypothesis.
 Characteristics of Hypothesis
4. Hypothesis should be limited in scope and must be
specific.

5. Hypothesis should be stated as far as possible in

most simple terms.

6. Hypothesis should be consistent with most known

facts i.e., it must be consistent with a substantial
body of established facts/theory.

7. Hypothesis should be amenable to testing within a

reasonable time.
 Steps in Hypothesis Testing
State the null and the alternate
hypotheses

Choose the appropriate statistical test

(parametric or nonparametric)

Determine the level of significance

desired (10%,5% or 1%)

Evaluate the results

Decision Rule: Reject H0 in favor of

H1 or Do not reject H0
 Summary

Research Theoretical Conceptual Types of Formulate

problem framework framework variables hypothesis