An Interdisciplinary Approach by Eli P. Cox III Infosurv PhD Level Researcher
A great deal of attention has been directed toward the decision-making process. This process has been characterized in numerous ways, but essentially it involves the following steps: problem or opportunity recognition, search for alternative courses of action, evaluation of these alternatives, choice of a course of action and implementation, and assessment of the results of the decision. The importance of relevant, accurate, current, and economical information at the various stages in this decision process cannot be over-emphasized. By the time that a problem or opportunity is universally apparent, it is often too late to do anything about it. Thus, in order to make changes successfully, a manager must have some sort of intelligence system whether he be in personnel, marketing, or finance. Once a problem or opportunity has been discovered, it is often the case that not all of the viable courses of action are known to the manager, so information must also be gathered at this stage. Certainly a manager's dependence upon information in the stage of evaluating alternatives is obvious. Such a process involves making forecasts of future events. As competitive pressures increase and as managers become more sophisticated, armchair decisions based upon a "feel" of the situation are being replaced by those which are based upon carefully fathered and analyzed information.
Finally, as information is used to discover problems or opportunities, the same information can be used to assess the results of management's decision making.
Research methodology is the body of knowledge concerned with the techniques necessary for gathering quality information. Originally, research methodology was developed in the physical sciences. Recently it has been expanded to include the social sciences, including business administration. Research activities are traditionally characterized dichotomously: activities directed toward the generation of knowledge are described as basic research and applied research refers to those activities involved in gathering information which will be useful in solving a particular problem.
It must be emphasized that this dichotomy exists in the application of research methodology. It need not and should not exist in the research methodology itself. The same techniques that have brought rigor to basic research hi the physical and social sciences can be applied successfully in providing information for quality business decision making.
Although research methodology can be useful to businesses regardless of their size or the type of product or service they sell, not all businesses use research methodology with equal effectiveness or even use it at all. In fact, managers may be characterized as existing in one of four stages according to their attitude toward research methodology as a means of gathering quality information for decision-making purposes:
- The Stage of Ignorance. Managers in this stage believe that research methodology is appropriately confined to the ethereal world of academia or at best to the technical research that may take place in the firm. These managers depend heavily upon intuition and experience, and the information they use is obtained informally.
- The Stage of Blind Faith. Managers in this stage naively believe that the result of the application of research methodology is the good decision itself rather than the basis for making a good decision. They fail to see that good research can only reduce uncertainty; it cannot eliminate it. For a manager in this stage, the less he is capable of evaluating research because of its complexity, the more he is impressed with it. Show him some statistical analysis in a research report and he is very much convinced. Show him the same analysis on computer print-out and he is awestruck.
- The Stage of Disillusionment. This stage characterizes managers who were in the Stage of Blind Faith but now feel betrayed. These managers are very cynical because they have made costly mistakes even though the decisions were research-based. This vulnerability was due to the fact that they could not distinguish good from bad research, or that they felt that if the research was good, the decision had already been made,
- The Stage of Sophistication. Managers in this final stage recognize the potential of research in improving the decision-making process. They recognize that a fortune teller is probably a better bargain than poor research. They also recognize that while good research does not eliminate the uncertainty involved in their jobs, it can be an economically warranted means of at least reducing that uncertainty.
If the effective application of applied business-research could eliminate uncertainty, rather than reduce it, there would hardly be a need for managers as skilled decision-makers. An experienced and sophisticated manager recognizes this fact. He sees the potential of good research in helping him to make good decisions, but at the same time he sees that some very real limitations exist regarding what such research has to offer.
First, the manager and the researcher face some very real time constraints. Social psychologists can afford to wait years and conduct dozens of research studies before they feel that anything conclusive can be said about the nature of the relationship between an individual's satisfaction with his participation in a group and associated variables. However, if the personnel director sees that turnover has reached an intolerable level among the clerical staff, then he is not in a position to wait very long. He can appraise the situation and try to make a remedial decision on the spot, or he can try to hedge his bet by systematically examining the situation before be takes action (i.e. by conducting research).
Second, the manager is faced with some very real financial constraints regarding the information he can gather. There is no internally specifiable budget limitation in basic research, because it is impossible to place a dollar value on knowledge that is gathered for its own sake. This is certainly not the case for applied research, where the information is obtained in order to deal with real problems, which at least in business situations can usually be evaluated economically. In such instances research is justified only so long as the costs of conducting it do not exceed the benefits derived from it.
Third, the manager is dealing with a decision-making environment of the utmost complexity. A chemist or physicist can reasonably conduct research in a controlled laboratory where he can systematically eliminate much of the complexity which confronts him. A sociologist or social psychologist is justified in creating situations which are amenable to study in order to draw tentative conclusions. A business manager can base his decisions upon information which has been gathered in a manner similar to that of me physical scientist or social scientist, but he is forced to confront the limitations of that research—he must live with the results of decisions which have been based upon imperfect information.
Because of the three factors just discussed, the business manager is faced with an important task before he can utilize the information which has been gathered through research. He must be able to appraise the quality of the information which has been gathered for his use. He should not be in a position where he is forced to accept blindly the results of applied business research at face value. He should recognize that every research project has its limitations. By inspecting these limitations a manager should be able to differentiate good from bad research. By examining the limitations which exist even within good research and adjusting for them, the manager can take quality information which has been gathered through research and make it even better as a tool for sound business decision making. Figure 1 (see page 17) presents an outline of the most common types of error. The three basic types: Errors of Definition, Errors of Estimation, and Errors of Explanation, will be discussed in turn.
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