Chapter 2:

Formulation of the Research

Problem and Hypotheses

Contents
Introduction ................................................................................................................................................. 2
Objectives of the Chapter ............................................................................................................................ 2
Glossary of Terms ........................................................................................................................................ 2
2.1 What is Research Problem?................................................................................................................... 2
2.1.1 Defining/Formulating the Research Problem ............................................................................... 3
2.1.2 Importance of Formulating a Research Problem .......................................................................... 4
2.1.3 Identifying Research Problem........................................................................................................ 4
2.1.4 Sources of Research Problem ......................................................................................................... 5
2.1.5 Guidelines for the Statement of the Problem................................................................................ 6
2.1.6 Evaluation of the Problem.............................................................................................................. 7
2.2 Hypothesis Formulation ........................................................................................................................ 8
2.2.1 Defining Hypothesis ....................................................................................................................... 8
2.2.2 Possible Sources of Hypothesis ...................................................................................................... 9
2.2.3 Null and Alternative Hypothesis ................................................................................................... 9
2.2.4 Basic Characteristics of Good Hypothesis...................................................................................... 9
2.2.5 Steps in Hypotheses Testing ......................................................................................................... 10
Summary .................................................................................................................................................... 10
Self-Examination Questions ...................................................................................................................... 10
Introduction
In chapter 1, we have discussed the meaning and significance of business research, types of research, and
the business research process. There we have shown that the research process begins with the raising of a
problem, leading to the gathering of data, their analysis and interpretation and finally ends with the writing
of the report. In this chapter, we propose to give a complete coverage on selection and specification of the
research problem, formulation of research hypotheses. Now we will dwell in detail on these aspects along
with the associated features which are interwoven with the research problem and hypothesis formulation
and testing.

Objectives of the Chapter

After studying this chapter, you should be able to:
a) Formulate a research problem and identify the selection of the research problem;
b) Select a research problem and identify sources of research problem,
c) Identify sources of research problem,
d) Understand that proper problem definition is essential for effective business research;
e) Define and specify a research problem,
f) Define hypothesis and classify the hypotheses,
g) Suggest criteria for a good hypothesis,
h) Test a hypothesis

Glossary of Terms
Alternative hypothesis: Statistical term for research hypothesis that specifies values that researcher
believes to hold true. It can be divided into directional and non-directional alternative hypothesis. A
directional alternative hypothesis states the researcher’s predicted direction of change, difference between
two or more sample means, or relationship among variables. On the other hand, a non-directional
alternative hypothesis states the researcher’s predictions without giving the direction of the difference.
Hypothesis: A hypothesis is a tentative answer/solution to the research problem or a statement of the
researcher’s expectations about a relationship between variables, whose validity remains to be tested.
Null hypothesis: The hypothesis that is of no scientific interest; sometimes the hypothesis of no difference.
The null hypothesis uses the form of “no difference” or “no relationship”.
Problem Definition: The process in order to clear understanding (explanation) of what the problem is.
Research Problem: It focuses on the relevance of the present study.

2.1 What is Research Problem?

A research problem, in general, refers to some difficulty which a researcher experiences in the context of
either a theoretical or practical situation and wants to obtain a solution for the same. Research problem is
a condition that causes a researcher to feel anxious, uneasy and confused. It involves the complete analysis
of the problem area involving who, what, where, when and why of the problem situation.
In research process, the first and most important step happens to be that of selecting and properly defining
a research problem. It is like the identification of destination before undertaking a journey. As in the absence
of a destination, it is impossible to identify the shortest or indeed any route, in the absence of a clear research
problem, a clear and economical plan is impossible. A research problem is like the foundation of a building.
The type and design of the building is dependent upon the foundation. If the foundation is well designed ad
strong you can expect the building to be also. The research problem serves as the foundation of a research
study: It is well formulated; you can expect a good study to follow.
A researcher must find the problem and formulate it so that it becomes susceptible to research. To define a
problem correctly, a researcher must know: what a problem is? If one wants to solve a problem one must
generally know what the problem is. It can be said that a large part of the problem lies in knowing what one
is trying to do.

Activity:
Question 1: What do you mean by a research problem?
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2.1.1 Defining/Formulating the Research Problem

Defining research problem is crucial and very hard part of a research process. It is crucial because, the
problem identified will provide us the topic of the designed research and the objective of the research. It is
the most difficult and hard part of the research study because; there is a cause and effect issue. It is
commonly difficult to distinguish effect of problem from the cause of the problem. The researcher should
be certain that the problem identified is a cause but not the effect. There is a famous saying that "problem
well-defined is half solved". This shows how important it is to "define the problem correctly".
Problem definition or problem statement is a clear, precise, and succinct statement of the question or issue
that is to be investigated with the goal of finding an answer or solution. For example, the problem could
pertain to:
(1) existing business problems where the manager is looking for a solution,
(2) situation that may not pose any current problems but which the manager feels have scope for
improvement,
(3) areas where some conceptual clarity is needed for better theory building, or
(4) situations in which a researcher is trying to answer a research question empirically because of
interest in the topic
A proper definition of research problem will enable the researcher to find answers to questions such as:
 What characteristics of data are relevant and need to be studied?
 What relations are to be explored among variables?
 What technique has to be used to collect and analyze data? And so forth
Therefore, defining a research problem properly is a prerequisite for any study and is a step of the highest
importance. In fact, formulation of a problem is often more essential than its solution.
The following points may be observed by a researcher in selecting a research problem or a subject for
research as a researchable research problem:
1. The topic selected should be original or at least less explored. The purpose of research is to fill the gaps
in existing knowledge or to discover new facts and not to repeat already known facts. Therefore, a
preliminary survey of the existing literature in the proposed area of research should be carried out to
find out the possibility of making an original contribution. Knowledge about previous research will
serve at least three purposes.
a) It will enable the researcher to identify his specific problem for research.
b) It will eliminate the possibility of unnecessary duplication of effort, and
c) It will give him valuable information on the merits and limitations of various research techniques
which have been used in the past.
2. It should be of significance and socially relevant and useful.
3. It should be interesting to the researcher and should fit into his aptitude.
4. It should be big enough to be researchable and small enough to be handled - the topic should be
amenable for research with existing and acquirable skills. Too narrow or too vague problems should be
avoided.
5. The feasibility of carrying out research on the selected problem should be checked against the following
considerations.
a) Whether adequate and suitable data are available?
b) Whether there is access to the organization and respondents?
c) Whether cooperation will be forth coming from the organization and respondents?
d) What are the resources required and how are they available?
e) Whether the topic is within the resources (money and man power) position of the researcher?
6. It should be completed within the time limits permissible.
7. The importance of the subject, the qualifications and the training of a researcher, the costs involved,
and the time factor are few other criteria that must also be considered in selecting a problem. In other
words, before the final selection of a problem is done, a researcher must ask himself the following
questions:
a. Whether he is well equipped in terms of his background to carry out the research?
b. Whether the study falls within the budget he can afford?
c. Whether the necessary cooperation can be obtained from those who must participate in research as
subjects?
8. The selection of a problem must be preceded by a preliminary study (if the research relatively new).
Activity:
Question 2: List any five points which will weigh in selecting a problem
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2.1.2 Importance of Formulating a Research Problem

The common say regarding the problem is, ‘a problem clearly stated is a problem half solved’. This
statement signifies the need for defining a research problem. The problem to be investigated must be defined
unambiguously for that will help to discriminate relevant data from the irrelevant ones.
The following Questions and Answers crop up in the mind of the researcher who can well plan his strategy:
i. What data are to be collected?
ii. What characteristics of data are relevant and need to be studied?
iii. What relations are to be explored?
iv. What techniques are to be used for the purpose?
Thus, defining a research problem properly is a prerequisite for any study and is a step of the highest
importance. In fact, formulation of a problem is often more essential than its solution. It is only on careful
detailing the research problem what we can work out the research design and can smoothly carry on all the
consequential steps involved while doing research.
A proper definition of research problem will enable the researcher to be on the track whereas an ill- defined
problem may create hurdles.
2.1.3 Identifying Research Problem
There is a famous saying that “Problem well defined is half solved.” This statement is true in research
because if the problem is not stated properly, the objectives will not be clear. Once objective is not clearly
defined, data collection becomes meaningless.
The first step in research is to formulate the problem. In order to conduct research, problem must be defined
accurately. While formulating the problem, clearly define:
 Who is the focus?
 What is the subject matter of research?
 To which geographical territory / area the problem refers to?
 To which period the study pertains to?
When choosing an area for research, we usually start either with a broad area of Finance, which particularly
interests us e.g. Investment or Source of fund, or we start with a very practical question like those in the
last paragraph, which need answers to help with managerial decision-making.
Refining from this point to a researchable question or objective is not easy. We need to do a number of
things:
1. Narrow down the study topic to one, which we are both interested in and have the time to investigate
thoroughly
2. Choose a topic context where we can find some access to practitioners if possible; either a direct
connection with an organization or professional body, or a context which is well documented either on
the web or in the literature
3. Identify relevant theory or domains of knowledge around the question for reading and background
understanding.
4. Write and re-write the question or working title, checking thoroughly the implications of each phrase
or word to check assumptions and ensure we really mean what we write. This is often best done with
other people to help us check assumptions and see the topic more clearly.
5. Use the published literature and discussion with others to help us narrow down firmly to an angle or
gap in the business literature, which will be worthwhile to explore.
6. Identify both the possible outcomes from this research topic, both theoretical and practical. If they are
not clear, we can refine the topic so that they become clear?
2.1.4 Sources of Research Problem
The selection of a suitable problem is not an easy task. It is a serious responsibility to commit oneself to a
problem that will inevitably require much time and energy and which is so academically significant. The
following are the main sources to which one may proceed for a suitable research problem:
1. Personal experiences of the investigator in the field of education are the main source for identifying
suitable problem. Many of the problems confronted in the classroom, the school or the community lend
themselves to investigation and they are perhaps more appropriate for the beginning researcher than are
problems more remote from his own teaching experiences.
2. The other source of problem which is most frequently used by the investigator as suggested by the
supervisors is the extensive study of available literature-research abstracts, journals, hand-books of
research international abstracts etc. He can draw an analogy for selecting a research problem or can
think parallel problem in the field studied.
3. In the choice of a suitable problem, the researcher has to decide his field of investigation. He should study
the field intensively in the specific area; this may enable him to identify a problem from the specific field.
4. The new innovations, technological changes and curricular developments are constantly bringing new
problems and new-opportunities for Social Studies Research.
5. The most practical source of problem is to consult supervisor, experts of the field and most experienced
person of the field. They may suggest most significant problem of the area. He can discuss certain issues
of the area to emerge a problem.
6. It is a general practice that researchers suggest some problems in their research reports. The researcher
can pick up a suitable problem for his own study.
2.1.5 Guidelines for the Statement of the Problem
The research problem should be defined in a systematic manner. The technique involved in defining a
research problem has a number of steps, which should be under taken one after another.
1. Statement of the problem in a general way: First of all the problem should be stated in a broad general
way, keeping in view either some practical concern or some scientific or intellectual interest. For this
purpose, the researcher must immerse himself thoroughly in the subject matter concerning which he
wishes to pose a problem. In case of social research, it is considered advisable to do some field
observation and as such the researcher may undertake some sort of preliminary survey (pilot survey).
Then the researcher can himself state the problem or he can seek the guidance of the guide or the subject
expert in accomplishing this task.
2. Understanding the nature of the problem: The next step is to understand the nature and the origin of
the problem. The best ways of understanding the problem are:
 To discuss it with those who first raised it in order to find out how the problem originally came
about and with what objectives in view;
 To discuss it with those who have good knowledge of the problem concerned or similar other
problem.
3. Surveying the available literature: All available literature concerning the problem must be surveyed
and examined before a definition of the research problem is given. This means that the researcher must
be familiar with:
 The relevant theories in the area. Theories has got the following role in overall research studies:
 Theories provides patterns of the interpretation of data
 It links on the study with others
 It supplies frameworks within which concepts and variables acquire special significance
 It allows us interpret the large meaning of our findings for ourselves and others
 Reports and records as also all other relevant literature- Reviewing of research works on related
problems is done to find out what data and other materials, if any, are available for operational
purposes. Knowledge about these often serves to narrow the problem itself as well as the technique
that might be used. This would also help a researcher to know:
 if there are certain gaps in the theories, or
 whether the existing theories applicable to the problem under study are inconsistent with each
other, or
 whether the findings of the different studies do not follow a pattern consistent with the
theoretical expectations
 Studies on related problem are also useful for indicating the type of difficulty that may be
encountered in the present study
4. Developing the ideas through discussions: Discussion on a problem often produces useful information.
Various new ideas can be developed through such an exercise. Hence, a researcher must discuss his
problem with his colleagues and others who have enough experience in the same area or in working on
similar problems. Such practice is called ‘experience survey’. People with rich experience are in a
position to enlighten the researcher on different aspects of his proposed study and their advice and
comments are usually invaluable to the researcher.
5. Rephrasing the research problem: Finally, the researcher at this stage should be able to reformulate
the problem that has been stated in broad and general way in to working proposition. The researcher should
narrow and break down the problem in to its components variables and relationships. That problem should
be expresses as:
 A relationship between two or more variables
 The problem should be stated either in question form or hypotheses form.
Question form is appropriate mostly when the research is descriptive in nature. What important is that when
a researcher state the problem in question form the formulated problem should be free from ambiguity and
the relationship among variables should be clearly expressed.
In addition to what has been stated above, the following points must also be observed while defining a
research problem:
a. Technical terms and words or phrases, with special meanings used in the statement of the problem,
should be clearly defined.
b. Basic assumptions or postulates (if any) relating to the research problem should be clearly stated.
c. A straight forward statement of the value of the investigation (i.e., the criteria for the selection of
the problem) should be provided.
d. The suitability of the time-period and the sources of data available must also be considered by the
researcher in defining the problem.
e. The scope of the investigation or the limits within which the problem is to be studied must be
mentioned explicitly in defining a research problem.
2.1.6 Evaluation of the Problem
Before the final decision is made on the investigation of the problem, the feasibility of the problem has to
be tested with regard to personal suitability of the researcher and social value of the problem. In short, the
research problem should be evaluated in terms of the following criteria:
1. Is the problem researchable? Some problem cannot be effectively solved through the process of
research. Particularly research cannot provide answers to philosophical and ethical questions that don’t
show the relationship exiting between two or more variables.
A problem may be unsolvable due to two reasons:
1. It may concern some super natural or amorphous phenomenon. For example, how does mind
work? Who created this world?
2. It cannot be operationally defined. For example, to measure sex or social class is every easy
but to measure anxiety, creatively is difficult.
2. Is the problem new? As much as possible, the research problems need to be new. One should not
target his investigation to the problem that has already been thoroughly investigated by other
researchers. To be safe from such duplication, the researcher has to go through the record of previous
studies in a given field. However, there are times where by a problem that has been investigated in the
past could be worthy of study. A researcher may repeat a study when he/she wants to verify its
conclusions or extend the validity of its findings in a situation entirely different from the previous one.
The purpose if research is to fill the gaps in existing knowledge to discover new facts and not to repeat
already known facts. Therefore, a preliminary survey of the existing literature in the proposed area of
research should be carried out to find out the possibility of making original contribution.
3. Is the problem significant? The question of significance of the problem usually relates to what a
researcher hopes to accomplish in a particular study. What his /her purpose in undertaking to solve the
particular problem selected/chosen? What new knowledge does he/she hope to add to the sum total of
what is known? And what value is this knowledge likely to have? When all this questions are answered
by the researcher the problem should be considered for further investigation. The major dimensions are
academic awareness and policy.
4. Is the problem feasible for the particular researcher? In addition to the above points, the feasibility
of the research problem should also be examined from the point of view of the researcher’s personal
aspect.
5. Research competency: the problem should be in an area in which the researcher is qualified and
competent. The researcher has to make sure that he/she is familiar with the existing theories, concepts,
laws and related to the problem. He/she must also posses the necessary skills and competence that may
 be needed to develop, administer, and interpret the necessary data gathering tools. What is more, he
needs to consider whether he has the necessary knowledge of research design and statistical procedure
that may be required to carry out the research through its completion.
6. Interest and enthusiasm: the researcher has to make sure that the problem really interests him/her.
He/she must also be truly enthusiastic about the problem. If the problem is chosen properly by observing
these points, the research will not be boring; rather its will be love’s labor.
7. Financial consideration: research is an expensive endeavor, which requires a great deal of money
invest. In this regard, the researcher should ascertain whether he has necessary financial resources to
carry on the investigation of the selected problem. An estimate of the expenditure involved in the data
gathering equipment, printing, test material, travel, and clerical assistance to be specified.
8. Time requirement: research should be undertaken within a given scope of time, which was allocated,
with careful analysis of the prevailing situation. Each and every of research process require time.
Particularly, it is worthwhile to plan for the time that will be needed for the development and
administration of tools, processing and analysis of data and writing of the research report.
9. Administration consideration: the researcher has to pay attention to all administrative matter that is
necessary to bring his/her study to its full completion. In this regard the researcher should consider
kinds of data, equipment, specialized personnel and administrative facilities that are needed to complete
study successfully. The researcher must assure whether the pertinent data are available and accessible
to him/ her.

2.2 Hypothesis Formulation

2.2.1 Defining Hypothesis
Hypothesis may be defined as a proposition or a set of propositions set forth as an explanation for the
occurrence of some specified group of phenomena either asserted merely as a provisional conjecture to
guide some investigation in the light of established facts. The word Hypothesis is composition of two words,
“Hypo” and “Thesis”. Hypo means “under or below” and thesis means “a reasoned theory or a rational
viewpoint”. Thus hypothesis means a theory which is not fully reasoned. Hypotheses are a set of suggested
tentative solution of a research problem, which can be or may not be a real solution.
A hypothesis is a tentative explanation for certain behaviors, phenomena, or events that have occurred or
will occur. A hypothesis states the researcher’s expectations concerning the relationship between the
variables in the research problem; a hypothesis is the most specific statement of the problem. It states what
the researcher thinks the outcome of the study will be. The researcher does not then set out to “prove” his
or her hypothesis but rather collects data that either support the hypothesis or do not support it; research
studies do not “prove” anything. Hypotheses are essential to all research studies with the possible exception
of some descriptive studies whose purpose is to answer certain specific questions.
The hypothesis is formulated following the review of related literature and prior to the execution of the
study. It logically follows the review since it is based on the implications of previous research. The related
literature leads one to expect a certain relationship. Hypotheses precede the study proper because the entire
study is determined by the hypothesis. Every aspect of the research is affected by the hypothesis, including
subjects (the sample), measuring instruments, design, procedures, data-analysis techniques, and
conclusions. Although all hypotheses are based on previous knowledge and aimed at extending knowledge,
they are not all of equal worth. There are a number of criteria that can be, and should be, applied to a given
hypothesis to determine its value.

Activity:
Question 3: What do you mean by a hypothesis?
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2.2.2 Possible Sources of Hypothesis
Hypothesis may be developed from a variety of sources, including the following:
3. Hypothesis originates in the science itself or in the scientist: The history of science provides an eloquent
testimony to the fact that personal and idiosyncratic experiences of the scientist contribute a great deal
to the type and form of questions one may ask, as also the kinds of tentative answers to this question
(hypothesis) that he/she might provide. Here the kinds of a person’s perception and conception would
play a major role. Researchers should think differently and carefully.
4. Analogies are often a fountainhead of valuable hypothesis. This involves comparisons or analogies
between social and natural systems.
5. Hypothesis may rest also on the findings of other studies- in social science research is usually
exploratory. i.e., they start with explicit hypothesis.
6. A hypothesis may stem from a body of theory, which may afford by way of logical deduction, the
prediction that if certain conditions are present certain results would follow.
7. It is worthy of note that value orientation of the culture in which a science develops may furnish many
of its basic hypotheses.
To conclude the ideal source of fruitful and relevant hypothesis is a fusion of past experience and
imagination of the researcher.
2.2.3 Null and Alternative Hypothesis
 Null hypothesis: a proposition that states a definitive, exact relationship between two variables
 States that the population correlation between two variables is equal to zero or that the difference
in the means of two groups in the population is equal to zero (or some definite number)
 Expressed as no (significant) relationship between two variables or no (significant) difference
between two groups
 Alternate hypotheses: the opposite of the null
 Statement expressing a relationship between two variables or indicating differences between groups
If we reject the null hypothesis, then all permissible alternative hypotheses relating to the particular
relationship tested could be supported
2.2.4 Basic Characteristics of Good Hypothesis
Hypotheses can be useful if and only if they are carefully formulated. There are several criteria used to
evaluate hypothesis. These include the following:
 Hypothesis should/must:
a) be clear and precise: - so that the inferences drawn on its basis would be reliable;
b) capable of being tested or verified (should be tested);
c) state relationship between variables, if it happens to be a relational hypothesis;
d) be limited in scope and must be specific as narrower hypotheses are generally more testable;
e) be stated as far as possible in most simple terms so that the same is easily understandable by all
concerned; but you must remember that simplicity of hypothesis has nothing to do with its
significance;
f) be consistent with most known facts i.e., it must be consistent with a substantial body of established
facts (i.e. it must be in the form of a statement which is most likely to occur);
g) be amenable to testing within a reasonable time and, no matter how excellent a hypothesis, you
should not use it if it cannot be tested within a given period of time, as no one can afford to spend
a life-time on collecting data to test it;
h) must explain the facts that gave rise to the need for explanation using the hypothesis plus other
known and accepted generalizations, and should be able to deduce the original problem condition;
2.2.5 Steps in Hypotheses Testing
1. State the null and the alternate hypotheses
2. Choose the appropriate statistical test depending on whether the data collected are parametric or
nonparametric
3. Determine the level of significance desired (p=0.05, or more, or less)
4. See if the output results from computer analysis indicate that the significance level is met.
5. When the resultant value is larger than critical value, the null hypotheses is rejected, and the alternate
accepted. If the calculated value is less than the critical value, the null is accepted and the alternate
rejected.

Summary
Proper problem formulation is the key to success in research. It is vital and any error in defining the problem
incorrectly can result in wastage of time and money.
The problem is stated in a general way, the ambiguities are resolved, thinking and rethinking process results
in a more specific formulation of the problem. It is done so that it may be a realistic one in terms of the
available data and resources and is also analytically meaningful. All this results in a well-defined research
problem that is not only meaningful from an operational point of view. But is equally capable of paving the
way for the development of working hypotheses and for means of solving the problem itself.
A hypothesis is an unproven proposition or a possible solution to be problem. Hypotheses state relationships
between variables that can be empirically tested.
Self-Examination Questions
Choose the best answer for each of the following questions and ENCIRCLE the letter of your choice.
1. Sources of researchable problems can include:
a) Researchers’ own experiences
b) Practical issues that require solutions
c) Theory and past research
d) All of the above
2. Research hypotheses are ______.
a) Formulated prior to a review of the literature
b) Statements of predicted relationships between variables
c) Stated such that they can be confirmed or refuted
d) b and c
3. Which of the following statements is false about research hypothesis?
a) A hypothesis is used to appreciate the kind of data to be collected for study.
b) A hypothesis refers to a set of tentative propositions that might be disproved.
c) It helps the researcher in organizing the data to be collected in the most appropriate ways.
d) All of the above
e) None of the above
Answer the following questions
1. What is a research problem? Explain the sources of research problems.
2. Defining a research problem properly is a prerequisite for any study. Why?
3. If you are appointed to do a research for some problem with the client, what would you take as the
sources for problem identification?
4. A problem well defined is half solved. Comment.
5. While you define a research problem what do you try to do?
6. What is the necessity of defining a research problem? Explain.
7. What are the characteristics of good hypothesis testing?
8. What are the different types of hypotheses?
References
 Alan Bryman and EmmaBell (2007), Business Research Methods, (paper back-).
 C. William Emory, Donald R. Cooper. Business Research Methods, 4th ed., 1991.
 Joe Hair, Arthur Money, Phillip samouel, and BarryBabin (2003), Essentials of Business Research
Methods.
 Kothari C.R. (1990) Research Methodology: Methods and Technique. Wishwa Prakashan, New Delhi.
 Mark N.K Saunders, Adrian Thorn hill, and Philip Lewis (2009), Research Methods for Business
students, 5th Edition.
 Wallace A. W., Accounting research methods: Do the facts speak for themselves?
 White John Adams, Hafiz TaKhan, Robert Raeside, and David I (2007), Research Methods for
Graduate Business and social science students, Sage Publications LTD.
 William G. Zikmund, Babin, jon c. carr, and Mitch Griffin (2009), Business Research Methods,
(hardcover-)
Answers for Self Examination Questions
1: D, 2:C, 3: B,