Theory and research

As you embark on your research, you will learn lots of terminology.

Each term represents subtle yet important distinctions between the type of research that is undertaken and, as we learned in Step 1.4, reveals some of the underlying philosophical assumptions of the researcher.

This means it is essential that you learn these terms and use them correctly to describe your research because they tell your reader a lot about how you have approached your particular area of interest. Learning these terms also helps you to understand and evaluate the research of others and appreciate that research is not all the same.

In this step, we are going to look at two of the key terms that describe the way we approach research: inductive and deductive.

What is a theory?

Before we look at these terms in more detail, we need to pause and think about what we mean by a theory. In its simplest form, a theory seeks to explain how something works. To do this, theories show how concepts or ideas are linked together. Indeed, concepts are often called the ‘building blocks’ of theories.

Can you think of a theory?

Perhaps the most famous example is Einstein’s theory of relativity. Einstein was seeking to explain the relationship between the concepts of energy (E) and mass (M) using the speed of light (C) and his equation expresses this theory in a very simple manner; that energy is equal to the sum of mass multiplied by the speed of light squared, or E=MC².

Another example perhaps more relevant to management research is social exchange theory. This theory seeks to explain how the concepts of exchange, costs and benefits are combined within social relationships. It suggests that we evaluate the nature of our relationships on the basis of the time and effort we have to put into them (costs) and what we get as a reward (benefits).

Although these theories are very different, they are both used (or were used until disproved) to explain how things work in specific fields. Einstein’s theory can be used to explain aspects of astrophysics, while social exchange theory can be used to explain how employees might react to different management initiatives.

But how do we know if theories are correct? How do we know they can accurately explain different phenomena? And how can we test to see if theories work in practice? This is where research comes in. We use research to refine and test our theories and to subject them to scrutiny in order to make sure they apply in different contexts. This is the principle behind scientific advances – these can only happen when we do more research that shows existing theories are limited or even wrong.

For your purposes, you are not expected to come up with a brand new theory through your research or comprehensively show that an existing theory needs to be debunked. Instead, you will be expected to show that you have a good insight into relevant theories and how you are using them to develop your approach to your research. And this means thinking about how far your approach can be described as either inductive or deductive.

Inductive research

Imagine that you are looking at a company’s annual accounts. You might notice the profit and loss figures or the difference between income and expenditure. The balance sheet might also show how much is being spent on staffing costs or infrastructure. There might be a comparison with the previous year as well. Based on this information, you form a view or develop a theory that this is a company in a good financial position and will be a worthwhile investment. It also means you have engaged in inductive research.

In its simplest form, inductive research means that you build theory from the data – in this example, you have started by looking at the company data and then you have built a theory, or you have sought to explain what that data means by developing a theory.

Inductive research is often associated with research that is exploratory or focused on new or unfamiliar situations. This is because we are looking at something about which little is known and we want to gather data to try to build a theory to explain this.

Take the increase in working from home during the COVID-19 pandemic as an example. We’ve never seen home working on this scale before and so we don’t have many theories about what happens when a whole business introduces remote working in a short space of time. As a result, researchers need to collect data to develop a theory about what will happen to organisations when they make these changes – this would be an inductive study.

Deductive research

Predictably, this is the opposite of inductive research. Let’s revisit our example of a company’s annual accounts. Perhaps you have read about a theory which says that companies with a significant gender pay gap have a lower return on investment. This means you will read the accounts looking for evidence of both these concepts (gender pay gap and return on investment) to prove or disprove your idea or your theory. This means you are undertaking deductive research because you have started with a theory (or often a hypothesis) and you have used that as a basis to explore the data.

Deductive research is commonly used in large-scale quantitative research – in our example, you might think that you actually need to look at the financial reports across lots of companies before you can prove if your theory about the gender pay gap is accurate.

So, inductive research means going from data to theory development and deductive research means going from theory to the data. Why is this important? Because your approach will guide your overall research and help you to think about what your objectives need to be.

Your task

Can you think about some other examples of where inductive or deductive research would be used?

What are the advantages and disadvantages of both approaches?