Micro Link Information Technology College Research Methods in Accounting and Finance

CHAPTER ONE
RESEARCH METHODS: AN INTRODUCTION

Introduction
Research is most frequently used terminology in different academic and business institutions.
Research as conscious and creative human activity involves discovering and learning new things.
Where there is a problem there is always a research. It is an essential tool for understanding the
events and structures of the social world. Research can mean different things to different people.
People have defined research differently according to their perception. Research is a means by
which you will be able to acquire knowledge.

1.1 Meaning of Research and Business Research

Different authors in many ways have defined the word research. Research can be defined as “a
careful study to discover correct information” or “a way of collecting information to facilitate
problem solving”. In most simple words, it is “search and search again”.
The term „Research‟ consists of two words: „Re‟ and „Search
„Re‟ Means again and again
„Search‟ means to find out something,
The research is a process of which a person observes the phenomena again and again and collects
the data and on the basis of data he/she draws some conclusions.
Research: is oriented towards the discovery of relationship that exists among phenomena of the
world in which we live. The fundamental assumption is that invariant relationship exists between
certain antecedents and certain consequents so that under a specific set of conditions a certain
consequents can be expected to follow the introduction of a given antecedent.
Research commonly refers to a search for knowledge. Some people consider research as a
movement from known to unknown. It is indeed a voyage of knowledge. For some people on
the other hand research implies an art of scientific investigation to the state of nature or
phenomenon. Authors are increasingly adding new names and definition for different kinds of

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

research. However, to avoid confusion and unnecessary cumbersomeness let us confine

ourselves to the definitions of research given by selected authors.
Hertz provided the most simplified definition of research. His definition referred
research to the original and creative activities. According to him, Research is the
application of human intelligence in a systematic manner to a problem whose solution is
not immediately available.
Wood on the other hand defined research as an activity comprises of defining and
redefining problems, formulating hypothesis or suggested solutions; collecting,
organizing and evaluating data; making deduction and reaching at conclusion to
determine whether they fit the formulated hypothesis.
Research is the manner in which we solve knotty problems in our attempt to push back the
frontiers of human ignorance. Research is ultimately a way of thinking. It is a way of looking at
accumulated fact so that a collection of data speaks to the mind of the researcher.
 Research can be defined as any scholarly investigation in search for truths, or for
certainties.
 Research is the activity of solving problems which leads to new knowledge using
methods of inquiry which are currently accepted as adequate by scholars in the field.
Research is a wide field and has many branches like agricultural research, medical research,
educational research and physiological research. Likewise, business research is an important sub-
sector of research and encompasses: market research, financial research, operation research,
human resource research, and others business function.
Business research is the application of the scientific method in searching for the truth about
business phenomena. These activities include defining business opportunities and problems,
generating and evaluating alternative courses of action, and monitoring employee and
organizational performance. Business research is more than conducting surveys. This process
includes idea and theory development, problem definition, searching for and collecting
information, analyzing data, and communicating the findings and their implications.
Research is a systematic, controlled empirical and critical investigation of hypothetical
propositions about the presumed relations among natural phenomena. The terms
Actually research is simply the process of arriving as dependable solution to a problem through
the planned and systematic collection, analysis and interpretation of data. Research is the most

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

important process for advancing knowledge for promoting progress and to enable people to
relate more effectively to his/her environment to accomplish his purpose and to resolve his
conflicts. Although it is not the only way, it is one of the more effective ways of solving
scientific problems.
To be brief, business research is any type of research to identify investment opportunities or start
of a business or subsequent improvement.
In startup, we need to know our target customers and market competition. We need to provide
information for attracting potential investors. Research is a must for analyzing strengths and
weaknesses of a company, what customers demand or what the business is offering. A company
can focus to serve customers better or gain over competitors or merely on its survival.
Research is a wide field and has many branches like agricultural research, medical research,
educational research and physiological research.
Likewise, business research is an important sub-sector of research and encompasses: market
research, financial research, operation research, human resource research, and others business
function.
Business research is the application of the scientific method in searching for the truth about
business phenomena. These activities include defining business opportunities and problems,
generating and evaluating alternative courses of action, and monitoring employee and
organizational performance. Business research is more than conducting surveys. This process
includes idea and theory development, problem definition, searching for and collecting
information, analyzing data, and communicating the findings and their implications.
A business manager faces problem, big or small, on daily basis which should be solved by
taking a right decision. Business research is systematic or a step-by-step approach. It can help the
manager to identify and solve small problems, discriminate good research from a bad one by
studying its scope, methodology, check and balance to ensure authenticity. Sound knowledge of
research would also enable a manager to assume calculated risks rather than total risk while
deciding about a change in procedure or location. A manager participates in all types of decisions
whether strategic, tactical or technical. Once again research would help make a better decision
and at the same time contain the losses to a minimum level should the decision backfires.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

An organization can develop a business research department where skilled administrative and
technical personnel can be appointed for a full time research career. Finally, the research job can
be out-sourced to consultant and researchers.

1.2 Motivation of Doing Research

Research is not a trouble free duty rather it is time consuming, tiresome and expensive
undertaking. Despite these all difficulties many people especially in academic institute would
like to carry out research at least once in their life.
The possible motives for doing research can be either one or a combination of the following.
1) Desire to get degree with its consequential benefit. The graduate and postgraduate students
are required to carry out research project as a partial fulfillment to obtain their master and Ph D.
degree. Research is therefore, prerequisite to complete their study.
2) Desire to get respect and promotion (to own respect in society) in academic and research
institutions publication is crucial for promotion and academic rank. “Publish or perish” is a
phrase commonly used in experienced and well established academic institutes. This implies and
individual should carry out a research activity and publish his findings in scientific or
international journal in order to get respect and academic rank. If not the individual will “perish”
meaning no proportion or academic rank and hence no respect is possible for that individual in
the academic environment.
3) Desire to face a challenge in solving the unsolved problem. Concern over a particular
problem initiates a researcher.
4) Desire to get intellectual joy of doing some creative work. Research will give the
opportunity to get intellectual joy of doing some creative work. Participation in some creative
activity will give some professional personal satisfaction.
5) Directive of government. Government sometimes gives directives to its employees to carry
out a particular study and investigation for better decision making ground. Ideally and policy
before implementation requires detail study and analysis of its impact on different parts of the
society.
6) Employment condition. Some employers set as criteria at least one publication in
international journal.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

1.3. Types of Research

Like its definition research has been classified differently. Generally research can be classified
on the basis of the following traits.
1. On the basis of the outcome of the research: Whether the research tries to solve a particular
problem or makes a general contribution to the knowledge, research can be:
A. Fundamental Research
This form of business research is where the motive is to generate a body of knowledge by
developing an understanding on how certain problems that occur in the organizations could be
solved. There is a definite possibility that organizations might transfer the learning from the
research to the workplace for problem solving. For instance a research carried out at a university
facility on “Motivating Employees in times Recession with Low Pay” could be a useful piece of
work, and could be applied to practical settings when businesses are facing downturn. Thus
research done primarily to enhance understanding on certain problems that commonly occur in
organizations is called basic, fundamental or pure research.
In general, fundamental research is concerned with the theoretical aspect of science. In other
words it studies the laws of nature, without or regardless of the immediate application of its
findings.
Example:
 The relationship between crime and economic status is an example of pure (academic)
research.
 Darwin Theory of Evolution
 Newton‟s law of Motion
 Einstein Theory of Relativity
B. Applied research
A research aimed at finding a solution for an immediate problem facing a society, a group or
industry (business organization). The results of such research would be used by either individuals
or groups of decision makers or event by policy makers. Applied form of business research
originates from real work problems that require timely solutions. For example a product may not
be selling well and the manager might want to find the reasons for this in order to take action or

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

Business is facing problems in retaining employees, or there is higher degree of absenteeism in

the business. All these are problems that require the business to find immediate solutions;
otherwise the business would fail to run smoothly. Thus research carried out with the intention of
applying the results of the findings to solve specific problems is applied business research.
While pure research discovers principles and laws, applied research discovers their application in
solving some social, economic or any other problems.
Example:
 The improvement of safety in the working place
 The reduction of wastage in the working places is example of applied research.
2. On the basis of the purpose (the reason why a research is conducted) it can be:
A. Exploratory research (pilot Survey)
It is also called preliminary research. As its name implied, such research is aimed at discovering,
identifying and formulating a research problem and hypothesis. When there are few or no studies
that can be referred such research is needed. The aim of this type of study is to look for patterns,
ideas, or hypothesis, rather than testing or confirming a hypothesis. In exploratory research the
focus is on gaining insights and familiarity with the subject area for more rigorous investigation
at a later stage.
B. Descriptive Research
Descriptive research is a research which describes phenomena as they exist. It is used to
identify and obtain information on the characteristics of a particular problem or issue. The main
purpose of such research is description of the state of nature or affairs as it exists at present. In
social science and business research we often use the tern ex- post facto research for descriptive
research. The main characteristic of such research is that the researcher has no control over the
variables; he/she can only report what has happened or what is happening.
Example:
What is the absentee rate in office or manufacturing department?
What is the qualification of different groups of employment?
Frequency of shopping
Preferences of people
Ex- post facto studies also include attempts by researchers to discover causes though they cannot
control the variables.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

Goals of Descriptive research

 To provide an accurate profile of a group
 To describe a processes, mechanism or relationship
 To provide a verbal or numerical picture about a phenomenon
 To find information to stimulate new explanations
 To present basic back ground information of a context
 To create a set of categories or classify types
 To document information that contradicts prior beliefs about a subject
C. Analytical or explanatory research
Analytical research on the other hand, goes beyond simple description of the state of nature.
When a researcher encounters an issue that is already known and have a description of it you
may begin to ask “why” things are the way they are. Analytical research uses facts or
information already available, and analyzes them to make a critical evaluation of the material.
Not only describe the characteristics, but also it analyzes and explains why and how it happened
or is happening. The information or facts used here can be either qualitative or quantitative
Goals of analytical research
 To determine the accuracy of a principle or a theory
 To find out which competing explanation is better
 To advance knowledge about an underling process
 To link different issues or topics under a common general statement
 To build and elaborate a theory so it becomes more completes
 To extend a theory or principle in to new areas or issues
 To provide evidence to support or refute an explanation or prediction
Example
 How can we reduce the numbers of complaints made by customers?
 How can we expand the range of our services?
C. Predictive research
Such research goes beyond explaining why and how things happened. It predicts (forecast) the
possible (probability) of happening similar situation in other places. It tries to explain about the
probability of happening similar thing in the future. Predictive research aims to generalize from
the analysis by predicting certain phenomena on the basis of hypothesized, general relationships.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

Example
 How would an increase in interest rate affect our profit margin?
 In which city would it be most profitable to open a new retail outlet?
3. On the basis of the process of research: That is, on the basis of data used in the research
process research can be:
A. Qualitative research:
Such research is applicable for phenomenon that cannot be expressed in terms of quantity. This
related to quality and kind. Research designed to find out how people feel or what they think
about a particular subject or institution is an example of such research.
B. Quantitative research
Quantitative research is on the other hand is concerned with quantitative phenomenon. It is based
on the measurement of quantity or amount. It is applicable for phenomenon that can be expressed
in term of quantity. A quantitative approach involves collecting and analyzing numerical data
and applying statistical tests. Quantitative research is more objective in nature.
4. On the basis of the environment in which the research is carried out research can be
A. Field research: It is a research carried out in the field. Such research is common in social
science, agricultural science, history and archeology.
B. Laboratory research: It is a research carried out in the laboratory. These are commonly
experimental research. Such researchers are common in medical science, agriculture and in
general in natural sciences.
C. Simulation research: Such research uses models to represent the real world. Simulation is
common in physical science, economics and mathematics.
5. On the basis of the time required to complete the research, research can be
A. One time research: It is a research limited to a single time period
B. Longitudinal research: Such research is also called ongoing research. It is a research carried
out over several time periods.

1.4. Research and Scientific Method

All research, whether basic or applied, involves the scientific method. The scientific method is
the way researchers go about using knowledge and evidence to reach objective conclusions about
the real world. The scientific method is the same in social sciences, such as business, as in
physical sciences, such as physics. In this case, it is the way we come to understand business
Prepared by Birhan Sura 2015 E.C.
Micro Link Information Technology College Research Methods in Accounting and Finance

phenomena. In the scientific method, there are multiple routes to developing ideas. When the
ideas can be stated in researchable terms, we reach the hypothesis stage. The next step involves
testing the hypothesis against empirical evidence (facts from observation or experimentation).
The results either support a hypothesis or do not support a hypothesis. From these results, new
knowledge is generated.
In basic research, testing these prior conceptions or hypotheses and then making inferences and
conclusions about the phenomena leads to the establishment of general laws about the
phenomena. Use of the scientific method in applied research ensures objectivity in gathering
facts and testing creative ideas for alternative business strategies. The essence of research,
whether basic or applied, lies in the scientific method. Thus, the techniques of basic and applied
research differ largely in degree rather than in substance.

1.4.1. Objectives of Research

Any research activity is designed to discover and answer to questions through the application of
scientific procedure. It is an activity amid at finding out the truth which is hidden and which has
not been discovered yet or to verify or reject that the existing phenomenon (theory, principle or
law) accepted as true.
Though each research study has its own specific objectives, any research has got the following
common (general) objectives.
 To generate new knowledge, principle and scientific law
 To review and synthesize existing knowledge. That is, to verify the validity of the previous
work.
 To investigate some existing situation or problem
 To explain new phenomenon
 To examine the cause of the problem
 To examine the nature of the problem
 To provide solution to a problem
 To construct or create a new procedure and new system
 A combination of any one of the above

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

1.5. Research Process

Before starting the details of research methods, it is appropriate to have a brief overview of the
research processes. Research processes consists of a series of actions or steps, which are
necessary to successfully carry out research activities. These activities (steps) can overlap
continuously rather than the following strictly prescribed sequence. The first step can determine
the nature of the last step to be under taken. These steps are not separated and distinct. They do
not necessarily follow each other in any specific order.
However, the following order of steps provides a useful procedural guide line regarding the
research process:
1. Identification and formulating the research problem
2. Extensive literature survey
3. Developing working hypothesis
4. Preparing the research design
5. Determining sample design
6. Collecting data
7. Execution of the project
8. Analysis of the data
9. Hypothesis testing
10. Generalization and interpretation
11. Reporting the result

1.6. Characteristics of Good Research

Good research is characterized by the following characteristics;
1) Good research is systematic: it means that the research is structured with specific step to be
taken in specified sequence in accordance with the well defined step of rules.
2) Good research is logical: this implies that the research is guided by the rules of logically
reasoning and the logical process of induction and deduction are of great value in carrying out
research.
3) Good research is empirical: it implies that research is related basically to one or more
aspects of a real situation and deals with concrete data that provides a basis for internal validity
to research results.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

4) Good research is replicable: this characteristic allows research results to be verified by

replicating the study and thereby building a sound basis for decisions.
Besides, the above characteristics of good research involve the following characteristics:
a) Purpose of research should be clearly defined,
b) The process of the research should be detailed,
c) Research design should be thoroughly planned,
d) In research high ethical standards should be applied by the researcher,
e) The limitations of research should be frankly revealed,
f) The outcome of the research should have adequate analysis for decision makers needs,
g) Findings of the research should be presented unambiguously,

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

DEFINING RESEARCH PROBLEM AND HYPOTHESIS

FORMULATION
2.1. Definitions of Research problem
Research forms a cycle. It starts with a problem and ends with a solution to the problem. The
problem statement is therefore the axis which the whole research revolves around, because it
explains in short the aim of the research.
A research problem is the situation that causes the researcher to feel apprehensive, confused and
ill at ease. It is the demarcation of a problem area within a certain context involving the WHO or
WHAT, the WHERE, the WHEN and the WHY of the problem situation.
On the surface, “problem” appears to be very easily defined. Dictionary definitions
include “a Situation, person or thing that needs attention and needs to be dealt with or
solved” (Cambridge online dictionary, 2007)
“A question raised for inquiry, consideration, or solution” (Merrian Webster online
dictionary, 2007).
From a scientific perspective, a research problem is defined as a general issue, concern, or
controversy addressed in research. Moreover, a research problem “must integrate concepts and
theoretical perspective of the literature into the problem to be addressed”. A research Problem,
in general, refers to some difficulty, which a researcher faces (experiences) in the context of
both a theoretical or practical situation and wants to obtain a solution for the same.
A research problem exists if at least two elements are present.
i) The current state differs from the ideal state (Sekaran, 2003).
ii) There is not an “acceptable” solution available.
The absence of an acceptable solution can entail either there being no solution documented in the
literature, or the solutions noted in the literature leading to mixed results or contradictions (i.e.
not properly addressing the problem) (Creswell, 2005).

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

There are many problem situations that may give rise to research.
Three sources usually contribute to problem identification.
1) Own experience or the experience of others may be a source of problem supply.
2) Scientific literature. You may read about certain findings and notice that a certain field was
not covered. This could lead to a research problem.
3) Theories could be a third source. Shortcomings in theories could be researched.
2.1 Principal Component of Research Problem Formulation
Research can thus be aimed at clarifying or substantiating an existing theory, at clarifying
contradictory findings, at correcting a faulty methodology, at correcting the inadequate or
unsuitable use of statistical techniques, at reconciling conflicting opinions, or at solving existing
practical problems.
Three principal components to be considered in the formulation of research problem:
i) The originating questions (what one wants to know?)
ii) The rational- theoretical or practical (why one wants to have the questions answered?)
iii) The specifying questions (possible answers to the originating) questions in term of that
satisfy the rationale.)

i) The originating Questions

Represent the beginning of certain difficulties or challenges
Are formulated in such specific indicate where exactly the answers to them can be searched
for.
Constitute the initial phase in the process of problem formulation.
May be formulated in terms of broadly delimited categories of social variable but do not
indicate specifically which particular variables in each class might be relevant to the issues.
Usually derive from a general theoretical orientation rather than a definite theory.

ii) Rationale of Questions

Is the statement of reasons why a particular question is worth putting a cross?
States what will happen to other parts of knowledge or practice if the question posed is
answered, i.e., how the answer to the question will contribute to theory and/ or practice.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

Helps to effect discrimination between scientifically good and scientifically trivial questions.
iii) Specifying Questions
Culminate the process of formulating a research problem
Involve the breaking down of originating question in to several specifying questions related to
particular aspects and their consequences.
2.2. Techniques or Approaches to Problem Definition
Research originates from a need that arises. A clear distinction between the PROBLEM and the
PURPOSE should be made. The problem is the aspect the researcher worries about, thinks
about, and wants to find a solution for. The purpose is to solve the problem, i.e. find answers to
the question(s). If there is no clear problem formulation, the purpose and methods are
meaningless.

Keep the following in mind:

Outline the general context of the problem area.
Highlight key theories, concepts and ideas current in this area.
What appear to be some of the underlying assumptions of this area?
Why are these issues identified important?
What needs to be solved?
Read round the area (subject) to get to know the background and to identify unanswered
questions or controversies, and/or to identify the most significant issues for further
exploration.
Research problems can be stated in the form of either questions or
statements.
 The research problem should always be formulated grammatically correct and as
completely as possible. You should bear in mind the wording (expressions) you use.
Avoid meaningless words. There should be no doubt in the mind of the reader what your
intentions are.
 Demarcating the research field into manageable parts by dividing the main problem into
sub problems is of the utmost importance.
Sub problem(s): Sub problems are problems related to the main problem identified. Sub
problems flow from the main problem and make up the main problem. It is the means to reach
the set goal in a manageable way and contribute to solving the problem.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

Statement of the problem:

The statement of the problem involves the demarcation and formulation of the problem, i.e. the
Who, What, Where, When, and Why. It usually includes the statement of the hypothesis.

CHECKLIST FOR TESTING THE FEASIBILITY OF THE RESEARCH PROBLEM

YES NO
1 Is the problem of current interest? Will the research results have social,
educational or scientific value?
2 Will it be possible to apply the results in practice?
3 Does the research contribute to the science of education?
4 4 Will the research opt new problems and lead to further research?
5 5 Is the research problem important? Will you be proud of the result?
6 6 Is there enough scope left within the area of research (field of research)?
7 7 Can you find an answer to the problem through research? Will you be able
to handle the research problem?
8 8 Will it be practically possible to undertake the research?
9 9 Will it be possible for another researcher to repeat the research?
10 10 Is the research free of any ethical problems and limitations?
11 11 Will it have any value?
12 Do you have the necessary knowledge and skills to do the research? Are you
qualified to undertake the research?
13 13 Is the problem important to you and are you motivated to undertake the
research?
14 Is the research viable in your situation? Do you have enough time and
energy to complete the project?
15 15 Do you have the necessary funds for the research?
16 Will you be able to complete the project within the time available?
17 Do you have access to the administrative, statistic and computer facilities
the research necessitates?
TOTAL

2.2.1.Points to be observed by a Researcher in Selecting a Research Problem

1. Subject which is overdone should not be normally chosen, for it will be a difficult task to
throw any new light in such a case.
2. Controversial subject should not become the choice of an average researcher
3. Too narrow and too vague problems should be avoided
4. The subject selected for research should be familiar and feasible so that the related research
material or sources of researcher are within one‟s reach.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

5. The importance of subject, the qualification and the training of a researcher, the costs
involved, and the time factor are few other criteria
6. The selection of a problem must be preceded by a preliminary study

2.2.2. Sources of Research Problem

There are some important sources of problems, which are helpful to a researcher for selecting a
problem. These include the following:
1. Theory of once own interest.
In such situations the researcher must have thorough knowledge of that theory and should be
sufficiently inquisitive to explore some unexplained aspects or assumptions of that theory. For
example, theory X and theory Y of leadership, motivational theories, and any other theories can
be a possible GAP for doing a research.
2. Daily problems.
Research problem can also be selected on the basis of daily experience of a researcher. Everyday
problems constantly present something new and worthy of investigation and it depends on the
worthy of investigation and it depends on the sharpness of the researcher intellect to join his
daily experiences in to a research problem. In our day to day life we have encountered from so
many problem. For example, while we are travelling by bus, we can observe problem such as
how passengers treated by driver and assistant driver; while you go to Bank you can observe so
many problems that can be researchable, such as dalliance of services, boost of teller.
3. Technological changes.
Technological changes in a fast changing society are constantly brought forth new problems and
new opportunities for research. What is the impact of a changed technology on the existing socio
– economic set up, always interests the researcher and tempts him to undertake such studies as
are revealing regarding the impact of new technology on the existing system. For example,
Change in methods of service delivers such as using cash register machine, using soft ware in
banking industry, implementing different approach to management such BPR, BSC, kaizen, and
others in organizations.
4. Unexplored areas.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

Research problems can be both abstract and of applied interest. These may also be selected from
those areas which have not been explored so far. Such area may be theoretical or empirical in
nature. For example, conducting research to find out a medicine that cures HIV/AIDS.
5. Discussions with other people.
Sometimes the researcher while discussing the interest with some other people may come across
a problem that can be researched by the investigator. The problem may relate to any source as
discussed above. For example, discussion with officials, discussion with coworkers, and friends
can enable to come up with research problem. In the same way reading assignments in text
books, special assignments, research reports and term papers may also suggest some additional
areas of needed research.
2.3. Components of Research Problem
The problem is consists of the following components
1. The decision maker (which can be individual, organization, etc..,) who has some difficulties or
problem.
2. There must be some objectives (goals) to be attained at. If one wants nothing then, cannot
have a problem. The objective of the decision maker provides motivation to solve the problem.
3. There must alternative courses of action for obtaining the objective(s) one wishes to attain.
If individual has no choice of alternative, he cannot have a problem.
4. There must remain some doubt in the mind of a researcher with regards to the selection of
alternatives.
5. There must be some environment(s) to which they difficulty pertains.
Thus, a researcher problem is one which requires a researcher to find out the best solution for the
given problems
2.3.1Criteria of a Good Research Problem
Factors to be taken in to account in the choice of research problem are both external and
personal. External criteria involve such issues as newness and significance for the area,
availability of data and method and administrative and institutional cooperation personal criteria
include such consideration as interest, training, cost and time.
The following are more detailed list of criteria for the choice of research problem.
1. Novelty: It should be sufficiently original so that it does not involve objectionable duplication.
Ignorance of prior studies may lead a student to spend time a problem already investigated. The

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

study should also employ the most recent data. Although originality is an important
consideration, there is also a constant need for verification of the findings of the previous
investigations, using newer and better devices and procedures. There is also a need for the testing
of former findings under changed conditions.
2. Interesting: The problem should be interesting for the investigator him/herself. If he/she is
not interested in to, he/she will be able to face and overcome the obstacles which come at every
step in research. His interest should be purely intellectual and should not be there only for a
reward, material benefit, advancement in position, increased authority, etc.
3. Importance: If it is not worthwhile, it adds to neither knowledge nor lead to any
improvements in the current practices, it would be in vain set up as a discipline and to previous
research findings in any way.
4. Immediate Application: The investigator should ask him/her self-question, “will my research
help in solving an urgent problem”
5. Feasibility or Amenability: The suitability of the problem for a particular research worker is
the matter of its feasibility. The investigator should be able to carry it to a successful conclusion.
He should possess the required competence, knowledge and understanding. He should be skillful
enough to develop, administer, and interpret the necessary data – gathering devices and
procedures etc.
Feasibility issue of research includes the following:
Availability of data
Availability of cooperation
Availability of guidance
Availability of other facilities
Experience and creativity,
Coverage and confidence
2.3.2. Common Errors in Formulating Research Problem.
i) Naming a broad field: To choose the broad area of study instead of specific problem makes
no justification.
ii) Narrowing or localizing a topic: The problem should not be narrowed to such an extent that
it becomes too small and insignificant from research point or view.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

iii) Lock of Precisions in the instrument: If the tools, tests, or devices, which are proposed to
be used in data collection and analysis, are no precise enough; they may result in another
constant error.

2.4. Research Hypothesis and Research Questions

2.4.1. Research Hypothesis

Hypothesis form is employed when the state of the existing knowledge and theory permits
formulation of reasonable prediction about the relationship among variables. Hypothesis is
considered as the principal instrument in research. Its main function is to suggest new
experiments and observations. Decision maker often face a situations wherein they are interested
in testing hypotheses on the basis of available information and then take decisions on the basis of
such testing.
The term hypothesis refers to an idea or a suggestion that is based on known facts and used as a
basis for reasoning or further investigation. It is also referred to as a mere assumption or some
supposition to be proved or disproved. Quite often a research hypothesis is a predictive
statement, capable of being tested by scientific methods.

Examples of hypothesis:
 An increase in sales person‟s effort will increase the sales of a product
 Business faculty students purchase more than the education students
 Females are more loyal than males in repayment of loan

Role of hypothesis
In research, a hypothesis serves important functions:
It guides the direction of the study
It identifies facts that are relevant and those that are not
It suggest which form of research design is likely to be most appropriate
It provides a framework for organizing the conclusions that result

Characteristics of Hypothesis
A good hypothesis must possess the following characteristics
Hypothesis should/must be:

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

Clear and precise

Capable of being tested
State relationship between variables
Limited in scope and must be specific
Consistent with most known facts
Stated as far as possible in simple terms
Amenable to testing within a reasonable time
Explain the facts that gave rise to the need for explanation
Difficulties in the formulation of Hypothesis
 Lack of knowledge and clarity of the theoretical frame work of the area in which the
investigator chooses to work.
 Lack of ability to make use of the theoretical frame work logically.
 Lack of acquaintance with available research techniques. This result in failure of phrasing
the hypothesis properly.
 Vagueness of the statement

2.4.2. Research Questions

A Research Questions is a fact oriented information gathering question. This is the point at
which the insight and expertise of the researcher come in to play. It should be remembered that a
choice of wrong research for the right problem can be dangerous. A research question is a single
question that best states the objective of the research study. On occasion, it may be more than
one question, but often, it is just one.
This is the question that you are trying to answer when you do research on a topic or write a
research report. It should be as specific as possible. In some cases, you may make two or more
research questions to cover a complex topic. For example, if you are studying the effects of
sleep on reflexes, you might formulate the following research questions:
What are the effects of sleep on reflexes?
Is maximum reflex efficiency achieved after eight hours of sleep?
If you are studying on causes and consequences of employees‟ turnover, you might formulate the
following research questions
 What are the causes for employees‟ turnover?
 What consequences does employees‟ turnover bring to organizational performance?
Prepared by Birhan Sura 2015 E.C.
Micro Link Information Technology College Research Methods in Accounting and Finance

RESEARCH PROPOSAL

3.1. Definitions of Research Proposal

A research proposal is a written document requesting both authorization and funds to undertake
a specific research project. It always includes a statement of explaining the purpose of the study
or a definition of the problem. It systematically outlines the particular research methodology and
details the process that will be utilized at each stage of the research process.
A written proposal is often required when a study is being suggested. It ensures that the parties
agree on the projects purpose and on the proposal method of investigations. Depending on the
needs and desires of the investigator, substantial background detail and elaboration of proposal
techniques may be included.
It is also the road map of the research which reveals about the what, who, when, why, how of the
research project.
In research proposal:
What information will be required?
What research procedures will be implemented?
Will be clearly specified so that others may understand their exact implications

3.2. Function of the Research Proposal

Research proposal may function at least in three ways, namely, as a means of communication,
as a plan and as a contract
1. Proposal as a means of communication serves to communicate the investigators research
plan to those who give consultations and/or disburse fund. Proposal is the primary source on
which the graduate students‟ thesis or dissertation committee must base the function of:
Review
Consultation
And more importantly, approval for implementation of the research project
In general, the quality of assistance and the probability of financial support will all depend
directly on the clarity and justification of the proposal.
2. Research proposal as plan, helps the researcher to organize his ideal in a systematic manner
and to look for strengths and flaws, a successful proposal sets out the plan in step by step detail.
Prepared by Birhan Sura 2015 E.C.
Micro Link Information Technology College Research Methods in Accounting and Finance

That is, it provides and inventory of what must be done and which materials have to be collected
as a preliminary step.
Generally, the acceptability of results is judged exclusively in terms of the adequacy of the
methods employed in recording, analyzing and interpreting the data in the planned study.
3. Proposal also functions as a contract. A completed proposal approved for execution and
signed by all members of the sponsoring committee, constitute a bond of agreement between the
researcher and that committee
An approved grant proposal results in a contract between the investigator (and often the
university) and funding sources.
Proposal for thesis and dissertation should be in final form prior to the collection of data.
Once document is approved in final form, neither the student nor the sponsoring faculty
members should be free to alter the fundamental terms of the contract by unilateral decision.
! The general purpose for writing proposals includes:
1. To present the problem that will be researched and to show its importance
2. To discuss the research efforts of others who have worked on related problems
3. To identify the data that are necessary for solving the problem and how these data will be
gathered, treated, and interpreted.

3.4. Reasons Why Research Proposal Fail

The research Proposal may be failed by sponsoring institutions or advisor because of the
following:
1) Aim and objectives of the research proposal are unclear
2) There is a mismatch between the approach being adopted and the issues to be addressed
3) The overall plan is too ambitious and difficult to achieve in the time table
4) The researcher does not seem to have conducted enough in depth background research
5) Problem is of insufficient importance
6) Information about data collection is insufficiently detailed
7) Information about the data analysis method is insufficiently detailed
8) Time scale is inappropriate or unrealistic
9) Resources and budget have not been carefully thought out

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

10) If the topic selected has been done too many times before-indicates a lack in background
research

3.5. General Format and Elements of Proposal

There is no a hard and a fast format in scientific research proposal writing. It varies from one
organization to another and from one country to another. Some universities and funding agencies
make very specific demand for the format of proposals. Others provide general guidelines for
form and content. Though the format varies, the essence expressed in different proposal remains
the same.
The major components (Elements of proposal
1. Cover Page
2. Title
3. Abstract (Optional)
4. Introduction
5. Rationale and Justification
6. Objective of the study
7. Literature review
8. Materials and methods (methodology)
9. Work plan (time budget)
10. Cost budget
11. References
12. Appendix
Each of them can have their own separate section in research proposal. Each main section should
begin on a new page. Some can be merged. Some on the other hand can be split into separate
sections or into further subsections.
1. Cover Page: Cover page contains introductory information for the proposal: the names of
the proposed project or title of the research, the author of the proposal or principal investigator
and the institution which funds the research or academic/research institute in which the research
will be done, and date (month, year). Some funding agencies have standardized cover page that
may contain additional information.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

2. Title: The title is one of the most important parts of a proposal. The title, which reflects the
research under consideration, must be chosen based on the criteria the relevance it has, the
feasibility of undertaking the study, the applicability of the research result, and the cost
effectiveness.
The title should be:
As explicit as possible and transparent
Clear and short
Capture and reflect the content of the proposal.
Enable the readers to understand the concepts of the study
Try to get the title down to one line or two maximum
3. Abstract (Optional in Proposal)
Is summary, which reflects the whole content of the proposal (most of the time less than 300
words).Abstract should be concise, informative and should provide brief information about the
whole problem to be investigated? An abstract is known by different names like executive
summary, synopsis, and epitome. It gives executives the chance to grasp the essentials of the
proposal without having to read the details.
The abstract of a proposal should contain the following points
Title or topic of the research
Statement of the problem and objective/s
Methodology of investigation
Expected result (tentative only if a researcher starts with a formulated hypothesis)

4. Introduction
This section in research proposal should give the general background of the study and the need
for undertaking the study. It reviews the previous work to reveal what is known of the subject.

Some question to be addressed in this part may include:

What are current and previous studies that have been made on the issues to be studied?
What is the present gap in knowledge and current trend?
What makes worth studying?
Why has the problem not been solved yet?
What do we intend to fill the gap or solve the problem?

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

If the researcher finds this section to be very vast he/she can add (split this section) a section
(heading) called “rationale” and or the problem statement.

5. The Rationale/Statement of the Problem or Justification of the study

The rationale provides some of the reasons for doing the study and its importance. Citations from
the past research may be relevant here; likewise recent political and economic events, previous
efforts to solve the problem that did not succeed can be mentioned.
Clarity in statement of the problem is important for the following three basic reasons
i) It is the foundation for the development of research problems which are necessary for securing
funds.
ii) It enables the researcher to describe the problem practically, to think about its importance, its
priority and to point out all the necessary points
iii) It provides the research with the basis for discussion with people in the community, the
relevant government \agency, and /or the potential funding agency.

6. Objective
In this section, the proposal can indicate what is expected to occur and why, suggest the variables
that determine a relationship, or provide an explanation for a phenomenon to that has been
observed, which strengthens the proposal and research agenda.

Generally this section should focus on the points

 What is to be achieved by the proposed investigation has to be stated clearly and
concisely
 Should be to the point and logically arranged
 Should be stated in a from which shows the relations between variables
 Must clearly state the target of the research activity, i.e. what kind of results are expected
or sought from conducting research.

7. Literature review
Literature review means locating literature in a variety of sources reading it carefully and
thoroughly organizing it in to these along with the line of investigation. Types of reviewed
literature can be
Theoretical works

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

Methodological review
Original findings and reviews of them
It is not necessary to have a separate heading for the review of literature in a proposal. In many
respects it is more useful to show that such a review has been made by citing useful literature in
problem statement (introductory part), objective, methodology and where ever this information
has been helpful in developing the research proposal.
The researcher may decide to have a separate heading for review literature when the wants to
develop theoretical frameworks reviewed from different sources, detailed explanation and
extensive references of the research outcomes related o the proposed study.

8. Material and Methods (Methodology) or Data and Methodology

The methodologies are the core and the largest part of the scientific research proposal. The
methodologies are largely descriptive. This section is an essential prerequisite for validating the
results and hence acceptability of the proposal.
An accurate, clear and valid methodology is required so the peers can:
 Replicate the experiments described in an experimental research
 Modify them with assurance that the modification is different from the original in
particular way
 Apply them under different conditions
Methodology should give full details to show how the research activity is going to be carried out
Since this section is the largest and the most important part of the research proposal, researchers
are advised to split it in to sub sections. Such effort makes the proposal transparent and clear to
the readers as well as the reviewing committee and therefore, minimizes the risk of being
rejected by a research committee (examiners board).
The suggested sub sections can be:
 Data (materials)
 Methodology (methods)

8.1 Data (some authors prefer Materials)

In this subsection of the methodology, information required to attack the problems is explained.
Each variable or indicator identified by a researcher is explained and justified to show how it is
relevant to the current study. The source of the data, the site (location) of the study and time that

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

will be included (relevant time period) should also be specified. Detailed techniques of sampling,
data collection and method of analysis would be left to the next sub section. This is important
particularly when a researcher plans to collect primary data to test the basic hypothesis.

8.2 Methods (Methodology)

In this subsection the details of all technical matters will be explained. These include:
 Method of data collection: how the data are obtained from earlier specified sources?
There are different methods to collect primary data. All available methods are expected to be
considered by a researcher and the best one is selected. The researcher explains and justifies how
his/her selection of a particular method is relevant and appropriate to his study.
 Method of sampling: from which elements are the data collected?
The researcher has to specify the elements from which the desired information is collected and
how these elements are selected. There are different sampling techniques. The researcher is
expected to consider all of them and select the one, which is appropriate for the current study.
Justification of his/her choice of a particular sampling technique is relevant here. The sample
size should also be specified with its method of sample size determination.
 Method of analysis: once the information is collected how it will be processed and
analyzed will also be explained.
Particularly if the researcher uses mathematical models like simple or multiple regression, time
series or liner programming models, he has to show their mathematical derivations and relations
briefly to demonstrate their relevancy for the current study.
 Method of presenting the outcome: Sometimes it is worth to mention how the outcome
of the research will be presented to consumers (general public).
This is important if the research is not a part of a particular study program (like, master or
doctoral study).

9. Budget of time
A time table explaining how the researcher expects to carry out his project and when each of the
important phases will be completed is helpful to both the researcher and the reviewer. It is a plan
in terms of numbers of weeks or months and expected completion dates. Commonly researcher
presents it in a table form.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

The length of time required for postgraduate study (Doctoral study) is determined by the budget
of the time presented by students. Thus researcher should be realist in budgeting his time.

10. Cost budget

Most proposals put together with the expectation what funding will be necessary and an itemized
list of the items needed to carry out the methodology is listed in some detail.
Personal needs, including the principal researcher‟s time are included.
These are items like:
Field expenses for data collection
Pay for consultants where they are necessary
Travel and all such items needed to be detailed
A sum of money for contingencies
A carefully developed budget reflects the seriousness of the proposal and the degree to which it
is a realistic assessment of what is needed.

11. Reference or Bibliography/ Literature cited)

All works cited in the proposal are listed either alphabetically or numerically at the end of the
document usually under the heading of “References or Bibliography”
Some conservative authors would like to make distinction between references and bibliography
as mentioned below:
References: are lists of literature, which have been cited in the text of a document
Bibliography: includes also items, which were not cited but are relevant to the
document.
There are several ways of making citation and recording references. The two main systems of
referring are:
A. Harvard system: this system uses author‟s name, date and page reference. This system is
used mainly by Anthropology, Social science and in life science research.

Harvard system is recommended to be used in business research.

B. Vancouver system: uses in text number instead of an author, date and page reference.
It is used in the applied science such as chemistry, physics and mathematics.
Harvard system
 The reference list must include all published works referred to in the text.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

 Each reference to a periodical publication must include in order, the name (s) of the
author(s) the year of publication, the full title of the article, the publication in which it
appears, and the volume and inclusive page number
 Reference to a book must give the author or authors‟ name(s) , the year, the title the
edition, if other than the first; the publisher, the city of publication, and the number of the
volume (if two or more).
Example of some of the common types of literature citation (J. Hussey AND Hussey, 1997)
i. Citation: Citation under the Harvard system:
In an investigation conducted in large factories, Gibbs (1993) reported that absenteeism was
higher on the night shift than the day.
Citing more than one authors
A number of research studies have been conducted in to the effect of the recession on small
business (smith, 1984: Anderson, 1990; Jones, 1995)

ii. Referring or listing the cited works

A. Reference for books
Hailay Gebretinsae (2007), Entrepreneurship and Small Business Management, 2nd ed.,
Mekelle University, Faculty of Business and Economics, Mekelle, Ethiopia
B. Reference for Journal article
Porter, Michael E. (1994), competitive advantage of nations, Harvard Business Review,
68(2), pp. 73 – 83
C. Other reference
It is possible to cite quote or paraphrase unpublished work if they are relevant to the study.
Unpublished works are:
 Personal communication with experts (professionals)
 Unpublished data collected by other researchers
 Unpublished research works
 Public speeches
 Conferences discussion and the like
The researcher should not put such an unpublished work in reference list unless it has been fully
approved and a date set for its publication.

Prepared by Birhan Sura 2015 E.C.

Micro Link Information Technology College Research Methods in Accounting and Finance

Unpublished references are not usually found or catalogued in libraries. And such unpublished
reference should be placed in the body of the text, not in the reference list.
Use parenthesis to enclose the complete name of the author, the year (if available) and
appropriate title, location, or other information needed to establish the authenticity of the
reference or help the reader locate it.
For Example
“…………………” (David Lee, Cornell University, 1995 personal Communication)
“ ………………” (Yilma Kebede, LAR, 1984 unpublished data)
It is also possible to use numbered footnote and will be referred to by using the number as a
superscript at the proper position.
12. Appendix (Annex)
It is not mandatory to have this section. If the researcher thinks that having this section will
increase the quality of the research proposal he/she is free to do so. Information types provided
in this section are those additional details, which are difficult to accommodate within the
standard headings
Stuffs (materials) to be included in appendix:
 Detail Questionnaires and interview schedules
 Detailed experimental design (in experimental research)
 Detailed statistical procedures
 Samples of research materials (chemical and some biological materials if used)
 Survey and other geographic maps

Prepared by Birhan Sura 2015 E.C.