PBL#1: Learning IssuesWhat is environmental disclosure?What is corporate social responsible behaviour?What is the research process?What is a theoretical framework?What is a research concept or research variable?What are the different types of research variables?What is meant by the operational definition of a research concept?What is a hypothesis?

Environmental Disclosure.. backgroundEnvironmental reporting guidelines for Malaysian companies were published in 2003 by ACCA in collaboration with the Department of Environment, MOSTI.In 2005, ACCA published Sustainable Reporting Guidelines for Malaysian companies and the guidelines were endorsed by MOSTI and Bursa.In 2006, Bursa published a social responsibility framework to guide social corporate responsibility (CSR) or sustainability reporting by all public-listed companies. The CSR items disclosed are voluntary and companies are not required to explain reasons for not conducting any CSR activities.

CSR Information ItemsHuman resource development, health & work safety Product safety and quality Energy savingEnvironment protection and waste preventionSocial & community contributions

Corporate Social Responsible (CSR) BehaviourExamples of socially irresponsible corporate behaviour are deceiving customers, swindling investors, exploiting and even brutalizing employees, putting consumers at risk, poisoning environment, cheating government etc (Vogel, 1992).Socially responsible corporate behaviour is exactly the opposite, and generally reflects maintaining standards of honesty & integrity, and not solely philanthropy.

The Research Process

Theoretical FrameworkA theoretical framework represents how a theory explains the nature of relationship between one (or more) concept(s) or variable(s) and another, and the reason why such relationship exists. It is a logically developed and described network of associations among concepts/variables deemed relevant to the research problem and identified through literature review, interview and observation.The framework forms the basis for development of testable hypotheses in a research study.

Basic Features in a Theoretical FrameworkClearly defined variables that are relevant to the research A conceptual model that describes the realtionships between the variables.A clear explanation for each expected relationship in the model.

Research Concepts and VariablesResearch constructs are images or ideas specifically created for a theory-building and/or research purpose.Research concepts are constructs derived by mutual agreement from mental images. Example: employee motivation, customer satisfaction & audit quality.Research variables are logical sets of attributes (example: high or low) that can vary at different situations for the same object. The variable can be a discrete (male or female) or continuous (income )Every variable must have two important qualitiesThe attributes composing it should be exhaustive (key attributes)Attributes must be mutually exclusive (either total assets or total employees or total sales)

Research ConceptsObjects include persons, strategic business units, companies, countries, restaurants and so on. It is determined by the unit of analysis. Examples of characteristics or attributes (abstract)of objects examined are:Persons morale or motivation, SBU - interdependency, Companies - organizational effectiveness, Countries - ethnic diversity, Restaurants - service quality.

ConceptualizationConceptualization is the mental process whereby fuzzy and imprecise notions (concepts) are made more specific & precise, i.e., the process which we state what we specifically mean when we use those particular terms in research.Conceptualization processes a specific agreed-on meaning for a concept for the purposes of research.

Operationalization Operationalization is the development of specific research procedures that will result in empirical observations representing those concepts in the real world.An operational definition specifies precisely how a concept will be measured that is, the operations we will perform. It is a working definition for the purpose of the enquiry. For example: loan decision quality is defined /measured by number of installments defaulted.

Measurement of Variable Attribute is a characteristic of a variable (example: Gender: male/female, Ownership: local/foreign )Dimension is a specifiable aspect of a concept. For example, Affection or care dimension, knowledge dimension & responsive dimension in service quality concept; Accuracy dimension, relevance dimension & timeliness dimension of information quality concept.Indicator is a specific proxy measure to reflect the presence of a variable.Responsive dimension: time interval taken to satisfy requestCan be substitutable or not substitutable

Achievement Motivation Concept

Types of VariablesFour main categories of variable:Dependent variableIndependent variableModerating variable Mediating variable

Dependent & Independent VariablesDependent variable (DV)Is of primary interest to the researcher. The goal of the research project is to understand, predict or explain the variability of this variable.

Independent variable (IV)Influences the DV in either positive or negative way. The variance in the DV is accounted for by the IV.

Example of DV & IV in the Cross-cultural study

Moderators Moderating variable : Moderator is qualitative (e.g., gender, race, class) or quantitative (e.g., level of reward) variable that affects the direction and/or strength of relation between independent and dependent variable.

Moderating Variable

Mediating VariableMediating variable surfaces between the time the independent variables start operating to influence the dependent variable and the time their impact is felt on it.It helps to explain the influence of the independent variable on the dependent variable.

ICT adoptionUser satisfactionOrganizational performance

HypothesisA proposition that is testable using empirical data. It is an empirical statement concerned with the relationship among variables.Must be developed from the theory (theoretical framework)Good hypothesis:Must be adequate for its purposeMust be testableMust be better than its rivals (alternative theory/explanation)A hypothesis can be:DirectionalNon-directional

HypothesisNull Hypothesis: H0Set up to be rejected in order to support an alternate hypothesis.It states that there is no significant relationship between the variables examoned

Alternate hypothesis: H1The opposite of null hypothesisA statement expresses the (expected) relationship between the variables examined.

Hypothesis statement:H1: Poor service quality is positively related to high incidence of customer switching

H2 Switching cost moderates the relationship between service quality and incidence of customer switching.

Service qualitySwitching cost

Customer switching

Hypothesis Statement:H1: Service quality enhances corporate performance

H2: Customer satisfaction mediates the relationship between service quality and corporate performanceCustomer satisfactionService quality

Corporate performance

Research Design for the Environmental Reporting Study

Theoretical Framework for Research Study on Environmental Reporting Organizational factors:

Ownership structureCompany SizeLeverageMarket Competition

Corporate Performance

Underlying theories: Institution theory; stakeholder theory; scare resource theory; proprietary cost theory; signally theory

Extent & quality of CSR reporting

HypothesesH1: Ownership structure is associated with the extent (& quality) of CSR reportingH2: Larger companies are associated with higher extent (& quality) of CSR reportingH3: High corporate leverage is associate with lower CSR reportingH4: Intensity of market competition is associated with extent (& quality) of CSR reporting.H5: Higher extent (& quality) of CSR reporting is associated with higher corporate performance.

Operational DefinitionOwnership structure: GLC, Institutional, Family-owned.Leverage: Debt/equity ratioCompany size: annual sales, total employees or total assetsMarket competition: H-indexCorporate performance: cost of capital, Tobin-Q, ROI or relative performance

Analytical Method Descriptive statisticsCorrelation analysisCluster analysisRegression analysis

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