BACC 005- BUSINESS RESEARCH

MODULE 4- INTRODUCTION SECTION

(Background of the Study, Research Questions or Hypothesis and
Significance of the Study)

Let us now start our discussion.

Introduction of the research paper

 The Word “INTRODUCTION” is written at the center of the page. Leave two blank
spaces before the subheading.

Subheadings Under the Introduction Section

a. Background of the Study

b. Research Questions or Hypothesis
c. Significance of the Study
d. Theoretical or Conceptual Framework
e. Literature Review

In this module, we shall take the background of the study, research questions or
hypothesis and the significance of the study. There will be a separate discussion
on the theoretical or conceptual framework and the literature review.

How to write the Background of the Study

 This consists of 3-5 paragraphs only to capture the background information on the
topic in order to set the larger context of the study. It is here where we write the
discussion of relevant issues mostly figured in.
 Describe the problem-situation by considering global, national, and local situation.

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 The following should be answered in the background of the study (a) What is known
and not yet known about the subject or topic. (b)What does the expert say? (c) What
are the controversies?
 The researcher may indicate what is wrong in the present system and explain his
desire to discover ways of enriching or improving something, thus the study.
 This section should not just enumerate and describe studies, but, critically review
those studies.
 It assesses both their contribution and limitations and, in doing so, clears the space
for the proposed study.
 Justify the existence of the problem situation by citing statistical data and
authoritative sources (related studies and literature, constitutions, laws, orders,
ordinances, circulars, memorandums, rules) as bases to support the problem.
 In the end of the background of the study, is the research objective which should
logically lead to the research questions.

Example:

WORKING CAPITAL MANAGEMENT PRACTICES OF SMALL FIRMS IN THE

ASHANTI REGION OF GHANA

Small firms play a critical role in providing job opportunities, nurturing a culture of
entrepreneurship, and opening up new business opportunities. They are recognized and
acknowledged worldwide as vital and significant contributors to economic development,
introduction and diffusion of new technology, ability in generating potential entrepreneurs and
skilled workers for the industrialization process both nationally and internationally (Ch‟ng Hak
Kee and Chang Zeph-Yun (1986: 25)

In the UK, SMEs make a major contribution to the health of the economy and help to
diversify opportunity in the society. SMEs in the UK have increased in importance, measured in
terms of their share of manufacturing, employment, and output. The number of SMEs continues
to rise, as does the number of people classified as self-employed. For example, in 1979, there
were only 2.4 million SMEs in the UK. By the year 1999, the number had grown to 3.67 million
(Burns, 2001). The SMEs are in many shapes and sizes: from high-growth start-ups to `life-
style‟ business and social enterprises. Together SMEs account for over 99 percent of the total
number of UK firms and generate 52 percent of total turnover. SMEs employ 12.6 million
people, which represent 56 percent of the private sector workforce. SMEs now generate over a
quarter of UK GDP (Burns, 2001). SMEs form part of the bedrock of local communities,
contributing to both economic prosperity and social cohesion in towns and in rural areas. SMEs
make an important contribution to improving the productivity of UK business (DTI, 2001).

The management of working capital is one of the most important aspects of the overall

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financial management practices of any organization. The existence of an efficient and effective
working capital management can make a substantial difference between the success and failure
of an enterprise. Research by Berryman (1983) indicated that `poor‟ or `careless‟ working
capital management is a major cause of SME failure. This assertion was confirmed by Ch‟ng
Hak Kee and Chang Zeph-Yun (1986: 28) when they stated that “cash management, an
important aspect of financial planning, has become a common factor for small business failure
in Singapore.” Some of the most important internal problems identified by Dodge et al. (1994),
which contribute to SME failure, are inadequate capital, cash flow management, and inventory
control. The survey conducted by the Insolvency Practitioners Society (CIMA, 1994) in the UK
also indicated that 20 percent of firms‟ failures were due to bad debts or poor receivable
management. Previous research findings related to working capital management practices
indicated that if working capital management could be significantly improved in the SME sector,
then few firms would fail, thus supporting the view that working capital management practices
are extremely important for SMEs (Peel and Wilson, 1994).

In Ghana, available data from the Registrar General indicates that 90% of companies
registered in 2006 are small and medium enterprises. This target group has been identified as
the catalyst for the economic growth of the country as they are a major source of income and
employment. Data from the Social Security & National Insurance Trust (SSNIT) reflects that by
size classifications, the Ghanaian private sector is highly skewed, with 90% of companies
employing less than 20 persons, and a small number of large-scale enterprises. In a developing
economy like Ghana, the share of business activity represented by the SME sector has increased
considerably over the last decade of the 20th century. The dynamic role of SMEs as engines
through which the growth of objectives of developing countries can be achieved has long been
recognized. The percentage of labor employed by SMEs in Ghana is 15.5%, and percentage of
GDP is 6%. The contribution of the SMEs to the encouragement of entrepreneurship, the
achievement of economic objectives including poverty alleviation, the process of regional
decentralization, and the employment is highly recognized. However, the contribution of these
SMEs to the national revenue budget through direct taxes is negligible. It is expected that these
SMEs contribute significantly to the national revenue; the inability of some of them to manage
their working capital efficiently is very worrying.

The government of Ghana, in an attempt to raise more revenue to meet its budget, has
imposed taxes on petroleum products. Since these products have inelastic demand, the
opposition political parties in the country have criticized the government in power as using the
“lazy man‟s” approach to raise revenue, thus compounding the hardships facing the
downtrodden people of the country. In proposing alternative solutions to generate more revenue
to the consolidated fund, it has been suggested that the tax net be widened by taxing all SMEs in
the informal sector. Because there is the need for all firms in the country, either big or small, to
pay appropriate taxes to the government, and the fact that some of the SMEs do not manage
their working capital efficiently which had adversely affected the viability of their businesses,
there is the need to conduct a study to investigate and identify the factors that prevent some
SMEs from managing their working capital efficiently. Hence the decision to undertake this case
study.

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How to write the Research Questions

 The problem should be adequately stated. The problem is borne out of an assessment
that something is wrong, amiss, or imperfect in the current state of knowledge. The
problem usually comes in a single statement and is followed by paragraphs
elaborating on this.
 When the problem has been identified, the next thing is an expression of what you
want to accomplish to address or answer the problem. In other words, this is the
purpose of your study.

Example

Borrowing Against the Future: Practices, attitudes, and knowledge of financial

management among college students.

Specifically, the study was designed to address the following research questions:
1. What are the practices of financial management among college students?
2. Are there differences in practices of financial management by race, gender, or SES?
3. What are the attitudes toward financial management among college students?
4. Are there differences in attitudes toward financial management by race, gender, or
SES?
5. How knowledgeable about financial management are college students?
6. Are there differences in how knowledgeable about financial management college
students are
by race, gender, or SES?

How to Write the Hypothesis

A hypothesis is defined as an intelligent guess formulated and temporarily adopted to
explain the observed facts covered by the study. A hypothesis guides the researcher in that it
describes the procedure to follow in conducting the study. The hypothesis is important for it
tells the researcher what to do and how to go about solving a research problem. The investigator
is in a much better position if there are hypotheses to guide him on the kind of data to collect
(Leedy, 1981).

 A hypothesis is a suggested answer to a problem. It is a shrewd guess that is

formulated and presumably adapted to explain observed facts or conditions and to
guide in further investigation.
 It is an expectation about events based on the generalization of the assumed
relationship between variables.

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Characteristics of the hypothesis (Aquino, 1992)

1. It should conjecture upon a relationship between two or more variables.

2. It should be stated clearly and unambiguously in the form of a declarative
sentence.
3. It should be testable; that is, it should be possible to restate it in an operational
form, which can then be evaluated based on data.

Example 1:

Problem: What is the relation between IQ and achievement?

Hypothesis: IQ and achievement are positively related.

 A hypothesis may also be a null hypothesis (null means not, empty, or zero). This
hypothesis is very common in psychological, social, and educational research.

Example of null hypothesis:

1. There is no significant relationship between IQ and achievement

2. There is no significant difference between educational attainment and teaching
effectiveness.

Example 2

The Impact of Financial Literacy on Individual Saving:

An Exploratory Study in the Malaysian Context

The following relationships between the dependent and independent variables are
predicted.

Financial Literacy: We posit that financial literacy has a significant impact on

individual savings. More knowledge on financial matters enables individuals to make more

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substantive financial plans and more informed decisions regarding allocations of their money
and saving. Hence, it is predicted that the relationship between financial literacy and
individual saving is positive.

Age: It is expected that when age increases, people save more money because elderly
people are more likely to be concerned about their retirement period. Furthermore, elderly
people have lower life-cycle expenses such as education, wedding, and house expenses. It is
posited that age is positively related to individual saving.

Gender: Generally, studies suggest that men are more able to save. For example,
Lusardi, Mitchell (2007) showed that women were usually less financially informed than men,
and financial literacy was found to influence the level of saving (spending less than income).
Some studies have shown that women are less likely to have a defined retirement saving plan
(Sunden, Surrette, 1998), although others have shown contradictory results (Agnew, 2006).
Hence, it is hypothesized that gender is a significant predictor of individual saving.

Work Experience: It is also expected that the number of years of work experience is
positively related to saving. Throughout their career, people have dealt with numerous
financial decisions, and they can be assumed to have a greater realization of the importance of
saving.

Number of Children: It is predicted that the number of children may be positively

related to the level of saving. This will be related to a greater sense of responsibility towards
children’s future.

Income: It is predicted that income is positively related to individual savings, simply

because people have or should have more money to save (assuming other factors constant).
So they may be able to save more, or at least have some savings.

Education Level: It is hypothesized that education level has a positive impact on

individual saving. Higher education levels imply that people have a better understanding of
their personal financial matters, so they will be better able to make financial decisions and
have more ability to plan for their future. There is evidence to show that more educated
people can manage their money in terms of insuring, investing, saving, and budgeting
(Hogarth, 2002).

Risk Tolerance: Previous studies have shown that when people are willing to take
more risks, they are less willing to save for emergency purposes. In other words, the more
risk-tolerant people are, the less likely they will save. Overall, the risk-taking behavior of
individuals can effect financial decision-making and, of course, their saving level (Zhong,
Xiao, 1995). It is predicted that risk tolerance will have a negative influence on individual
savings.

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Saving regularity: We posit that people who save more regularly, as opposed to
those who do not, will be more likely to have positive individual savings.

In summary, the hypotheses to be tested are:

Hypothesis 1: Individual’s financial literacy level is positively related to individual

saving (+)

Hypothesis 2: Demographic characteristics are significantly related to individual

saving.

This hypothesis can be broken into details as follow:

A.Age is significantly related to individual saving (+)

B.Gender is significantly related to individual saving (+)
C.Number of Children is significantly related to individual saving (+)
D.Length of work experience is significantly related to individual saving (+)
E.Income is significantly related to individual saving (+)
F.Education level is significantly related to individual saving (+)
G.Risk tolerance significantly related to individual saving (-)

Hypothesis 3: Individual’s saving regularity is positively related to individual saving

(+)

How to Write the Significance of the study

 This part of the research work discusses the contribution of the research to the
discovery of knowledge; it describes the benefits derived from the investigation, the
contribution to the generation of new knowledge, and the general relevance of the
study to the readers.
 For applied researches, there is a need to specify who might be interested in the
results/ findings of the study. Be very specific. Show exactly how these interested
groups can utilize these results/ findings.

e.g., Significance

There is an increasing appreciation of the impact of financial literacy in the

teaching and learning process as students apply their financial knowledge to
help address a real-world financial crisis. This work may be of interest to
higher education institutions (HEI’s), which are designing financial literacy

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programs with optimized societal outcomes.

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