BUSN20016: RESEARCH IN BUSINESS

Lecture 6 & Tutorial 6

Dr. Delwar Akbar

School of Business and Law
Email: d.akbar@cqu.edu.au
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Research in Business: Lecture 6 & Tutorial 6

Hypothesis testing

Learning objectives

To understand the processes involved in hypothesis

testing
To know the concepts of type I error, type II error and
statistical power

To know how to choose the appropriate statistical

technique to test hypotheses

Introduction

Conjecture
Supposition
Speculation
Postulation or postulate
Proposition
Premise
Surmise
Assumption
Presumption or presupposition
notion, concept or idea,
contention, opinion, view or belief

Statement of
relationship
between events
or variables

On the basis of
evidence ( limited
or adequate) or
prior knowledge
or guess

Testing hypothesis
Research problem, purpose, research questions, indepth literature review and then hypothesis
True or false should be nothing in between
Using all possible evidence
Testing may takes few seconds or may take few years
Some hypotheses are very difficult to prove scientifically
because of difficulty in gathering sufficient supporting
evidence
Testing can be done by qualitative method or can be by
quantitative method
This lecture mostly focus on quantitative methods
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Testing hypothesis- processes

1. State the null (an hypothesis of no difference) and the
alternate (research) hypotheses
Example:
H0= There is no relationship between pedagogical training and
effective teaching among the university academics
H1= There is a relationship between pedagogical training and
effective teaching among the university academics

2. Determine the level of significance desired ( = 0.05, or

more, or less)
3. Choose the appropriate statistical test depending on the
type of data (nominal, ordinal, interval, or ratio) Parametric or non-parametric tests
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Testing hypothesis- processes

4. Conduct the test with p-value
Use SPSS or any other statistical software)
Or, do it manually by using electronic calculator
p-value is a function of the observed sample results

5. Analyse the test score:

If the p-value is equal to or smaller than the significance level (),
then the null hypothesis (H0) must be rejected and the alternative
hypothesis (H1) is accepted as true; and vice versa
Or
When the calculated (resultant) value is larger than the critical
value, the null hypothesis is rejected, and the alternate accepted;
and vice versa

Errors and statistical power in hypothesis

testing
Type I error:
A type I error is the incorrect rejection of a true null hypothesis
Probability of rejecting null hypothesis when it is actually true under
a known significance level
An error of first kind
Type I errors are equivalent to false positives
It leads to conclude that a supposed effect or relationship exists
when in fact it doesn't
For illustration, it occurs when the results of research show that a
difference exists but in reality there is no difference
For example, a test that shows a company computers failure rate is
more than 5% when it is not in reality
This is directly related to alpha ( = level of significance) in that
alpha was likely set too high and therefore lowering the amount of
acceptable error would reduce the chances of a Type I error
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Errors and statistical power in hypothesis

testing
Type II error:
A type II error is the failure to reject a false null
hypothesis
A type II error occurs if a test does not reject a null
hypothesis when in fact it is false
An error of the second kind
The symbol beta () is used to define type II error as the
probability of failing to reject a true null hypothesis
Type II errors are equivalent to false negatives
For example, a test that shows a company computers
failure rate is equal to 5% when a company found that
more than 5% of the computers are not working properly
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Errors and statistical power in hypothesis

testing
Statistical power:
Probability of correctly rejecting a false null hypothesis
Ability of a test to detect an effect, if the effect actually
exists
Directly related to alpha () and inversely related to beta
()
Statistical power is mainly affected by the size of the
effect and the size of the sample
Four components of statistical power analysis: effect
size, sample size, test size (significance level, ) and
power of test (1- ).
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Source: Sekaran and Bougie, 2013

Hypothesis
test:
Statistical
techniques

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Hypothesis test
One-sample t-test
To test the hypothesis that the mean of the population from which a sample is
drawn is equal to a comparison standard
For example:
H0: The number of study hours of students from CQuniversity is equal to the
number of study hours of students in all Australian universities
H1: The number of study hours of students from CQuniversity differs from
the number of study hours of students in all Australian universities
Formula:
If t-statistic is larger than the appropriate table value, the it means that the
difference between CQUniversity and all Australian university is statistically
significant
The null hypothesis must thus be rejected; and vice versa.
Source: Sekaran and Bougie, 2013
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Hypothesis test
Testing hypotheses about two unrelated means:
Independent samples t-test
To test if there are any significant differences in the means for
two groups in the variable of interest

Testing hypotheses about several means: an analysis of

variance (ANOVA)
To examine the significant mean differences among more than
two groups on an interval or ratio-scaled dependent variable
For example, is there a significant difference in the amount of
sales by the following four groups of salespersons: those who
are sent to training schools; those who are given on-the-job
training during field trips; those who have been tutored by the
sales manager; and those who have had none of the above?
Source: Sekaran and Bougie, 2013
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Source: Sekaran and Bougie, 2013

Hypothesis test

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Hypothesis test

MANOVA
MANOVA is similar to ANOVA, with the difference that ANOVA
tests the mean differences of more than two groups on one
dependent variable, whereas MANOVA tests mean differences
among groups across several dependent variables
simultaneously
MANOVA reduces the bias by simultaneously testing all the
dependent variables, cancelling out the effects of any intercorrelations among them

Source: Sekaran and Bougie, 2013

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Hypothesis test

Nonparametric test (when the population cannot be assumed to be

normally distributed)

Wilcoxon signed-rank test examining significance difference

between two related sample or repeated measurements on a
single sample.
McNemars test to assess the significance of the difference
between two dependent samples when the variable of interest is
dichotomous. For example, to test whether is there any
significance difference in employees performance before and
after new training

Source: Sekaran and Bougie, 2013

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Summary
What have we learned now:

What is a hypothesis test?

What are the processes involved with a hypothesis test?
What are the errors can occur in a hypothesis test?
What is a statistical power?
How do we select a statistical techniques to test a particular
hypothesis?

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Tutorial 6
Can you calculate the following measures of central
tendency and dispersion of the exam marks given in
Column 3 of Exercise 1 Table on page 300 in your text
book (Also please see the table on the next slide)
1.
2.
3.
4.
5.
6.
7.
8.
9.

Mean
Median
Mode
Range
Variance
Standard Deviation
How many observations are within the one standard deviation from the mean?
How many observation are within the two standard deviation from the mean?
Difference between the average value of first quartile and the that of the last
quartile
10. Interquartile range

(COUNT/ESTIMATE ALL OF THEM IN ROUND FIGURE)

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Tutorial 6

Source: Exercise 1 Table, page 300, Sekaran and Bougie, 2013

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BUSN 20016

If you have any query about any content of this lecture

note, please put it into the weekly discussion forum

Thank you

Dr Delwar Akbar

School of Business and Law

d.akbar@cqu.edu.au