Theory, Reviewing the Literature &

Problem Statement

“The literature review is a crucial part of an

undergraduate or postgraduate
dissertation.....It provides the basis on which
you justify your research questions and build
your research design”
Theory
• Definitions :
• A system of interconnected abstractions or ideas that
condenses and organizes knowledge about the world.
• In a general sense, any more or less formalized
conceptualization of the relationship between variables.
Any generalized explanatory principle.
• An always tentative explanation of phenomena that we
observe; never proven; representative of the most logical
explanation based on currently available evidence;
becomes stronger as more supporting evidence is gathered;
provides a context for predictions.

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Misconceptions about theory

• A tentative theory about the natural world; a concept that is

not yet verified but that if true would explain certain facts
or phenomena; "a scientific hypothesis that survives
experimental testing becomes a scientific theory
• A theory is more than just an idea.
• All theories are not equal.
• Examples of theories:
– Theory of gravity
– Theory that the earth revolves around the sun
– Theory of evolution

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Hypothesis vs. theory

 Hypothesis is an educated guess. A prediction about

the relationship between two or more variables.
 A prediction as to what you expect to find.
 Hypotheses are more specific than theories.
 Theories have many different hypotheses.
 Results of a single research study will not prove or
disprove a theory. 
◦ If the hypotheses offered by the theory are confirmed, the
theory is supported (not proved).
◦ If lots of studies reveal that many of the hypotheses
generated by the theory are false, the theory must be
reevaluated.
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The use of theory
• Theory guides research
– Organizes ideas
– All research has a purpose
• Paradigms
– Sociology, history, and political science, especially.
– A model or framework for observation and understanding,
which shapes both what we see and how we understand it.
– E.g., conflict theory, feminist theory

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The Aspects of Theory

• Theories can be categorized by:

– The direction of reasoning
– The level of explanation

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Direction of theorizing

• Inductive vs. deductive reasoning

• Deductive reasoning –reasoning from the
general to the particular
• Process of concluding that something must be
true because it is a special case of a general
principle that is known to be true
– All children like ice-cream [general principle]
– Tommy is a child [particular case]
– Tommy will like ice-cream [deduction]
• Examples…….
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• Inductive reasoning – reasoning from the
particular to the general
• Process of reasoning that a general principle is
true because the special cases you've seen are true
• Example:
– “Dr. Boughner is strange”
– “Dr. Boughner lives in Tulsa”
– “People who live in Tulsa are strange”
• More examples…
• Creation and use of stereotypes
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• Applying these types of reasoning to theory
construction.
• Deductive approach – build a theory by starting
with an abstract, logical idea. Based on the
theory, perform research to test the theory.
– Often starts with common sense, personal experience
– Theories change with testing

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• Inductive approach – build a theory by first looking
at the results of many research projects and offering
a theory that can be used to explain the data.
– Creating a theory in order to explain data.

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• Grounded theory
– Full use of induction
• Typically, both induction and deduction are used
by scientists.
• Good theories probably use a little of both.

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Theories used in Accounting
Studies
• Rational choice theory
• Human relations theory
• Agency theory
• Transaction cost economics
• Grounded theory
• Institutional theory
• Stakeholder theory

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Rational Choice Theory
• A normative theory which provides an explanation
of purposeful human action.
• The key = “optimization”
• Examples of use:
– RCT to explain why double entry bookkeeping emerge as a
dominant form of accounting – because technical
superiority.
– RCT to explain investment decision making processes

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Human relations theory
• Human relations is motivating people in groups to
develop teamwork which effectively fulfill their needs
and achieve organizational objectives.
• “the effectiveness of any accounting procedure
depends ultimately upon how it influences the
behaviour of people in the enterprise..” (Hopwood,
1974)
• Examples: what are the effects of budgeting initiatives
on human beings, their mental states, behaviour and
performance?
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Agency theory
• Arises when one party (principal) hires another
(the agent) to perform a task.
• Firms are viewed as “legal fictions which serve as a
nexus for a set of contracting relationships among
individuals”
• Employment contracts – bonus, stock options
• Corporate governance

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Transaction cost economics
• Transaction cost minimizing is central to the study
of organizations through assessing how their
governance structures serve to economize on
transaction cost.
• Costs – information cost, contracting, opportunism.

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Grounded Theory
• A theory discovery method
• Theory should be grounded in empirical evidence
rather than be developed a priori and then be tested.

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Institutional theory
• Examine why and how particular of behaviour emerge,
sustain and/or change over time.
• To explain the existence or appearance of some institutions,
and the non-existence or disappearance of others.
• Analysis must account for multiplicity of influences that
shape an institution (include rules, habits, routines, norms
and assumptions)
• Example: a study on one professional accounting body or
one organization that is adapt their practices based on an
agreed industry norm.

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Stakeholder theory
• Stakeholder theory focuses more from stakeholder
view of the organization.
• The basis is supported by social contract,
legitimacy, ethical and institutional theories.
• Example: Social and environmental reporting, value
added statement for performance reporting

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Explain how chosen theory could assist you in
your prediction

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Literature Review: Overview
 Synthesizing the literature;
 What should be in a Literature Review?
 How is it assessed?
 Is the existing research in your field of high
quality?
 Referencing and bibliographies;
 Plagiarism: crime and punishment.

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 Reasons for Writing a Literature Review

Because:
• you need to know what is already known about your research
area;
• you can learn from the mistakes of others;
• you can learn about different theoretical and methodological
approaches to your research area;
• it may help you to develop an analytic framework;
• it may lead you to consider including variables in your
research of which you might not have thought;
• it may suggest further research questions;
• it is required! 22
Searching the Literature Should Answer
These Questions: (Done in L2)

 What is already known about this area?

 What concepts and theories are relevant?
 What research methods and strategies have been
used in this area?
 Are there any controversies?
 Are there any inconsistencies in findings?
 Are there unanswered questions?

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A Literature Review can be... Searching the
Literature Should Answer These Questions:
(Done in L2)

• a list of relevant theories;

• a search for relevant information;
• a survey of writing on the subject;
• a way of learning about the subject;
• a help in finding dissertation topics and
research methods;
• an important component of a dissertation or
report.
Adapted from Bruce (1994)

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Getting the Most from Your ReadingSearching
the Literature Should Answer These
Questions: (Done in L2)
• Take lots of notes (including references);
• Ask yourself questions about what you read (its value
to your topic, methods used, conclusions);
• Find research questions (perhaps because what you read
indicates contention);
• Identify sources to which you will want to return later
on;
• Be selective (read for relevance);
• Don’t stop reading!!
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A Word (or two) of Warning about the Internet

• Search engines find sites but do not evaluate them;

• Dictionaries and encyclopaedias are fine for basic
definitions, but little else;
• Many Internet sites serve a commercial purpose, so don’t
be taken in by propaganda;
• Rely on academic sites (usually.ac or .edu), government
sites (.gov), not-for-profit institutions (.org), in that order;
• Download and save all material found on the Internet.
Sites are dynamic and you may not find the data a second
time. Your institution may also require proof when
defending your thesis.
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Putting Your Reading to Work I

By:
1. demonstrating your knowledge*;
2. preparing the ground for your research;
3. showing how gaps or problems correspond to
your research questions.

*adapted from Gilbert, 1977

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 Putting Your Reading to Work II

Through:
• putting material together which is not usually
related (synthesized coherence);
• building up separate items into a consensus
(progressive coherence);
• showing lots of related contributions but no overall
agreement (non-coherence);
• revealing a gap in the literature;
• developing a new perspective;
• showing the existing literature to be simply wrong.
(Golden-Biddle and Locke, 1997:43).
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 Referencing Your Work I

• A source is usually referenced in two parts:

- the citation, in your text at the point of use;
- full publication details, in a reference list, or
bibliography, at the end of your dissertation or
report.
• There are two main referencing conventions:
- the Harvard system,
- the footnote system.

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Referencing Your Work II

• Follow your institution’s guidelines for

referencing protocols and terminology;
• If no clear guidelines are offered, use the
Harvard system;
• Always include a list of references at the end,
in any event.

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How your Supervisor can help
your Writing

• By questioning or amending your references;

• By highlighting unsupported assertions;
• By suggesting a more coherent structure;
• By highlighting gaps in your logic.

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 Questions to Ask When Doing a
Literature Review I

• Is your reading list up-to-date?

• Are there any new areas of interest?
• What have you read recently?
• How much time do you allocate to reading?
• What have you learned from your reading?

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Questions to Ask When Doing a
Literature Review II
• Has this changed your understanding of your
subject area?
• Has your reading influenced your research
design?
• Has it given you ideas about your hypotheses and
research tools?
• Have you been taking notes from your reading?
Adapted from Bruce, 1994

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 Key Points

 Writing a literature review is a means of reviewing the main

ideas and research relating to your chosen area of interest;
 A competent literature review confirms you as someone who is
competent in the subject area;
 A great deal of the work of writing a literature review is based
upon reading the work of other researchers in your subject area;
key skills can be acquired to help you get the most from your
reading;
 Systematic review is a method that is gaining in popularity in
business research as a way of enhancing the reliability of
literature searching and review;
 Narrative review is a more traditional approach which has
advantages of flexibility that can make it more appropriate for
inductive research and qualitative research designs. 36
Write and justify a structure of your literature
review

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