The role and significance of research in aiding business decision is very significant. The question one might ask here is about the critical importance of research in different areas of management. Is it most relevant in marketing? Do financial and production decisions really need research assistance? Does the method or process of research change with the functional area?
The answer to all the above questions is NO. Business managers in each field— whether human resources or production, marketing or finance—are constantly being confronted by problem situations that require effective and actionable decision making.
Most of these decisions require additional information or information evaluation, which can be best addressed by research. While the nature of the decision problem might be singularly unique to the manager, organization and situation, broadly for the sake of understanding, it is possible to categorize them under different heads.
Table of Content
Applications of Research in Business Decisions
- Marketing Function
- Personnel and Human Resource Management
- Financial and Accounting Research
- Production and Operation Management
- Cross-Functional Research
This is one area of business where research is the lifeline and is carried out on a vast array of topics and is conducted both in-house by the organization itself and outsourced to external agencies. Broader industry- or product-category-specific studies are also carried out by market research agencies and sold as reports for assisting in business decisions. Studies like these could be:
- Market potential analysis; market segmentation analysis and demand estimation.
- Market structure analysis which includes market size, players and market share of the key players.
- Sales and retail audits of product categories by players and regions as well as national sales; consumer and business trend analysis—sometimes including short- and long-term forecasting.
However, it is to be understood that the above-mentioned areas need not always be outsourced; sometimes they might be handled by dedicated research or new product development department in the organizations.
Other than these, an organization also carries out researches related to all four Ps of marketing, such as:
- Product Research: This would include new product research; product testing and development; product differentiation and positioning; testing and evaluating new products and packaging research; brand research—including equity to tracks and imaging studies.
- Pricing Research: This includes price determination research; evaluating customer value; competitor pricing strategies; alternative pricing models and implications.
- Promotional Research: This includes everything from designing of the communication mix to design of advertisements, copy testing, measuring the impact of alternative media vehicles, impact of competitors’ strategy.
- Place Research: This includes locational analysis, design and planning of distribution channels and measuring the effectiveness of the distribution network.
These days, with the onset of increased competition and the need to convert customers into committed customers, Customer Relationship Management (CRM), customer satisfaction, loyalty studies and lead user analysis are also areas in which significant research is being carried out.
Personnel and Human Resource Management
Human Resources (HR) and organizational behaviour is an area which involves basic or fundamental research as a lot of academic, macro-level research may be adapted and implemented by organizations into their policies and programmes.
Applied HR research by contrast is more predictive and solution-oriented. Though there are a number of academic and organizational areas in which research is conducted, yet some key contemporary areas which seem to attract more research are as follows:
- Performance Management: This includes leadership analysis development and evaluation; organizational climate and work environment studies; talent and aptitude analysis and management; organizational change implementation, management and effectiveness analysis.
- Employee Selection and Staffing: This includes pre and on-the-job employee assessment and analysis; staffing studies.
- Organizational Planning and Development: This includes culture assessment—either organization specific or the study of individual and merged culture analysis for mergers and acquisitions; manpower planning and development.
- Incentive and Benefit Studies: These include job analysis and performance appraisal studies; recognition and reward studies, hierarchical compensation analysis; employee benefits and reward analysis, both within the organization and industry best practices.
- Training and Development: These include training need gap analysis; training development modules; monitoring and assessing impact and effectiveness of training.
- OtherAreas: Other areas include employee relationship analysis; labours tudies; negotiation and wage settlement studies; absenteeism and accident analysis; turnover and attrition studies and work-life balance analysis.
Critical success factor analysis and employer branding are some emerging areas in which HR research is being carried out. The first is a participative form of management technique, developed by Rockart (1981) in which the employees of an organization identify their critical success factors and help in customizing and incorporating them in developing the mission and vision of their organization.
The idea is that a synchronized objective will benefit both the individual and the organization, and which will lead to a commitment and ownership on the part of the employees. Employer branding is another area which is being actively investigated as the customer perception (in this case it is the internal customer, i.e., the employee) about the employer or the employing organization has a strong and direct impact on his intentions to stay or leave.
Thus, this is a subjective qualitative construct which can have a hazardous effect on organizational effectiveness and efficiency.
Financial and Accounting Research
The area of financial and accounting research is so vast that it is difficult to provide a pen sketch of the research areas.
In this section, we are providing just a brief overview of some research topics:
- Asset Pricing, Corporate Finance and Capital Markets: The focus here is on stock market response to corporate actions (IPOs or Initial Public Offerings, takeovers and mergers), financial reporting (earnings and firm specific announcements) and the impact of factors on returns, e.g., liquidity and volume.
- Financial Derivatives and Interest Rate and Credit Risk Modeling: This includes analysing interest rate derivatives, development and validation of corporate credit rating models and associated derivatives; analysing corporate decision- making and investment risk appraisal.
- Market Based Accounting Research: This includes analysis of corporate financial reporting behaviour; accounting-based valuations; evaluation and usage of accounting information by investors and evaluation of management compensation schemes.
- Auditing and Accountability: This includes both private and public sector accounting studies, analysis of audit regulations; analysis of different audit methodologies; governance and accountability of audit committees.
- Financial Econometrics: This includes modelling and forecasting involatility, risk estimation and analysis.
- Other Areas: Other related areas of investigation are in merchant banking and insurance sector and business policy and economics areas.
Considering the nature of the decision required in this area, the research is a mix of historical and empirical research. Behavioural finance is a new and contemporary area in which, probably, for the first time subjective and perceptual variables are being studied for their predictive value in determining consumer sentiments.
Production and Operation Management
This area of management is one in which quantifiable implementation of the research results takes on huge cost and process implications. Research in this area is highly focused and problem specific. The decision areas in which research studies are carried out are as follows:
- Operation planning which includes product/service design and development; resource allocation and capacity planning.
- Demand forecasting and decision analysis.
- Process planning which includes production scheduling and material requirement management; work design planning and monitoring.roduction scheduling and material requirement management; work design planning and monitoring.
- Project management and maintenance management studies.
- Logistics and supply chain, and inventory management analysis.
- Quality estimation and assurance studies which include Total QualityManagement (TQM) and quality certification analysis.
This area of management also invites academic research which might be macro and general but helps in developing technologies, such as JIT (Just-In-Time) technology and EOQ (Economy Order Quantity)—an inventory management model which are then adapted by organizations for optimizing operations.
Business management being an integrated amalgamation of all these and other areas sometimes requires a unified thought and approach to research. These studies require an open orientation where experts from across the disciplines contribute to and gain from the study.
For example, an area, such as new product development requires the commitment of the marketing, production and consumer insights team to exploit new opportunities.
Other areas requiring cross-functional efforts are:
- Corporate governance and ethics—the role of social values and ethics and their integration into a company’s working is an area that is of critical significance to any organization.
- Technical support systems, enterprise resource planning systems, knowledge management, and data mining and warehousing are integrated areas requiring research on managing coordinated efforts across divisions.
- Ecological and environmental analysis; legal analysis of managerial actions; human rights and discrimination studies.