Kellogg Operations Workshop 2006

"From Observation to Theory in OM Empirical Science"

Aleda Roth

Abstract

One key objective of OM empirical science is to develop and test theories that explain phenomena of interest to our professional community. An inductive theory is a belief that is verifiable by observation and/or experimentation. In this presentation, we illustrate how the scientific method is used to build and test OM theory. Specifically, we describe the process of theory building in OM research using the development of competitive progression theory (CPT) as an example. The starting off point is the observed 'sand cone' effect made by OM scholars researching manufacturing strategy in the late 1980s. These researchers observed that the successful manufacturers in Japan, Europe and the U.S. had multiple competitive capabilities and the observed levels of these capabilities appeared to be cumulative from quality to delivery to flexibility to low cost. This observation was in stark contrast to the conventional wisdom of the time - that successful firms make trade-offs in their capability building, such as quality for low costs. We describe the theory-building process from how evidence was collected to the formation of hypotheses that form the basis of CPT. The presentation highlights the discovery process, the construct and measurement development, and the empirical model. We highlight the evolution of thought and the obstacles in the empirical journey of theory building and testing.

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