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BAT 32

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Tuesday, October 5, 2021

Significance of econometrics in business affair and software used for statistical analysis

Significance of Econometrics in business affair and software used for statistical analysis 

According to Qu (2020), econometrics is the combination of these three view-points that of statistics, economic theory, and mathematics and it helps to real understanding of the quantitative relations in modern economic life with what we call general economic theory, although a considerable portion of this theory has a definitely quantitative character. The scholar Greene (2000) has claimed it is an integration of economics, mathematical economics and statistics with an objective to provide numerical values to the parameters of economic relationships. The econometric tools are helpful in explaining the relationships among variables. Econometrics is the quantitative application of statistical and mathematical models using data to develop theories or test existing hypotheses in economics and to forecast future trends from historical data. It subjects real-world data to statistical trials and then compares and contrasts the results against the theory or theories being tested (Gujarati, Porter & Gunasekar, 2012; Dougherty, 2011; Mukras, 1993).

The researchers Clinch and Murphy, (2001) noted that econometrics is the use of statistical methods using quantitative data to develop theories or test existing hypotheses in economics or finance. Econometrics relies on techniques such as regression models and null hypothesis testing. Econometrics can also be used to try to forecast future economic or financial trend. Different types of methods as follows;

Source; Public trust of in Basic Social and Political institutions (2005)


Significance of Econometrics in Management and Business field

According to Groot and Garcia (2006), econometric is concerned with the quantitative relationships between economic variables with applied business data in various fields of business management and it can provide an important input into the decision-making process. The econometric problem is how to use these tools along with measurement to answer business cycle questions Econometric enhanced our understanding of the way the managerial decision works by using quantitative analysis of actual economic phenomena based on theory, observations and set of assumptions to simplify the complex economic phenomena (Terng, 2017).

Dima and Man (2015) claimed econometrics is differs from other aspects of management science in that it considers problems primarily, though not exclusively, from a background of economics rather than of other disciplines and behavior is usually dealt with at higher levels of data aggregation than the individual firm. 

Econometrics has developed models for cross-sectional data, and panel data and dynamic panel data. To different types of data, different estimation methods can be chosen according to their advantages and disadvantages of business firm (Johnston, & Reeves, 2019).

In the field of business and management, the practical applications of econometrics are;

·            Forecasting macroeconomic indicators

·            Estimating the impact of immigration on native workers

·            Identifying the factors that affect a firm’s entry and exit into a market

·            Determining the influence of minimum-wage laws on employment levels

·            Finding the relationship between management techniques and worker productivity

·            Measuring the association between insurance coverage and individual health outcomes

·            Deriving the effect of dividend announcements on stock market prices and investor behavior

·            Predicting revenue increases in response to a marketing campaign

·            Calculating the impact of a firm’s tax credits on R&D expenditure

·            Estimating the impact of cap-and-trade policies on pollution levels.

Significance of the use of Software for Statistical Analyses

Jascaniene et al. (2013), noted statistical software as a tools that assist in the statistics based collection and analysis of data to provide science-based insights into patterns and trends. Statistical analysis software products are specialized programs designed to allow users to perform complex statistical analysis. These products typically provide tools for the organization, interpretation, and presentation of selected data sets. IBM SPSS Statistics, RStudio, Stata, Minitab etc. are the some mostly used software.

Importance of SPSS in Research & Data Analysis

SPSS -Statistical Package for the social sciences is a software program combined in a single package. The main application of SPSS is analyzing data. They are widely used in a social science-related research project to analyze enormous data. That can be used in surveys, market research, data mining, etc.; with the help of this, researchers can easily identify the particular product’s demands in the market. Based on the result, they can change the business or research strategy work. Generally, SPSS is like a store or organize the provided data, which can be used later to produce the desired output. It is designed in a way to handle a huge set of data (Arkkelin, 2014; Verma, 2012; Connolly, 2007).

Importance of STATA in Data Analysis

Stata is one of the most common and widely used statistical software among researchers in the world. Stata enables one to write their own code or use menus to achieve their analysis. It supports importing data in various formats, including CSV and spreadsheet (including Excel) formats. Its file formats are platform-independent, allowing users of various operating systems to share their datasets and programs easily (Kothari, 2015; Hamilton, 2012).

It has data management features as well. Stat’s graphical user interface (GUI) includes menus and dialogue boxes. Through these dialogue boxes, users can access various useful features, such as data management, data analysis, and statistical analysis. The details, graphics, and statistical menus are all easily accessible (Farhat & Robb, 2014).


By the above discussion, it is clear that Econometric analysis is concerned with the quantitative relationships between economic variables and it can provide an important input into the decision-making process. The range of areas in which econometric models are successfully applied has steadily widened including finance and business management. Econometrics has enhanced our understanding of the way the managerial decision works. Econometrics is used in doing quantitative analysis of actual economic phenomena based on theory and observations.  The tools for the organization, interpretation, and presentation of selected data sets have crucial value in econometrics.



Arkkelin, D. (2014). Using SPSS to understand research and data analysis.

Clinch, J., & Murphy, A. (2001). Modelling winners and losers in contingent valuation of public goods: appropriate welfare measures and econometric analysis. The Economic Journal111(470), 420-443.

Connolly, P. (2007). Quantitative data analysis in education: A critical introduction using SPSS. Routledge.

Dima, I. C., & Man, M. (2015). Econometrics and Scientific Management. In Modelling and simulation in management (pp. 69-96). Springer, Cham.

Dougherty, C. (2011). Introduction to econometrics. Oxford university press.

Farhat, J. B., & Robb, A. (2014). Applied survey data analysis using Stata: The Kauffman firm survey data. Available at SSRN 2477217.

Greene, W. H. (2000). Econometric Analysis. International edition, New Jersey: Prentice Hall, 4th edition, 4201-215.

Groot, T., & García-Valderrama, T. (2006). Research quality and efficiency: An analysis of assessments and management issues in Dutch economics and business research programs. Research policy35(9), 1362-1376.

Gujarati, D. N., Porter, D. C., & Gunasekar, S. (2012). Basic econometrics. Tata McGraw-Hill Education.

Hamilton, L. C. (2012). Statistics with Stata: version 12. Cengage Learning.

Jascaniene, N., Nowak, R., Kostrzewa-Nowak, D., & Kolbowicz, M. (2013). Selected aspects of statistical analyses in sport with the use of STATISTICA software. Central European Journal of Sport Sciences and Medicine3(3), 3-11.

Johnston, J., & Reeves, A. (2019). Research in UK universities: a tale of two subjects–Economics and Econometrics; and Business and Management Studies. European Journal of Higher Education.

Kothari, P. (2015). Data analysis with STATA. Packt Publishing Ltd.

Mukras, M. S. (1993). Elementary econometrics: Theory, application and policy. East African Publishers.

Qu, Z. (2020). Introduction to Econometrics.

Terng, C. (2017). Price Determinants of Scholarly Business Books: An Econometric Model. Library Collections, Acquisitions, & Technical Services40(3-4), 106-113.

Verma, J. P. (2012). Data analysis in management with SPSS software. Springer Science & Business Media.


Various principles of good governance

Good Governance

According to Khouya & Benabdelhadi (2020), good governance is an open and transparent process that carries out the involvement, integration and accountability of stakeholders and brings economic development strategies closer together. Johnston (2004) articulated that good governance is a competent management of a country’s resources and affairs in a manner that is open, transparent, accountable, equitable and responsive to people’s needs. Hence, good governance is legitimate, accountable and effective ways of obtaining and using public power and resources in the pursuit of widely-accepted social goals and relates to political and institutional processes and outcomes which are deemed necessary to achieve the goals of sustainable development.
The scholar, Dasanandan (2013), has claimed that effectiveness of community organizations depends on the existence of pillars of good governance like, participation, accountability, transparency, predictability and rule of law. Good governance implies presence of rule of law, safeguard of human rights, and existence of honest and efficient government, accountability, transparency, predictability and openness (Landell-Mills & Serageldin, 1991). So, good governance is the manner in which power is exercised in the management of a country's economic and social resources for development.
Ali (2015) stated, “The term ‘good governance’ is a multi-dimensional which occupies a central stage in the development discourse. It is considered as the crucial element to be incorporated in the development strategy.” The concept of good governance conveys the qualitative dimension of governance that indicates effective, efficient, participative, or democratic form of government which is responsible for transparent and accountable management of human, natural, economic and financial resources for equitable and sustainable development (Rahman, 2016)
The following table indicates various definitions of good governance from various institutions and multi-laterals:

Source: Gisselquist, R. M. (2012). Good governance as a concept, and why this matters for development policy. United Nations University (UNU), World Institute for Development Economics Research (WIDER).

Principles of Good Governance
The Council of Europe’s 12 principles of good governance include principle
Fair conduct of elections, representations, and participation
Efficiency and effectiveness
Openness and transparency
Rule of law
Ethical conduct
Competence and capacity
Innovation and openness to change
Sustainability and long-term orientation
Sound of financial management
Human rights, cultural diversity, and social cohesion; principle
(Council of Europe, 2008)
Thus, it can be concluded that the responsible conduct of public affairs and management of public resources is encapsulated in the Council of Europe 12 principles of good governance and they cover issues such as ethical conduct, rule of law, efficiency and effectiveness, transparency, sound financial management and accountability.
In OECD (2015), the organization for Economic Co-operation and Development (OECD) has identified common elements underlying good corporate governance and included in “Principles of Corporate Governance”. The principles include the right of shareholders, equitable treatments of shareholders, role of stakeholders, disclosure and transparency, and responsibility of the board. The principles focus on various issues that organizations should respect the rights of shareholders and help shareholders to exercise those rights, organizations should recognize that they have legal, contractual, social, and market driven obligations to non-shareholder stakeholders, including employees, investors, creditors, suppliers, local communities, customers, and policy makers, the board needs sufficient relevant skills and understanding to review and challenge management performance, integrity should be a fundamental requirement in choosing corporate officers and board members, and organizations should clarify and make publicly known the roles and responsibilities of board and management to provide stakeholders with a level of accountability.
Thus, the OCED principles of corporate governance help policy makers to evaluate and improve the legal, regulatory, and institutional framework for corporate governance, with a view to supporting economic efficiency, sustainable growth and financial stability.
The principle of good governance recognized by UN member states in the Millennium Declaration in 2000 and include; participation, equity, non-discrimination and inclusiveness; gender equality, rules-based, transparency, accountability and responsiveness. They are congruent with key human rights principles set out in a variety of UN declarations and conventions and can be summarized in three core principles: participation and inclusion, accountability and rule of law and equality and non-discrimination (UNDP, 2010). Thus, accountability, transparency, and participation are key requirements of good governance. Moreover, good governance requires fair and legal frameworks, institutions and process try to serve all stakeholders within the reasonable timeframe, and decisions taken & their enforcement should follow rules and regulations. Furthermore, good governance requires a broad and long-term perspective on what is needed for sustainable human development and how to achieve goals of such development.

The scholars Arowolo and Aluko (2012) have studied the case of failure of government in Nigeria, to improve the governmental stability efficiency, minimum of six months litigation period for the conclusion of grievances and all electoral litigations arising from electoral malpractices before swearing-in or constituting new government.  Appropriate sanctions, ranging from jail term without option of fines to permanent disqualification from contesting future election, should be imposed on any erring political actors and INEC officials that are involved in or known to have aided any form of electoral malpractices found the result that Nigeria does not require strong men but strong institutions. Strong institutions are capable of compelling the occupants of the offices to behave according to the dictates of their offices. Another important point to note is the need for good leadership. Leadership is good when it pursues public good and places national interests over and above personal interests. Leadership, in this sense, is responsive and responsible
The study of  Bhattrai (2017) explains that the higher board size in Nepalese banks leads to worse financial performance and higher audit committee size and higher portion of independent directors leads to improved financial performance of Nepalese commercial bank.
In Public Sector corporate governance, the scholars Mulyadi, Anwar, and Ikbal (2012) found that community and citizen perceive that public sector corporate governance is essential in determining its service quality. Using three variables (accountability, transparency and efficiency and effectively) to measure both conformance and performance aspect, find all aspects have a positive and significant correlation to service quality (perception on public sector corporate governance).
Governance is the norms, values, and rules through which public affairs are managed in a manner that is transparent, participatory, inclusive, and responsive. Good governance is a way of measuring how public institutions conduct public affairs and manage public resources in a preferred way. Accountability, transparency, efficiency and effectiveness, responsiveness, forward vision, and rule of law are the major pillars of good governance.  To evaluate and improve the legal, regulatory, and institutional framework for corporate governance, with a view to supporting economic efficiency, sustainable growth and financial and political stability, various principles of good governance such as OCED principles, Council of Europe’s 12 principles, and United Nation’s principles help policy makers and governing body.

Bhattrai, H. (2017). Effect of corporate governance of financial performance of bank in nepal. 7 (3), 97-110.
Council of Europe. (2008). 12 Principles of Good Governance. Retrieved from Good Governnace: https://www.coe.int/en/web/good-governance/12-principles
Dasanandan, R. (2013). Good governance practice for better performance of community organizations -Myths and realities. Journal of Power, Politics & Governance , 1 (1), 10-26.
Gisselquist, R. M. (2012). Good governance as a concept, and why this matters for development policy. United Nations University (UNU), World Institute for Development Economics Research (WIDER). UNU-WIDER.
Israr, S. M., & Islam, A. (2006). Good governance and sustainability: A case study from Pakistan. The International journal of health planning and management , 21 (4), 313-325.
Johnston, M. (2004). Good governance: Rule of law, transparency, and accountability. Research Gate .
Khouya, M., & Benabdelhadi, A. (2020). Good governance and its impact on economic development: A systematic literature review. International Journal of Accounting, Finance, Auditing, Management and Economics , 1 (1), 47-67.
Landell-Mills, P., & Serageldin, I. (1991). Governance and the external factor. . The World Bank Economic Review , 303-320.
Mulyadi, M. S., Anwar, Y., & Ikbal, M. (2012). The importance of corporate governance in public sector. 1 (1), 25-31.
Organization for Economic Corporation and Development. (2015, November 30). G20/OECD principles of corporate governance. OECD Publishing .
Organization for Economic Corporation and Development. (1999). OECD principles of corporate governance. Organization for Economic Co-operation and Development, Paris.
Rahim, A. (2019). Governance and good governance:A conceptual perspective. Journal of Public administration and Governance , 9 (3), 133-142.
Rahman, M. (2016). Governance and good governance: A theoretical framework. Public Policy and Administration Research , 6, 40-50.
United Nations Development Programme. (2010). Measuring capacity. United Nations Development Programme, Bureau for Development Policy, New York.

Monday, October 4, 2021

Relationship between the preliminary review of literature, problem statements, and conceptual framework of study in quantitative research methodology

 Preliminary Review of Literature

Literature review is a form of research that reviews, critiques, and synthesizes representative literature on a topic in an integrated way such that new frameworks and perspectives on the topic are generated (Rocco & Plakhotnik, 2009).  According to Pokhrel and Chhetri (2021), literature review surveys from various sources such as articles, books, and documents to generate constructs of chosen area of research. The scholar, Creswell (2002) stated that literature review helps to determine whether the topic is worth studying, and it provides insight into ways in which the researcher can limit the scope to a needed area of inquiry. Some of scholars as Hart (2018); Maxwell (2012); Kothari (2004) noted that research study commences with a review of literature with the objective of establishing a detailed stock of conceptual and evidence-based knowledge related to the concerned theme of study.

Thus, review of literature should enumerate, describe, summarize and clarify the previous studies, and the preliminary literature review section presents the initial conceptual framework to focus the study. It identifies the need for the study by identifying gaps in knowledge.

Problem Statement

According to Creswell (2013), problem statement is a short statement describing the problems that is required to be addressed, which serves as basis of study. Rocco and Plakhotnik (2009) claimed problem statement is a concise description of the problem or issues a project seeks to address. In (Nenty, 2009; Baron, 2008), scholars have claimed that a problem statement is an important communication tool that can help ensure everyone working on a project knows what the problem they need to address is and why the project is important. A problem statement is a concise description of a problem to be addressed or a condition to be improved upon that identifies the gap between the current state and desired state of a process or product (Chawla & Sodhi, 2011)

Thus, a statement of the problem is used in research work as a claim that outlines the problem addressed by a study. A good research problem should address an existing gap in knowledge in the field and lead to further research.

Conceptual Framework

A conceptual framework is a synthesis of interrelated components and variables which help in solving a real-world problem. It is the final lens used for viewing the deductive resolution of an identified issue (Imenda, 2014). According to Tamene (2016), a conceptual framework represents the researcher’s synthesis of the literature on how to explain a phenomenon It maps out the actions required in the course of the study, given his previous knowledge of other researchers’ point of view and his observations on the subject of research. The conceptual framework relates concepts, empirical research, and relevant theories to advance and systematize knowledge about related concepts or issues (Watson, 2007).  In addition Vinz (2020) recalled the conceptual framework as concepts in our research, proposes relations between them, and discusses relevant theories based on a literature review with strongly giving our research direction, allowing us to convincingly interpret, explain and generalize from our findings.

Thus, from all above statement, the conceptual framework is a visual tool that helps you analyze and get a comprehensive understanding. This analytical tool can be used in different variations and contacts, so it is useful in many fields of work. It is commonly used to visually explain systems, relationships, concepts, and ideas in an organized way.

Relationship between preliminary literature review, problem statement, and conceptual framework

By the study of Hart (2018), Creswell (2013), Maxwell (2012), Rocco and Plakhotnik (2009), and Kothari (2004), the research study commences with a review of literature with the objective of establishing a detailed conceptual and evidence-based knowledge related to the concerned theme of study. And, it enumerates, describe, summarize and clarify the previous studies, and the preliminary literature review section presents the initial conceptual framework to focus the study. It identifies the need for the study by identifying gaps in knowledge. Also in Creswell (2013), Chawla and Sodhi (2011), Baron (2008), Rocco and Plakhotnik (2009), and Nenty (2009), the problem of statement is used in research work as a claim that outlines the problem addressed by a study. A good research problem should address an existing gap in knowledge in the field and lead to further research. Also, conceptual framework is a visual tool that helps you analyze and get a comprehensive understanding. This analytical tool can be used in different variations and contacts, so it is useful in many fields of work. In this quote, the problem statement can precede or follow the literature review, and conceptual framework. When the problem statements are presented, the literature review or conceptual framework that supports the problem follows. The problem statement flows from the literature review or conceptual framework. The conceptual framework is used gradually refines and narrows the topic to an identifiable gap in what is known about the topic. The gap is then articulated into a problem statement of a few paragraphs in length that clearly delineates what the field needs to investigate. Conceptual framework also builds the case for the research problem in the beginning of the paper, gradually narrowing the focus of the paper to end with a problem statement, which concludes with the purpose of the paper and this can be followed by research questions or propositions and then the research design.

The purpose of the literature review is to determine if a topic is researchable, to report the results of closely related studies, and to establish the importance of the current study in relationship to previous studies. The literature review might be seen as casting a broad net around an area to explore the topic.


In summary, a clear understanding of the relationship among the literature review, problem statement, and conceptual framework provides better guidance for organizing, conceptualizing, and conducting research. Since, research is the systematic and scientific inquiry of a subject or a problem in order to explore relevant information, in quantitative research, review of literature is very important task for identifying the research gap, expanding the body of knowledge of researcher, crafting main constructs of the study in chosen area of research and designing overall conceptual framework of the study. Defining the problem and crafting conceptual framework need review of literature. Thus, there is triangular relationship between statement of problem, review of literature and conceptual framework of the study to accomplish the research work.




Baron, M. A. (2008). Guidelines for writing research proposals and dissertations. Division of Educational Administration: University of South Dakota , 1, 1-52.

Chawla, D., & Sodhi, N. (2011). Research Methodology: Concept and cases. Vikas Publication House.

Creswell, J. W. (2002). Educational research: Planning, conducting, and evaluating quantitative. Upper Saddle River , p. 676.

Creswell, J. W. (2013). Research Design: Qualitative, quantitative, and mixed method approaches.

Hart, C. (201
8). Doing a literature review: Releasing the research imagination (2nd ed.). Saga Publication.

Imenda, S. (2014). Is there a conceptual difference between theoretical and conceptual frameworks? Journal of Social Sciences , 38 (2), 185.

Kothari, C. R. (2004). Research methodology: Methods and techniques. New Age International .

Maxwell, J. A. (2012). Quantitative research design: An interactive approach. Saga Publication .

Nenty, H. J. (2009). Writing a quantitative research thesis. International Journal of Educational Sciences , 1 (1), 19-32.

Pokhrel, S., & Chhetri, R. (2021). A l
iterature review on impact of COVID-19 pandemic on teaching and learning. Higher Education for the Future , 8 (1), 133–141.

Rocco, T. S., & Plakhotnik, M. (2009). Literature reviews, conceptual frameworks, and theoretical frameworks: Terms, functions, and distinctions. Human Development Review , 8 (1), 120-130.

Rocco, T. S., & Plakhotnik, M. S. (2009). Literature reviews, problem statement, conceptual frameworks:Terms, functions and distinctions. Human Resource Development Review , 8 (1), 121-128.

Tamene, E. H. (2016). Theorizing conceptual framework. Asian Journal of Educational Research , 4 (2), 50-56.

Vinz, S. (2020). Sample of theoretical framework, problem statement and research questions. .

Watson, E. (2007). Who or what creates? A conceptual framework of social creativity. Human Resource Development Review , 6, 419-441.