Hypothesis Identification Article Analysis In today's business environments, companies must carefully select effective decision makers for their company. They argue that the best decision maker is the person with the best incentives to make successful decisions. This holds different in larger organizations with separate boards of directors, or in any organization with outside investors, management and shareholders. A study was conducted to find out ways large companies can resolve problems.
The study investigates four corporate structures, using these as the hypothetical basis of the study. Evans and Wier establish four hypotheses to analyze their research. The objective of the study is to show that organizations "employing appropriate monitoring and incentive schemes will on average, have a higher level of profitability than firms that do not" (Evans and Wier, 1995)Evans and Wier use a four hypothesis model to match the four-step decision making model that they believe companies use. This four-step includes initiation, ratification, implementation, and monitoring.
Initiation is generating alternative ways to use resources. Ratification is the choice of decision making. Implementation is executing the choices. Monitoring is measuring and rewarding performance. The study assumes that managers concern themselves with initiation and implementation, and the directors primarily handle the ratification and monitoring of agents.
A hypothesis is a preliminary assumption or tentative explanation that accounts for a set of facts. These facts are assumed to be true for the purpose of investigation and testing, a theory. The scientific method is a systematic approach to research falsifiability is the most important feature of hypothesis testing. Other methods of testing hypotheses include dialectic, logic, probability and statistics. (Answers, 2007)Evans and Wier constructed the following four hypotheses:1. Firms which clearly separate the process of decision management from decision control will be able to reduce the ability of lower levels of management to pursue...