Propositions that express a probabilistic relation

average increasing, or decreasing, continuously, or not continuously, depending on the proposition. Also note that we do not mean that vari- ation as shown in Figure 4.4 is due to “measurement error”. Figure 4.4 depicts the variation of the actual values of the concepts of the object of study. These actual values are interpreted as a representation of an underlying, “realistic”, probabilistic relation.

4.3 Business relevance of propositions

We have presented two different types of propositions: deterministic propositions and probabilistic propositions. We consider deter- ministic propositions as “stronger” than probabilistic ones because they explain more and sometimes all variation in a dependent con- cept and, therefore, can often predict effects in individual instances. Deterministic propositions make the theory more powerful. Further- more, deterministic propositions if supported in many replications are very useful for practitioners. An insight that tells you how to act or not to act in order to create a “critical” condition for success or for the absence of failure is often more useful in managerial practice than an insight that tells you how to increase the likelihood of success. This is not to say that absolute certainty about an effect can be achieved, but an “almost certainty” see Box 8 is a powerful ground for decision making. The distinction between deterministic conditions and probabilistic relations reflects two different types of knowledge that managers might need for their decision making. Typically, managerial problems Chapter 4 Concept A Concept B Figure 4.4 Scatter plot of instances indicating a probabilistic relation between concept A and concept B Box 8 Is business reality deterministic or probabilistic? A note on “pragmatic determinism” In Chapter 4.3 we claim that many causal relations in real life situations in business and management can be formulated as deterministic necessary conditions. This claim is usually received with scepticism. Most business researchers assume that deterministic conditions and relations do not exist in the actual practice of management and busi- ness. It is assumed that every causal relation that is of interest to business research is multi-causal or multi-factorial and, thus, must be expressed in probabilistic statements. Our response to such criticisms consists of three parts: 1. academic theories in business and management in fact express deterministic conditions and relations; 2. even if reality is probabilistic, this does not undermine the usefulness of deter- ministic theories; 3. managerial theories-in-use are deterministic. Many theories are deterministic Goertz 2003 reviewed the political science literature in search for theories that do not present themselves as deterministic but actually are. He found no less than 150 neces- sary condition hypotheses covering large areas of political science, sociology, and eco- nomic history 2003: 76–94. On the basis of this finding he formulated Goertz’s First Law: “For any research area one can find important necessary hypotheses” 2003: 66. We are confident that we would find an equally impressive list of necessary condition hypotheses in a review of management theories. A prominent example is Porter’s the- ory of the conditions of competitive advantage of nations see Box 12; 9.1. Other examples are the theories-in-use tested by Sarker and Lee see Box 11; 5.1 and the examples of case studies in Chapter 5 of this book 5.2 and 5.4. In this book we use the concept of “necessary condition” as formulated in classic mathematical and philosophical logic. The necessary character of A for B is expressed in this formulation by “if”: “B only if A”. The sufficient character of A for B is expressed by “B if A” meaning “always B if A”. In this logic such expressions are always either true or false. This leads to the common view in theory that a necessary condition is dichotomous: true or false Figure A. But conditions and effects can also be continuous. Various authors have shown that it is possible to express necessary conditions for continuous variables using multi-value logic. Goertz and Starr 2003 present these authors and their ideas. They show how it is possible to express a continuous expression of a necessary condition, as illustrated in Figure B adapted from Goertz and Starr, 2003: 10. In the upper left part of the graph there are no instances. The basic idea of a necessary condition as depicted in Figure B is that a specific value of A is necessary for a specific value of B, which is expressed in the graph by the necessity that every instance is situated below a sloping line between the