The most important role of the hypothesis is that it guides the direction of study a frequent problem in research study is the proliferation of interesting information, hypothesis defines what shell be studied and what shell not, it provide a framework for organizing the conclusions that result from the study.

What is good hypothesis’s good hypothesis should fulfill following conditions.

1) It should be adequate for its purpose

2) It must be testable

3) It must be better than its rivals

4)The better hypos thesis is the simple one requiring fewer conditions or assumptions.

Hypothesis play an important role in the development of theory. While theory development has not to date been an important aspect of business research it is likely to become more so in the future.

THEORY :The tem theory is often by the layman to mean the opposite of fact. In this sense theory is viewed as being speculative. When you are too theoretical it means that your explanations or decision has no empirical value.

Our ability to make rational decisions as well as to develop scientific knowledge is measured by the degree to which we combine fact and theory.

In one sense theories are the generalizations we make about variables and the relationship among them. We may define as a set of systematically interrelated concepts definitions and propositions that are advanced to explain and predict phenomena. We quote that the difference between theory and hypothesis is one of the degree of complexity and abstraction. At times these may be confused but it should not make much practical research difference.