Conventional wisdom calls for taxonomy as a technique to build theory. However, in a world of academics the views are different. Let us see the meaning of taxonomy and its role in research. According to Hollenback et al (2012) the purpose of taxonomic structures is to classify units of study by creating similar super ordinate categories, underlying numerous dimensions. In simpler words, taxonomy refers to classification of systems, that categorize phenomena into mutually exclusive (different) and exhaustive sets with a series of discrete decision rules. For example, Woodward (1965) classification of organization based on technological competence and complexity is mutually exclusive. Meaning, two organizations of different levels of technical complexity cannot be classified under the same category. Later, Koontz and O’Donnell recognize the importance of the idea by pointing out that theory is essentially a systematic grouping of interrelated principles, hence is a form of classification and thus referred as Taxonomy. What we must understand is that, taxonomy is more than mere classification. For academic purposes, taxonomy can be viewed as classification, nomenclature and Identification. Key role of taxonomy is to bring about superior communication among research scholars on their domains. It is more exploratory in its approach towards basic understanding of concepts and less of building a theory.
According to Doty and Glick (1994), Typology is used to build theory and play a higher role in than taxonomy, Typology is the branch of knowledge that deals in classes with same characteristics or classification of especially human behaviour or characteristics according to the type. (Oxford Dictionary, 2004) Typologies have also been useful in the study of organizations. Mintzberg (1979) reviewed exhaustive literature on organizations and concluded that organization can be grouped into five types that are internally consistent and clearly differentiated configurations. Unlike classification systems, typologies do not follow decision rules for classifying organizations. Instead they identify multiple ideal types, each of which represent, each of which represents a unique combination of the organizational attributes that are believed to determine the relevant outcome(s). For example Porter (1980, 85) identifies three ideal-type strategies that are hypothesized to maximize competitive advantage. Chen (2012) identifies three types of company characteristics on Information system strategy using factor analysis. To conclude, typologies are intended to predict the variance in a specified dependent variable, since the organizational types are developed as a specified organizational outcome. Besides typology, identifies the variables as mediator or moderator between independent and dependent variable extending the same in theory building or aide by incorporating antecedents or consequences that were not part of the original theory formulation. Colquitt and Zapata-phelan, (2007).