Grounded theory (GT) is a systematic methodology in the social sciences emphasizing generation of theory from data in the process of conducting research. It is mainly used for qualitative research, but is also applicable to other data (e.g., quantitative data; Glaser, 1967, chapter VIII).

It is a research method that operates almost in a reverse fashion from traditional research and at first may appear to be in contradiction of the scientific method. Rather than beginning by researching and developing a hypothesis, the first step is data collection, through a variety of methods. From the data collected, the key points are marked with a series of codes, which are extracted from the text. The codes are grouped into similar concepts in order to make them more workable. From these concepts, categories are formed, which are the basis for the creation of a theory, or a reverse engineered hypothesis. This contradicts the traditional model of research, where the researcher chooses a theoretical framework, and only then applies this model to the studied phenomenon.

http://en.wikipedia.org/wiki/Grounded_Theory