To be honest, this question had been confusing me for many years until I read this article “Theory: A Scientific Concept” by Wayne K. Hoy and Curt M. Adams in their book Quantitative Research in Education – A Primer.
Here are some excerpts I found very useful. For a detailed explanation, I recommend to read the book or the online article in Tomorrow’s Professor.
About the definition of theory
– First, theory is logically composed of concepts, definitions, assumptions, and generalizations [propositions].
– Second, the major function of theory is to describe and explain – in fact, theory is a general explanation, which often leads to basic principles.
– Third, theory is heuristic because it stimulates and guides the further development of knowledge.
The components of theory
– Assumptions are generalizations if they specify the relationship among two or more concepts.
– Hypotheses are generalizations with limited empirical support.
– Principles are generalizations with substantial empirical support.
– Laws are generalizations with an overwhelming degree of empirical support (more than principles); there are few laws in the social sciences, but consider the law of supply and demand in economics.