Methodology | Papers
Methodology

The use of logit and probit models in strategic management research: Critical issues

The logit and probit models hove become critical parts of the management researcher's analytical arsenal, growing rapidly from almost no use in the 1980s to appearing in 15% of all articles published in Strategic Management Journal in 2005. However, a review of three top strategy journals revealed numerous areas in their use and interpretation where current practice fell short of ideal. Failure to understand how these models differ from ordinary least squares can lead researchers to misunderstand their statistical results and draw incorrect conclusions regarding the theory they are testing. Based on a review of the methodological literature and recent empirical papers in three leading strategy journals, this paper identifies four critical issues in their use: interpreting coefficients, modeling interactions between variables, comparing coefficients between groups (e.g., foreign and domestic firms), and measures of model fit. For each issue, the paper provides a background, a review of current practice, and recommendations for best practice. A concluding section presents overall implications for the conduct of research with logit and probit models, which should assist both authors and readers of strategic management research.

Hoetker, G., "The use of logit and probit models in strategic management research: Critical issues", Strategic Management Journal, Vol. 28, No. 4, 2007, pp. 331-343. View and download

NK modeling methodology in the strategy literature: Bounded search on a rugged landscape

We discuss recent methodological advances in the NK modeling in the strategy literature and analyze issues related to its current use including different implementation algorithms, relative versus absolute performance, establishing significance of simulation results and long- versus short-term performance measurements. To facilitate cross- pollination of ideas, we point to advances and extensions of the model developed in other fields that could be effectively utilized to answer Strategy-related questions. These include modeling the strength of interaction, varying the importance of decision elements, utilizing alternative functional forms, incorporating endogeneity in N and K parameters, and embedding the NK model in a broader dynamic framework.

Ganco, M, Hoetker, G., "Nk modeling methodology in the strategy literature: Bounded search on a rugged landscape." Edited by Don Bergh and Dave Ketchen Jr., Research Methodology in Strategy and Management, Emerald Group Publishing, Ltd., 2009, pp. 237-268 View and download