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

The logit and probit models have 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. Copyright © 2007 John Wiley & Sons, Ltd.     

Experimental Evidence on Alternative Environmental Valuation Methods

Experimental methods are central to assessments of environmental valuation approaches that are operationally meaningful. Existing lab experiments focus attention sharply on the neglect of hypothetical bias. They also offer constructive solutions to correct this bias, and beg for validation in field experiments.     

Consumer behavior: An appraisal

This article deals with the status of consumer research after nearly twenty years of emphasis. There is a brief history of the subject, an analysis of the number and type articles being published, and an assessment of the direction consumer behavior may take in the future. *** DIRECT SUPPORT *** A00BV020 00002     

A SUPPLY CHAIN MANAGER SELECTION METHODOLOGY: EMPIRICAL TEST AND SUGGESTED APPLICATION

With the expanding global economy, no managerial position requires a broader set of skills than that of the supply chain manager. Understanding the complexities of filling this vital managerial position, recent conceptual research has called for the development of a tool designed to identify the top candidates for supply chain positions. This research presents a full test of a three hurdle methodology for supply chain manager selection. Empirical results reported here suggest that managers must possess superior general mental aptitude, need for achievement, and adaptability for firms to maximize performance.     

The Effect of SEC-Ordered Suspensions on Returns, Volatility, and Trading Volume

This study evaluates the effect of SEC-ordered suspensions on securities' returns, volatility, and trading volume during 1963–1987. It is found that there is a permanent devaluation of these securities during the suspension. This result, however, is sensitive to the announced reason for the suspension. Both the variance and the trading volume are found to be substantially higher than normal in the presuspension period. This trend continues in the immediate postsuspension period. The variance and volume levels return to more normal levels only at a much later date. We conclude that trading suspensions are not associated with the immediate elimination of unusual market activity.     

Current issues in US transportation politics

Les transports en commun deviennent rapidement un exemple critique de la crise générale des politiques de l'état dans la production et la distribution des équipements collectifs. La destruction antérieure des transports en commun aux Etats Unis par les intérêts de l'automobile, ainsi que les contraintes de l'énérgic, de l'utilisation du sol, et du chômage, produisent une situation selon laquelle diverses fractions du capital se regroupent dans une coalition afin de déterminer une politique future des transports. Une telle politique doit tant bien que mal satisfaire les besoins souvent contradictoires du transport, le résultat d'un développement urbain structuré autour de la dominance de l'automobile. Ces besoins sont soulignés ici-bas. Cet article présente les diverses options considérées actuellement ainsi que les contradictions survenant de chaque direction proposée. Les divisions à l'intérieur de la classe capitaliste sur ces options sont aussi présentés. Finalement, une brève considération est donnée aux mouvements sociaux urbains passés et présents organisés autour des questions de transport, ainsi que les problèmes auxquels ces mouvements doivent faire face dans les luttes futures autour de cet enjeu critique.     

SYNERGY,DIVERSIFICATION, AND INCENTIVE EFFECTS OF CORPORATE MERGER ON BONDHOLDER WEALTH: SOME EVIDENCE

The theory relating to the effects of a merger on the wealth of bondholders implies countervailing results. On the one hand, bondholders might share the benefits of operating synergies and diversification with shareholders. On the other hand, they might suffer from an incentive effect—the expropriation by the shareholders. Studies by Kim and McConnell (1977) and Asquith and Kim (1982) find that the wealth of bondholders is not significantly affected by conglomerate mergers. Using a more inclusive sample and a different methodology, this study finds that the wealth of bondholders is affected positively by merger, which implies synergies to bondholders and/or a diversification effect. Furthermore, an incentive effect would be inferred if leverage were increased substantially after merger and if the size of the increase were inversely related to bondholder gains. Since neither of these events is observed, this study finds no evidence for an incentive effect.     

Estimation in sequential decisionmaking models: A methodological note

The purpose of this note is to develop an appropriate model of behavior and a statistical technique for estimating it for individuals who make sequential decisions under uncertainty. The distinctive aspect of this model is that differences among individuals are reflected in their behavior rather than being swept into the error term.