Addressing the endogeneity dilemma in operations management research: Theoretical,empirical, and pragmatic considerations |
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| Affiliation: | 1. IE Business School, IE University, Spain;2. Government of Canada, Public Safety, Canada;1. Michigan State University, Eli Broad College of Business, 632 Bogue Street N370, East Lansing, MI 48824, United States;2. Texas Christian University, Neeley Business School, PO Box 298530, Fort Worth, TX 76129, United States;3. University of Minnesota, Carlson School of Management, 321 19th Ave. S., Minneapolis, MN 55455, United States;1. Department of Supply Chain Management, W. P. Carey School of Business, Arizona State University, P.O. Box 874706, Tempe, AZ, 85287-4706, USA;2. Department of Management Sciences, Fisher College of Business, The Ohio State University, 600 Fisher Hall, 2100 Neil Avenue, Columbus, OH, 43210, USA;3. Department of Marketing and Logistics, Fisher College of Business, The Ohio State University, 500 Fisher Hall, 2100 Neil Avenue, Columbus, OH 43210, USA;1. Graduate School of Business, Doshisha University, Karasuma-Imadegawa, Kamigyo-ku, Kyoto, 602-8580, Japan;2. International Research Institute for Sustainable Operations, School of Management, Northwestern Polytechnical University, China;3. Ashbel Smith Professor of Operations Management, University of Texas at Dallas, School of Management, P.O. Box 830688, SM30 Richardson, TX 75083-0688 United States;4. Eunice and James L. West Chair of Supply Chain Management, Texas Christian University, Neeley School of Business, Box 298530, Fort Worth, TX 76129 United States;5. Faculty of Environmental and Information Studies, Tokyo City University, Ushikubonishi 3-3-1, Yokohama, 224-8551, Japan;1. Department of Information Systems and Supply Chain Management, Neeley School of Business, Texas Christian University, Fort Worth, TX 76129, USA;2. Department of Management, Entrepreneurship and Leadership, Neeley School of Business, Texas Christian University, Fort Worth, TX 76129, USA;1. College of Business, University of Illinois, United States;2. Fisher College of Business, The Ohio State University, United States |
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| Abstract: | In this paper, we examine the problem of endogeneity in the context of operations management research. Whereas the extant literature has focused primarily on the statistical aspect of the problem, a comprehensive treatment requires an examination of theoretical and pragmatic considerations as complements. The prevailing problem with the focus on statistical techniques is that the standards tend to be derived from idealizations: the correlation between a regressor and a disturbance term must be exactly zero, or the analysis will be invalid. In actual empirical research settings, such a knife-edge assumption can never be satisfied, indeed it cannot even be directly tested. Idealizations are useful in helping us understand what it would take to eliminate endogeneity, but when applied directly and unconditionally, they lead to unreasonable standards that may unnecessarily stifle substantive inquiry. We believe that it is far more productive and meaningful to ask: “What can we realistically expect empirical scientists to be able to achieve?” To this end, we cover and revisit some of the general technical material on endogeneity, paying special attention to the idiosyncrasies of operations management research and what could constitute reasonable criteria for addressing endogeneity in empirical operations management studies. |
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