Strategy Research and Panel Data: Evidence and Implications

Abstract

A number of studies in strategic management rely on panel (longitudinal) data to test theory. The advantages of panel data notwithstanding, such data introduce analytic problems (e.g., autocorrelation, heteroskedasticity, contemporaneous correlation) that make traditional estimators (e.g., ordinary least squares) inappropriate. This study highlights the influence of contemporaneous correlation, a statistical problem that affects the analysis of panel data. Using Monte Carlo simulations, the authors find that contemporaneous correlation is particularly problematic when analyzing data sets typically used in strategic management research. They suggest straightforward techniques to mitigate the harmful effects of contemporaneous correlation.

Keywords

research methodology contemporaneous correlation heteroskedasticity autocorrelation panel data longitudinal data

Get full access to this article

View all access options for this article.

References

Afuah, A. 2001. Dynamic boundaries of the firm: Are firms better off being vertically integrated in the face of a technological change? Academy of Management Journal, 44(6): 1211-1228.

Allison, P. D. 2005. Fixed effects regression methods for longitudinal data using SAS. Cary, NC: SAS Institute.

Baltagi, B. H. 1995. Econometric analysis of panel data. New York: John Wiley.

Beck, N. 2001. Time-series-cross-section data: What have we learned in the past few years? Annual Review of Political Science, 4(1): 271-293.

Beck, N. , & Katz, J. N. 1995. What to do (and not to do) with time-series cross-section data. American Political Science Review, 89(3): 634-647.

Bergh, D. D. 1993a. Don’t “waste” your time! The effects of time series errors in management research: The case of ownership concentration and research and development spending. Journal of Management, 19(4): 897-914.

Bergh, D. D. 1993b. Watch the time carefully: The use and misuse of time effects in management research. Journal of Management, 19(3): 683-705.

Bergh, D. D. , & Holbein, G. F. 1997. Assessment and redirection of longitudinal analysis: Demonstration with a study of the diversification and divestiture relationship. Strategic Management Journal, 18(7): 557-571.

Berman, S. L , Down, J. , & Hill, C. W. L. 2002. Tacit knowledge as a source of competitive advantage in the National Basketball Association. Academy of Management Journal, 45(1): 13-31.

10.

Bowen, H. P. , & Wiersema, M. F. 1999. Matching method to paradigm in strategy research: Limitations of cross-sectional analysis and some methodological alternatives. Strategic Management Journal, 20(7): 625-636.

11.

Boyd, B. K. , Gove, S. , & Hitt, M. A. 2005a. Consequences and measurement problems in strategic management research: The case of Amihud and Lev. Strategic Management Journal, 26: 367-375.

12.

Boyd, B. K. , Gove, S. , & Hitt, M. A. 2005b. Construct measurement in strategic management research: Illusion or reality? Strategic Management Journal, 26: 239-257.

13.

Carpenter, M. A. , & Wade, J. B. 2002. Microlevel opportunity structures as determinants of non-CEO executive pay. Academy of Management Journal, 45(6): 1085-1103.

14.

Cook, T. D. , & Campbell, D. T. 1979. Quasi-experimentation: Design & analysis issues for field settings. Boston: Houghton Mifflin.

15.

David, P. , Kochhar, R. , & Levitas, E. 1998. The effect of institutional investors on the level and mix of CEO compensation. Academy of Management Journal, 41(2): 200-208.

16.

Gimeno, J. 1999. Reciprocal threats in multimarket rivalry: Staking out “spheres of influence” in the U.S. airline industry. Strategic Management Journal, 20(2): 101-128.

17.

Greene, W. H. 2003. Econometric analysis. Upper Saddle River, NJ: Prentice Hall.

18.

Greve H. R. , & Goldeng, E. In press. Longitudinal analysis in strategic management. In D. D. Bergh & D. Ketchen Jr. (Eds.), Research methods in strategy and management. Amsterdam: Elsevier.

19.

Hambrick, D. C. , & Mason, P. A. 1984. Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2): 193-206.

20.

Jensen, M. C. , & Meckling, W. H. 1976. Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4): 305-360.

21.

Kennedy, P. 1998. A guide to econometrics. Cambridge, MA: MIT Press.

22.

Khanna, T. , & Rivkin, J. W. 2001. Estimating the performance effects of business groups in emerging markets. Strategic Management Journal, 22(1): 45-74.

23.

Levinthal, D. A. , & March, J. G. 1993. The myopia of learning. Strategic Management Journal, 14(8): 95-112.

24.

Peteraf, M. A. 1993. The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14(3): 179-191.

25.

Peteraf, M. A. , & Barney, J. B. 2003. Unraveling the resource-based tangle. Managerial and Decision Economics, 24(4): 309-323.

26.

Porter, M. E. 1980. Competitive strategy. New York: Free Press.

27.

Shook, C. L. , Ketchen, D. J. , Cycyota, C. S. , & Crockett, D. 2003. Data analytic trends and training in strategic management. Strategic Management Journal, 24(12): 1231-1237.

28.

Stata Corporation . 2005. Longitudinal/panel data reference manual. College Station, TX: Stata Press.

29.

Stimson, J. A. 1985. Regression in space and time: A statistical essay. American Journal of Political Science, 29(4): 914-947.

30.

Westphal, J. D. , & Zajac, E. J. 1998. The symbolic management of stockholders: Corporate governance reform and shareholder reactions. Administrative Science Quarterly, 43(1): 127-153.

31.

Wooldridge, J. M. 2002. Econometric analysis of cross section and panel data. Cambridge, MA: MIT Press.