Moderation and Mediation in Strategic Management Research

[We’re pleased to welcome Herman Aguinis of George Washington University School of Business. Herman recently published an article in Organizational Research Methods entitled, “Improving Our Understanding of Moderation and Meditation in Strategic Management Research” with co-authors Jeffrey R. Edwards and Kyle J. Bradley.]

Organizational strategy and structure are important variables in understanding firm outcomes, but does the strength of those relationships depend on contingency factors such as the uncertainty of the environment or the products and services offered by the firm? Questions such as this one require that we statistically examine the possible presence of contingency or moderating effects. Is the effect of the competitive environment on firm performance transmitted by firm strategy such that the environment influences strategic choices that in turn affect performance? Questions such as this one require that we statistically examine the possible presence of an intervening or mediating effects.

For decades, questions and hypotheses that involve moderation and mediation have been central to strategic management research. Moreover, accurate answers to these questions have important implications for practice because knowledge about moderating effects (i.e., conditions under which an effect occurs) and mediating effects (i.e., reasons why an antecedent is related to an outcome) leads to more accurate decisions and allocation of resources that will enhance firm outcomes.

Our article published in Organizational Research Methods (ORM) titled “Improving Our Understanding of Moderation and Mediation in Strategic Management Research” reviews common impediments to the accurate and valid assessment of moderating and mediating effects. We reviewed articles published in Strategic Management Journal and Organization Science over the past 10 years and discovered the unfortunate and pervasive presence of these problems, which lead researchers to misleading conclusions about moderating and mediating effects. Our review of the 205 articles that assessed moderation revealed seven key problems. Overall, published articles demonstrated an average of 2.57 of the seven problems we identified, with only one article avoiding the problems entirely. In similar fashion, our review of the 62 articles that addressed mediation revealed six key problems and, on average, the articles exhibited 3.52 of the problems each, with none of the published articles being problem-free.

We believe that our ORM article describing these problems and their solutions will be useful for strategy researchers interested in examining moderation and mediation. Implementing these solutions will help improve the appropriateness and accuracy of tests of moderation and mediation. Our recommendations can be implemented by researchers and also used as guidelines for editors and reviewers who evaluate manuscripts reporting tests of moderation and mediation.  Our article also provides references to key methodological sources on moderation and mediation that readers can pursue for further details about the issues we discuss.

We look forward to the reactions that our article will generate and sincerely hope that it will serve as a catalyst to improve the assessment of moderation and mediation, which in turn will lead to more accurate results that will benefit theory and practice.

The abstract for the article:

We clarify differences among moderation, partial mediation, and full mediation and identify methodological problems related to moderation and mediation from a review of articles in Strategic Management Journal and Organization Science published from 2005 to 2014. Regarding moderation, we discuss measurement error, range restriction, and unequal sample sizes across moderator-based subgroups; insufficient statistical power; the artificial categorization of continuous variables; assumed negative consequences of correlations between product terms and its components (i.e., multicollinearity); and interpretation of first-order effects based on models excluding product terms. Regarding mediation, we discuss problems with the causal-steps procedure, inferences about mediation based on cross-sectional designs, whether a relation between the antecedent and the outcome is necessary for testing mediation, the routine inclusion of a direct path from the antecedent to the outcome, and consequences of measurement error. We also explain how integrating moderation and mediation can lead to important and useful insights for strategic management theory and practice. Finally, we offer specific and actionable recommendations for improving the appropriateness and accuracy of tests of moderation and mediation in strategic management research. Our recommendations can also be used as a checklist for editors and reviewers who evaluate manuscripts reporting tests of moderation and mediation.

You can read “Improving Our Understanding of Moderation and Meditation in Strategic Management Research” from Organizational Research Methods free for the next two weeks by clicking here. Want to know about the latest research from Organizational Research Methods? Click here to sign up for e-alerts!

*Image attributed to Anssi Koskinen (CC)

Herman Aguinis is the Avram Tucker Distinguished Scholar and Professor of Management at the George Washington University School of Business. His research interests span several human resource management, organizational behavior, and research methods and analysis topics. He has published five books and more than 130 articles in refereed journals. He is a fellow of the Academy of Management, past editor of Organizational Research Methods, and received the Academy of Management Research Methods Division Distinguished Career Award.

Jeffrey R. Edwards is the Belk Distinguished Professor of Organizational Behavior at the Kenan-Flagler Business School, University of North Carolina. He is past editor of Organizational Behavior and Human Decision Processes, past chair of the Research Methods Division of the Academy of Management, and a fellow of the Academy of Management, the American Psychological Association, and the Society for Industrial and Organizational Psychology. His methodological research addresses difference scores, polynomial regression, moderation and mediation, structural equation modeling, construct validity, and the development and evaluation of theory.

Kyle J. Bradley is a doctoral candidate in organizational behavior and human resource management in the Kelley School of Business, Indiana University. His scholarly interests include research methods, performance management, star performers, and the work-life interface. His work has appeared in Industrial and Organizational Psychology: Perspectives on Science and Practice, Organizational Research Methods, and Organizational Dynamics and has been presented at the meetings of the Academy of Management and Society for Industrial and Organizational Psychology