RJG_Measurement theory.pptx

Strategic Management: Cultural Orientation & Quantitative Measurement QUANTITATIVE MEASUREMENT Borut Milfelner CONCEPTS IN BUSINESS SCIENCE The theory gives a clear explanation to individual concepts (Wacker, 1998). Theory therefore plays a central role i...

Strategic Management: Cultural Orientation & Quantitative Measurement QUANTITATIVE MEASUREMENT Borut Milfelner CONCEPTS IN BUSINESS SCIENCE The theory gives a clear explanation to individual concepts (Wacker, 1998). Theory therefore plays a central role in management research (Udo Akang, 2012). Concepts represent generalized abstractions. When we know a concept, we get some general idea that can be associated with an understanding of certain concepts (Jaccard and Jacoby, 2009). The concepts are hypothetical, meaning they are only descriptions and ideas of reality and exist only in the minds of people and researchers (Jaccard and Jacoby, 2009). In social sciences, including management, concepts are measured using constructs, which are most often quantified variables, that is, they can take different numerical values. 2 MEASUREMENT DEFINITION As part of quantitative measurement, we assign values (numbers) to characteristics of objects or subjects of measurement according to certain rules. The value determines different levels of characteristics of individual measurement subject, objects or events or sometimes if the subject or object has a specific characteristic. We do not measure subjects and objects directly; we measure their characteristics. In social sciences, many characteristics are not directly measurable (they are purely theoretical concepts, e.g. market orientation, employe satisfaction, firm performance, etc.) 3 BASIC MEASURING SCALES Nominal scale Ordinal scale Interval scale Proportional scale 4 EXAMPLE: MEASURING SATISFACTION One or more questions? Likert scale with several questions: X1: I'm pleased to visit this hotel. X2: Visiting this hotel exceeded my expectations. X3: I will recommend this hotel to my friends and acquaintances. 5 TERMINOLOGY Construct – a conceptual term used to describe theoretical phenomena (concepts).  Constructs can be simple (have one dimension) or assembled (have several components or dimensions).  In measurement models, constructs are latent variables (there are usually several) and are not measured directly. Indicators (variables, items) are observed scores (usually quantified).  In measurement models, indicators represent manifest variables and are measured directly. 6 AN EXAMPLE OF A SIMPLE (SINGLE- FACTOR) AND COMPOSITE (TWO- FACTOR) REFLECTIVE CONSTRUCT ϕ ξ1 ξ1 ξ2 λ1 λ2 λ3 λ1 λ2 λ3 λ4 x1 x2 x3 x1 x2 x3 x4 δ1 δ2 δ3 δ1 δ2 δ3 δ4 7 CHARACTERISTICS OF REFLECTIVE CONSTRUCTS Constructs affect indicators. Indicators of the same construct should be as interconnected as possible. Indicators of different constructs should not be related to each other. Omission of indicators is not problematic. Indicators may be excluded. 8 A GOOD MEASUREMEND SCALE IS... Garbage and, Garbage out principle VALID  It measures what is consistent with the definition of the concept.  Content validity  Convergent validity  Discriminant validity  Nomological validity RELIABLE  Consistent with repeated measurements  Internally consistent GENERALIZABLE  It can be used repeatedly for similar concepts PARSIMONIC  Shorter and simpler measuring scales are preferred 10 CONTENT VALIDITY Content validity is assessed before data collection Concept definition and construct design – market orientated culture (Narver and Slater, 1990):  According to Narver and Slater (1990), market orientation is defined as an organizational culture that most effectively and efficiently creates the necessary behaviors for the creation of superior value for consumers, thus achieving superior business performance. It encompasses three core components: customer orientation, competitor orientation, and interfunctional coordination.  Customer orientation involves understanding and meeting the needs and preferences of target customers.  Competitor orientation focuses on recognizing and responding to the strategies and actions of current and potential competitors.  Interfunctional coordination ensures that all departments and functions within the organization work collaboratively to deliver value to customers. 11 CONTENT VALIDITY Content validity is assessed before data collection, a prerequisite for content validity is a good literature review It represents the level to which items measure what we want to measure:  The various items of the scale cover all aspects of the characteristic we want to measure.  Each item has a logical relationship with the concept we measure.  With the help of expert opinions, we can evaluate the level of content validity (academics and experts).  Overview of items by respondents. In our case:  three academics evaluated the items, one from strategic management, one from marketing, and one from the field of marketing research.  Also, the scale was reviewed by potential respondents (understanding and relevance). 12 CONVERGENT VALIDITY Convergent validity is tested on test or final sample data. It measures the relationships (level of correlation) between items that represent the same construct  Items that are related from the point of view of the theory should also be related in practice.  Items measuring the same constructs must be strongly interrelated. Three methods for assessing convergent validity:  Pearson correlation coefficient.  Exploratory (research) factor analysis (EFA)  Confirmatory (confirmatory) factor analysis (CFA) 13 DISCRIMINANT VALIDITY Discriminant validity is tested on test or final sample data. It measures the relationship (level of correlation) between questions that represent different constructs.  The relationships between items measuring different constructs must be weaker than the relationships between items measuring the same constructs.  Discriminant validity is achieved when there is a weak correlation between the items of different constructs. Methods for verifying discriminant validity:  Pearson correlation coefficient  Confirmatory (confirmatory) factor analysis (CFA) 14 NOMOLOGICAL VALIDITY The nomological network represents the constructs that are measures and the relationships between constructs. The relationships between constructs must be consistent with the theory. Nomological validity is tested by hypothesis testing. 15 RELIABILITY Possible reliability testing:  Double testing (difficult to implement in practice)  Conducting survey on the same population on two occasions and comparing the results, which means double data collection.  Internal consistency testing (more often):  a measure of the internal consistency of a set of items with the same measurement scale Cronbach alpha coefficient 16