The Use of Limited Dependent Variable Techniques in Strategy Research: Issues and Methods

Abstract:     
Strategy researchers are increasingly turning their attention from examining the impact of strategic choices on firm performance to examining the factors that determine strategic choices at the firm level. This shift of research orientation has meant that researchers are increasingly faced with a limited dependent variable (LDV) that takes a limited number of usually discrete values, for which LDV methods such as Logit or Probit are required. Despite their growing popularity, there appears to be widespread problems in the use of LDV methods. This paper complements recent papers that offer general guidelines by presenting and illustrating the practical steps needed to implement the methods essential for analyzing and interpreting the results from LDV models.

Keywords: empirical methods, limited dependent variable, strategy research

Accepted Paper Series