Using Item Response Theory to Improve Measurement in Strategic Management Research: An Application to Corporate Social Responsibility

44 Pages Posted: 30 Aug 2013 Last revised: 11 Mar 2015

See all articles by Robert Carroll

Robert Carroll

University of Rochester

David M. Primo

University of Rochester - Department of Political Science

Brian Kelleher Richter

University of Texas at Austin - Red McCombs School of Business

Date Written: January 23, 2015

Abstract

We introduce item response theory (IRT) to management and strategy research. IRT explicitly models firms’ and individuals’ observable actions in order to measure unobserved, latent characteristics. IRT models have helped researchers improve measures in numerous disciplines. To demonstrate their potential in strategic management, we show how the method improves upon a key measure of corporate social responsibility (CSR) and corporate social performance (CSP), the KLD Index, by creating what we term D-SOCIAL-KLD scores, and associated estimates of their accuracy, from the underlying data. We show, for instance, that firms like Apple may not be as “good” as previously thought, while firms like Walmart may perform better than typically believed. We also show that the D-SOCIAL-KLD measure outperforms the KLD Index and factor analysis in predicting new CSR-related activity.

Keywords: Research Methods, Measurement, Item Response Theory, Bayesian Estimation, Corporate Social Responsibility, Corporate Social Performance

JEL Classification: C11, C43, M14, L21

Suggested Citation

Carroll, Robert and Primo, David M. and Richter, Brian Kelleher, Using Item Response Theory to Improve Measurement in Strategic Management Research: An Application to Corporate Social Responsibility (January 23, 2015). Available at SSRN: https://ssrn.com/abstract=2318105 or http://dx.doi.org/10.2139/ssrn.2318105

Robert Carroll

University of Rochester ( email )

300 Crittenden Blvd.
Rochester, NY 14627
United States

David M. Primo

University of Rochester - Department of Political Science ( email )

Rochester, NY 14627
United States
585-273-4779 (Phone)

Brian Kelleher Richter (Contact Author)

University of Texas at Austin - Red McCombs School of Business ( email )

2100 Speedway
B6500, CBA 5.250
Austin, TX 78712
United States
512-232-6751 (Phone)

HOME PAGE: http://briankrichter.com/

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