Measurement of Business Economic Performance: An Examination of Method Convergence

Strategic management researchers have measured business economic performance (BEP) through either perceptual assessments of senior executives or secondary data sources, but few explicitly evaluate the degree of convergence across methods. In an effort to examine method convergence, we collected data on three dimensions-sales growth, net income growth, and profitability (ROI) using both methods. Although convergent and discriminant validity were achieved using Campbell and Fiske's Multi Trait, Multi Method (MTMM) and Confiratory Factor Analysis (CFA), the approaches yielded different insights. The advantages of CFA over MTMM is demonstrated with implications for strategy research.

[1]  D. Campbell,et al.  Convergent and discriminant validation by the multitrait-multimethod matrix. , 1959, Psychological bulletin.

[2]  Stanley E. Seashore,et al.  Factorial Analysis of Organizational Performance , 1967 .

[3]  J. Sheth.  A Factor Analytical Model of Brand Loyalty , 1968 .

[4]  K. Jöreskog.  Statistical analysis of sets of congeneric tests , 1971 .

[5]  A. E. Maxwell,et al.  Factor Analysis as a Statistical Method. , 1964 .

[6]  Barr Rosenberg,et al.  Error Rates in CRSP and Compustat Data Bases and their Implications , 1974 .

[7]  K. Jöreskog,et al.  Intraclass Reliability Estimates: Testing Structural Assumptions , 1974 .

[8]  Richard M. Steers.  Problems in the Measurement of Organizational Effectiveness , 1975 .

[9]  Thomas J. Bouchard,et al.  Unobtrusive Measures , 1976 .

[10]  Paul S. Goodman,et al.  New perspectives on organizational effectiveness , 1977 .

[11]  Bruce A. Kirchhoff,et al.  Organization Effectiveness Measurement and Policy Research , 1977 .

[12]  R. Rohner.  Advantages of the Comparative Method of Anthropology , 1977 .

[13]  N. Denzin,et al.  The Research Act , 1978 .

[14]  T. Jick.  Mixing Qualitative and Quantitative Methods: Triangulation in Action. , 1979 .

[15]  Jay Magidson,et al.  Advances in factor analysis and structural equation models , 1979 .

[16]  Charles W. Hofer,et al.  Strategic management : a new view of business policy and planning , 1980 .

[17]  P. Bentler,et al.  Significance Tests and Goodness of Fit in the Analysis of Covariance Structures , 1980 .

[18]  William R. Darden,et al.  Causal Models in Marketing , 1980 .

[19]  C. Fornell,et al.  Evaluating structural equation models with unobservable variables and measurement error. , 1981 .

[20]  R. Bagozzi.  An Examination Of The Validity Of Two Models Of Attitude. , 1981, Multivariate behavioral research.

[21]  L. Phillips.  Assessing Measurement Error in Key Informant Reports: A Methodological Note on Organizational Analysis in Marketing , 1981 .

[22]  Rosabeth Moss Kanter,et al.  Organizational Performance: Recent Developments in Measurement , 1981 .

[23]  R. Bagozzi,et al.  Representing and testing organizational theories: A holistic construal. , 1982 .

[24]  Jeffrey D. Ford,et al.  Conceptual Issues of Linkage in the Assessment of Organizational Performance , 1982 .

[25]  Subhash Sharma,et al.  Sample size effects on chi square and other statistics used in evaluating causal models. , 1982 .

[26]  Claes Fornell,et al.  A second generation of multivariate analysis , 1982 .

[27]  David Rindskopf,et al.  Parameterizing inequality constraints on unique variances in linear structural models , 1983 .

[28]  T. Mitchell,et al.  Strategic Decision Processes: Comprehensiveness and Performance in an Industry with an Unstable Environment , 1984 .

[29]  James C. Anderson,et al.  The effect of sampling error on convergence, improper solutions, and goodness-of-fit indices for maximum likelihood confirmatory factor analysis , 1984 .

[30]  Jiing-Lih Farh,et al.  ASSESSING ENVIRONMENTAL SCANNING AT THE SUBUNIT LEVEL: A MULTITRAIT‐MULTIMETHOD ANALYSIS* , 1984 .

[31]  Gregory G. Dess,et al.  Measuring organizational performance in the absence of objective measures: The case of the privately-held firm and conglomerate business unit , 1984 .

[32]  M. Aldenderfer,et al.  Cluster Analysis. Sage University Paper Series On Quantitative Applications in the Social Sciences 07-044 , 1984 .

[33]  G. Huber,et al.  Retrospective reports of strategic‐level managers: Guidelines for increasing their accuracy , 1985 .

[34]  B. Chakravarthy.  Measuring strategic performance , 1986 .

[35]  John H. Grant,et al.  Construct Measurement in Organizational Strategy Research: A Critique and Proposal , 1986 .

[36]  Nancy Brandon Tuma,et al.  Sociological Methodology 1985. , 1987 .