Thank you to all the list members who provided some excellent advice and
different perspectives on this question.

 

This issue arose when I was looking at strategy classification. Using a
random effects model

I was getting significant variances accounted for by groups pursuing
different strategies but the question was were these

meaningful?

 

In many cases the intra class correlation coefficient indicated that choice
of strategy may account for up to 30 to 40%

of results. Intuitively these results makes sense good business strategy
should impact on results. My observations were based on sometimes as few as
5 or 6 groups

 but the total number of observations could be quite large - frequently in
the hundreds and sometimes thousands.

 

My request for a definitive reference was because reviewers frequently
submit equivocal responses and I was looking to understand

a)      whether this approach was sensible i.e. that the results meant
something and b) how to defend this choice.

 

Any help on the second of these or indeed further comment on the original
question would be welcome.

 

>From my perspective and from comments received I suggest that;

 

a)      Observations on individuals pursuing similar strategic choices are
likely to be correlated (whether this arises through mimicry or 

original thought is unimportant the result is that such activities will
coalese together) and therefore this should be taken into account in order

to achieve reliable fixed effect estimates.

b)      For strategic choice to be meaningful it must account for the
variance in the outcome. The ICC provides a measure of the magnitude of this


and by comparing the model with the random effect against that of a model
lacking the effect some estimate of its significance can be achieved (or am
I

making a grave error here?)

c)       The actual number of groups reported in the analysis may actually
be largely ignored if we assume that these are drawn from a much larger
population of choices i.e. strategies 1 to 5 may be

the only ones in evidence but this doesn't mean that others do not exist,
they are merely not deployed in this operational setting at this point in
time.

 

 

Kind regards

 

 

 

 

Dr Graham Leask

Economics & Strategy Department

Aston Business School

Aston University

Aston Triangle

Aston Street

Birmingham

West Midlands

B4 7ET

 

Tel: 0044 121 204 3150

 


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