How to conduct and interpret tests involving moderated and mediated relations

What is it about?

Organizational strategy and structure are important variables in understanding firm outcomes, but does the strength of those relationships depend on contingency factors such as the uncertainty of the environment or the products and services offered by the firm? Questions such as this one require that we statistically examine the possible presence of contingency or moderating effects. Is the effect of the competitive environment on firm performance transmitted by firm strategy such that the environment influences strategic choices that in turn affect performance? Questions such as this one require that we statistically examine the possible presence of an intervening or mediating effects. For decades, questions and hypotheses that involve moderation and mediation have been central to strategic management research. Moreover, accurate answers to these questions have important implications for practice because knowledge about moderating effects (i.e., conditions under which an effect occurs) and mediating effects (i.e., reasons why an antecedent is related to an outcome) leads to more accurate decisions and allocation of resources that will enhance firm outcomes. Our article to appear in Organizational Research Methods (ORM) titled “Improving Our Understanding of Moderation and Mediation in Strategic Management Research” reviews common impediments to the accurate and valid assessment of moderating and mediating effects. We reviewed articles published in Strategic Management Journal and Organization Science over the past 10 years and discovered the unfortunate and pervasive presence of these problems, which lead researchers to misleading conclusions about moderating and mediating effects. Our review of the 205 articles that assessed moderation revealed seven key problems. Overall, published articles demonstrated an average of 2.57 of the seven problems we identified, with only one article avoiding the problems entirely. In similar fashion, our review of the 62 articles that addressed mediation revealed six key problems and, on average, the articles exhibited 3.52 of the problems each, with none of the published articles being problem-free. We believe that our ORM article describing these problems and their solutions will be useful for strategy researchers interested in examining moderation and mediation. Implementing these solutions will help improve the appropriateness and accuracy of tests of moderation and mediation. Our recommendations can be implemented by researchers and also used as guidelines for editors and reviewers who evaluate manuscripts reporting tests of moderation and mediation. Our article also provides references to key methodological sources on moderation and mediation that readers can pursue for further details about the issues we discuss. We look forward to the reactions that our article will generate and sincerely hope that it will serve as a catalyst to improve the assessment of moderation and mediation, which in turn will lead to more accurate results that will benefit theory and practice.

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