Conceptual Analysis of Moderator and Mediator Variables in Business Research

Abstract

Abstract The major purpose of this article is to expand the domain of the business research by providing conceptual analysis of the moderating and mediating variables and exploring their potent effects in business research. To provide specific implications, Kang et al. (2015) model with respect to Balanced Scorecard technique is conceptually extended. Theoretical foundation of the moderating, mediating, and their major distinctions along with appropriate statistical tests applicable to each situation are also provided. The model is also extended to analyzing interaction effects of Mediated-Moderation and Moderated-Mediation designs and their testing. The article concludes that: 1) the nature of complex business problems will be more transparently captured by considering moderating and mediating variables, 2) without specifying moderating and mediating variables, business models are incomplete and therefore are not able to solve real business obstacles. Lack of inclusion of moderating and mediating effects is one viable reason which indicates why most business models do not function in real practice, 3) moderating and mediating variables are widening the scope of the prevalent business theories, and 4) moderating and moderating variables makes it possible to respond to the inquiries regarding “when” “how” and “why” a particular relationship exists between the independent and dependent variables. Hence, this study posits great impacts in future correlational and experimental studies in business.