The Truth Lies Within…and Between: The Theoretical and Empirical Implications of Longitudinal Data

Abstract

We investigate the theoretical and empirical implications of longitudinal data in strategy research. Theoretically, longitudinal data allow strategy researchers to distinguish between relationships among constructs within versus between firms. Empirically, longitudinal data contain information about two types of relationships: within-firm and between-firm relationships. We provide three empirical studies to examine between-firm and within-firm relationships in strategy research. Study 1 investigates the relative between-firm versus within-firm variance in a number of variables used in strategy research. Studies 2 and 3 use simulation techniques to assess the statistical power and bias of techniques (e.g., random effects, fixed effects, etc.) used by strategy scholars to analyze longitudinal data. Based on our review and empirical findings, we offer a number of recommendations to strategy scholars utilizing longitudinal data.