The Presence of Equivalent Models in Strategic Management Research Using Structural Equation Modeling

Abstract

The use of structural-equation modeling (SEM) in strategic-management research has grown dramatically during recent years. Although this statistical technique offers researchers a valuable tool for testing hypothesized models, certain challenges accompany the use of SEM. The current article examines one of these challenges, equivalent models, and its prevalence in strategy research. An equivalent model is an alternative model that fits the data equally well, thus producing the same covariance or correlation matrix but often differing significantly in theoretical interpretation. We examined the application of SEM in 109 strategic-management studies and found that equivalent models are a cause for concern in most strategic-management studies. Using a published article, we also provide a statistical demonstration of the potential effect of equivalent models. This article highlights both the extent of potential equivalent models in strategy research and the possible effect of such models on strategic-management theory.