Sample selection bias and Heckman models in strategic management research

Samuel Certo, John R. Busenbark, Hyun soo Woo, Matthew Semadeni

Research output: Contribution to journalArticle

104 Citations (Scopus)

Abstract

Research summary: The use of Heckman models by strategy scholars to resolve sample selection bias has increased by more than 700percent over the last decade, yet significant inconsistencies exist in how they have applied and interpreted these models. In view of these differences, we explore the drivers of sample selection bias and review how Heckman models alleviate it. We demonstrate three important findings for scholars seeking to use Heckman models: First, the independent variable of interest must be a significant predictor in the first stage of a model for sample selection bias to exist. Second, the significance of lambda alone does not indicate sample selection bias. Finally, Heckman models account for sample-induced endogeneity, but are not effective when other sources of endogeneity are present. Managerial summary: When nonrandom samples are used to test statistical relationships, sample selection bias can lead researchers to flawed conclusions that can, in turn, negatively impact managerial decision-making. We examine the use of Heckman models, which were designed to resolve sample selection bias, in strategic management research and highlight conditions when sample selection bias is present as well as when it is not. We also distinguish sample selection bias, a form of omitted variable (OV) bias, from more traditional OV bias, emphasizing that it is possible for models to have sample selection bias, traditional OV bias, or both. Accurately identifying the type(s) of OV bias present is essential to effectively correcting it. We close with several recommendations to improve practice surrounding the use of Heckman models.

Original languageEnglish (US)
JournalStrategic Management Journal
DOIs
StateAccepted/In press - 2016
Externally publishedYes

Fingerprint

Sample selection bias
Heckman
Strategic management research
Omitted variable bias
Endogeneity
Predictors
Managerial decision making
Statistical tests
Inconsistency

Keywords

  • Endogeneity
  • Heckman models
  • Research methods
  • Sample selection bias

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

Cite this

Sample selection bias and Heckman models in strategic management research. / Certo, Samuel; Busenbark, John R.; Woo, Hyun soo; Semadeni, Matthew.

In: Strategic Management Journal, 2016.

Research output: Contribution to journalArticle

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