So!apbox: Editorial essay Mediation remediation

Theorizing in strategic organization often leads researchers to state hypotheses involving mediating effects, in which an antecedent variable, X, affects an outcome, Y, through the intermediate channel of a mediator, M (Whetten, 1989). Sometimes the entire effect of X on Y is thought to operate through M (i.e. complete mediation), and sometimes X is thought to affect Y directly and also indirectly through M (i.e. partial mediation). When empirical researchers set out to test such mediating hypotheses the vast majority of tests use either of two standard methodologies introduced in the mid-1980s. The first is the ‘causal steps’ approach of Baron and Kenny (1986), extended in Kenny et al. (1998) and further discussed in MacKinnon et al. (2002) and Shrout and Bolger (2002). The second is the SEM approach, advocated in James and Brett (1984) and further discussed in James et al. (2006). While the two standard methods and their variants feature an appealing simplicity that has sustained their popularity for decades, they both require a stringent assumption that is unlikely to hold in most contexts of interest in strategic organization research. The result has been a proliferation of studies reporting problematic tests of mediating effects.1 The good news is that better, instrument-based mediation tests such as two-stage least squares (2SLS) and three-stage least squares (3SLS) that do not require the stringent assumptions underlying the standard methods are available and have been well known for decades. The bad news is that they are rarely used, despite some clear and compelling articulations of their merits (e.g. Shaver, 2005). Some have recently argued that research in strategic organization would benefit from adopting these alternative methods given that they do not require the stringent assumptions of the standard methods (DeVaro, 2011; Shaver, 2005; Wood et al., 2008). The key point is not that evidence of mediating effects is more or less likely to be uncovered using the alternative methods versus the standard methods but rather that the standard methods are more likely to support incorrect conclusions regarding mediation. This essay offers a program for mediation remediation in the field of strategic organization and complements earlier papers that emphasized the importance of endogeneity and of correct interpretation of regressions in strategic organization research (e.g. Bascle, 2008; Hamilton and Nickerson, 2003; Yip and Tsang, 2007). It also provides a useful addition to the ‘hallmarks of high-quality empirical research’ identified in Oxley et al. (2010). But the call to replace the standard methods with instrument-based ones is not new. Given that the most important arguments for instrument-based methods have been made cogently before – without appreciably shifting the literature away from the standard methods – it is fair to ask what value there is in yet another orator ascending the soapbox to critique the standard methods. My answer is to focus this essay on what I see as the main reasons why scholars resist moving beyond 426357 SOQ9410.1177/1476127011426357DeVaroStrategic Organization