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Sample Selection And Theory Development: Implications Of Firms' Varying Abilities To Appropriately Select New Ventures, Arthurs Kalnins Oct 2007

Sample Selection And Theory Development: Implications Of Firms' Varying Abilities To Appropriately Select New Ventures, Arthurs Kalnins

Arturs Kalnins

I highlight the need to consider sample selection when developing theory. When a sample is the result of a selection process, the process may be (1) generating empirical relationships consistent with a theoretical explanation that plays no causal role or (2) canceling out an empirical relationship actually generated by a causal process associated with a proposed theory. I argue that firms' varying abilities to appropriately select new ventures and select in or out of samples of such investments can lead to empirical misinterpretation and inappropriate theoretical conclusions.


Sample Selection And Theory Development: Implications Of Firms' Varying Abilities To Appropriately Select New Ventures, Arturs Kalnins Oct 2007

Sample Selection And Theory Development: Implications Of Firms' Varying Abilities To Appropriately Select New Ventures, Arturs Kalnins

Arturs Kalnins

I highlight the need to consider sample selection when developing theory. When a sample is the result of a selection process, the process may be (1) generating empirical relationships consistent with a theoretical explanation that plays no causal role or (2) canceling out an empirical relationship actually generated by a causal process associated with a proposed theory. I argue that firms' varying abilities to appropriately select new ventures and select in or out of samples of such investments can lead to empirical misinterpretation and inappropriate theoretical conclusions.