Divided We Fall: How Ratios Undermine Strategy Research

Using ratios complicates the interpretation of statistical results. Despite scholars’ previous admonitions regarding this practice, the use of ratios in strategy research persists. In this study, we employ simulations to demonstrate the implications of using ratios. Our simulations illustrate that the estimated relationships between independent and dependent variables fluctuate as a function of the dispersion of the numerators or denominators of...