The measurement process

As stated by Bollen, “The measurement process begins with the concept. A concept is an idea that unites phenomena [...] under a single term” (Bollen 1989: 180). When the researcher has come up with a concept to measure, four steps should be followed in the measurement process:

1) give the meaning of the concept, 2) identify the dimensions and latent variables to represent it, 3) form measures, and 4) specify the relation between the measures and the latent variables (Bollen 1989). The measurement process links the theoretically developed concepts to one or more latent variables³⁹, and these latent variables/dimensions are further linked to observable variables. Bollen’s (1989) four-step measurement procedure is highly acknowledged and much cited, and will be used in this study although other comparable approaches exist (Churchill Jr.

1979).

The first two stages of the measurement procedure were achieved in Chapter 2. First, the relevant theoretical concepts were defined and explained on the basis of existing literature. “A theoretical definition explains in as simple and precise terms as possible the meaning of a concept” (Bollen 1989: 180). Second, the dimensions of the constructs were identified and explained. A

theoretical construct may consist of one or many dimensions, thus the researcher may need one or more latent variables in the measurement model (i.e., one latent variable per dimension is needed). In this study, seven constructs (i.e., the independent and dependent variables) are

included in the theoretical model. Except for relational contracts⁴⁰, all of the constructs consist of

39 Latent variables are the representation of concepts in the measurement model.

40 The construct ‘relational contract’ consists of or is represented by three dimensions – information exchange, solidarity, and harmonization of conflict.

one dimension; the main model consists of seven constructs and ten dimensions or latent variables⁴¹.

The third phase of Bollen’s (1989) measurement process is to form measures to represent the latent variables in the theoretical model. As far as possible, this study applies established

theoretical constructs and established measures that have been validated in previous studies. This is in line with the recommendations in Churchill’s (1979) acknowledged article. Churchill (1979) states that it is difficult to accumulate knowledge if identical constructs are operationalized differently across empirical studies; thus, in order to “build” or accumulate knowledge, it is important that constructs and measures are cumulative (Churchill Jr. 1979; McGrath and Brimberg 1983).

An extensive review of the literature was conducted to identify potentially relevant empirical measures. This study applies multiple measures to ensure that the constructs are not

underrepresented. However, single items are used in connection with the control variables. The use of multiple measures allows us to test the validity requirements. Regarding the theoretical point of departure, the inter-organizational literature suited my purpose well. This literature is well developed theoretically; furthermore, established and validated measures have been developed. A huge challenge was that these measures were mainly developed within the B2B marketing literature. The unit of analysis in the aforementioned literature is the ‘relationship’

between two parties, typically a buyer and a seller; whereas, in this study the transaction (i.e., the inter-firm innovation project) is the unit and object of analysis. This implied that the measures had to be rephrased to fit the unit of analysis and to fit within the empirical setting. Thus, the validity of the measurements could be threatened. Although the measures had been validated in the inter-organizational literature, extensive work was executed to establish face validity. Face validity is defined as the researcher’s subjective evaluation of the validity of the measure (Frankfort-Nachmias and Nachmias 1996). Several experts should be consulted and if there is agreement among the experts, the researcher may state that the measures show face validity. In the measurement process, several experts were consulted. They were industry leaders and academic experts with in-depth knowledge of the industry. Some items were excluded in this process, several were rephrased, and some new items were included.

The independent constructs have been operationalized and measured a number of times in the interorganizational literature. This applies to formal contracts, relational contracts, and

41 In addition, several control variables and rival predictors are included in the measurement model.

transaction specific investments. However, the unit of analysis and empirical setting is different here; therefore, a considerable amount of time and energy was used to identify appropriate measures and conduct the necessary modifications of these constructs. The items chosen were consequently rephrased to fit the empirical setting and unit of analysis.

The dependent construct of goal attainment (i.e., specification, function, quality, cost and time) has been operationalized several times in relevant empirical studies; hence, it was

straightforward to use these measures in the study. The value creation measures were

considerably more challenging; these measures were especially tailored for the B2B marketing setting and were useless for the purpose of this study. A considerable amount of time was used to search for suitable measures, but in the end, we had to rely on global measures on this construct;

that is, the measures are not specific (for example cost reductions, improvements etc. were used as measures of value creation). Furthermore, the contractor value creation potential and

innovative performance measures were adapted from the new product development literature and fitted to our empirical setting.

The fourth phase of Bollen’s (1989) measurement process is to specify the relations between the measures and the latent variables. This is achieved in Chapter 6 where a measurement model is constructed to show the relation between the measures and the latent variables. Reflective scales are used instead of formative scales, since the items are assumed to share a common factor.

When the constructs increase in value, this should be reflected in the value of the items, which should also increase in value. Finally, all constructs are measured by use of perceptual data. In the next section, the measures representing the constructs in the theoretical model are presented.