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Frontiers of Business Research in China
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Do continuous and categorical measures capture the same construct of diversity? Evidence from China

Frontiers of Business Research in China volume 4, pages 423–450 (2010)Cite this article

Abstract

Chinese researchers have long preferred substantive research (i.e., examination of relationships among variables) to construct validation research, while failing to realize that construct validation research is the foundation of substantive research. This paper endeavors to answer a question: Do Rumelt’s (1974) categorical and Standard Industrial Classification (SIC) and skill-based continuous measures capture the same construct of diversity in the context of China? We take two steps to investigate the question. First, are continuous measures (SIC & skill-based entropy and Montgomery product count) appropriately differentiated among Rumelt’s categories? Second, are the categories converted from SIC & Skill-based measures convergent to Rumelt’s categorical measures? Results show that the two measures are consistent with each other.

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Authors and Affiliations

  1. School of Business, Nanjing University, Nanjing, 210093, China

    Liangding Jia

  2. Business School, Hong Kong University of Science and Technology, Hong Kong, China

    Guoguang Wan

  3. School of Business, Nanjing University, Nanjing, 210093, China

    Jieyu Zhou

  4. Business School, National University of Singapore, Singapore, 119077, Singapore

    Qian Lu

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  1. Liangding Jia
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  2. Guoguang Wan
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  3. Jieyu Zhou
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  4. Qian Lu
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Correspondence to Jieyu Zhou.

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Jia, L., Wan, G., Zhou, J. et al. Do continuous and categorical measures capture the same construct of diversity? Evidence from China. Front. Bus. Res. China 4, 423–450 (2010). https://doi.org/10.1007/s11782-010-0105-0

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  • DOI: https://doi.org/10.1007/s11782-010-0105-0

Keywords

  • diversification
  • continuous measures
  • categorical measures
  • Standard Industrial Classification