R- Homework5

Inês Silva

1) Based on the description above and the analyses that the manager did, what are
according to you the likely research hypotheses in this study? Formulate the
moderation hypotheses as we have seen in Lecture 11

H1: There will be an interaction between the size of the company and the return on
investment (ROI), such that:

H1a: A larger employee pool could be associated with a higher ROI, for older companies.

H1b: A larger employee pool could be detrimental to the ROI, for younger companies.

2) Replicate the 7 analyses of the manager with the dataset that you downloaded from
UV:

A. Attach the relevant R-output (including the R-commands). Highlight in the tables all
coefficients that are relevant to testing the research hypotheses of the manager.
Interpret the coefficient of the size variable after each analysis, like we did in lecture
11

Figure 1. Creating new datasets with the specific variables to test

For the first and second model we can see that for values=0 for the predictors the dependent
variable (ROI) is equal to 17.57.
When considering the companies that have an age that is 1sd below the average of the age of
the companies and the ones which are the same age as the average:

• For values=0 for the predictors the dependent variable (ROI) is equal to 36.68.
• The estimate of size indicates that when age=0, then the ROI decreases -0.52 for each
unit of size.
• The estimate of age shows that when the size=0 then the ROI increases 0.86 with each
unit of age.

When considering the companies that have an age that is 1 sd above the average of the age of
the companies and the ones which are the same age as the average:

• For values=0 for the predictors the dependent variable (ROI) is equal to 72.23.
• The estimate of size indicates that when age=0, then the ROI decreases 1.50 for each
unit of size.
• The estimate of age shows that when the size=0 then the ROI decreases 16.86 with each
unit of age.
• The interaction effect: when the companies age are one 1sd above the average, ROI
increases 0.49 with each unit of size.

When considering the companies that have an age that is 2 or 3 sd above the average of
the age of the companies and the ones which are the same age as the average:
 • For values=0 for the predictors the dependent variable (ROI) is equal to 76.83.
• The estimate of size indicates that when age=0, then the ROI decreases 1.61 for each
unit of size.
• The estimate of age shows that when the size=0 then the ROI decreases 18.55 with each
unit of age.
• The interaction effect: when the companies age are two and three sd above the average,
ROI increases 0.52 with each unit of size.

B. Visualize these 7 simple slopes of Size on ROI in a line diagram. Use for this Excel:
Make first a cross-table, and calculate cell-means using your regression equation
and coefficient estimates, as you did for TP4. Then ask Excel to draw a line diagram
like this:

Company Age
"- 3 sd" "- 2 sd" "- 1 sd" Average "+ 1 sd" "+ 2 sd" "+ 3 sd"
Average -639,66 -628,61 -617,57 -606,52 -595,48 -584,44 -573,39
Company Size
"+ 1 sd" -729,35 -716,81 -704,26 -691,72 -679,17 -666,63 -654,08

C. Describe the results in your own words; what do they mean in terms of the
hypotheses that you formulated?
• When companies are of average size, the younger they are the smaller their ROI
is.
• When companies are 1 sd above the average regarding size, the younger they are
the smaller their ROI is.
• The larger the company the smaller the ROI.
• The larger and younger the company is the smaller the ROI is.
 • This confirms the hyphoteses to be tested.

3) Can you think of the relation between these 3 variables in terms of a mediation
model?
A. What could be in this case a plausible research hypotheses? Systematically
formulate these hypotheses.

Hypothesis: When the company gets older and better structured they may tend to size
up

Hypothesis: As size increases, the ROI decreases.

B. Visualise the mediation model, as we have seen in the lessons on mediation

analysis

size

age ROI