IDEAS home Printed from https://ideas.repec.org/a/spr/qualqt/v59y2025i1d10.1007_s11135-024-01980-0.html
   My bibliography  Save this article

Additional caution regarding rules of thumb for variance inflation factors: extending O’Brien to the context of specification error

Author

Listed:
  • Arturs Kalnins

    (University of Iowa)

  • Kendall Praitis Hill

    (Swarthmore College)

Abstract

Despite the popularity of Variance Inflation Factor (VIF) scores as multicollinearity diagnostics, methodological work has voiced skepticism. In a paper that has become the most highly cited reference regarding the use of VIF scores, O’Brien urged caution when applying VIF thresholds. More recent articles have considered the validity of VIF scores in the presence of regression specification error. These suggest a need for additional caution. In this paper, we present a strategy to incorporate analytic results from the specification error literature directly into the framework developed and employed by O’Brien. We confirm O’Brien’s main result that VIF scores far above thresholds may be benign, but we establish a boundary condition for his original framework: regressions must be perfectly specified. Further, our extension reconciles the O’Brien framework with results from the specification error literature. We conclude that multicollinearity may indeed be the cause of excess type 1 errors regardless of whether VIF scores are high or low.

Suggested Citation

  • Arturs Kalnins & Kendall Praitis Hill, 2025. "Additional caution regarding rules of thumb for variance inflation factors: extending O’Brien to the context of specification error," Quality & Quantity: International Journal of Methodology, Springer, vol. 59(1), pages 291-314, February.
    • Handle: RePEc:spr:qualqt:v:59:y:2025:i:1:d:10.1007_s11135-024-01980-0
    DOI: 10.1007/s11135-024-01980-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11135-024-01980-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11135-024-01980-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Arturs Kalnins, 2018. "Multicollinearity: How common factors cause Type 1 errors in multivariate regression," Strategic Management Journal, Wiley Blackwell, vol. 39(8), pages 2362-2385, August.
    2. Lenz, Gabriel S. & Sahn, Alexander, 2021. "Achieving Statistical Significance with Control Variables and Without Transparency," Political Analysis, Cambridge University Press, vol. 29(3), pages 356-369, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mario Vaupel & David Bendig & Denise Fischer-Kreer & Malte Brettel, 2023. "The Role of Share Repurchases for Firms’ Social and Environmental Sustainability," Journal of Business Ethics, Springer, vol. 183(2), pages 401-428, March.
    2. Iara da Silva & Caroline Fernanda Hei Wikuats & Elizabeth Mie Hashimoto & Leila Droprinchinski Martins, 2022. "Effects of Environmental and Socioeconomic Inequalities on Health Outcomes: A Multi-Region Time-Series Study," IJERPH, MDPI, vol. 19(24), pages 1-22, December.
    3. Andreas Wagner & Denise Fischer‐Kreer, 2024. "The role of CEO regulatory focus in increasing or reducing corporate carbon emissions," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 1051-1065, February.
    4. Fischer, Denise & Greven, Andrea & Tornow, Mark & Brettel, Malte, 2021. "On the value of effectuation processes for R&D alliances and the moderating role of R&D alliance experience," Journal of Business Research, Elsevier, vol. 135(C), pages 606-619.
    5. Jiazhen Song & Xiaobao Peng & Sumran Ali & Emmanuel Mensah Horsey & Jiashun Huang, 2024. "The relationship between CEO narcissism and hybrid organising," Asian Business & Management, Palgrave Macmillan, vol. 23(5), pages 767-791, November.
    6. Yusen Dong & Pengcheng Ma & Lanzhu Sun & Daniel Han Ming Chng, 2024. "Goodwill Hunting: Why and When Ultimate Controlling Owners Affect Their Firms’ Corporate Social Responsibility Performance," Journal of Business Ethics, Springer, vol. 193(3), pages 535-553, September.
    7. Stephen J. Smulowitz & Didier Cossin & Alfredo De Massis & Hongze (Abraham) Lu, 2023. "Wrongdoing in Publicly Listed Family- and Nonfamily-Owned Firms: A Behavioral Perspective," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1233-1264, July.
    8. Valentina Marano & Steve Sauerwald & Marc Essen, 2022. "The influence of culture on the relationship between women directors and corporate social performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(7), pages 1315-1342, September.
    9. Mônica Cavalcanti Sá de Abreu & Romulo Alves Soares & Victor Daniel‐Vasconcelos & Vicente Lima Crisóstomo, 2023. "Does board diversity encourage an environmental policy focused on resource use, emission reduction and innovation? The case of companies in Latin America," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(3), pages 1161-1176, May.
    10. David Bendig & Andreas Wagner & Kevin Lau, 2023. "Does it pay to be science‐based green? The impact of science‐based emission‐reduction targets on corporate financial performance," Journal of Industrial Ecology, Yale University, vol. 27(1), pages 125-140, February.
    11. Kravtsova, Maria & Libman, Alexander, 2023. "Historical family structure as a predictor of liberal voting: Evidence from a century of Russian history," Economic Systems, Elsevier, vol. 47(2).
    12. Gotsopoulos, Aleksios & Pitsakis, Konstantinos, 2024. "United we stand? Organizational groups and spinoff mortality in the context of academic entrepreneurship," Journal of Business Venturing, Elsevier, vol. 39(1).
    13. Wu, Tao & Delios, Andrew & Chen, Zhaowei & Wang, Xin, 2023. "Rethinking corruption in international business: An empirical review," Journal of World Business, Elsevier, vol. 58(2).
    14. Wang, Pengfei, 2019. "Price space and product demography: Evidence from the workstation industry, 1980–1996," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    15. Stephen J. Smulowitz & Didier Cossin & Hongze Lu, 2023. "Managerial Short-Termism and Corporate Social Performance: The Moderating Role of External Monitoring," Journal of Business Ethics, Springer, vol. 188(4), pages 759-778, December.
    16. Erik Mooi & Qiong Wang & Steven Seggie & Sandy D. Jap, 2024. "The show must go on: The role of contract frames in safeguarding relationship continuity," Journal of the Academy of Marketing Science, Springer, vol. 52(6), pages 1842-1858, November.
    17. Arzi Adbi, 2023. "Financial Sustainability of For-Profit Versus Non-Profit Microfinance Organizations Following a Scandal," Journal of Business Ethics, Springer, vol. 188(1), pages 57-74, November.
    18. Robert Becker Pickson & Peng Gui & Lirong Jian & Elliot Boateng, 2025. "The role of private sector investment in agriculture: A catalyst for sustainable development in Asia," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(1), pages 113-128, February.
    19. Xiao, Shufeng & Yu, Tianjiao, 2024. "Underperformance duration and R&D internationalization: Institutional contingencies in an emerging economy," International Business Review, Elsevier, vol. 33(4).
    20. Justin Frake & Andreas Hagemann & Jose Uribe, 2024. "Collider bias in strategy and management research: An illustration using women CEO's effect on other women's career outcomes," Strategic Management Journal, Wiley Blackwell, vol. 45(7), pages 1393-1419, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:qualqt:v:59:y:2025:i:1:d:10.1007_s11135-024-01980-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.