Assignment 4 – Path Analysis

1. First, read this general information related to a new topic – path analysis.
   Path analysis is an extension of regression analysis in which several regressions are incorporated into a visual model of the relationships among several variables such as the model below. This model theorizes that adoption of a supply chain management strategy (SCMS) in combination with the implementation of an enterprise resource planning information system (ERP) will yield improved supply chain performance (SCP) followed by improved organizational performance (OP). All of the relationships (the arrows) are hypothesized as positive. Note that there are three regressions imbedded in the model:
   Regression 1: OP as dependent; SCMS, SCP, and ERP as independents.
   Regression 2: SCP as dependent; SCMS and ERP as independents.
   Regression 3: ERP as dependent; SCMS as independent.
   

   SCMS

   
   

   OP

   
   

   SCP

   
   

   ERP

2. Now, follow the instructions to complete a path analyses related to the impact of SCMS and ERP on SCP and OP.
   1. Note the research question: Will adoption of a supply chain management strategy and implementation of an ERP system lead to improved supply chain performance and improved organizational performance?
   2. Complete the three regressions listed in the table below using the SCMS_ERP_SCP_OP dataset. If you don’t remember how to run the regressions, look back at assignment 2.

      Dependent Variable	Independent Variables
      OP	SCMS, SCP, ERP
      SCP	SCMS, ERP
      ERP	SCMS

   3. Use the results from the regressions to complete the path model below by inserting the appropriate beta values and R ² values. Note that you are to insert the values into the already provided text boxes. Along with each beta value indicate its level of significance with ** for the .01 level, * for the .05 level, or ns for not significant.
      

      SCMS

      
      

      b =

      
      

      R ² =

      R ² =

      b =

      
      

      OP

      b =

      
      

      SCP

      b =

      
      

      ERP

      b =

      b =

      
      

      R ² =

   4. Interpret the results of the path analysis by answering the following questions related to the R ² values.
      1. What percent of the variation in OP is explained by SCMS, SCP, and ERP combined?
      2. What percent of the variation of SCP is explained by SCMS and ERP combined?
      3. What percent of the variation in ERP is explained by SCMS?
   5. Further interpret the results of the path analysis by answering the following questions related to the direct effects in the model.
      1. Does SCMS positively and directly affect OP? Your answer is based on the beta value and its significance level.
      2. Does ERP positively and directly affect OP?
      3. Does SCMS positively and directly affect SCP?
      4. Does ERP positively and directly affect SCP?
      5. Does SCMS directly affect ERP?
   6. Further interpret the results of the path analysis by answering the following questions related to the indirect effects of the model. This is a little more difficult. An indirect effect requires that both beta values along the indirect path (SCMSSCPOP, for example) be positive and significant.
      1. Does SCMS indirectly affect OP through SCP?
      2. Does ERP indirectly affect OP through SCP?
   7. Answer the research question based on your interpretation of the results.
      d. Interpret the results of the path analysis by answering the following questions related to the R ² values.
      1. What percent of the variation in OP is explained by SCMS, SCP, and ERP combined?
      2. What percent of the variation of SCP is explained by SCMS and ERP combined?
      3. What percent of the variation in ERP is explained by SCMS?

e. Further interpret the results of the path analysis by answering the following questions related to the direct effects in the model.

i. Does SCMS positively and directly affect OP? Your answer is based on the beta value and its significance level.

ii. Does ERP positively and directly affect OP?

iii. Does SCMS positively and directly affect SCP?

iv. Does ERP positively and directly affect SCP?

f. Further interpret the results of the path analysis by answering the following questions related to the indirect effects of the model. This is a little more difficult. An indirect effect requires that both beta values along the indirect path (SCMSSCPOP, for example) be positive and significant.

i. Does SCMS indirectly affect OP through SCP?

ii. Does ERP indirectly affect OP through SCP?

g. Answer the research question based on your interpretation of the results.

Price: $12.96

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