Fall $2024$

Assignment $6$

Measurement Scales:

Thus far, you$$ve been using what I call summary variables. These summary variables are actually means computed from the individual responses to multiple$-$item measurement scales. In this assignment, you$$ll be working with the variables market orientation $($MO$)$ and operational performance $($OP$).$ Three hundred and twenty$-$eight managers working for U$.$S$.$ manufacturing firms responded to a $10-$item market orientation scale and an $8-$item operational performance scale. Market orientation is a measure of customer focus and the organization$$s ability to generate and disseminate information related to changes in customer demand. Operational performance is a form of organizational performance that focuses primarily on an organization$$s efficiency.

The actual measurement scales are provided below. In the case of the market orientation scale, each manager was asked to read each item and indicate the degree to which they disagree or agree with the item. If the manager strongly disagrees, he or she is likely to put a $1.$ If the manager strongly agrees, he or she is likely to put a $7.$ If their agreement or disagreement is not so strong, they will respond somewhere in between $1$ and $7.$ In the case of the operational performance scale, each manager was asked to read each item and rate their organization$$s performance as compared to the industry average. If the manager rates their organization$$s performance well above the industry average, he or she will likely put a $7.$ If the manager rates their organization$$s performance well below the industry average, they will likely put a $1.$ If their rating is not so strong, they will respond somewhere between $1$ and $7.$

Market Orientation Measurement Scale

Please indicate the extent to which agree or disagree with each statement $(1=$ strongly disagree, $7=$ strongly agree$).$

$1.$ Our business objectives are driven primarily by customer satisfaction.

$2.$ We constantly monitor our level of commitment and orientation to serving customer needs.

$3.$ We freely communicate information about our successful and unsuccessful customer experiences across all business functions.

$4.$ Our strategy for competitive advantage is based on our understanding customers$$ needs.

$5.$ We measure the satisfaction of the customers systematically and frequently.

$6.$ We have routine or regular measures of customer service.

$7.$ We are more customer$-$focused than our competitors.

$8.$ I believe this business exists primarily to serve customers.

$9.$ We poll end users at least once a year to assess the quality of our products and services.

$10.$ Data on customer satisfaction are disseminated at all levels in this business unit on a regular basis.

Operational Performance Measurement Scale

Please rate your organization's performance in each of the following areas as compared to the industry average. $(1=$well below industry average; $7=$well above industry average$)$

$1.$ Throughput

$2.$ Inventory expense

$3.$ Operating expense

$4.$ Lead time

$5.$ Product cycle time $($throughput time$)$

$6.$ Due date performance

$7.$ Inventory levels

$8.$ Cash flow

Reliability and Validity of Measurement Scales:

When using measurement scales to collect data, you must use scales that are both valid and reliable. Validity means that the scales measure what they are supposed to measure like market orientation and operational performance. Reliability means that the scales measure consistently across similar samples. Each time measurement scales are used, they must be assessed for reliability and validity.

Validity is assessed first. There are many types of validity. We$$ll be assessing content, discriminant and convergent validity. Content $($or face$)$ validity means that the scale items look like they are measuring what they are supposed to measure. There is no statistical way to determine content validity. Just read the items and see if they all seem related to what is being measured. Do the items in the market orientation scale seem to relate to market orientation? Do the items in the operational performance scale seem to relate to operational performance? If they do$,$ conclude that the scales exhibit sufficient content validity. Discriminant validity means that the items in one measurement scale are measuring something distinctly different from the items in another measurement scale. We assess discriminant validity using a statistical technique called factor analysis. Convergent validity means that all the items in a measurement scale are measuring the same thing. We assess convergent validity using factor analysis as well. So$,$ factor analysis is the key to determining discriminant and convergent validity. Once validity has been established, reliability can be assessed. The simplest way to measure reliability is to have SPSS compute Cronbach$$s Alpha values.

It is sometimes necessary to remove scale items if they are found to hinder validity or reliability. The re