i am working on inventory management strategies and firm performance and i am controlling for firm size. my supervisor would prefer i use a rating scale (1-5) to ask questions on firm size. i would like to know how to go about it. i.e. which questions are appropriate for firm size as a control variable
Perhaps it is an option to consider firm size as defined by, e.g., tax law. Various legal entities use classification systems, mostly based on number of employees and turnover, to assign companies to classes, say small, medium, large. I am not sure if you necessarily end up with five firm size classes if considering this option, but it could be one way to define class sizes in a methodologically sound way. Please check this link, for example: https://en.wikipedia.org/wiki/Small_and_medium-sized_enterprises
Though it is okay but it will be better if u shall use 7 point scale to get the responses for accuracy.
U may refer to Boyle GJ, Saklofske DH, Matthews G. Criteria for selection and evaluation of scales and measures. In: Boyle GJ, Saklofske DH, Matthews G, eds. Measures of personality and social psychological constructs. London, United Kingdom: Academic Press; 2015:3‐15.
regarding the selection of variables u may visit
- DOI: 10.6007/IJARBSS/v7-i11/3543
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Article The Effect of Inventory Management on Firm Performance
it doesn't make sense to measure firm size using a rating scale. number of employees is a good measure.
I found that the natural logarithm of number of employees is a good measure for firm size.
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