Causality and endogeneity: Problems and solutions

Most leadership and management researchers ignore one key design and estimation problem rendering parameter estimates uninterpretable: Endogeneity. We discuss the problem of endogeneity in depth and explain conditions that engender it using examples grounded in the leadership literature. We show how consistent causal estimates can be derived from the randomized experiment, where endogeneity is eliminated by experimental design. We then review the reasons why estimates may become biased (i.e., inconsistent) in non-experimental designs and present a number of useful remedies for examining causal relations with non-experimental data. We write in intuitive terms using nontechnical language to make this chapter accessible to a large audience.