Hierarchical Linear Modeling of Multilevel Data

Abstract

Most data involving organizations are hierarchical in nature and often contain variables measured at multiple levels of analysis. Hierarchical linear modeling (HLM) is a relatively new and innovative statistical method that organizational scientists have used to alleviate some common problems associated with multilevel data, thus advancing our understanding of organizations. This article presents a broad overview of HLM’s logic through an empirical analysis and outlines how its use can strengthen sport management research. For illustration purposes, we use both HLM and the traditional linear regression model to analyze how organizational and individual factors in Major League Baseball impact individual players’ salaries. A key implication is that, depending on the method, parameter estimates differ because of the multilevel data structure and, thus, findings differ. We explain these differences and conclude by presenting theoretical discussions from strategic management and consumer behavior to provide a potential research agenda for sport management scholars.