(Tiểu luận) criterias of teammate selection procedure for class projects in foreign trade university

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FOREIGN TRADE UNIVERSITY

HO CHI MINH CITY CAMPUS

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MID-TERM REPORT Subject: Econometrics CRITERIAS OF TEAMMATE SELECTION PROCEDURE FOR CLASS

PROJECTS IN FOREIGN TRADE UNIVERSITY

Authors: Tran My Linh (2212155117), Trinh The Minh (2212155124), Le Hoang Ngan (2212155138), Nguyen Mac Phi Nga (2212155133)

Class: K61CLC5 Intake: 61 Instructor: PhD Le Hang My Hanh

Examiner 1’s signature Examiner 2’s signature

Invigilator 1’s signature Invigilator 2’s signature

Ho Chi Minh City, March 2023

I.Abstract 1

II.Introduction 1

III Literature review 3

1 General background information 3

1.1 Competence: 5

1.2 Warmth: 6

1.3 Bonding capital: 6

1.4 Bridging capital: 6

2 Research questions and objectives 7

IV Methodology 7

1 Participants 8

2 Research design 8

2.1 Demographic information: 8

2.2 Competence: 9

2.2.1 Technical skills 9

2.2.2 Previous experience 9

2.2.3 Communication skills 9

2.3: Warmth: 9

2.3.1 Social skills 9

2.3.2 Psychological collectivism: 10

2.3.3 Creativity 10

2.3.4 Personality 10

2.4 Bonding Capital 12

2.5 Bridging Capital 12

3 Data collection procedure 12

4 Data analysis 13

1 Cronbach’s alpha: 13

2 OLS Assumptions Verification 15

2.1 Assumption 1, 2 and 4: 15

2.2 Assumption 3: No Perfect Multicollinearity 15

2.3 Assumption 5: No Heteroskedasticity 16

2.4 Assumption 6: Normality Assumption 17

3 Findings 18

3.1 Results: 18

3.2 Individual Significance: 19

3.3 Overall Significance: 19

3.4 Linearity restriction: 20

VI Discussion, Limitation, and Recommendations 20

1 Discussion 20

2 Limitations and Recommendations 25

VII Conclusion 26

APPENDIX 27

Phần 1: Người Đồng Đội và Sự Thành Công Của Dự Án 27

Phần 2: Năng Lực Của Đồng Đội 27

Phần 3: Kinh Nghiệm Của Đồng Đội Trong Những Dự Án Tương Tự 28

Phần 4: Kỹ Năng Xã Hội Của Đồng Đội 28

Phần 5: Mindset Làm Việc Nhóm Của Đồng Đội 28

Phần 6: Tính Cách Của Đồng Đội 29

Phần 7: Đời Tư Xã Hội Của Đồng Đội 29

REFERENCES 30

Ho Chi Minh City We conduct an online survey asking undergraduate students of all majors

of Foreign Trade University in Ho Chi Minh City to rate one specific past teammate on how much their competence, warmth, bonding capital and bridging capital influence the satisfaction after working with their partner We anticipated that the results will be consistent with previous literature in that social capital will be greatly valued yet competence and warmth will be the deciding factors that affect the overall team experience

II Introduction

Strong teamwork skills are valued by employers as teams in organizations today are more independent to perform increased tasks (Hernandez, as cited in Hansen, 2006) Workplaces have always required teamwork from the employees both in projects as well as the day-to-day tasks because of its benefits Teamwork allows employees to work more productively, creatively, and focused Research has shown that teamwork allows the team to make more accurate decisions (Bamber, Watson, & Hill; Hackman; as cited in Hansen, 2006) as it allows team members to take in, consider, and build off each other’s ideas, resulting in a product that

is more than all of their efforts working individually combined Companies are expanding the number of teams inside the organization (Applebaum & Blatt; Taninecz; as cited in Hansen, 2006) and therefore employers consistently have the most demands for graduates with great teamwork (Tarricone & Luca, as cited in Hansen, 2006) Furthermore, teamwork governing

is an essential ability for any future managers (Ashraf; Chen, Donahue, & Klimoski; as cited

in Hansen, 2006), which is part of career advancement since managers have to spend up to 90% of their time in team affairs (Chapman, Meuter, Toy & Wright, as cited in Pearlstein, 2019), and in fresh talented university graduates (McCorkle et al.; Tarricone & Luca; Thacker

& Yost; as cited in Hansen, 2006)

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Due to its significance, teamwork is greatly implemented in both classroom and project context of university students (Johnson, Johnson & Smith, as cited in Pearlstein, 2019) by professors who are fully aware of its future benefits (Pearlstein, 2020) The use of classroom teams projects have been increasing over the years (Alexander & Stone; Ashraf; Bolton; Kunkel & Shafer; as cited in Hansen, 2006) Students are given assignments and projects that require being done in groups to enhance those skills more (Antonioni; Chapman et al.; Swaim

& Henley; as cited in Pearlstein, 2020; Hansen, 2006) Due to its significance, it is unsurprising that students themselves use a variety of ways to improve their ability to work together and to get along well with each other

The first step to any satisfied teamwork is selecting the team itself Using a hastily assembled team would be detrimental as research shows ad hoc teams are the source of countless problems such as disharmony, unclear goals, conflicts, unequal participation, unbalanced skills levels, (Cox & Bobrowski, McCorkle et al., McKendall, Rau & Heyl, as cited in Hansen, 2006; Suzanne T Bell, Elizabeth Mannix & Margaret A Neale, Mathieu et al., as cited in Gómez Zará et al., 2019) In fact, CBInsights (2021) suggests that 14% of startups' failure is contributed to not finding the right team while 7% is due to team disharmony

While empirical researches have thoroughly explore the mechanism of team formation through the more generalized human and social capital as well as controlled research on how students would form their teams using a computerized system or multiple offline presentations sessions which provide clear information about others’ capabilities, we believe more should be done in the case of students’ team formation with the ambiguity of information Markaki et al (2011) did research on selection procedures employed by laboratories project managers to overcome this ambiguity suggesting that CV is the preferred method but students, especially in the earlier years, have little experience and knowledge in evaluating another’s capabilities without experiences with the mentioned individual

This paper contributed to the literature by examining students' team formation processes in the old classroom context This paper will categorize new items as measurements to old variables to test which factors affect the overall satisfaction teamwork and which items make

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literature We would like to specify that for the purpose of this study, we will only examine self-assembled teams without any intervention from professors as a way to structurally form teams

III Literature review

1 General background information

These days, as corporations and companies value graduates with strong teamwork skills, students are given assignments and projects that require being done in groups to enhance those skills more (Antonioni; Chapman et al.; Swaim & Henley, as cited in Pearlstein, 2020; Hansen, 2006) It is also the case of the majority of classes for Foreign Trade University students where they are assigned projects that require them to work in teams In such projects, students have a tendency to choose their partners based on prior collaboration and seat proximity (Connerly & Mael, as cited in Pearlstein, 2020) Despite that, there is no guarantee such methods will result in satisfaction and overall team success Thus, in order for the team

to perform and students to have a good time, they need to find potential teammates to form a good team

A team is generally considered as a group of individuals working towards a common goal Bercovitz & Feldman (2011, as cited in Bailey & Skvoretz, 2017) considered a team to be “a collection of individuals who share responsibility for an outcome.” In previous research, teams have been classified in multiple ways depending on the context of the teams and the studies itself but teams can always be classified into self-assembled and appointed teams (Bailey & Skvoretz, 2017) These classifications are dependent on how the team is formed, which can determine a team’s structure (Pinto, as cited in Bailey & Skvoretz, 2017) According to Hackman (1987, as cited in Bailey & Skvoretz, 2017), there are three types of team structures: manager-lead work teams, self-managing work groups, and self-designing work teams A manager is responsible for tracking the work and performance of the team in

a manager-lead team while self-managing groups take accountability for the manager’s work among one another Self-organizing teams are teams where members mutually agree on the structure of the team itself, which fits our desired context as most classroom teams are allowed

to work in their preferred style Another thing to note about these teams is that they fall into

Econometrics 100% (5)

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after the project is finished (Zhu, Huang, & Contractor, as cited in Bailey and Skvoretz, 2017)

In our study, we are only interested in self-organized project teams, as this is the type of teams

in the occasional projects in the classroom context

Selection procedures “is a process that has a specific systematic methodology where the selector understands the differences of people, identifies needs and expectations, sets standards, evaluates them and decides selection methods” (Markaki, Sakas, &

Chadjipantelis, 2011) From a structural social psychological perspective (Sell & Kuipers; Lawler, Ridgeway, & Markovsky, as cited in Bailey & Skvoretz, 2017), teams are like microcosmic societies They represent a process of social cohesion through interaction

“Previous studies have acknowledged that ad hoc team formation processes lead to disharmony among members, lack of cohesion, organization, and diversity” (Gómez-Zará et al., 2019) In institutions, one major reason for why it is hard for both students and professors

to form a good team is that “they lack information about each of the students in the class to make sound choices” (Pearlstein, 2020) That is, collaborating with other parties without knowing their strengths, weaknesses and other things like that could lead to poor teamwork experience

Mello’s study (as cited in Bacon, Stewart & Silver, 1999) states that self-selected teams will

be more responsible for group problems, including solving conflicts arising within groups This helps the team to overcome the second phase of Tuckman’s stages of group development

- storming, more easily Storming is the stage when personal opinions and personalities come into view, they start to have disagreements about the oriented goals, division of work and missions Therefore, when the team is more capable of tackling team’s conflicts, it can get to pass the storming stages more quickly and move on to the third stage - norming Many previous researches have carefully examined in multiple ways as well as suggest different methods to improve the in-class team experience Despite that, we would want to confirm the results as well as focus more on new items that can be added as new measurements to old variables

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based on several attributes Our study shall classify factors including human capital and social capital in which human capital consists of competence and warmth, social capital includes bonding capital and bridging capital that serve as either interpersonal criteria or data that enter into the process of assessing and selecting the best member(s) for a team while under various constraints and pressures such as lack of skill and quality information about others, In other words, these factors are the social psychological mechanisms that frame the partner‐selection process of team formation as a qualification assessment activity Thus, they are used to qualify (or disqualify) the selection of individuals as team members

1.1 Competence:

These days, competence has proved to be a vital tool in human resource management, vocational training and performance management (Lachance; Lucia and Lepsinger; Sanghi; Hoge et al.,; Otto, as cited in Sampson & Fytros, 2008) According to Spencer and Spencer’s study (as cited in Sampson & Fytros, 2008), competence is defined as “an underlying characteristic of an individual that is causally related to criterion-referenced affecting and/or superior performance in a job situation Competences can be distinguished into essential competences which serve as the foundation of knowledge and skills needed by everyone and differentiating competences, which are used to distinguish superior performance from average performance and they may include characteristics such as self-concepts, traits and motives.” Therefore, people who are seen as competent are welcomed to any teams, organizations and projects

Competence is not only about the characteristics of an individual but also how others perceive

it as in the context of teammate selection According to Bailey & Skvoretz (2017), perceived competence can either be status expectations or reputational information, both of which stems from the expectation state theory The theory states that there will be inequality between members despite members being collectively-oriented This favoring is the result of stereotypes, assumptions accompanied with achieved status characteristics The general belief held about a group regarding their competence is referred to as diffuse characteristics (Berger, Ridgeway, & Zelditch, as cited in Bailey, 2017) while achieved status refers to more specific characteristics in relevant specific social and technological abilities (Knottnerus & Greenstein, as cited in Bailey, 2017) These expectations have the ability to impact one’s

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be forcefully connected with specific jobs despite being applicable or not (Bailey & Skvoretz, 2017) One’s information on competence can be gathered from the words of others (Bailey & Skvoretz, 2017) to use as a sign of a potential teammate in the teammate selection process (Hinds et al., as cited in Bailey, 2017) According to the literature, information about one’s performance can be shared among the society which dictates one’s value and competence 1.2 Warmth:

One of the major factors affecting the selection of team members is warmth “Warmth captures traits that are related to perceived intent (e.g., friendliness, helpfulness, sincerity, trustworthiness, and morality) A person’s warmth portends trustworthiness and allows a degree of predictability in a relationship” (Gómez-Zará et al., 2019)

1.3 Bonding capital:

In addition to warmth, bonding capital is another outstanding factor affecting team selection procedure “Bonding capital characterizes the quality of a connection between two people People choose close friends (strong ties) or strangers (weak ties) for different purposes Working with prior collaborators increases the certainty of working styles, communication, and outcomes Working with weak ties increases access to novel information” (Gómez-Zará

et al., 2019)

1.4 Bridging capital:

Last but not least, the factor that has a huge impact on the selection of who the students want

to work with is bridging capital “Bridging social capital is characterized by occupying an advantaged position in social networks (e.g., a high popularity, brokerage, or closeness value) People who are brokers fill the structural holes between disconnected individuals, allowing more access and control over information and resources” (Gómez-Zará et al., 2019)

In our study we will not treat these two as separate variables but instead as a whole in social capital since we are more focused in competence and warmth than in social capital These also serve the function later in our study as a way to present multicollinearity to prevent the correlation between independent variables and the error term

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In this study, we aim to analyze the factors influencing the teammate selection process within business case competitions teams in Vietnam Our goal is to test the previous literature and suggest ways for students to improve themselves as a potential teammate

From that overall goal, we have devised our research questions:

- RQ1: How does each factor affect the teammate selection process?

- RQ2: What items account for a high percentage in each factor?

- RQ3: Which elements can you improve to become a potential student teammate?

3 Model

IV Methodology

In this study, we focus on examining how students choose their teammates in the classroom setting The reason for why we choose this old and explored classroom setting is to minimize unseen variables and factors that can affect the results of our study This method of team formation is also the preferred method by professors at Foreign Trade University in HCMC, and it fits the location and scope of our research There is also a lack of other team formation methods in our research location as well and it will be much easier both in theory and practice

to conduct a research using this setting As for the new items we choose to categorize, they are taken from Connerley and Mael's study conducted in 2001 using a qualitative approach to define these items and a quantitative approach to test them Yet the study has done little in

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these in the proper context and categorize them based on the more popular variable categories: Competence, Warmth, and Social Capital (Bonding and Bridging Capital combined)

1 Participants

In our study, we will distribute a survey to students in Foreign Trade University (FTU2) in

Ho Chi Minh City to rate a specific prior collaborator that they have worked with in previous class projects These represent the majority of the top economic students in Ho Chi Minh that engage in lots of in-class self-assembled team projects as part of their university studies This sample will have the ability to represent:

1) Students of the university as they are directly surveyed

2) Top economics students in Vietnam as FTU2 is among the top in the nation

Our survey will allow participants to rate how competence, warmth, social and bridging capital affect the overall teamwork satisfaction based on their opinion of previous personally chosen teammates on a 5-point likert scale ranging from “very negatively affected” to “very positively affected.” We have decided to use participants' satisfaction for the ratee as a teammate and it is measured with 1 item using a 7-point Likert scale

2.1 Demographic information:

Our survey targets the group of undergraduates regardless of gender We expect that there are more female responses than male as that is the general population trend of Foreign Trade University

2.2.2 Previous experience

Since “competence can be distinguished into essential competences which serve as the foundation of knowledge and skills needed by everyone and differentiating competences” (Spencer and Spencer, as cited in Sampson & Fytros, 2008), previous experience plays an important role in providing needed and useful knowledge and a set of skills required to compete in business case contests Five items of this category will be assessed on a 5-point Likert scale, which ranges from “very negatively affected” to “very positively affected.”

2.2.3 Communication skills

The ability to communicate well is highly favored by everyone who is looking for teammates Only when one delivers information in a way that is clear, logical and understandable, can they make a difference and stand out in the majority of people For example, a person who has a good idea but cannot explain that to his or her team is a far cry from someone who can present it in a way that everyone can understand Therefore, we believe that communication skills have a huge impact on competence and teammate selection procedure We will have our surveyees rated two items about this category on a 5-point Likert scale ranging from “very negatively affected” to “very positively affected.”

- Networking ability: “Individuals with strong political skill are exceptionally good at establishing and using relationships with people, both key organizational members and outsiders” (Lvina et al., 2012)

- Apparent sincerity: “Politically skilled individuals come across as possessing high levels

of integrity, authenticity, and sincerity They are, or appear to be, honest, open, and genuine” (Lvina et al., 2012)

These items will be assessed on a 5-point Likert scale ranging from “very negatively affected”

to “very positively affected.”

2.3.2 Psychological collectivism:

In this category, “to assess the extent to which participants valued teamwork and team’s success” (Gómez-Zará et al., 2019), we will have our surveyees answer nine items which correspond to psychological collectivism These questions were assessed on a 5-point Likert scale, which ranged from “very negatively affected” to “very positively affected.”

2.3.3 Creativity

Creativity is a dimension of warmth, as creative thinking relates to one's self-efficacy and ability to form positive and emotional relationships (Tierney & Farmer, as cited in Gómez-Zará et al., 2019) In our survey, we will ask surveyees to rate their previous partners’ ability

to come up with new ideas on a 5-point Likert scale ranging from “very negatively affected”

to “very positively affected.”

2.3.4 Personality

To measure this category, four items will be used to assess Big Five personality traits (Donnellan, Oswald, Baird, and Lucas, as cited in Gómez-Zará et al., 2019) The Big Five personality traits consist of:

- Openness: Openness (also known as openness to experience) places the greatest emphasis on imagination and insight of all five personality traits (Power RA, Pluess M., 2015) It describes the way a person approaches new experience; whether he/she

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routine way This spectrum includes traits such as imagination, spontaneity, and originality People who score high on the Openness to experience tend to be more open-minded, creative and adventurous than people who have low scores on this trait

- Conscientiousness: Of all personality traits, conscientiousness is defined as high levels

of thoughtfulness, good impulse control, and goal-directed behaviors (Power RA, Pluess M., 2015) A person that scores high on the conscientiousness spectrum often possesses a high level of self control and discipline and are capable of planning and executing their life accordingly They will have a tendency to be scrupulous and careful but at the same time determined to reach their goals (Roccas, Sagiv, Schwartz, & Knafo, 2002) On the contrary, people who score low are likely to procrastinate and be disorganized

- Extraversion: can also be called extroversion, is a personality trait characterized by excitability, sociability, talkativeness, assertiveness, and high amounts of emotional expressiveness (Power RA, Pluess M., 2015) It addresses a person's desire to engage with their environment Whether participating in social situations is exciting or depleting, or whether someone likes or dislikes being the center of attention (Roccas

et al., 2002) People who have high scores in extraversion are seen as outgoing and gregarious

- Agreeableness: Trustworthiness, benevolence, friendliness, affection, and other prosocial traits are included in this personality feature (Power RA, Pluess M., 2015)

It reveals their level of helpfulness toward others and whether they are truly altruistic

or more protective in character An individual who scores highly on the agreeableness scale will be seen as modest, well-liked, and helpful They won't be very self-centered and will prioritize others They are likely to have a strong social support network since they are kind and patient with others Additionally, they will be flexible with their circumstances and have a cooperative perspective Contrarily, those who score poorly

on the agreeableness scale will have low levels of relationship satisfaction and will be wary and untrusting of others They will be portrayed as egotistical and unconcerned with upholding societal norms or completing social obligations (Roccas et al., 2002)

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anxiety and depression, and is commonly defined as emotional instability” (Power RA, Pluess M., 2015) Individuals who score high in neuroticism tend to experience mood swings, anxiety, irritability, and sadness Those low in this personality trait tend to be more stable and emotionally resilient (Roccas et al., 2002)

Participants will respond to items on a 5-point Likert scale ranging from “very negatively affected” to “very positively affected.” We have also used one extra item to measure the effect

of the ratee’s personality in general

2.4 Bonding Capital

This measurement scale was adapted to fit with the context and methodology of this study from scales used by Gómez Zará et al (2019) and Ellison, Steinfield & Lampe (2007) Since the participants will have difficulty accurately evaluating their previous collaborators over bonding capital, we have adapted forementioned measurements scales in a way that helps us

to evaluate the bonding capital between the participant and the ratee and how the relationship affects the overall performance of the team

2.5 Bridging Capital

In terms of measurements, bridging capital has the same problems as bonding capital in which the overall value of the ratee cannot be measured from the perspectives of the participant Adapting from scales used by Gómez Zará et al (2019) and Ellison et al (2007), we have modified these scales to test the impact of prior connections of the ratee to the overall team performance and satisfaction

3 Data collection procedure

Our survey questionnaire will be distributed to university students through online channels using Google Forms Each participant will answer the survey by themself about a specific teammate that they have worked with in the past As participants are economics students, we have decided to use support materials ranging from E-books, informative slides to IELTS materials as compensation for their time Personal information will not be asked Information confidentiality will be insured and informed as well as consent is considered obtained when

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research team

4 Data analysis

We will use the Stata software to calculate and analyze the data that we collect from the survey

to check if previous literature is accurate within Vietnam’s classrooms Our analysis will include reliability metrics such as Cronbach’s Alpha and Composite reliability, model evaluation and regression analysis The data will be analyzed using Stata to see elements which are desired from teammates and factors that can contribute to the overall satisfaction

of a teammate From this analysis, we would be able to identify and suggest which skills that the potential teammate should work on to be able to become a better teammate

V Results

1 Cronbach’s alpha:

Cronbach’s alpha is a measure used to assess the reliability, or internal consistency, of a set

of scales or test items In other words, the reliability of any given measurement refers to the extent to which it is a consistent measure of a concept, and Cronbach’s alpha is one way of measuring the strength of that consistency In this model, we used Stata to test the Cronbach’s alpha of items measured competence, warmth and social capital

❖ Competence:

Item Sign Item-test

correlation correlation Item-rest Average interitem covariance Alpha techskill + 0.9049 0.8068 2514286 0.6566 exp + 0.8525 0.6880 2845481 0.7434 com + 0.8566 0.5991 2703907 0.8826

Table 1: Cronbach’s Alpha of Competence’s items (Source: Authors)

In order to measure competence, we used 3 items: technical skill, experience and communication skills Overall, competence has Cronbach's alpha of 0.8199 which is larger than 0.7 so we can conclude that the set of scales we used to measure competence is very good According to the item-rest correlation numbers, there is no item that has the amount smaller than 0.3, which means that all items are useful in measuring competence

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❖ Warmth:

Item Sign Item-test

correlation correlation Item-rest Average interitem covariance Alpha socskill + 0.8244 0.6210 0770238 0.3921 psycol + 0.7941 0.6185 0968707 0.4299 cre + 0.6188 0.2097 1817942 0.7477 per + 0.5590 0.3109 1793282 0.6255

Table 2: Cronbach’s Alpha of Warmth’s items (Source: Authors)

Four items used to measure warmth are social skills, psychological collectivism, creativity and personality After using Stata to analyze, we found that warmth had Cronbach’s alpha of 0.6313 - larger than 0.6 In other words, the set of scales we used to measure warmth is acceptable However, the item “cre” which stands for creativity is smaller than 0.3 which means that it doesn’t play an important role in measuring warmth Thus, we decided to eliminate it

After eliminating item “cre” from the scale, we had a more potential result

Item Sign Item-test

correlation

Item-rest correlation

Average interitem covariance

Alpha socskill + 0.8588 0.6067 1451531 0.6389 psycol + 0.9098 0.7797 1010204 0.4202 per + 0.6723 0.3906 2992092 0.8457

Table 3: Cronbach’s Alpha of fixed Warmth’s items (Source: Authors) The Cronbach’s alpha increased from 0.6313 to more than 0.7 and no item has the item-rest correlation amount smaller than 0.3

❖ Social capital:

Item Sign Item-test

correlation correlation Item-rest Average interitem covariance Alpha soclife + 0.7679 0.5278 4163265 0.5975 exacti + 0.7799 0.4835 4020408 0.6421 relastab + 0.8228 0.5395 3191837 0.5720

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Table 4: Cronbach’s Alpha of Social Capital’s items (Source: Authors) The set of scales used to measure social capital include social life, extracurricular activities and relationship stability From the Stata output, we can see that the scale is good as the overall Cronbach’s alpha is larger than 0.6 and approximately 0.7 and no item has the item-rest correlation amount smaller than 0.3

2 OLS Assumptions Verification

2.1 Assumption 1, 2 and 4:

Our model consist of a linear multiple regression function of this form:

𝑠𝑎𝑠 =𝛽0+𝛽1𝑐𝑜𝑚𝑝+𝛽2𝑤𝑎𝑟𝑚𝑡ℎ+𝛽3𝑠𝑜𝑐𝑐𝑎𝑝+𝑢

That is why assumption 1 about parameter linearity is met

As we use Google Form to distribute our survey due to limited resources and time, our sample isn’t considered random but convenience and snowball sampling (as our friends help in spreading the survey), we will ignore the violation of this assumption for the purpose of this study

For assumption 4, we will assume this assumption isn’t violated because as you can see below, both assumption 3 and 5 isn’t violated They have served to prove that all the independent variables and the error term have no correlation with one another, which is the basis for the acceptance of this assumption

2.2 Assumption 3: No Perfect Multicollinearity

After the three assumptions 1,2 and 4 are satisfied, we will come to assumption 3 For assumption 3, we have to test the perfect multicollinearity to guarantee that there are no intertwining parameters here among three variables Because if there is a sign of perfect multicollinearity, all the variables will affect each other, making the results inaccurate and leading to wrong predictions Here, we will test the correlation among three variables first as

it will help to define whether there are “mutual effects” (correlation coefficients) among them through the Pearson product-moment Correlation Coefficient, as follow: