Best-Practice Recommendations for Estimating Cross-Level Interaction Effects Using Multilevel Modeling

Multilevel modeling allows researchers to understand whether relationships between lower-level variables (e.g., individual job satisfaction and individual performance, firm capabilities and performance) change as a function of higher-order moderator variables (e.g., leadership climate, market-based conditions). We describe how to estimate such cross-level interaction effects and distill the technical literature for a general readership of management researchers, including a description of the multilevel model building process and an illustration of analyses and results with a data set grounded in substantive theory. In addition, we provide 10 specific best-practice recommendations regarding persistent and important challenges that researchers face before and after data collection to improve the accuracy of substantive conclusions involving cross-level interaction effects. Our recommendations provide guidance on how to define the cross-level interaction effect, compute statistical power and make research d...