Restriction of Variance Interaction Effects and Their Importance for International Business Research

A recent Journal of International Business Studies editorial on interaction effects within and across levels highlighted the importance of and difficulty associated with justifying and reporting of such interaction effects. The purpose of this editorial is to describe a type of interaction hypothesis that is very common in international business (IB) research: the restricted variance (RV) hypothesis. Specifically, we describe the nature of an RV interaction and its evidentiary requirements. We also offer several IB examples involving interactions that could have been supported with RV arguments. Our hope is that IB researchers can use this paper to bolster their arguments for interaction hypotheses by explaining them in terms of RV.