Eight Simple Guidelines for Improved Understanding of Transformations and Nonlinear Effects

Abstract

Transforming variables before analysis or applying a transformation as a part of a generalized linear model are common practices in organizational research. Several methodological articles addressing the topic, either directly or indirectly, have been published in the recent past. In this article, we point out a few misconceptions about transformations and propose a set of eight simple guidelines for addressing them. Our main argument is that transformations should not be chosen based on the nature or distribution of the individual variables but based on the functional form of the relationship between two or more variables that is expected from theory or discovered empirically. Building on a systematic review of six leading management journals, we point to several ways the specification and interpretation of nonlinear models can be improved.