Cluster analysis was used to develop a taxonomy based on the constructs for lean
and agile supply chain characteristics. We followed several rules similar to those
used in Kathuria (2000) and Frohlich and Dixon (2001) to select the number of
clusters. As in Frohlich and Dixon (2001), we used a hierarchical cluster analysis
to generate a hierarchical dendogram and an agglomeration schedule table. Our
goal was to balance parsimony or few clusters with accuracy (more clusters retains
more data). The choice of the final number of clusters is a subjective one that is
generally guided by a few rules of thumb. Lehmann (1979) indicates the number
of clusters should lie between n/30 and n/60. Because our sample size is 604,
this would suggest a solution with between 10 and 20 clusters. Unfortunately,
this high number of clusters makes managerial interpretability difficult due to
the lack of parsimony. We employed K-mean cluster analysis to generate three-,
four-, and five-cluster solutions. After a careful examination of the three-, four-
, and five-cluster solutions, we decided that the four-cluster solution shown in
Table 4 provided the best interpretability. The five-cluster group had two clusters
that were very similar in that they were heavily focused on lean with very little
emphasis on agile. The three-cluster choice did not have the group that focused
primarily on agile to the exclusion of lean. We feel that the four-cluster choice
provides more explanatory power than the choice of three clusters without the
added complexity of a five-cluster solution, thus we chose four clusters, which is
a common number in the literature (Roth & Miller, 1992; Boyer, Ward, & Leong,
1996). We prefer the four-cluster solution because it provides more explanatory
power—in fact we believe the difference between Lean/agile and Traditional to be very important.
Cluster analysis was used to develop a taxonomy based on the constructs for leanand agile supply chain characteristics. We followed several rules similar to thoseused in Kathuria (2000) and Frohlich and Dixon (2001) to select the number ofclusters. As in Frohlich and Dixon (2001), we used a hierarchical cluster analysisto generate a hierarchical dendogram and an agglomeration schedule table. Ourgoal was to balance parsimony or few clusters with accuracy (more clusters retainsmore data). The choice of the final number of clusters is a subjective one that isgenerally guided by a few rules of thumb. Lehmann (1979) indicates the numberof clusters should lie between n/30 and n/60. Because our sample size is 604,this would suggest a solution with between 10 and 20 clusters. Unfortunately,this high number of clusters makes managerial interpretability difficult due tothe lack of parsimony. We employed K-mean cluster analysis to generate three-,four-, and five-cluster solutions. After a careful examination of the three-, four-, and five-cluster solutions, we decided that the four-cluster solution shown inTable 4 provided the best interpretability. The five-cluster group had two clustersthat were very similar in that they were heavily focused on lean with very littleemphasis on agile. The three-cluster choice did not have the group that focusedprimarily on agile to the exclusion of lean. We feel that the four-cluster choiceprovides more explanatory power than the choice of three clusters without theadded complexity of a five-cluster solution, thus we chose four clusters, which isa common number in the literature (Roth & Miller, 1992; Boyer, Ward, & Leong,1996). We prefer the four-cluster solution because it provides more explanatorypower—in fact we believe the difference between Lean/agile and Traditional to be very important.
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