EXAMPLE 9.7 Are Flexible Companies More Competitive?

CASE 9.1 The results of the chi-square significance test that we described appear in the lower portion of the computer outputs in Figure 9.1 (pages 459–460) for the flexibility and competitiveness example. They are labeled “Pearson” or “Pearson Chi-Square.” The outputs also give an alternative significance test called the likelihood ratio test. The results here are very similar.

Because all the expected cell counts are moderately large, the distribution provides accurate P-values. We see that and . Examine the outputs and find the P-value in each output. The rounded value is . As a check, we verify that the degrees of freedom are correct for a table:

The chi-square test confirms that the data contain clear evidence against the null hypothesis that there is no relationship between competitiveness and flexibility. Under , the chance of obtaining a value of greater than or equal to the calculated value of 8.715 is small—less than one time in 100.