The Utility of Hierarchical Dirichlet Process for Relationship Detection of Latent Constructs

This paper introduces Hierarchical Dirichlet Process (HDP) as an effective method to advance strategic management research. We use HDP to automatically explore large collections of text in a stream of literature for the purpose of knowledge and hypothesis generation. This method analyzes the words of the original texts to identify latent constructs, and detect their underlying relationships. We illustrate detailed application of HDP on one of the most important areas of strategic management (i.e. absorptive capacity), and conclude the effectiveness of this method in relationship detection of the constructs, and generation of novel hypotheses.