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Purpose – The purpose is to present item response theory (IRT) as a promising approach to deal with theoretical and methodological challenges which may not be adequately addressed with linear factor analysis (LFA) techniques.

Approach – We address this limitations and present IRT's approach to counteracting these difficulties. We further present two IRT models in greater detail and make a theoretical comparison between these models and LFA techniques. Then, we illustrate how IRT is applied in practice by analyzing a scale of trust by an IRT and an LFA approach and comparing their results.

Practical implications – Scale properties may vary among countries because some items may function differently in different contexts. Moreover, a scale's reliability depends on the value of the latent variable being assessed, which implies that the scale may discriminate better among certain ranges of the latent trait than among others. The theory we hereby present offers a more adequate approach to dealing with these issues than extant LFA methods.

Originality/value – This chapter presents a methodology of recognized value in other fields of knowledge into the field of strategy and international business, thereby advancing the methodologies available for doing research in these domains.

Welcome to the seventh volume of Research Methodology in Strategy and Management. The mission of this book series is to provide a forum for critique, commentary, and discussion about key methodology issues in the strategic management field. Strategic management relies on an array of complex methods to understand how firms can attain and sustain competitive advantage. How researchers employ different methods to conduct their research in different research contexts and understand the implications associated with their research choices is fundamental to the methodological rigour and the advancement of strategic management theory.

Maladies afflicting the higher education system in developing countries are well represented by what is happening in India and have been discussed in detail by many researchers and educationists (Anandakrishnan, 2008; Balram, 2005, 2008). The Government of India has formulated different projects and programmes for improving the education scenario in the country. The successive education commissions from Radhakrishnan (1949) through Kothari commission (1966) discussed various issues related to the higher education system and suggested many steps to resolve them. Recently, the Committee to Advice on Renovation and Rejuvenation of Higher Education (2009) headed by Yash Pal discussed the challenges faced by the Indian higher education system and recommended complete revamping of the higher education system and evolving it as an Indian model. The National Knowledge Commission (NKC, 2006–2009) in 2007 while recommending several measures to keep up the pace of higher education with the developments of knowledge society and knowledge economy observed that ‘We recognize that a meaningful reform of the higher education system with a long-term perspective is both complex and difficult. Yet it is imperative.’ The view that the reforms cannot easily be carried out is more strengthened by the fact that the vision and recommendations of the Kothari Commission of 1966 (based on which the 1968 educational policy was formulated) are still valid and useful even now (Sam Pitroda, 2007).