The positivity constraint (not enforced on the intercepts) described in equation (8) is the methodological nuance in this manuscript that is added to the DeSarbo and Cron (1988) procedure given the a priori theoretical structure implied between specified firm capabilities ð _X Þ and profitability ð _y Þ in the application. Given the RBV theory which postulates positive effects for capabilities (it is indeed intuitive to believe that more of a capability or resource cannot possibly decrease performance), problems of multi-collinearity can often flip signs in such linear models. This is even more of a potential problem in clusterwise regression in which the sample size is sequentially partitioned into groups (DeSarbo and Edwards, 1996). Unfortunately, the addition of such constraints complicates the computational aspect of the proposed new methodology as shown in Appendix 1.