Group Size, ICC Values, and Group-Level Correlations: A Simulation

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Abstract
In the organizational literature, the impact of group size on the magnitude of the group-level correlation has not been explicitly delineated, despite the fact that group sizes vary considerably in organizational research. This article discusses the relationship between group size, ICC(J) values, and the magnitude of the group-level correlation, and shows that group size and ICC(I) values are important because they influence the reliability of the aggregate variables. Based on this discussion, a correction for attenuation formula is proposed that permits one to estimate the magnitude of the actual group-level correlation corrected for the reliability of the aggregate variables. A simulation study demonstrates that the correction for attenuation formula provides accurate estimates of the actual group-level correlation under a wide range of conditions. Implications for multilevel analyses are discussed.
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