JournalofManagement 1998, Vol. 24,No.5, 623-641 Centering Decisions in Hierarchical Linear Models: Implications for Research in Organizations David A. Hofmann Texas A & M University Mark B. Gavin Oklahoma State University Organizational researchers are increasingly interested in model- ing the multilevel nature of organizational data. Although most organi- zational researchers have chosen to investigate these models using traditional Ordinary Least Squares approaches, hierarchical linear models (i.e., random coefficient models) recently have been receiving increased attention. One of the key questions in using hierarchical linear models is how a researcher chooses to scale the Level-1 indepen- dent variables (e.g., raw metric, grand mean centering, group mean centering), because it directly influences the interpretation of both the level-1 and level-2 parameters. Several scaling options are reviewed and discussed in light of four paradigms of multilevel~cross-level research in organizational science: incremental (Le., group variables add incremental prediction to individual level outcomes over and above individual level predictors), mediational (i.e., the influence of group level variables on individual outcomes are mediated by individual perceptions), moderational (i.e., the relationship between two individ- ual level variables is moderated by a group level variable), and sepa- rate (i.e., separate within group and between group models). The paper concludes with modeling recommendations for each of these paradigms and discusses the importance of matching the paradigm under which one is operating to the appropriate modeling strategy. Organizations are inherently hierarchical. Individuals are nested in work groups, work groups are nested in departments, departments are nested in organizations, and organizations are nested in environments. Given this characteristic, a natural concern is how these level issues influence organizational research (e.g., Rous- seau, 1985). Even though recent theoretical discussions and empirical investiga- Direct all correspondence to: DavidA. Hofmann,Departmentof Management, Collegeof Business Administra- tion, Texas A & M University,CollegeStation, Texas 77843;e-maih <dhofmann@tamu.edu>. Copyright © 1998 by JAI Press Inc. 0149-2063 623