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Proportional structural effects of formative indicators

Author

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  • Franke, George R.
  • Preacher, Kristopher J.
  • Rigdon, Edward E.

Abstract

Formative constructs must influence two or more distinct outcome variables for meaningful tests of the formative conceptualization. Because the construct mediates the effects of its indicators, the indicators must have effects on the outcomes that are proportional to their effects on the formative construct itself. This constraint has important implications for developing and testing formative models. This study demonstrates the existence of the constraint, shows that researchers must consider proportionality as a criterion for evaluating the formative conceptualization, provides examples of indicators having different effects and interpretations depending on the outcome variables used, discusses the selection of outcomes to provide rigorous rather than trivial tests of the formative conceptualization, and contends that the formative nature of constructs cannot be justified in isolation from the consideration of outcome variables. In addition, the study demonstrates the importance of considering how the scaling of the formative construct influences the significance of the effects in the model.

Suggested Citation

  • Franke, George R. & Preacher, Kristopher J. & Rigdon, Edward E., 2008. "Proportional structural effects of formative indicators," Journal of Business Research, Elsevier, vol. 61(12), pages 1229-1237, December.
    • Handle: RePEc:eee:jbrese:v:61:y:2008:i:12:p:1229-1237
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    References listed on IDEAS

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    1. Jarvis, Cheryl Burke & MacKenzie, Scott B & Podsakoff, Philip M, 2003. "A Critical Review of Construct Indicators and Measurement Model Misspecification in Marketing and Consumer Research," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 30(2), pages 199-218, September.
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    1. Diamantopoulos, Adamantios & Riefler, Petra & Roth, Katharina P., 2008. "Advancing formative measurement models," Journal of Business Research, Elsevier, vol. 61(12), pages 1203-1218, December.
    2. Baxter, Roger, 2009. "Reflective and formative metrics of relationship value: A commentary essay," Journal of Business Research, Elsevier, vol. 62(12), pages 1370-1377, December.
    3. Adamantios Diamantopoulos & Dirk Temme, 2013. "MIMIC models, formative indicators and the joys of research," AMS Review, Springer;Academy of Marketing Science, vol. 3(3), pages 160-170, September.
    4. Nitzl, Christian, 2016. "The use of partial least squares structural equation modelling (PLS-SEM) in management accounting research: Directions for future theory development," Journal of Accounting Literature, Elsevier, vol. 37(C), pages 19-35.
    5. Roy D. Howell, 2013. "Conceptual clarity in measurement—Constructs, composites, and causes: a commentary on Lee, Cadogan and Chamberlain," AMS Review, Springer;Academy of Marketing Science, vol. 3(1), pages 18-23, March.
    6. Cadogan, John W. & Lee, Nick, 2013. "Improper use of endogenous formative variables," Journal of Business Research, Elsevier, vol. 66(2), pages 233-241.
    7. Dirk Temme & Adamantios Diamantopoulos & Vanessa Pfegfeidel, 2014. "Specifying Formatively-measured Constructs In Endogenous Positions In Structural Equation Models: Caveats and Guidelines For Researchers," Schumpeter Discussion Papers SDP14005, Universitätsbibliothek Wuppertal, University Library.
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    10. Chang, Woojung & Franke, George R. & Lee, Nick, 2016. "Comparing reflective and formative measures: New insights from relevant simulations," Journal of Business Research, Elsevier, vol. 69(8), pages 3177-3185.
    11. Temme, Dirk & Diamantopoulos, Adamantios & Pfegfeidel, Vanessa, 2014. "Specifying formatively-measured constructs in endogenous positions in structural equation models: Caveats and guidelines for researchers," International Journal of Research in Marketing, Elsevier, vol. 31(3), pages 309-316.
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    13. Nick Lee & John W. Cadogan & Laura Chamberlain, 2013. "The MIMIC model and formative variables: problems and solutions," AMS Review, Springer;Academy of Marketing Science, vol. 3(1), pages 3-17, March.
    14. Navarro, Antonio & Losada, Fernando & Ruzo, Emilio & Díez, José A., 2010. "Implications of perceived competitive advantages, adaptation of marketing tactics and export commitment on export performance," Journal of World Business, Elsevier, vol. 45(1), pages 49-58, January.
    15. Diamantopoulos, Adamantios, 2010. "Reflective and formative metrics of relationship value: Response to Baxter's commentary essay," Journal of Business Research, Elsevier, vol. 63(1), pages 91-93, January.
    16. Jeffrey G. Covin & William J. Wales, 2012. "The Measurement of Entrepreneurial Orientation," Entrepreneurship Theory and Practice, , vol. 36(4), pages 677-702, July.
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