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Problems with formative and higher-order reflective variables

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  • Lee, Nick
  • Cadogan, John W.

Abstract

Cadogan and Lee (this issue) discuss the problems inherent in modeling formative latent variables as endogenous. In response to the commentaries by Rigdon (this issue) and Finn and Wang (this issue), the present article extends the discussion on formative measures. First, the article shows that regardless of whether statistical identification is achieved, researchers are unable to illuminate the nature of a formative latent variable. Second, the study clarifies issues regarding formative indicator weighting, highlighting that the weightings of formative components should be specified as part of the construct definition. Finally, the study shows that higher-order reflective constructs are invalid, highlights the damage their use can inflict on theory development and knowledge accumulation, and provides recommendations on a number of alternative models which should be used in their place (including the formative model).

Suggested Citation

  • Lee, Nick & Cadogan, John W., 2013. "Problems with formative and higher-order reflective variables," Journal of Business Research, Elsevier, vol. 66(2), pages 242-247.
    • Handle: RePEc:eee:jbrese:v:66:y:2013:i:2:p:242-247
    DOI: 10.1016/j.jbusres.2012.08.004
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