IDEAS home Printed from https://ideas.repec.org/p/zbw/sfb649/sfb649dp2006-083.html
   My bibliography  Save this paper

Formative measurement models in covariance structure analysis: Specification and identification

Author

Listed:
  • Hildebrandt, Lutz
  • Temme, Dirk

Abstract

Many researchers seem to be unsure about how to specify formative measurement models in software programs like LISREL or AMOS and to establish identification of the corresponding structural equation model. In order to make identification easier, a new, mainly graphically-oriented approach is presented for a specific class of recursive models with formative indicators. Using this procedure it is shown that some models have erroneously been considered underidentified. Furthermore, it is shown that specifying formative indicators as exogenous variables rises serious conceptual and substantial issues in the case that the formative construct is truly endogenous (i. e. influenced by more remote causes). An empirical study on the effects and causes of brand competence illustrates this point.

Suggested Citation

  • Hildebrandt, Lutz & Temme, Dirk, 2006. "Formative measurement models in covariance structure analysis: Specification and identification," SFB 649 Discussion Papers 2006-083, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    • Handle: RePEc:zbw:sfb649:sfb649dp2006-083
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/25166/1/522568238.PDF
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dijkstra, Theo, 1983. "Some comments on maximum likelihood and partial least squares methods," Journal of Econometrics, Elsevier, vol. 22(1-2), pages 67-90.
    2. 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.
    3. Herman Wold, 1980. "Model Construction and Evaluation When Theoretical Knowledge Is Scarce," NBER Chapters, in: Evaluation of Econometric Models, pages 47-74, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Josef A. Mazanec & Amata Ring, 2011. "Tourism Destination Competitiveness: Second Thoughts on the World Economic Forum Reports," Tourism Economics, , vol. 17(4), pages 725-751, August.
    2. 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.
    3. 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.
    4. Magali Jara, 2009. "« Retail Brand Equity: A PLS Approach," Post-Print halshs-00413604, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. repec:hum:wpaper:sfb649dp2006-083 is not listed on IDEAS
    3. Sarstedt, Marko & Ringle, Christian M. & Smith, Donna & Reams, Russell & Hair, Joseph F., 2014. "Partial least squares structural equation modeling (PLS-SEM): A useful tool for family business researchers," Journal of Family Business Strategy, Elsevier, vol. 5(1), pages 105-115.
    4. Ringle, Christian M. & Götz, Oliver & Wetzels, Martin & Wilson, Bradley, 2009. "On the Use of Formative Measurement Specifications in Structural Equation Modeling: A Monte Carlo Simulation Study to Compare Covariance-Based and Partial Least Squares Model Estimation Methodologies," MPRA Paper 15390, University Library of Munich, Germany.
    5. Ringle, Christian M., 2006. "Segmentation for path models and unobserved heterogeneity: The finite mixture partial least squares approach," MPRA Paper 10734, University Library of Munich, Germany.
    6. Aurelio Scaglione & Daria Mendola, 2017. "Measuring the perceived value of rural tourism: a field survey in the western Sicilian agritourism sector," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(2), pages 745-763, March.
    7. Ralph Foorthuis & Marlies Steenbergen & Sjaak Brinkkemper & Wiel A. G. Bruls, 2016. "A theory building study of enterprise architecture practices and benefits," Information Systems Frontiers, Springer, vol. 18(3), pages 541-564, June.
    8. Andreas Herrmann & Frank Huber & Frank Kressmann, 2006. "Varianz- und kovarianzbasierte Strukturgleichungsmodelle — Ein Leitfaden zu deren Spezifikation, Schätzung und Beurteilung," Schmalenbach Journal of Business Research, Springer, vol. 58(1), pages 34-66, February.
    9. Radosevic, Slavo & Yoruk, Esin, 2013. "Entrepreneurial propensity of innovation systems: Theory, methodology and evidence," Research Policy, Elsevier, vol. 42(5), pages 1015-1038.
    10. Jörg Henseler & Nick Lee & Ellen Roemer & Ildikó Kemény & Taşkın Dirsehan & John W. Cadogan, 2024. "Beware of the Woozle effect and belief perseverance in the PLS-SEM literature!," Electronic Commerce Research, Springer, vol. 24(2), pages 715-744, June.
    11. Bisbe, Josep & Batista-Foguet, Joan-Manuel & Chenhall, Robert, 2007. "Defining management accounting constructs: A methodological note on the risks of conceptual misspecification," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 789-820.
    12. Nienaber, Ann-Marie & Tietmeyer, Jan, 2010. "Wie sollten Non-Profit Organisationen ihre Mitarbeiter vertrauensvoll motivieren? Eine vergleichende Analyse bei gemeinnützigen und renditeorientierten Unternehmen," ZögU - Zeitschrift für öffentliche und gemeinwirtschaftliche Unternehmen, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 33(4), pages 333-353.
    13. Reinartz, Werner & Haenlein, Michael & Henseler, Jörg, 2009. "An empirical comparison of the efficacy of covariance-based and variance-based SEM," International Journal of Research in Marketing, Elsevier, vol. 26(4), pages 332-344.
    14. Hossan, Dalowar, 2021. "A Study On Partial Least Squares Structural Equation Modeling (Pls-Sem) As Emerging Tool In Action Research," OSF Preprints py57k, Center for Open Science.
    15. Nebojsa S. Davcik, 2013. "The Use And Misuse Of Structural Equation Modeling In Management Research," Working Papers Series 2 13-07, ISCTE-IUL, Business Research Unit (BRU-IUL).
    16. Liu, Qian & Shao, Zhen & Fan, Weiguo, 2018. "The impact of users’ sense of belonging on social media habit formation: Empirical evidence from social networking and microblogging websites in China," International Journal of Information Management, Elsevier, vol. 43(C), pages 209-223.
    17. Philippe Cohard, 2020. "Information Systems Values: A Study of the Intranet in Three French Higher Education Institutions," Post-Print hal-02987225, HAL.
    18. Joan-Lluis Capelleras & Ignacio Contín-Pilart & Martin Larraza-Kintana, 2011. "Publicly Funded Prestart Support for New Firms: Who Demands it and How it Affects Their Employment Growth," Environment and Planning C, , vol. 29(5), pages 821-847, October.
    19. Kusa, Rafał & Suder, Marcin & Duda, Joanna, 2023. "Impact of greening on performance in the hospitality industry: Moderating effect of flexibility and inter-organizational cooperation," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    20. Deng, Qian (Claire) & Messinger, Paul R., 2022. "Dimensions of brand-extension fit," International Journal of Research in Marketing, Elsevier, vol. 39(3), pages 764-787.
    21. B. Praag & T. Dijkstra & J. Velzen, 1985. "Least-squares theory based on general distributional assumptions with an application to the incomplete observations problem," Psychometrika, Springer;The Psychometric Society, vol. 50(1), pages 25-36, March.

    More about this item

    Keywords

    Formative indicators; Latent variables; Covariance structure analysis; Identification;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:sfb649:sfb649dp2006-083. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/sohubde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.