IDEAS home Printed from https://ideas.repec.org/a/rnd/arimbr/v7y2015i2p113-130.html
   My bibliography  Save this article

PLS-based SEM Algorithms: The Good Neighbor Assumption, Collinearity, and Nonlinearity

Author

Listed:
  • Ned Kock

Abstract

The partial least squares (PLS) method has been extensively used in information systems research, particularly in the context of PLS-based structural equation modeling (SEM). Nevertheless, our understanding of PLS algorithms and their properties is still progressing. With the goal of improving that understanding, we provide a discussion on the treatment of reflective and formative latent variables in the context of three main algorithms used in PLS-based SEM analyses –PLS regression, PLS Mode A, and PLS Mode B. Two illustrative examples based on actual data are presented. It is shown that the “good neighbor†assumption underlying modes A and B has several consequences, including the following: the inner model influences the outer model in a way that increases inner model coefficients of association and collinearity levels in tandem, and makes measurement model analysis tests dependent on structural model links; instances of Simpson’s paradox tend to occur with Mode B at the latent variable level; and nonlinearity is improperly captured. In spite of these mostly detrimental outcomes, it is argued that modes A and B may have important and yet unexplored roles to play in PLS-based structural equation modeling analyses.

Suggested Citation

  • Ned Kock, 2015. "PLS-based SEM Algorithms: The Good Neighbor Assumption, Collinearity, and Nonlinearity," Information Management and Business Review, AMH International, vol. 7(2), pages 113-130.
    • Handle: RePEc:rnd:arimbr:v:7:y:2015:i:2:p:113-130
    DOI: 10.22610/imbr.v7i2.1146
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/imbr/article/view/1146/1146
    Download Restriction: no
    File URL: https://ojs.amhinternational.com/index.php/imbr/article/view/1146
    Download Restriction: no
    File URL: https://libkey.io/10.22610/imbr.v7i2.1146?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Wold, Herman, 1974. "Causal flows with latent variables : Partings of the ways in the light of NIPALS modelling," European Economic Review, Elsevier, vol. 5(1), pages 67-86, June.
    2. Dirk Temme & Henning Kreis & Lutz Hildebrandt, 2006. "PLS Path Modeling – A Software Review," SFB 649 Discussion Papers SFB649DP2006-084, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    3. Brian L. Dos Santos & Ken Peffers, 1995. "Rewards to Investors in Innovative Information Technology Applications: First Movers and Early Followers in ATMs," Organization Science, INFORMS, vol. 6(3), pages 241-259, June.
    4. Lee Cronbach, 1951. "Coefficient alpha and the internal structure of tests," Psychometrika, Springer;The Psychometric Society, vol. 16(3), pages 297-334, September.
    5. Wynne W. Chin & Barbara L. Marcolin & Peter R. Newsted, 2003. "A Partial Least Squares Latent Variable Modeling Approach for Measuring Interaction Effects: Results from a Monte Carlo Simulation Study and an Electronic-Mail Emotion/Adoption Study," Information Systems Research, INFORMS, vol. 14(2), pages 189-217, June.
    6. Martin, Michael A., 2007. "Bootstrap hypothesis testing for some common statistical problems: A critical evaluation of size and power properties," Computational Statistics & Data Analysis, Elsevier, vol. 51(12), pages 6321-6342, August.
    7. Vittadini, Giorgio & Minotti, Simona C. & Fattore, Marco & Lovaglio, Pietro G., 2007. "On the relationships among latent variables and residuals in PLS path modeling: The formative-reflective scheme," Computational Statistics & Data Analysis, Elsevier, vol. 51(12), pages 5828-5846, August.
    8. Adelman, Irma & Lohmoller, Jan-Berndt, 1994. "Institutions and development in the nineteenth century: A latent variable regression model," Structural Change and Economic Dynamics, Elsevier, vol. 5(2), pages 329-359, December.
    9. Tenenhaus, Michel & Vinzi, Vincenzo Esposito & Chatelin, Yves-Marie & Lauro, Carlo, 2005. "PLS path modeling," Computational Statistics & Data Analysis, Elsevier, vol. 48(1), pages 159-205, January.
    10. TENENHAUS, Michel & CHATELIN, Yves-Marie & ESPOSITO VINZI, Vincenzo, 2002. "State-of-art on PLS Path Modeling through the available software," HEC Research Papers Series 764, HEC Paris.
    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. Nikhashemi, S.R. & Knight, Helena H. & Nusair, Khaldoon & Liat, Cheng Boon, 2021. "Augmented reality in smart retailing: A (n) (A) Symmetric Approach to continuous intention to use retail brands’ mobile AR apps," Journal of Retailing and Consumer Services, Elsevier, vol. 60(C).
    2. Anna Rogozińska-Pawełczyk & Katarzyna Gadomska-Lila, 2022. "The Mediating Role of Organisational Identification between Psychological Contract and Work Results: An Individual Level Investigation," IJERPH, MDPI, vol. 19(9), pages 1-20, April.
    3. Kinga Witczak-Błoszyk & Karolina Krysińska & Karl Andriessen & Jacek Stańdo & Adam Czabański, 2022. "Work-Related Suicide Exposure, Occupational Burnout, and Coping in Emergency Medical Services Personnel in Poland," IJERPH, MDPI, vol. 19(3), pages 1-14, January.
    4. Daniel Możdżyński & Wojciech Cellary, 2022. "Determinants of the Acceptance of Mobile Payment Systems by E-Merchants," Journal of Electronic Commerce in Organizations (JECO), IGI Global, vol. 20(1), pages 1-23, January.
    5. Lill, Philipp A. & Wald, Andreas, 2021. "The agility-control-nexus: A levers of control approach on the consequences of agility in innovation projects," Technovation, Elsevier, vol. 107(C).
    6. Nikhashemi, S.R. & Jebarajakirthy, Charles & Nusair, Khaldoon, 2019. "Uncovering the roles of retail brand experience and brand love in the apparel industry: Non-linear structural equation modelling approach," Journal of Retailing and Consumer Services, Elsevier, vol. 48(C), pages 122-135.
    7. Murad Moqbel & Barbara Hewitt & Fiona Fui-Hoon Nah & Rosann M. McLean, 2022. "Sustaining Patient Portal Continuous Use Intention and Enhancing Deep Structure Usage: Cognitive Dissonance Effects of Health Professional Encouragement and Security Concerns," Information Systems Frontiers, Springer, vol. 24(5), pages 1483-1496, October.
    8. Aleksandra Grobelna & Ewa M. Wyszkowska-Wrobel, 2021. "Understanding Employment Aspirations of Future Tourism and Hospitality Workforce: The Critical Role of Cultural Participation and Study Engagement," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 1312-1332.

    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. 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.
    2. Joseph F. Hair & G. Tomas M. Hult & Christian M. Ringle & Marko Sarstedt & Kai Oliver Thiele, 2017. "Mirror, mirror on the wall: a comparative evaluation of composite-based structural equation modeling methods," Journal of the Academy of Marketing Science, Springer, vol. 45(5), pages 616-632, September.
    3. Molinillo, Sebastian & Liébana-Cabanillas, Francisco & Anaya-Sánchez, Rafael & Buhalis, Dimitrios, 2018. "DMO online platforms: Image and intention to visit," Tourism Management, Elsevier, vol. 65(C), pages 116-130.
    4. Jörg Henseler & Marko Sarstedt, 2013. "Goodness-of-fit indices for partial least squares path modeling," Computational Statistics, Springer, vol. 28(2), pages 565-580, April.
    5. Gudmundsson, Sveinn Vidar & Lechner, Christian, 2013. "Cognitive biases, organization, and entrepreneurial firm survival," European Management Journal, Elsevier, vol. 31(3), pages 278-294.
    6. Claudio Vitari & Elisabetta Raguseo, 2016. "Big data value and financial performance: an empirical investigation [Digital data, dynamic capability and financial performance: an empirical investigation in the era of Big Data]," Post-Print halshs-01923271, HAL.
    7. Gupta, Prashant & Seetharaman, A. & Raj, John Rudolph, 2013. "The usage and adoption of cloud computing by small and medium businesses," International Journal of Information Management, Elsevier, vol. 33(5), pages 861-874.
    8. Asif Khan & Chih-Cheng Chen & Kwanrat Suanpong & Athapol Ruangkanjanases & Santhaya Kittikowit & Shih-Chih Chen, 2021. "The Impact of CSR on Sustainable Innovation Ambidexterity: The Mediating Role of Sustainable Supply Chain Management and Second-Order Social Capital," Sustainability, MDPI, vol. 13(21), pages 1-25, November.
    9. P. A. Ferrari & S. Salini, 2008. "Measuring Service Quality: The Opinion of Europeans about Utilities," Working Papers 2008.36, Fondazione Eni Enrico Mattei.
    10. Bulent Akkaya & Anna Bagieńska, 2022. "The Role of Agile Women Leadership in Achieving Team Effectiveness through Interpersonal Trust for Business Agility," Sustainability, MDPI, vol. 14(7), pages 1-16, March.
    11. Huang, Shih-Chieh & Lo, Shang-Lien & Lin, Yen-Ching, 2013. "Application of a fuzzy cognitive map based on a structural equation model for the identification of limitations to the development of wind power," Energy Policy, Elsevier, vol. 63(C), pages 851-861.
    12. Paul, Michael & Hennig-Thurau, Thorsten & Groth, Markus, 2015. "Tightening or loosening the “iron cage”? The impact of formal and informal display controls on service customers," Journal of Business Research, Elsevier, vol. 68(5), pages 1062-1073.
    13. Mohsin, Asad & Lengler, Jorge & Aguzzoli, Roberta, 2015. "Staff turnover in hotels: Exploring the quadratic and linear relationships," Tourism Management, Elsevier, vol. 51(C), pages 35-48.
    14. A. Q. Adeleke & A. Y. Bahaudin & A. M. Kamaruddeen, 2018. "Organizational Internal Factors and Construction Risk Management among Nigerian Construction Companies," Global Business Review, International Management Institute, vol. 19(4), pages 921-938, August.
    15. Insu Cho & Young Hoon Kwak & Jaehyeon Jun, 2019. "Sustainable Idea Development Mechanism in University Technology Commercialization (UTC): Perspectives from Dynamic Capabilities Framework," Sustainability, MDPI, vol. 11(21), pages 1-16, November.
    16. María Luisa Pajuelo Moreno & Teresa Duarte-Atoche, 2019. "Relationship between Sustainable Disclosure and Performance—An Extension of Ullmann’s Model," Sustainability, MDPI, vol. 11(16), pages 1-33, August.
    17. Ricardo A. Santa & Alejandro Acosta & Silvio Borrero & Annibal Scavarda, 2020. "Corporate, operational, and information systems strategies: Alignment and firm performance," Estudios Gerenciales, Universidad Icesi, vol. 36(157), pages 454-464, December.
    18. Immacolata Di Napoli & Pasquale Dolce & Caterina Arcidiacono, 2019. "Community Trust: A Social Indicator Related to Community Engagement," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(2), pages 551-579, September.
    19. Yeh, Ching-Hsuan & Wang, Yi-Shun & Yieh, Kaili, 2016. "Predicting smartphone brand loyalty: Consumer value and consumer-brand identification perspectives," International Journal of Information Management, Elsevier, vol. 36(3), pages 245-257.
    20. Popa, Simona & Soto-Acosta, Pedro & Perez-Gonzalez, Daniel, 2018. "An investigation of the effect of electronic business on financial performance of Spanish manufacturing SMEs," Technological Forecasting and Social Change, Elsevier, vol. 136(C), pages 355-362.

    More about this item

    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:rnd:arimbr:v:7:y:2015:i:2:p:113-130. 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: Muhammad Tayyab (email available below). General contact details of provider: https://ojs.amhinternational.com/index.php/imbr .

    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.