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The Use And Misuse Of Structural Equation Modeling In Management Research

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  • Nebojsa S. Davcik

Abstract

The research practice in management research is dominantly based on structural equation modeling, but almost exclusively, and often misguidedly, on covariance-based SEM. We adumbrate theoretical foundations and guidance for the two SEM streams: covariance-based, also known as LISREL, covariance structure analysis, latent variable analysis, etc.; and variance-based SEM, also known as a component-based SEM, PLS, etc. Our conceptual framework discusses the two streams by analysis of theory, measurement model specification, sample and goodness-of-fit. We question the usefulness of Cronbach’s alpha research paradigm and discuss alternatives that are well-established in social science, but not well-known in the management research community. We conclude with discussion of some open questions in management research practice that remain under-investigated and unutilized.

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File URL: http://bru-unide.iscte.pt/RePEc/pdfs/13-07.pdf
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Bibliographic Info

Paper provided by ISCTE-IUL, Business Research Unit (BRU-IUL) in its series Working Papers Series 2 with number 13-07.

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Date of creation: 13 Sep 2013
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Handle: RePEc:isc:iscwp2:bruwp1307

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Keywords: Structural equation modeling; covariance- and variance-based SEM; formative and reflective indicators; LISREL; PLS;

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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. Heungsun Hwang & Moon-Ho Ho & Jonathan Lee, 2010. "Generalized Structured Component Analysis with Latent Interactions," Psychometrika, Springer, vol. 75(2), pages 228-242, June.
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