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Formative Measurement Models in Covariance Structure Analysis: Specification and Identification

Author

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  • Dirk Temme
  • Lutz Hildebrandt

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

  • Dirk Temme & Lutz Hildebrandt, 2006. "Formative Measurement Models in Covariance Structure Analysis: Specification and Identification," SFB 649 Discussion Papers SFB649DP2006-083, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  • Handle: RePEc:hum:wpaper:sfb649dp2006-083
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    File URL: http://sfb649.wiwi.hu-berlin.de/papers/pdf/SFB649DP2006-083.pdf
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    References listed on IDEAS

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    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, Oxford University Press, 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

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    Cited by:

    1. 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, Universit├Ątsbibliothek Wuppertal, University Library.
    2. Magali Jara, 2009. "┬ź Retail Brand Equity: A PLS Approach," Post-Print halshs-00413604, HAL.
    3. repec:eee:ijrema:v:31:y:2014:i:3:p:309-316 is not listed on IDEAS

    More about this item

    Keywords

    Formative Indicators; Latent Variables; Covariance Structure Analysis; Identification;

    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

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