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On the Relationships among Latent Variables and Residuals in PLS Path Modeling: the Formative-Reflective Scheme

Giorgio Vittadini, Simona Minotti (), Marco Fattore () and Pietro Giorgio Lovaglio

No 20061101, Working Papers from Università degli Studi di Milano-Bicocca, Dipartimento di Statistica

Abstract: A new approach for the estimation and the validation of a Structural Equation Model with a formative-reflective scheme is presented. The basis of the paper is a proposal for overcoming a potential deficiency of PLS Path Modeling. In the PLS approach the reflective scheme assumed for the endogenous latent variables is inverted; moreover, the model errors are not explicitly taken into account for the estimation of the endogenous latent variables. The proposed approach utilizes all the relevant information in the formative manifest variables providing solutions which respect the causal structure of the model. The estimation procedure is based on the optimization of the redundancy criterion. The new approach, entitled Redundancy Analysis approach to Path Modeling is compared with both traditional PLS Path Modeling and LISREL methodology, on the basis of real and simulated data.

Keywords: Latent Variables; Partial Least Squares; PLS Path Modeling; Redundancy Analysis; LISREL Model (search for similar items in EconPapers)
JEL-codes: C10 C30 J24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ecm, nep-ets and nep-mac
Date: 2005-11, Revised 2006-10
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Forthcoming in Computational Statistics and Data Analysis

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http://www.statistica.unimib.it/utenti/WorkingPapers/WorkingPapers/20061101.pdf Revised version, October 2006 (application/pdf)

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Journal Article: On the relationships among latent variables and residuals in PLS path modeling: The formative-reflective scheme (2007) Downloads
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