Empirical Validation of the 10-Times Rule for SEM

Ralf Wagner () and Malek Simon Grimm ()
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Ralf Wagner: University of Kassel, Chair for Sustainable Marketing
Malek Simon Grimm: University of Kassel, Chair for Sustainable Marketing

A chapter in State of the Art in Partial Least Squares Structural Equation Modeling (PLS-SEM), 2023, pp 3-7 from Springer

Abstract: Abstract Structural equation modeling has become indispensable in empirical research due to its ability to measure latent constructs. However, researchers always face the central dilemma of determining a sufficient sample size to ensure a converting model, true estimates, and sufficient statistical power. The prominent 10-times rule suggests that the minimum sample size should be 10 times the maximum number of arrowheads pointing at a latent variable anywhere in the partial least squares path model. Despite its prominence in research practice, this rule of thumb lacks systematic validation. This study contributes a simulation assessing the validity of 10-times traits in which an original trait was tested against a 60-times trait, a 50-times trait, a 40-times trait, a 30-times trait, a 20-times trait, and a 10-times trait. The results show that the 10-times trait is substantially biased and that researchers are well-advised to use at least a 30-times trait.

Keywords: 10-times rule; 10-thumb rule; Structural equation modeling; Partial least squares; Missing values (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-34589-0_1

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DOI: 10.1007/978-3-031-34589-0_1

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