Latent class analysis in PLS-SEM: A review and recommendations for future applications

Marko Sarstedt, Lăcrămioara Radomir, Ovidiu Moisescu () and Christian M. Ringle

Journal of Business Research, 2022, vol. 138, issue C, 398-407

Abstract: With the increasing prominence of partial least squares structural equation modeling (PLS-SEM) in business research, the use of latent class analyses for identifying and treating unobserved heterogeneity has also gained momentum. Researchers have introduced various latent class approaches in a PLS-SEM context, of which finite mixture PLS (FIMIX-PLS) plays a central role due to its ability to identify heterogeneity and indicate a suitable number of segments to extract from the data. However, applying FIMIX-PLS requires researchers to make several choices that, if incorrect, could lead to wrong results and false conclusions. Addressing this concern, we present the results of a systematic review of FIMIX-PLS applications published in major business research journals. Our review provides an overview of the interdependencies between researchers’ choices and identifies potential problem areas. Based on our results, we offer concrete guidance on how to prevent common pitfalls when using FIMIX-PLS, and identify future research areas.

Keywords: Partial least squares structural equation modeling; PLS-SEM; Finite mixture; FIMIX-PLS; Latent class analysis (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:138:y:2022:i:c:p:398-407

DOI: 10.1016/j.jbusres.2021.08.051

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