The Use And Misuse Of Structural Equation Modeling In Management Research

Nebojsa Davcik

No 13-07, Working Papers Series 2 from ISCTE-IUL, Business Research Unit (BRU-IUL)

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.

Keywords: Structural equation modeling; covariance- and variance-based SEM; formative and reflective indicators; LISREL; PLS (search for similar items in EconPapers)
JEL-codes: C18 C3 M0 (search for similar items in EconPapers)
Date: 2013-09-13
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (12)

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