Purpose – The authors aim to present partial least squares (PLS) as an evolving approach to structural equation modeling (SEM), highlight its advantages and limitations and provide an overview of recent research on the method across various fields Design/methodology/approach – In this review article, the authors merge literatures from the marketing, management, and management information systems fields to present the state-of-the art of PLS-SEM research Furthermore, the authors meta-analyze recent review studies to shed light on popular reasons for PLS-SEM usage Findings – PLS-SEM has experienced increasing dissemination in a variety of fields in recent years with nonnormal data, small sample sizes and the use of formative indicators being the most prominent reasons for its application Recent methodological research has extended PLS-SEM's methodological toolbox to accommodate more complex model structures or handle data inadequacies such as heterogeneity Research limitations/implications – While rese

Partial least squares structural equation modeling (PLS-SEM): An emerging tool in business research

The Social Psychology of Groups. J. W Thibaut & H. H. Kelley. New York: alley, 1959. The team of Thibaut and Kelley goes back to 1946 when, after serving in different units of the armed services psychology program, the authors joined the Research Center for Group Dynamics, first at M.LT and then at the University of Michigan. Their continued association eventuated in appointments as fellows at the Center for Advanced Study in the Behavioral Sciences, 19561957. It is during these years that their collaboration resulted in the publication of The Social Psychology of Groups. The book was designed to "bring order and coherence to present-day research in interpersonal relations and group functioning." To accomplish this aim, the authors introduced, defined, and illustrated basic concepts in an effort to explain the simplest of social phenomena, the two-person relationship. These basic principles and concepts were then employed to illuminate larger problems and more complex social relationships and to examine the significance of such concepts as roles, norm, power, group cohesiveness, and status. The lasting legacy of this book is derived from the fact that the concepts and principles discussed therein serve as a foundation for one of the dominant conceptual frameworks in the field of family studies today-the social exchange framework. Specifically, much of our contemporary thinking about the process of interpersonal attraction and about how individuals evaluate their close relationships has been influenced by the theory and concepts introduced in The Social Psychology of Groups. Today, as a result of Thibaut and Kelley, we think of interpersonal attraction as resulting from the unique valence of driving and restraining forces, rewards and costs, subjectively thought to be available from a specific relationship and its competing alternatives. We understand, as well, that relationships are evaluated through complex and subjectively based comparative processes. As a result, when we think about assessing the degree to which individuals are satisfied with their relationships, we take into consideration the fact that individuals differ in terms of the importance they attribute to different aspects of a relationship (e.g., financial security, sexual fulfillment, companionship). We also take into consideration the fact that individuals differ in terms of the levels of rewards and costs that they believe are realistically obtainable and deserved from a relationship. In addition, as a result of Thibaut and Kelley's theoretical focus on the concept of dependence and the interrelationship between attraction and dependence, there has evolved within the field of family studies a deeper appreciation for the complexities and variability found within relationships. Individuals are dependent on their relationships, according to Thibaut and Kelley, when the outcomes derived from the existing relationship exceed those perceived to be available in competing alternatives. Individuals who are highly dependent on their relationships are less likely to act to end their relationships. This dependence and the stability it engenders may or may not be voluntary, depending on the degree to which individuals are attracted to and satisfied with their relationships. When individuals are both attracted to and dependent on their relationships, they can be thought of as voluntarily participating in their relationship. That is, they are likely to commit themselves to the partner and relationship and actively work for its continuance. Thibaut and Kelley termed those relationships characterized by low levels of satisfaction and high levels of dependence "nonvoluntary relationships. …

The Social Psychology of Groups

https://flora.insead.edu/fichiersti_wp/inseadwp2009/2009-44.pdf

An empirical comparison of the efficacy of covariance-based and variance-based SEM

In this innovative approach to the practice of social science, Charles Ragin explores the use of fuzzy sets to bridge the divide between quantitative and qualitative methods. Paradoxically, the fuzzy set is a powerful tool because it replaces an unwieldy, "fuzzy" instrument—the variable, which establishes only the positions of cases relative to each other, with a precise one—degree of membership in a well-defined set. Ragin argues that fuzzy sets allow a far richer dialogue between ideas and evidence in social research than previously possible. They let quantitative researchers abandon "homogenizing assumptions" about cases and causes, they extend diversity-oriented research strategies, and they provide a powerful connection between theory and data analysis. Most important, fuzzy sets can be carefully tailored to fit evolving theoretical concepts, sharpening quantitative tools with in-depth knowledge gained through qualitative, case-oriented inquiry. This book will revolutionize research methods not only in sociology, political science, and anthropology but in any field of inquiry dealing with complex patterns of causation.

Fuzzy-Set Social Science

Variance-based SEM, also known under the term partial least squares (PLS) analysis, is an approach that has gained increasing interest among marketing researchers in recent years. During the last 25 years, more than 30 articles have been published in leading marketing journals that have applied this approach instead of the more traditional alternative of covariance-based SEM (CBSEM). However, although an analysis of these previous publications shows that there seems to be at least an implicit agreement about the factors that should drive the choice between PLS analysis and CBSEM, no research has until now empirically compared the performance of these approaches given a set of different conditions. Our study addresses this open question by conducting a large-scale Monte-Carlo simulation. We show that justifying the choice of PLS due to a lack of assumptions regarding indicator distribution and measurement scale is often inappropriate, as CBSEM proves extremely robust with respect to violations of its underlying distributional assumptions. Additionally, CBSEM clearly outperforms PLS in terms of parameter consistency and is preferable in terms of parameter accuracy as long as the sample size exceeds a certain threshold (250 observations). Nevertheless, PLS analysis should be preferred when the emphasis is on prediction and theory development, as the statistical power of PLS is always larger than or equal to that of CBSEM; already, 100 observations can be sufficient to achieve acceptable levels of statistical power given a certain quality of the measurement model.

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An Empirical Comparison of the Efficacy of Covariance-Based and Variance-Based SEM

In recent years, there has been a resurgence of interest in the value construct among both marketing researchers and practitioners. Despite a growing body of research, it is still not clear how value interacts with related marketing constructs. Researchers have called for an investigation of the interrelationship between customer satisfaction and customer value to reduce the ambiguities surrounding both concepts. Investigates whether customer value and satisfaction represent two theoretically and empirically distinct concepts. Also addresses whether value is a better predictor of behavioral outcomes than satisfaction in a business marketing context. Two alternative models are developed and empirically tested in a cross-sectional survey with purchasing managers in Germany. The first model suggests a direct impact of perceived value on the purchasing managers' intentions. In the second model, perceived value is mediated by satisfaction. This research suggests that value and satisfaction can be conceptualized and measured as two distinct, yet complementary constructs.

Customer perceived value: a substitute for satisfaction in business markets?

Many business customers today consolidate their supply bases and implement preferred supplier programs. Consequently, vendors increasingly face the alternative of either gaining a key supplier status with their customers or being pushed into the role of a backup supplier. As product and price become less important differentiators, suppliers of routinely purchased products search for new ways to differentiate themselves in a buyer–seller relationship. This research investigates avenues for differentiation through value creation in business-to-business relationships. The results suggest that relationship benefits display a stronger potential for differentiation in key supplier relationships than cost considerations. The authors identify service support and personal interaction as core differentiators, followed by a supplier's know-how and its ability to improve a customer's time to market. Product quality and delivery performance, along with acquisition costs and operation costs, display a moderate potential to help a firm gain and maintain key supplier status. Finally, price shows the weakest potential for differentiation.

Value-Based Differentiation in Business Relationships: Gaining and Sustaining Key Supplier Status

Purpose – Established models of buyer-seller relationships do not reflect managerial emphasis on supplier performance evaluation when modelling business relationships. Proposes that relationship value should be included as a key constituent in such models. Aims to explore the construct's links with key constituents of relationship quality, i.e. commitment, satisfaction, and trust. Design/methodology/approach – A two-stage research design was used. First, depth-interviews were conducted with ten senior-level purchasing managers in US manufacturing companies. Second, data were gathered in a nation-wide mail survey among 400 purchasing professionals. Findings – The findings suggest that relationship value is an antecedent to relationship quality and behavioural outcomes in the nomological network of relationship marketing. Value displays a stronger impact on satisfaction than on commitment and trust. Value also directly impacts a customer's intention to expand business with a supplier. In turn, its impact on the propensity to leave a relationship is mediated by relationship quality. Contrary to previous research, trust does not appear in this study as an antecedent of behavioural outcomes, but as a mediator of the satisfaction-commitment link. Research limitations/implications – Confirms the role of value as a key relationship building-block. Researchers should integrate this cognitive performance-based construct in models of business relationships. Limitations and research directions refer to the sampling procedure, the need to include the supplier's value perceptions, the possibility of conducting longitudinal research, and the opportunity to assess additional moderating variables. Practical implications – When the goal is to increase business with an existing customer, managers should focus on relationship value. In turn, when managers are concerned with the risk of customers leaving a relationship, they should focus on relationship quality. Trust appears as an important ingredient in stabilising existing business relationships. Originality/value – Stresses the pivotal role of relationship value in marketing. Contributes to a better fit between relationship marketing models and managerial practice in business markets.

Andreas Eggert

Papers

Customer perceived value: a substitute for satisfaction in business markets?

Customer perceived value: a substitute for satisfaction in business markets?

Value-Based Differentiation in Business Relationships: Gaining and Sustaining Key Supplier Status

Relationship value and relationship quality: Broadening the nomological network of business‐to‐business relationships

Relationship value and relationship quality: Broadening the nomological network of business-to-business relationships