Discriminant validity assessment has become a generally accepted prerequisite for analyzing relationships between latent variables. For variance-based structural equation modeling, such as partial least squares, the Fornell-Larcker criterion and the examination of cross-loadings are the dominant approaches for evaluating discriminant validity. By means of a simulation study, we show that these approaches do not reliably detect the lack of discriminant validity in common research situations. We therefore propose an alternative approach, based on the multitrait-multimethod matrix, to assess discriminant validity: the heterotrait-monotrait ratio of correlations. We demonstrate its superior performance by means of a Monte Carlo simulation study, in which we compare the new approach to the Fornell-Larcker criterion and the assessment of (partial) cross-loadings. Finally, we provide guidelines on how to handle discriminant validity issues in variance-based structural equation modeling.

/pdf/a-new-criterion-for-assessing-discriminant-validity-in-4xs4c94ene.pdf

A new criterion for assessing discriminant validity in variance-based structural equation modeling

According to W. Edwards Deming, American companies require nothing less than a transformation of management style and of governmental relations with industry. In Out of the Crisis, originally published in 1982, Deming offers a theory of management based on his famous 14 Points for Management. Management's failure to plan for the future, he claims, brings about loss of market, which brings about loss of jobs. Management must be judged not only by the quarterly dividend, but by innovative plans to stay in business, protect investment, ensure future dividends, and provide more jobs through improved product and service. In simple, direct language, he explains the principles of management transformation and how to apply them.

Out of the Crisis

Most methodological fields undertake regular critical reflections to ensure rigorous research and publication practices, and, consequently, acceptance in their domain. Interestingly, relatively little attention has been paid to assessing the use of partial least squares structural equation modeling (PLS-SEM) in marketing research—despite its increasing popularity in recent years. To fill this gap, we conducted an extensive search in the 30 top ranked marketing journals that allowed us to identify 204 PLS-SEM applications published in a 30-year period (1981 to 2010). A critical analysis of these articles addresses, amongst others, the following key methodological issues: reasons for using PLS-SEM, data and model characteristics, outer and inner model evaluations, and reporting. We also give an overview of the interdependencies between researchers’ choices, identify potential problem areas, and discuss their implications. On the basis of our findings, we provide comprehensive guidelines to aid researchers in avoiding common pitfalls in PLS-SEM use. This study is important for researchers and practitioners, as PLS-SEM requires several critical choices that, if not made correctly, can lead to improper findings, interpretations, and conclusions.

An assessment of the use of partial least squares structural equation modeling in marketing research

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 objective of this paper is to provide a basic framework for researchers interested in reporting the results of their PLS analyses. Since the dominant paradigm in reporting Structural Equation Modeling results is covariance based, this paper begins by providing a discussion of key differences and rationale that researchers can use to support their use of PLS. This is followed by two examples from the discipline of Information Systems. The first consists of constructs with reflective indicators (mode A). This is followed up with a model that includes a construct with formative indicators (mode B).

How to Write Up and Report PLS Analyses

Commentaries on “The Lenses of Lean”

This paper presents a conceptual framework that hypothesizes the nature of the relationships between a firm’s use of Internet-based information technology (IT), supply chain planning capability, and operational performance. Using data from 266 manufacturing sites and structural equation modeling, we show that the impact of IT on operational performance is contingent upon the intent of its use. Specifically, our results suggest that IT’s use in exploiting existing opportunities has both a direct effect and an indirect effect, mediated through supply chain planning capabilities, on operational performance. In contrast, when IT is used to explore new opportunities, it has neither a direct nor an indirect effect on operational performance. Implications of these research findings are reported.

Assessing the performance impact of supply chain planning in net-enhanced organizations

Is lean a theory? Viewpoints and outlook

A configurational view of lean manufacturing and its theoretical implications

Focus in healthcare has been heralded as the next frontier in improving its efficiency and efficacy (Herzlinger 2004) Focus takes several different forms, ranging from standalone specialty centers to a hospital that places a strategic emphasis on a clinical area We adopt this latter perspective and define focus as a disproportionate emphasis on a particular clinical area in a hospital We use secondary data from hospitals providing cardiology care in New York State to examine the relationship between focus and performance We develop two measures of focus Proportional focus is defined to be the proportion of cases treated in a particular clinical specialty Expertise focus is defined to be specific evidence that a hospital has taken action to build expertise in treating diseases in that specialty We operationalize hospital performance along cost and quality dimensions, and we use hierarchical regression to examine the impact of focus on performance Our results indicate that proportional focus, but not expertise focus, is associated with better cost performance Quality performance, on the other hand, was associated only with the interaction between proportional focus and expertise focus, which means that only hospitals exhibiting higher levels of both proportional and expertise focus achieve better quality performance These findings support the notion that not only is focus important in healthcare, but also that researchers and practitioners need to recognize that relationships are contingent on the performance and focus measures used and thus, findings may not be generalizable from one metric to another

Rachna Shah

Papers

Commentaries on “The Lenses of Lean”

Assessing the performance impact of supply chain planning in net-enhanced organizations

Is lean a theory? Viewpoints and outlook

A configurational view of lean manufacturing and its theoretical implications

Relating focus to quality and cost in a healthcare setting