Estimation issues with PLS and CBSEM: Where the bias lies!

Sarstedt, Marko ; Hair, Joseph F.; Ringle, Christian M.; Thiele, Kai O. und Gudergan, Siegfried P. (2016): Estimation issues with PLS and CBSEM: Where the bias lies! In: Journal of Business Research, Vol. 69, No. 10: pp. 3998-4010

Abstract

Discussions concerning different structural equation modeling methods draw on an increasing array of concepts and related terminology. As a consequence, misconceptions about the meaning of terms such as reflective measurement and common factor models as well as formative measurement and composite models have emerged. By distinguishing conceptual variables and their measurement model operationalization from the estimation perspective, we disentangle the confusion between the terminologies and develop a unifying framework. Results from a simulation study substantiate our conceptual considerations, highlighting the biases that occur when using (1) composite-based partial least squares path modeling to estimate common factor models, and (2) common factor-based covariance-based structural equation modeling to estimate composite models. The results show that the use of PLS is preferable, particularly when it is unknown whether the data's nature is common factor- or composite-based.

• Item Type: Journal article
• Keywords: Common factor models, Composite models, Reflective measurement, Formative measurement, Structural equation modeling, Partial least squares
• Faculties: Munich School of Management > Institute for Marketing
• Subjects: 300 Social sciences > 330 Economics
• ISSN: 0148-2963
• Language: English