University of Twente
NL
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A new criterion for assessing discriminant validity in variance-based structural equation modeling
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.
Using PLS path modeling in new technology research: updated guidelines
Purpose – Partial least squares (PLS) path modeling is a variance-based structural equation modeling (SEM) technique that is widely applied in business and social sciences. Its ability to model composites and factors makes it a formidable statistical tool for new technology research. Recent reviews, discussions, and developments have led to substantial changes in the understanding and use of PLS. The paper aims to discuss these issues. Design/methodology/approach – This paper aggregates new insights and offers a fresh look at PLS path modeling. It presents new developments, such as consistent PLS, confirmatory composite analysis, and the heterotrait-monotrait ratio of correlations. Findings – PLS path modeling is the method of choice if a SEM contains both factors and composites. Novel tests of exact fit make a confirmatory use of PLS path modeling possible. Originality/value – This paper provides updated guidelines of how to use PLS and how to report and interpret its results.