Abstract
Purpose– Structural equation modeling (SEM) has been widely used to examine complex research models in international business and marketing research. While the covariance-based SEM (CB-SEM) approach is dominant, the authors argue that the field’s dynamic nature and the sometimes early stage of theory development more often require a partial least squares SEM (PLS-SEM) approach. The purpose of this paper is to critically review the application of SEM techniques in the field.Design/methodology/approach– The authors searched six journals with an international business (and marketing) focus (Management International Review,Journal of International Business Studies,Journal of International Management,International Marketing Review,Journal of World Business,International Business Review) from 1990 to 2013. The authors reviewed all articles that apply SEM, analyzed their research objectives and methodology choices, and assessed whether the PLS-SEM papers followed the best practices outlined in the past.Findings– Of the articles, 379 utilized CB-SEM and 45 PLS-SEM. The reasons for using PLS-SEM referred largely to sampling and data measurement issues and did not sufficiently build on the procedure’s benefits that stem from its design for predictive and exploratory purposes. Thus, the procedure’s key benefits, which might be fruitful for the theorizing process, are not being fully exploited. Furthermore, authors need to better follow best practices to truly advance theory building.Research limitations/implications– The authors examined a subset of journals in the field and did not include general management journals that publish international business and marketing-related studies. Fur-thermore, the authors found only limited use of PLS-SEM in the journals the authors considered relevant to the study.Originality/value– The study contributes to the literature by providing researchers seeking to adopt SEM as an analytical method with practical guidelines for making better choices concerning an appropriate SEM approach. Furthermore, based on a systematic review of current practices in the international business and marketing literature, the authors identify critical challenges in the selection and use of SEM procedures and offer concrete recommendations for better practice.
Highlights
Researchers in international business and marketing face the challenge of constantly and rapidly changing research contexts owing to the growing internationalization of firms, the development of the global economy, and significant shifts in the formal and informal institutional environments
The international research agenda has changed in the past few epochs: The focus from 1945 to the 1950s was on explaining foreign direct investments flows and shifted toward the explanation of the existence, strategy, and organization of multinational firms, which was especially popular from the 1970s to the 1990s
While CB-Structural equation modeling (SEM) has often been used during the past decades (379 of the articles we identified used covariance-based SEM (CB-SEM)), and its use is growing year-on-year, very few of the researchers in our sample had used partial least squares SEM (PLS-SEM) (45 articles), and it is only very recently that the number of such published studies has increased
Summary
Researchers in international business and marketing face the challenge of constantly and rapidly changing research contexts owing to the growing internationalization of firms, the development of the global economy, and significant shifts in the formal and informal institutional environments. Following these changes, the international research agenda has changed in the past few epochs: The focus from 1945 to the 1950s was on explaining foreign direct investments flows and shifted toward the explanation of the existence, strategy, and organization of multinational firms, which was especially popular from the 1970s to the 1990s. Over the past decades, the fluid and dynamic environment has led to increasingly complex research phenomena and models (e.g. Dunning, 2007, 2008)
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