An Assessment of the Use of Structural Equation Modeling in International Business Research

Abstract

Structural equation modeling (SEM) is a powerful multivariate statistical technique that requires careful application. The use of SEM in international business research has substantially increased recently, necessitating a critical evaluation of its use in the field. Through an analysis of 148 articles in the international business (IB) literature, we detail the state of current use of SEM in IB research and compare its use to the established best practices. In many instances, SEM's use in IB has been faulty, suggesting that authors may have drawn incorrect conclusions. To expand the IB field's knowledge base, methodological accuracy is essential. Based on our review of the technique's use in IB research coupled with the established practices in the social science literature, we provide practical suggestions for better applying SEM in the IB literature.