Abstract
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.
Highlights
Structural equation modeling (SEM) is a family of statistical techniques that has become very popular in business and social sciences
The plethora of discussions and developments around Partial least squares (PLS) path modeling called for a fresh look at this technique as well as new guidelines
As important aspect of this endeavor, we provide an answer the question “What has changed?” This answer is given in Table II, which contrasts traditional and modern perspectives on PLS
Summary
Structural equation modeling (SEM) is a family of statistical techniques that has become very popular in business and social sciences. Two types of SEM can be distinguished: covariance- and variance-based SEM. Covariance-based SEM estimates model parameters using the empirical variancecovariance matrix, and it is the method of choice if the hypothesized model consists of one or more common factors. Variance-based SEM first creates proxies as Industrial Management & Data Systems Vol 116 No 1, 2016 pp. © Jörg Henseler, Geoffrey Hubona and Pauline Ash Ray. Published by Emerald Group Publishing Limited. The full terms of this licence may be seen at http://creativecommons.org/ licences/by/3.0/legalcode
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