FINAL ASSIGNMENT

“EFA & CFA Analysis”

Submitted to

(Dr. NADEEM UZ-ZAMAN)

Submitted by
Nasir Khan
CMS ID-48388
EXPLORATORY FACTOR ANALYSIS

Exploratory factor analysis is a statistical technique that is used to reduce data to a smaller
set of summary variables and to explore the underlying theoretical structure of the
phenomena. It is used to identify the structure of the relationship between the variable and
the respondent

Treating the Missing Value:

For finding the Missing value from the given data open the SPSS file and copy the all data
and then open new excel sheet and copy data into it.

COUNT MISSING VALUE:

Now insert the formula as “=COUNTBLANK(RANGE)” in range select the data from last cell
at the right most end of first row to the first cell to the left most first cell and close the
parenthesis and press enter. The result shows“0” because there is no missing value in the
first row of data. Now apply the formula to the entire sheet by dragging the cell from cell right
bottom plus sign or double click on it, the formula is applied to the entire rows of the data.
The next step is to select the entire column and go to Data section on the top of excel sheet
and sort it to “ZtoA” means Largest to Smallest values. The data is sorted to from highest to
smallest values and the largest value is 47 whereas the smallest value is 0. We have two
highest missing values that are 47 out of 48 which distorts the result so we will go to spss
data and find the reference no data that is 288 and 303 in spss data sheet and delete them
by selecting the entire row and click the right click on it and clear it and same procedure for
303.

STANDARD DEVIATION:

Now the standard deviation of the data is find through the formula by typing the command
of “=STDEV.P (RANGE)”. After applying the formula we get the numbers of standard
deviations, now apply the formula to the rest of rows till end by dragging the formula cell till
end of the data. Standard deviation shows different values according to the data.
PERCENTAGE:

The next step is to find out the percentage of missing values by typing the formula of
percentage “=Missing value cell/total numbers of responses*100” the result shows the
percentage values of Missing values.

Factor Analysis Procedure:

Following is the procedure of exploaratory factor analysis;

The factor analysis can be found in Analyze/Dimension Reduction/Factor

In the dialog Descriptive we need to add a few statistics to verify the assumptions made by
the factor analysis. To verify the assumptions, we need the KMO test of sphericity and the
Anti-Image Correlation matrix
Description:

The dialog box Extraction allows us to specify the extraction method and the cut-off value for
the extraction. Generally, SPSS can extract as many factors as we have variables. In an
exploratory analysis, the eigenvalue is calculated for each factor extracted and can be used
to determine the number of factors to extract. A cutoff value of 1 is generally used to
determine factors based on eigenvalues.

EXTRACTION:
Next, an appropriate extraction method needs to be selected. Principal components are the
default extraction method in SPSS. It extracts uncorrelated linear combinations of the
variables and gives the first factor maximum amount of explained variance. All following
factors explain smaller and smaller portions of the variance and are all uncorrelated with
each other. This method is appropriate when the goal is to reduce the data, but is not
appropriate when the goal is to identify latent constructs.

OPTIONS:

In the dialog box Options we can manage how missing values are treated – it might be
appropriate to replace them with the mean, which does not change the correlation matrix but
ensures that we do not over penalize missing values. Also, we can specify in the output if
we do not want to display all factor loadings. The factor loading tables are much easier to
read when we suppress small factor loadings. Default value is 0.1, but in this case, we will
increase this value to 0.3.
Results/ interpretation:

 Kaiser-Meyer-Olkin Measure of Sampling Adequacy: This measure varies

between 0 and 1, and values closer to 1 are better. A value of .6 is a suggested
minimum.

 Bartlett’s Test of Sphericity: This tests the null hypothesis that the correlation
matrix is an identity matrix. An identity matrix is matrix in which all of the diagonal
elements are 1 and all off diagonal elements are 0. You want to reject this null
hypothesis.

 Significant value is .000: Statistical significance is often referred to as the p-value

(short for “probability value”) or simply p in research papers. A small p-value basically
means that your data are unlikely under some null hypothesis. A somewhat arbitrary
convention is to reject the null hypothesis if p < 0.05
 Communalities: This is the proportion of each variable’s variance that can be
explained by the factors (e.g., the underlying latent continua). It is also noted as
h2 and can be defined as the sum of squared factor loadings for the variables.

 Initial: With principal factor axis factoring, the initial values on the diagonal of the
correlation matrix are determined by the squared multiple correlation of the variable
with the other variables

 Extraction: The values in this column indicate the proportion of each variable’s
variance that can be explained by the retained factors. Variables with high values are
well represented in the common factor space, while variables with low values are not
well represented. (In this example, we don’t have any particularly low values.) They
are the reproduced variances from the factors that you have extracted. You can find
these values on the diagonal of the reproduced correlation matrix.
 Factor: The initial number of factors is the same as the number of variables used in
the factor analysis. However, not all 12 factors will be retained. In this example, only
the first three factors will be retained (as we requested).

 Initial Eigenvalues: Eigenvalues are the variances of the factors. Because we

conducted our factor analysis on the correlation matrix, the variables are
standardized, which means that the each variable has a variance of 1, and the total
variance is equal to the number of variables used in the analysis.

 Total: This column contains the eigenvalues. The first factor will always account for
the most variance (and hence have the highest eigenvalue), and the next factor will
account for as much of the left over variance as it can, and so on. Hence, each
successive factor will account for less and less variance.

 % of Variance: This column contains the percent of total variance accounted for by
each factor.

 Cumulative %: This column contains the cumulative percentage of variance

accounted for by the current and all preceding factors.

 Extraction Sums of Squared Loadings: The number of rows in this panel of the
table correspond to the number of factors retained.
Confirmatory Factor Analysis (CFA)

In statistics, confirmatory factor analysis (CFA) is a special form of factor analysis, most
commonly used in social research. It is used to test whether measures of a construct are
consistent with a researcher's understanding of the nature of that construct (or factor). As
such, the objective of confirmatory factor analysis is to test whether the data fit a
hypothesized measurement model. This hypothesized model is based on theory and
previous analytic research

PROCESS OF CONDUCTING CFA IN AMOS:

CFA process is done through Amos Spss.

Gto

 Plugins
 Pattern Matrix Model builder
 Paste the copied Rotated Component Matrix
 Run create diagram option to get a diagram

Fig is shown below;

validity and reliability:

The process for running the Amos from SPSS is as follow;

Run Plugins Validity and reliability test

Model Validity Measures AVE for 1 is

less than 0.50
CR AVE MSV MaxR(H) 1 2 3 4 5 6
1 0.91 0.48 0.43 0.923 0.698
1 7 0
2 0.91 0.60 0.29 0.924 0.383** 0.778
4 5 9 *
3 0.93 0.69 0.29 0.935 0.473** 0.547*** 0.831
1 1 9 *
4 0.93 0.74 0.19 0.939 0.260** 0.402*** 0.243*** 0.861
4 1 2 *
5 0.88 0.66 0.43 0.890 0.656** 0.348*** 0.520*** 0.269*** 0.813
6 1 0 *
6 0.81 0.52 0.20 0.815 0.227** 0.448*** 0.334*** 0.438*** 0.293*** 0.72
3 1 1 2

Validity Concerns

Convergent Validity: the AVE for 1 is less than 0.50. Try removing DecQual_8 to improve
AVE.

As mentioned above the DecQual_8 is remeoved and run the process again and received
the following results;

Model Validity Measures

CR AVE MSV MaxR(H 1 2 3 4 5 6

)
1 0.91 0.50 0.44 0.920 0.711
0 6 0
2 0.91 0.60 0.29 0.924 0.375** 0.778
4 5 9 *
3 0.93 0.69 0.29 0.935 0.470** 0.547** 0.831
1 1 9 * *
4 0.93 0.74 0.19 0.939 0.260** 0.402** 0.243** 0.861
4 1 2 * * *
5 0.88 0.66 0.44 0.890 0.663** 0.348** 0.520** 0.269** 0.813
6 1 0 * * * *
6 0.81 0.52 0.20 0.815 0.222** 0.448** 0.334** 0.438** 0.293** 0.72
3 1 1 * * * * 2
Validity Concerns:.

It is confirm from the table that Composite reliability (CR) is above the required value of 0.7.
The Maximum Shared Variance (MSV) is less than Average Variance Extracted (AVE) which
confirms the discriminant validity and hence good to go.

To move further, open data file in Amos and Select Calculate estimate. Furthermore, by
selecting show estimates we will get Model Fit Summary as shown and discussed below.

MODEL FIT SUMMARY

CMIN
Model NPAR CMIN DF P CMIN/DF

Default model 103 1566.038 758 .000 2.066

Saturated model 861 .000 0

Independence model 41 12087.034 820 .000 14.740

 CMIN/DF should be around 2 and here we got 2.066 which is slightly above 2. The
‘P’ value significant i.e below 0.05.

BASELINE COMPARISONS
Model NFI RFI IFI TLI CFI
Delta1 rho1 Delta2 rho2

Default model .870 .860 .929 .922 .928

Saturated model 1.000 1.000 1.000

Independence model .000 .000 .000 .000 .000

 The minimum Comparative Fit Index (CFI) required is 0.9 and here we got 0.928
which indicates that our model is very good.
RMSEA
Model RMSEA LO 90 HI 90 PCLOSE

Default model .053 .050 .057 .065

Independence model .192 .189 .195 .000

 The Root Mean Square Error of Approximation (RMSEA) value should be around
0.05 – 0.08 and here we got 0.053 which indicates that our model is acceptable.
 The PCLOSE value is 0.065 which is above the required limit of greater than 0.05

The end