Partial Least Squares - Structural Equation Modeling (PLS - SEM)

Using SmartPLS 3.0

Associate Professor Dr. S. Mostafa Rasoolimanesh

School of Hospitality, Tourism, and Events
Taylor’s University
11th June – 2nd July, 2020
 Advanced Application of PLS in
Measurement Model and Structural Model
 Higher order constructs
• A number of recent papers have presented second order
construct models.
 Higher Order Constructs

• When using higher order constructs, several issues need to

be considered.
• The most important is the purpose of the model:
• Often the initial answer is that a good model
demonstrates that a general, more global factor exists
that explains the first order factors.
• Is this second order factor expected to mediate fully the
relationship of the first order factors when applied in a
theoretical model?
 Higher Order Constructs

• Key requirement for defining and operationalizing multidimensional

constructs is that they should be derived from theory and theory should
indicate the number of (sub)dimensions and their relationship to the higher-
order construct (Johnson et al., 2012; MacKenzie et al., 2011; Polites et al.,
2012). (Becker et al., 2012, p.360).
• Proponents of the use of higher-order constructs have argued that they
allow for more theoretical parsimony and reduce model complexity.
Moreover, hierarchical latent variable models allow matching the level of
abstraction for predictor and criterion variables in conceptual models (Becker
et al., 2012, p.360).
 Reflective–Reflective Type I
(5 of 25 models; 20%) (Ringle et al., 2012)
Reflective–Formative Type II
(13 of 25 models; 52%)
Formative–Reflective Type III
(1 of 25 models; 4.00%)
Formative–Formative Type IV
(6 of 25 models; 24.00%)
 Assessment of Higher Order Constructs

• Three
approaches to model hierarchical latent variables in PLS-
SEM have been proposed in the literature:
• The repeated indicator approach (Lohmoller, 1989; Wold,
1982),
• The sequential latent variable score method or two-stage
approach (Ringle et al., 2012; Wetzels et al., 2009), and
• The hybrid approach (Wilson and Henseler, 2007). (Becker et
al., 2012)
 Assessment of Higher Order Constructs

• When using the repeated indicator approach, researchers have to make

decisions regarding the mode of measurement for the higher-order construct
and the inner weighting scheme.
• First, as for any construct in a PLS-SEM model, the mode of measurement for the
higher-order repeated indicators needs to be specified (i.e., Mode A or Mode B).
Usually, Mode A measurement is associated with reflective constructs and Mode B is
associated with formative constructs (Henseler et al., 2009; Tenenhaus et al., 2005). The
standard approach for repeated indicators on a hierarchical latent variable is to use
Mode A (Wold, 1982) which generally suits reflective-reflective type models best.
Therefore, formative type models are often also estimated using Mode A for the
repeated indicators, especially when the first-order constructs are reflective (i.e.,
reflective-formative type) (Chin, 2010; Ringle et al., 2012)
 Assessment of Higher Order Constructs

• The formative nature of the higher-order construct might suggest

Mode B measurement. Therefore, we think it is more appropriate to
use Mode B for the repeated indicators of a formative type hierarchical
latent variable model (i.e., reflective-formative and formative-
formative types). However, the importance of the mode of
measurement is usually not discussed in research papers presenting
the repeated indicator approach, but only indirectly inferred by the
direction of arrows in the path diagram (Chin, 2010; Ringle et al.,
2012). (Becker et al., 2012, p.365)
 Assessment of Higher Order Constructs

• Inaddition, it is frequently mentioned that the

repeated indicator approach is only advisable if the
lower-order constructs have an equal number of
indicators, otherwise leading to biased loadings/
weights for the lower-order construct on the
higher-order constructs (Chin et al., 2003;
Lohmoller, 1989; Ringle et al., 2012).
 Assessment of Higher Order Constructs

• Overall, the simulation results indicate that there may be

situations in which the two-stage approach proves more useful
than the repeated indicator approach. (Becker et al., 2012)
• Moreover, the simulation results show that neither the repeated
indicator approach with Mode B and path weighting scheme, nor
the two-stage approach having an unequal number of indicators
on the lower-order constructs leads to biased results. (Becker et
al., 2012)
Formative- formative, and reflective- formative
for endogenous HOC (Ringle et al., 2012)
 Assessment of Higher Order Constructs

• For assessment of measurement model including

high order constructs, at first all low order
constructs (LOCs) should be assessed together, and
then all criteria should be checked for generated
HOC a other LOCs (Akter et al., 2011, Hair et al.,
2014).
Sarstedt, M., Hair Jr, J. F., Cheah, J. H., Becker, J. M., & Ringle, C. M. (2019). How to specify, estimate, and
validate higher-order constructs in PLS-SEM. Australasian Marketing Journal (AMJ), 27(3), 197-211.
Thank you for your attention
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