Research Methodology

Data Analysis: Structural Model Assessment

Evaluation Criteria-
Structural Model

Model Estimations
and results

Dr. Sachin Batra | NICMAR University, Pune

 Introduction Assess collinearity issues in the structural
model

• Once measurement model

is established, the next
step is to assess the Assess the significance and relevance of
structural model. the structural model relationships

• Figure shows a systematic

approach to the structural
model assessment. Assess the model’s explanatory power

Dr. Sachin Batra | NICMAR University, Pune

Collinearity
• The structural model regressions must be examined for potential
collinearity issues.
• This process is like assessing formative measurement models, but in
this case, the latent variable scores of the predictor constructs in a
partial regression are used to calculate the VIF values.
• VIF values above 5 are indicative of probable collinearity issues
among the predictor constructs, but collinearity problems can also
occur at lower VIF values of 3-5 (Mason and Perreault, 1991; Becker
et al., 2015).
• Ideally, the VIF values should be close to 3 and lower.
• If collinearity is a problem, a frequently used option is to create
higher-order models that can be supported by theory (Hair et al.,
2019 & 2018).

Dr. Sachin Batra | NICMAR University, Pune

Explanatory Power
• R2 of endogenous construct(s)
• R2 measures the variance, which is explained in each of the endogenous constructs
and is therefore a measure of the model’s explanatory power (Shmueli and Koppius,
2011).
• The R2 is also referred to as in-sample predictive power (Rigdon, 2012).
• It means how much change in the dependent variable can be accounted by one or
more independent variables.
• The R2 ranges from 0 to 1, with higher values indicating a greater explanatory power.
• As a guideline, R2 values of 0.75, 0.50, and 0.25 can be considered substantial,
moderate and weak (Henseler et al., 2009; Hair et al., 2011).

Dr. Sachin Batra | NICMAR University, Pune

Dr. Sachin Batra | NICMAR University, Pune
Effect size 2
(f )
• A variable in a structural model may be influenced by a number of different variables.

• Removing an exogenous variable can affect the dependent variable.

• F-square is the change in R-square when an exogenous variable is removed from the
model. It means how much an exogenous latent variable contributes to an endogenous
latent variable’s R-square value.

• The Cohen’s Indicator (f2 ) is obtained by the inclusion and exclusion of model constructs
(one by one). Just how useful each construct is for the adjustment model is evaluated.

• Values of 0.02, 0.15, and 0.35 are considered small, medium, and large respectively (Hair
et al., 2014).
Dr. Sachin Batra | NICMAR University, Pune
Significance and relevance of the path
coefficients
• Bootstrapping is used to determine statistical significance (Chin,
1998).
• If the confidence interval of path coefficient includes zero OR p-value
greater than 0.05, this indicates that the coefficient is not statistically
significant.
• Construct’s direct and indirect effect on a certain target construct via
one or more intervening constructs is relevant in the assessment of
mediating effects.
Dr. Sachin Batra | NICMAR University, Pune
Dr. Sachin Batra | NICMAR University, Pune
Mediation Effect

Dr. Sachin Batra | NICMAR University, Pune

Hair Jr, J. F., Hult, G. T. M., Ringle, C. M., Sarstedt, M., Danks, N. P., & Ray, S. (2021). Partial least squares structural equation modeling (PLS-SEM) using R: A
workbook. Dr. Sachin Batra | NICMAR University, Pune
Dr. Sachin Batra | NICMAR University, Pune
 Interpretation of Mediation
Constructs CB POSM
Path coeff. 95% BCa CI VIF Path coeff 95% BCa CI VIF
Indirect Effect
1. BIM 0.34 [0.19; 0.56]
Direct Effect
2. BIM 0.617 [0.44; 0.77] 1.25 0.278 [0.03; 0.49] 1.66
3. CB 0.55 [0.35; 0.74] 1.66
4. CPL 0.057 [-0.35; 0.17] 1.18
Moderation
Effect
CPL*BIM 0.031 [-0.18; 0.19] 1.06
Dr. Sachin Batra | NICMAR University, Pune
 Interaction/Moderation Effect
• When moderation is present, the strength or even the direction of a relationship
between two constructs depends on a third variable.

• In other words, the nature of the relationship differs depending on the values of
the third variable.

• As an example, the relationship between two constructs is not the same for all
customers, but differs depending on their income.

• As such, moderation can (and should) be seen as a means to account for

heterogeneity in the data.
Dr. Sachin Batra | NICMAR University, Pune
 Advanced Topics
• Non-linear effects • Higher Order
• Endogeneity Constructs
• Unobserved Heterogeneity • IPMA
• Moderating effect in case of • POS
formative model • CTA
• Multi Group Analysis • MICOM

Dr. Sachin Batra | NICMAR University, Pune

Thank You

Dr. Sachin Batra | NICMAR University, Pune