Professional Documents
Culture Documents
1
THE EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT CAPABILITIES
ON FIRM COMPETITIVE ADVANTAGE AND MARKET PERFORMANCE
ii
ACKNOWLEDGEMENTS
iii
PLAGIARISM STATEMENT
iv
COPYRIGHT STATEMENT
v
TABLE OF CONTENTS
ACKNOWLEDGEMENTS..............................................................................iii
PLAGIARISM STATEMENT.........................................................................iv
COPYRIGHT STATEMENT............................................................................v
ABBREVIATION..............................................................................................xi
ABSTRACT.......................................................................................................xii
CHAPTER 1........................................................................................................1
INTRODUCTION...............................................................................................1
1.1. Overview...................................................................................1
CHAPTER 2........................................................................................................8
LITERATURE REVIEW..................................................................................8
2.1. Overview...................................................................................8
vi
2.2.1.2 Customer Relationship Upgrading Capability....................11
CHAPTER 3.....................................................................................................27
RESEARCH METHODOLOGY....................................................................27
3.1. Overview.................................................................................27
vii
3.6. Sample of the Research...........................................................32
CHAPTER 4......................................................................................................42
4.1 Overview................................................................................42
CHAPTER 5.....................................................................................................56
5.1 General....................................................................................56
5.5 Conclusion..............................................................................58
REFERENCES..................................................................................................60
APPENDIX........................................................................................................71
viii
LIST OF TABLES
Table 1 Details of Measurement Items.............................................................................34
Table 2 Summary Guidelines for Measurement Model Evaluation.....................38
Table 3: Summary Guidelines for Structural Model Evaluation..........................40
Table 4 Respondents Information.........................................................................43
Table 5 Factor Loadings.......................................................................................45
Table 6 Results of Internal Consistency...............................................................46
Table 7 AVE value...............................................................................................47
Table 8 Fornell-Larcker Criterion........................................................................47
Table 9 Cross Loadings........................................................................................48
Table 10 Heterotrait-Monotrait Ratio (HTMT)....................................................49
Table 11 Outcomes of the Collinearity Evaluation..............................................50
Table 12 Outcome of R2 and Q2 Values...............................................................52
Table 13 Outcomes of the f2 effect sizes..............................................................53
Table 14 Path Coefficient and Hypothesis Testing..............................................54
ix
LIST OF FIGURES
x
ABBREVIATION
xi
ABSTRACT
This research investigates the impact of Instagram Reels content types on
consumer behavior, particularly focusing on brand attitude and purchase
intention. With the burgeoning influence of social media in marketing, this study
zeroes in on how different formats of Reels content—social, entertainment,
informational, and remunerative—affect perceived usefulness and enjoyment,
and subsequently, consumer brand perceptions and purchase behaviors. A
comprehensive literature review establishes the groundwork, detailing the
evolving landscape of Instagram as a marketing platform and identifying gaps in
current understanding, especially regarding the unique features of Reels. The
methodology, grounded in the positivist research paradigm, employs a
quantitative approach to test hypotheses derived from the Technology
Acceptance Model (TAM) and Uses and Gratifications Theory (UGT). The
research employs Partial Least Squares Structural Equation Modeling (PLS-
SEM) for data analysis, drawing on a sample of frequent Instagram users,
predominantly from younger demographics. The study aims to provide strategic
insights for brands on optimizing Reels content for marketing and contributes to
academic discussions on social media's evolving role in consumer engagement.
This research addresses a significant gap in contemporary marketing literature,
offering both theoretical and practical implications for leveraging Instagram
Reels in digital marketing strategies.
xii
CHAPTER 1
INTRODUCTION
1.1. Overview
1
music, and various effects. The strategic use of Reels can significantly
enhance brand visibility and audience engagement. Key benefits include
increased engagement, as the Instagram algorithm actively promotes Reels
content; the ability to stand out, especially for brands with smaller followings
through effective hashtag usage; and the opportunity to showcase a brand's
personality within the concise 3-30 second format of Reels. Moreover, Reels
offers a platform for brands to resonate with their target audience through
authentic and tailored content, moving away from hard selling to crafting a
relatable brand voice. The in-app functionalities of Reels simplify content
creation and editing, presenting a nearly standalone application experience.
Brands can repurpose Reels content across various social media platforms,
enhancing content reach. Notably, the viral potential of trending Reels
presents a significant opportunity for exponential audience growth, driven by
popular trends, songs, and effects. These features collectively underline the
transformative role of Instagram Reels in contemporary brand marketing
strategies.
1.3 Problem Statement
2
impedes the ability of brands to optimize Reels content for maximizing sales.
The aim of this study is to address this problem by developing and testing a
theoretical model of how Reels content types influence purchase intention
through perceived enjoyment, usefulness and brand attitude. The findings will
provide strategic guidance to brands on effective Reels content strategies for
strengthening consumer brand perceptions and driving purchase behavior.
This will expand academic understanding of optimizing new social video
platforms for marketing impact.
1.4 Research Objectives and Research Questions
1.4.1 Research Questions
3
it bridges a crucial gap in existing literature by providing a deeper
understanding of Reels as a novel format in social media marketing. The
study meticulously develops and tests a conceptual model to explore how
various types of Reels content influence consumer purchase intentions,
mediated by perceived enjoyment and brand attitude. This approach offers
fresh insights into the distinct effects of ephemeral video content on
consumer behavior, distinguishing Reels from traditional Instagram posts.
The research enriches academic discourse by integrating concepts from
marketing and information systems, such as perceived enjoyment, usefulness,
and content typology, offering a comprehensive view of the interplay
between consumer behavior and digital platform engagement.
4
1.7 Scope and Limitation
5
1.8 Research Structure
Chapter I. Introduction
This initial segment sets the stage for the investigation by outlining
the focus on the dynamics of Instagram Reels in shaping consumer behavior.
It delves into identifying the research problem, formulating specific
objectives, and articulating the study's scope and inherent limitations. The
chapter concludes by delineating the overall structure and progression of the
research.
Chapter II. Literature Review
6
CHAPTER 2
LITERATURE REVIEW
2.1. Overview
7
Expanding this concept within the vibrant and visually
stimulating environment of Instagram Reels, social content takes on a
multifaceted character. This involves interactive polls, user-generated
responses to trending challenges, and conversational elements like Reaction
Reels and narrative invitations that draw personal stories into the public
sphere. Features like duets and hashtags further integrate individual
contributions into a broader community narrative, fostering a sense of
collective creativity and engagement (Muntinga et al., 2011).
8
adapts to the platform’s visually stimulating and dynamic nature. Brands
leverage the short-form video format to present exclusive promotions,
product sneak peeks, and interactive contests. These elements are tailored to
the Reels environment to create a sense of urgency and exclusivity, tapping
into the platform's swift and transitory nature. This approach aligns with the
understanding that the appeal of tangible rewards can significantly influence
consumer behavior by tapping into the fundamental human desire for benefit
and gain (Wang et al., 2003; Wood et al., 2013).
9
to grasp. It may contain brief lessons, product demos, or updates about
the newest product releases, all packaged in a manner that is natural to
Instagram's fast-paced, visually rich environment.
The efficacy of informative material on Instagram resides on
its capacity to offer important stuff rapidly. The combination of subtitles,
on-screen text, and dynamic images may boost message clarity and recall.
By leveraging the strengths of Instagram Reels, brands can create bite-
sized, informative content that is not only educational but also engaging,
increasing the likelihood of viewers taking the desired action, such as
visiting a website or making a purchase (Muntinga et al., 2011; De Vries
et al., 2012).
2.2.1.4 Instagram Reels Entertainment Content
Entertainment content type on Instagram Reels, especially in
the context of brand or product promotion, is a creative combination of
entertainment, creativity, and marketing message. This content genre is
differentiated by its concentration on bringing enjoyment and
entertainment to the viewer, frequently via comedy, narrative, and unique
graphics (Muntinga et al., 2011). The fundamental objective is to attract
and engage the audience, generating a lasting and favorable relationship
with the brand (Cvijikj and Michahelles, 2013). Entertainment content in
this context is created not merely to be entertaining and interesting, but
also to discreetly reinforce the consumer's favorable attitude towards the
brand, hence driving continued involvement with the company's content
(Taylor, Lewin, and Strutton, 2011).
In case of Instagram Reels, entertainment content takes use of
the platform's potential to generate quick but dramatic films that engage
emotionally with viewers. This includes trending challenges, comedic
skits, and visually engaging storylines that are conducive to sharing,
liking, and commenting—key actions that amplify brand reach and
10
engagement. Instagram Reels facilitates a connection with the audience
through content that is relatable and enjoyable, making it stand out in a
highly competitive social media landscape.
The true strength of Instagram Reels' entertainment content lies
in its ability to seamlessly weave brand-centric messages within appealing
and engaging narratives. This content type is not overtly promotional but
rather integrates brand elements within the entertainment context, making
it more palatable and memorable to the audience. This subtle integration is
key to the effectiveness of entertainment content on Instagram Reels, as it
not only satisfies the entertainment needs of the audience but may also
fosters a positive brand attitude in a subtle yet powerful manner. The
blend of creative storytelling, humor, and visual appeal, aligned with the
brand's identity and message, is crucial in engaging users in a manner that
is both authentic and enjoyable. This approach not only enhances brand
image but also potentially influences consumer behavior, leveraging the
platform's visual storytelling strengths and algorithm preferences for
highly engaged content (Muntinga et al., 2011; Taylor, Lewin, and
Strutton, 2011; Raney et al., 2003).
11
improved career prospects or social status). From a terms of job
performance enhancement (Davis, 1989), later, Venkatesh and Davis
(2000) expanded by suggesting that users evaluate technologies based on
the perceived improvements they offer in various aspects of their lives,
not just work-related tasks. This broadens the concept to encompass any
perceived benefit from using a technology.
12
Willemsen et al. (2011) provide a more nuanced view by
examining how content characteristics impact perceived usefulness in
online reviews. Their findings indicate that argumentation quality, review
valence, and the presence of expertise claims are significant predictors of
perceived usefulness. Applied to Instagram Reels, this suggests that the
way information is presented (its clarity, argumentation, and perceived
expertise) significantly affects users' perceptions of product’s usefulness.
13
appear via numerous sorts of content, such as visually stunning
photographs, interactive stories, and relevant or entertaining Reels.
14
influence of these content types on brand attitude is crucial, as it directly
impacts purchase intention, bridging the gap between brand perception
and consumer action (Hwang et al., 2021). Thus, brand attitude can be
viewed as the evaluative summary of a brand formed by consumers'
interactions with various Instagram Reels content, influencing their
intention to purchase.
15
Theory of Reasoned Action (TRA) and posits that the actual use of
technology is influenced by behavioral intentions, attitudes, perceived
usefulness, and perceived ease of use (Davis et al., 1989; Fishbein &
Ajzen, 1975). TAM has been a seminal framework in the field of
information systems, illuminating the factors that drive technology
acceptance and usage.
16
Technology Acceptance Model (TAM) for being incomplete and lacking
specifics. They argue that TAM should be extended and adapted to
particular contexts and situations by incorporating additional relevant
variables. Therefore, my thesis aim to expand this model into marketing
field, specifically at how the instagram reel’s content can affect PU, PE,
and then how PU, PE can effect the Brand Attitude and later the purchase
intention.
17
understanding the active role of audiences in media consumption,
particularly within the social media landscape. UGT posits that
individuals use media to fulfill specific needs, ranging from knowledge
enhancement, entertainment, and relaxation to social interaction and
reward (Katz, 1959; Blumler & Katz, 1974; Ko et al., 2005). This theory
emphasizes the audience's proactive role in seeking, identifying with, and
utilizing media to satisfy these gratifications (Katz and Foulkes, 1962; Ku
et al., 2013). In social media contexts such as instagram, this translates
into user engagement behaviors, driven by underlying motivations such as
remuneration, information seeking, social interaction, and entertainment
(Whiting & Williams, 2013; Cvijikj & Michahelles, 2013; Tri D.Le,
2018), which are crucial for understanding the appeal of platforms like
Instagram Reels. Furthermore, UGT underscores the necessity of content
creation that caters to these individual gratifications to foster stronger
engagement and loyalty (Malthouse et al., 2013; Swanson, 1987). This
framework has evolved to address the nuances of consumer behavior in
digital and social media, highlighting the dynamic interplay between user
motivations and media content, thus offering a comprehensive lens for
examining contemporary media consumption patterns (Smock et al., 2011;
Muntinga et al., 2011). However, critiques of UGT often point to its broad
and sometimes vague conceptual framework (Ruggiero, 2000), prompting
a shift towards more nuanced understandings of media behavior. This
includes differentiating between 'gratifications sought' (motivations) and
'gratifications obtained' (outcomes), aligning UGT with goal-directed
behavior psychology (Rubin, 2002).
18
hand, the gratifications obtained by users are multifaceted. Enhanced
Brand Perception and Increased Purchase Intention are significant
outcomes, where engaging content shapes consumer’s attitude about brand
and boosts likelihood of purchase. Social Gratification, through
community and belonging, and Knowledge Acquisition, via informational
content, align with UGT research and users' information-seeking motives
(Whiting & Williams, 2013; Tri D. Le, 2018). Additionally, Enjoyment
and Entertainment from engaging content (Muntinga et al., 2011), along
with Economic Rewards from remunerative content (Cvijikj &
Michahelles, 2013), highlight the platform’s impact on user interaction
and brand-related behaviors. These gratification obtains could be a good
source to analyze how the content type of instagram can affect to
perceived usefulness of products and perceived enjoyment.
19
Literature suggests that informational content is highly valued
by users, as it contributes directly to the utility they derive from the media
(Willemsen et al., 2011). The clarity, argumentation quality, and perceived
expertise embedded in informational Reels are likely to increase the
perceived usefulness of the products, thus fulfilling the 'gratifications
obtained' from the consumption of such content (Willemsen et al., 2011).
These gratifications align with the expectancy value theory (EVT), which
postulates that content attributes directly influence attitudes and behavioral
intentions, based on their utility (Fishbein and Ajzen, 1975). From a
discussion above, the hypothesis is advanced:
H1a: Instagram Informational Reels content are positively
impact on the Perceived Usefulness
20
Furthermore, the concept of perceived usefulness, as outlined in
the Technology Acceptance Model (TAM), is grounded in expectancy
theory, which relates directly to the perceived benefits of a behavior, such as
engaging with remuneration content (Davis, 1989; Chau, 1996). When users
perceive that engaging with such content will lead to financial rewards or
savings, the perceived usefulness of the product is heightened (Venkatesh &
Davis, 2000). On the other hand, the expectation of rewards fulfills a dual
role—meeting immediate economic needs and enhancing the product's
perceived value—leading to a greater intention to engage with the brand
(Willemsen et al., 2011). Thus, this hypothesis is proposed:
21
Willemsen et al. (2011) emphasize that the perceived usefulness
of online content is shaped by argumentation quality and the presence of
expertise claims. In the context of Instagram Reels, social content often
contains such persuasive elements, as users naturally discuss the pros and
cons of products, share their expertise, and provide recommendations. The
cumulative effect of these interactions is an enhanced perception of product
utility derived from the social content. From a discussion above, the
hypothesis is advanced:
H1c: Instagram Social Reels content are positively impact on
the Perceived Usefulness
22
development:
H1d: Instagram Entertainment Reels content are positively
impact on the Perceived Usefulness
23
with the brand's offerings (Taylor, Lewin, & Strutton, 2011).
Moreover, when consumers engage with informative content
that is well-integrated into the fast-paced and visually compelling format of
Reels, it can fulfill cognitive and emotional needs—resulting in an enjoyable
learning experience (Muntinga et al., 2011). Thus, the pleasure consumers
derive from the content is influenced not only by its entertainment value but
also by its capacity to inform and enlighten. Given this synthesis of literature
and theory, the following hypothesis is posited:
H2a: Instagram Informational Reels content about brand's
products positively impacts the Perceived Enjoyment.
24
Michahelles, 2011).
Furthermore, this enhancement in perceived enjoyment can be
attributed to the expectancy value theory (EVT) within the context of UGT.
EVT posits that the perceived benefits of an action or behavior influence
individuals' attitudes and behaviors (Fishbein and Ajzen, 1975). Thus, when
consumers perceive remuneration content as beneficial, it positively impacts
their enjoyment of the product featured within these Reels. Therefore, based
on these theoretical underpinnings and empirical evidence, it can be
hypothesized that:
H2b: Instagram Remuneration Reels content about brand's
products positively impacts the Perceived Enjoyment.
25
is pivotal in this context (Davis et al., 1992). The interactive and communal
aspects of social content on Instagram Reels contribute significantly to this
enjoyment. By engaging with user-generated content, consumers gain
insights and personal stories that enrich their experience with the product,
thus elevating the perceived enjoyment. Furthermore, the literature suggests
that the integration of social content in Instagram Reels enhances perceived
product utility through social interactions and information exchange
(Muntinga et al., 2011; De Vries et al., 2012). These interactions contribute
to a deeper, more enjoyable product experience, affirming the positive impact
of social content on perceived enjoyment. Therefore, a hypothesis is
proposed:
H2c: Instagram Social Reels content about brand's products
positively impacts the Perceived Enjoyment.
26
perceived enjoyment of the product (De Vries et al., 2012; Cvijikj &
Michahelles, 2013).
Furthermore, the intrinsic pleasure derived from engaging with
entertainment content on Instagram Reels influences the consumer's
emotional connection with the brand. This aligns with Davis et al. (1992),
who identified perceived enjoyment as an intrinsic motivator in technology
acceptance and user interaction. The entertainment value of Instagram Reels
thus not only meets the entertainment gratification sought by users but also
enhances the informational gratifications obtained, resulting in an elevated
perception of the product's value and enjoyment (De Vries et al., 2012;
Willemsen et al., 2011). Given this synthesis of literature and theory, the
following hypothesis is posited:
H2d: Instagram Entertainment Reels content about brand's
products positively impacts the Perceived Enjoyment.
27
found to influence attitudes positively (Koufaris, 2002; Li, Chau, & Lou,
2005).
28
and Dwivedi (2017) emphasize that marketing activities, including those on
social media platforms, can significantly influence customers' brand attitudes.
They highlight the role of perceived usefulness in shaping attitudes towards
brands, suggesting that when users find content on platforms like Instagram
Reels useful, it positively affects their attitude towards the brand. This is
supported by Biehal, Stephens, and Curlo (1992) and Sallam & Algammash
(2016), who found a significant relationship between perceived usefulness
and positive brand attitude. In line with UGT, which posits that media usage
is driven by the gratifications users seek and obtain (Katz, 1959), the
perceived usefulness of Instagram Reels content can be seen as a gratification
that consumers seek. This is particularly relevant for content that is
informative, educational, or offers tangible benefits like promotions or
insider knowledge (Cvijikj & Michahelles, 2013). Drawing from these
diverse strands of research, the hypothesis below will be proposed:
H4: Perceived Usefulness can have a positively impact to Brand
Attitude
2.5.5 Brand Attitude and Purchase Intention
The According to the theory of reasoned action, brand attitude is
a key predictor of purchase intentions (Fishbein & Ajzen, 1975). Brand
attitude refers to consumers’ overall evaluation and sentiments toward a
brand. As consequence of this brand attitude leads to forming actions (Spears
and Singh, 2004), therefore leading to intention to buy (Bagozzi, 1981;
Spears and Singh, 2004) whether it is an online platform (Haenlein and
Kaplan, 2009) or conventional means (Shimp, 1981) of marketing, attitudes
hold a very essential position in strategic planning. There are several
theoretical explanations for the positive effect of brand attitude on purchase
intentions:
Firstly, a positive brand attitude signifies greater perceived
brand quality, trustworthiness, and satisfaction (Keller, 1993). The
cumulative favorable associations that shape brand attitude transfer to
29
perceptions about anticipated brand benefits and ability to meet customer
needs. This results in greater willingness to obtain expected rewards through
purchases.
Secondly, a favorable brand attitude strengthens motivations
and goals to purchase the brand, according to the theory of planned behavior
(Taylor & Todd, 1995). Consumers seek to achieve desired identity
enhancement or social approval goals linked to well-liked brands through
acquiring their products. Positive brand attitudes also elicit approach
behaviors toward the brand and its offerings (Pham & Avnet, 2004).
Finally, strong brand attitudes engender brand loyalty and
equity, reducing perceptions of risk and uncertainty in purchasing those
brands (Delgado-Ballester & Munuera-Alemán, 2005). The goodwill stored in
a favorable brand attitude acts as a buffer against worries about product
performance, social evaluation, or economic risks. This enhances purchase
intentions.
In summary, by improving brand perceptions, approach
motivations, and mitigating product uncertainty, a positive brand attitude is
likely to increase consumers' willingness and intentions to purchase the
brand's offerings. Thus, it is hypothesized:
H5: Brand Attitude has a significant positive influence on
Purchase Intentions for the brand's products
30
Figure 1 Proposed Model of Instagram Reels Content Type on Brand Attitude
and Purchase Intention
31
CHAPTER 3
RESEARCH METHODOLOGY
3.1. Overview
32
and their interrelations, frequently specified in hypotheses, provide the core
of quantitative analysis. The preference for a quantitative strategy in this
dissertation originates from its ability to delineate patterns and lucidly
elucidate variable interrelationships. Additionally, the quantitative method
augments the credibility of the findings through the evaluation of the validity
and reliability of scales for measurement.
The quantitative data utilized to evaluate the proposed hypotheses in
this study are obtained by a survey and then statistically evaluated. The
motivation for utilizing the survey approach is its inherent advantages, as
described by Jankowicz (2005); surveys allow for the engagement with a
wide range of participants and facilitate data gathering on multiple topics
within a confined timeframe. Furthermore, surveys prove helpful when
dealing with a big population size and are valued for their cost and time
efficiency, their capacity to avoid researcher bias, and their effectiveness in
testing hypotheses. Specifically, this study tries to evaluate distinct
hypotheses and the interactions among independent and dependent variables.
Consequently, a survey methodology is adopted.
3.3. Research Process
33
acquired through these surveys were then inputted and analysed using
SmartPLS 4.0 software. In the final part of the research process, the author
collated and finalised the study, combining findings, limitations, and
applications, all supported by statistical evidence produced from software
reports.
34
Problem findings
Research objectives
Literature Review
Development of Hypothesis
Research Design
Design Questionnaire
Collect Data
35
3.4. Sample Size and Population
The target population for this study would be frequent Instagram
users who regularly view branded content on Reels, constrained to a specific
geographic region, age range, and product/brand interests based on the
research goals. Ideal participants would be demographics of people who
actively engage with brands through Reels content and could provide insights
into how this social video format influences their perceptions, attitudes, and
purchase intentions. The study chose a choice sample approach, in spite of
time and resource limits inherent to the investigation. This approach is
beneficial when the population is easily available to researchers (M.Given,
2008). Convenience sampling is applied in preliminary research attempts to
yield a gross estimate of outcomes, without the accompanying time or expense
constraints of picking a random sample. It was employed in order to connect
with respondents who were most aligned with the study's objectives and were
readily accessible to participate in the survey (Iacobucci & Churchill, 2010).
3.5. Process of Data Collection
36
had utilized reels as a marketing medthod. Given the problem of collecting a
valid sample, the researcher thoroughly reviewed employment descriptions to
assure that the surveys reached the relevant persons.
37
3.7. Design Questionaire and Scale Development
38
SC3 The content on Reels prompts me to share and engage with others.
Instagram Reels Informational Content IC1 The information provided in the Reels is helpful and enlightening.
Type
These Reels effectively educate me about the brand's products or
IC2
services.
Instagram Reels Remuneration Content The Reels content offers appealing incentives, such as discounts or
RC1
Type rewards.
39
The data was processed with SPSS 26.0 and SmartPLS 4.0 software.
The first step includes data preparation for the identification of missing
values, outliers, and evaluation of the data distribution using SPSS 26.0.
Following this, the data was used to test the given hypotheses using the Partial
Least Square (PLS) approach through SmartPLS.
The major purpose of this research was to explore the linkages and
implications of the essential elements, namely Instagram Reels Content Type
on Perceived Usefulness and Perceived Enjoyment, then Perceived Usefulness
and Perceived Enjoyment affect to Brand Attitude and Customer Win-back
Capabilities. PLS-SEM was regarded ideal since it is adequate for
sophisticated models of structure and helps establish the model's primary
driving variables.
In this research, given the adequate sample size and the acceptable
number of indicators for each variable, the possible bias is considered to be
minimal. Also, PLS-SEM was recommended for its adaptability in handling
complicated models, which is especially pertinent in this investigation given
40
the many markers.
(iii) The intricate character of the suggested model (Hair et al., 2022).
41
Reliability (CR) is preferred for evaluating the internal consistency of
measurement items (Chin, 1998b). While both CA and CR measure internal
consistency, CR is more suitable due to varying indicator loadings.
Conversely, CA might underrate the reliability of internal consistency as it
assumes uniform distribution of weights among indicators, a limitation
highlighted by Werts, Linn, & Jöreskog (1974). Both CR and CA values range
from 0 to 1, with higher values indicating greater reliability. Values ranging
from 0.60 to 0.70 are considered adequate for preliminary research, whereas
values between 0.70 and 0.90 are suitable for more advanced research. Values
exceeding 0.90, especially above 0.95, are generally not preferred as they
might indicate item redundancy, echoing similar queries (Hair et al., 2022).
42
Discriminant validity Evaluation: Discriminant validity assesses
how distinctly a construct is differentiated from others in the model. The
Fornell-Larcker criterion is a common method for this, involving comparing
the square root of a construct’s AVE with its correlations to other constructs
(Fornell & Larcker, 1981). An indicator should load more highly on its own
construct than on others. However, Henseler et al. (2015) argue that simple
cross-loading analysis might not adequately detect significant discriminant
validity breaches. They propose using the Heterotrait-Monotrait Ratio
(HTMT) of correlations as a more accurate measure. HTMT estimates the true
correlation between two constructs, ideally not approaching 1, to maintain
discriminant validity.
Table 1 Summary Guidelines for Measurement Model Evaluation
Rule of thumb
Internal 0.6 < CA/CR < 0.7 (exploratory research)
consistency 0.7 < CA/CR < 0.9 (advanced research)
reliability CA/CR > 0.9 indicative of redundant items
CA/CR < 0.6 lack of internal consistency reliability
43
guidelines set by Urbach & Ahlemann (2010).
44
Rule of thumb
R2 Value Evaluates the proportion of variance in an endogenous construct
attributed to its predictors. With a range from 0 to 1, values
closer to 1 suggest greater explanatory strength.
Path Coefficient Reflects the proposed associations between constructs. Notable
thresholds are set at 1.65 (indicating 10% significance), 1.96 (5%
significance), and 2.57 (1% significance).
Predictive relevance Measured by the blindfolding method, a Q2 value exceeding zero
indicates the model's ability to predict.
Effect size Assesses the influence of an exogenous construct on an
endogenous one. f2 values are categorized as 0.02 (small impact),
0.15 (medium impact), and 0.35 (large impact).
VIF Detects potential collinearity within formative construct indicators.
A VIF value above 5 points to significant collinearity, while
optimal VIF values should ideally be around or below 3.
45
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