The research practice in management research is dominantly based on structural equation modeling (SEM), but almost exclusively, and often misguidedly, on covariance-based SEM. The purpose of this paper is to question the current research myopia in management research, because the paper adumbrates theoretical foundations and guidance for the two SEM streams: covariance-based and variance-based SEM; and improves the conceptual knowledge by comparing the most important procedures and elements in the SEM study, using different theoretical criteria.
The study thoroughly analyzes, reviews and presents two streams using common methodological background. The conceptual framework discusses the two streams by analysis of theory, measurement model specification, sample and goodness-of-fit.
The paper identifies and discusses the use and misuse of covariance-based and variance-based SEM utilizing common topics such as: first, theory (theory background, relation to theory and research orientation); second, measurement model specification (type of latent construct, type of study, reliability measures, etc.); third, sample (sample size and data distribution assumption); and fourth, goodness-of-fit (measurement of the model fit and residual co/variance).
The paper questions the usefulness of Cronbach's α research paradigm and discusses alternatives that are well established in social science, but not well known in the management research community. The author presents short research illustration in which analyzes the four recently published papers using common methodological background. The paper concludes with discussion of some open questions in management research practice that remain under-investigated and unutilized.
The author is grateful to Oriol Iglesias, Ming Lim, Fathima Saleem and Zoran Cajka for insightful comments and suggestions on previous versions of this manuscript. The author had valuable technical support from Verica Beslic. All mistakes and misunderstandings are the author's.
S. Davcik, N. (2014), "The use and misuse of structural equation modeling in management research: A review and critique", Journal of Advances in Management Research, Vol. 11 No. 1, pp. 47-81. https://doi.org/10.1108/JAMR-07-2013-0043
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