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Most empirical balanced scorecard (BSC) studies have shown a tendency to wrongly employ reflective indicators instead of the more theoretically suitable formative indicators. However, formative indicators are difficult to apply due to the lack of statistical software support and a standardized model testing method. The paper aims to discuss these issues.

This study empirically compares the reflective and formative measurement method with standardized model comparison criteria. After collecting 217 valid questionnaires from companies in South Korea, the authors applied a structural equation modeling technique to analyze the data.

The result shows that the formative measure provides greater validity for the corporate performance measurement using BSC. Further, this study shows the indicators’ relative influence on each BSC perspectives using the formative measure.

This study proved the usefulness of the formative measure analysis method and suggested its practical use, focusing on the indicators most useful in developing corporate strategies. In addition, the authors showed that formative indicators could be used in the corporate environment by overcoming the limitations of conventional studies that were confined to causal relationships with latent variables.

This study may be the pioneering work that compares formative and reflective indicators simultaneously, addressing the usefulness of formative measurement and its application validity in the existing empirical studies using reflective measurements.

Information and communications technology (ICT) offers enormous opportunities for individuals, businesses and society. The application of ICT is equally important to economic and non-economic activities. Researchers have increasingly focused on the adoption and use of ICT by small and medium enterprises (SMEs) as the economic development of a country is largely dependent on them. Following the success of ICT utilisation in SMEs in developed countries, many developing countries are looking to utilise the potential of the technology to develop SMEs. Past studies have shown that the contribution of ICT to the performance of SMEs is not clear and certain. Thus, it is crucial to determine the effectiveness of ICT in generating firm performance since this has implications for SMEs’ expenditure on the technology. This research examines the diffusion of ICT among SMEs with respect to the typical stages from innovation adoption to post-adoption, by analysing the actual usage of ICT and value creation. The mediating effects of integration and utilisation on SME performance are also studied. Grounded in the innovation diffusion literature, institutional theory and resource-based theory, this study has developed a comprehensive integrated research model focused on the research objectives. Following a positivist research paradigm, this study employs a mixed-method research approach. A preliminary conceptual framework is developed through an extensive literature review and is refined by results from an in-depth field study. During the field study, a total of 11 SME owners or decision-makers were interviewed. The recorded interviews were transcribed and analysed using NVivo 10 to refine the model to develop the research hypotheses. The final research model is composed of 30 first-order and five higher-order constructs which involve both reflective and formative measures. Partial least squares-based structural equation modelling (PLS-SEM) is employed to test the theoretical model with a cross-sectional data set of 282 SMEs in Bangladesh. Survey data were collected using a structured questionnaire issued to SMEs selected by applying a stratified random sampling technique. The structural equation modelling utilises a two-step procedure of data analysis. Prior to estimating the structural model, the measurement model is examined for construct validity of the study variables (i.e. convergent and discriminant validity).

The estimates show cognitive evaluation as an important antecedent for expectation which is shaped primarily by the entrepreneurs’ beliefs (perception) and also influenced by the owners’ innovativeness and culture. Culture further influences expectation. The study finds that facilitating condition, environmental pressure and country readiness are important antecedents of expectation and ICT use. The results also reveal that integration and the degree of ICT utilisation significantly affect SMEs’ performance. Surprisingly, the findings do not reveal any significant impact of ICT usage on performance which apparently suggests the possibility of the ICT productivity paradox. However, the analysis finally proves the non-existence of the paradox by demonstrating the mediating role of ICT integration and degree of utilisation explain the influence of information technology (IT) usage on firm performance which is consistent with the resource-based theory. The results suggest that the use of ICT can enhance SMEs’ performance if the technology is integrated and properly utilised. SME owners or managers, interested stakeholders and policy makers may follow the study’s outcomes and focus on ICT integration and degree of utilisation with a view to attaining superior organisational performance.

This study urges concerned business enterprises and government to look at the environmental and cultural factors with a view to achieving ICT usage success in terms of enhanced firm performance. In particular, improving organisational practices and procedures by eliminating the traditional power distance inside organisations and implementing necessary rules and regulations are important actions for managing environmental and cultural uncertainties. The application of a Bengali user interface may help to ensure the productivity of ICT use by SMEs in Bangladesh. Establishing a favourable national technology infrastructure and legal environment may contribute positively to improving the overall situation. This study also suggests some changes and modifications in the country’s existing policies and strategies. The government and policy makers should undertake mass promotional programs to disseminate information about the various uses of computers and their contribution in developing better organisational performance. Organising specialised training programs for SME capacity building may succeed in attaining the motivation for SMEs to use ICT. Ensuring easy access to the technology by providing loans, grants and subsidies is important. Various stakeholders, partners and related organisations should come forward to support government policies and priorities in order to ensure the productive use of ICT among SMEs which finally will help to foster Bangladesh’s economic development.

The purpose of this paper is to provide an understanding of the issues related to formative modeling and the implications for its use, including some practical suggestions on methods for utilizing causal indicators within models.

In order to understand and explore the issues relating to formative models, this paper explores both formative and reflective indicators that together address the basic approach to the causal relationship within measurement models in structural equations modeling. Process recommendations for formative model/variable conceptualization and development are presented as well as a discussion of several evaluative issues including identification and proportionality. Some of the main arguments for and against its use are also discussed.

While the literature on formative models stresses its contribution to behavioral sciences, perhaps its greatest contribution is the flexibility of choice that it provides researchers in the development of models to more accurately estimate the relationship under consideration.

The paper contributes to the on-going debate on the relative advantages and disadvantages of the formative and reflective approaches to modeling and examination. Although the pendulum has swung in recent years away from an almost singular focus on reflective models, both approaches provide useful and complementary tools to theoretical management research modeling.

While the conceptualization and operationalization of export performance has been receiving increased attention in the literature, practically all multi‐item measures of export performance available are based on reflective (effect) indicators. Explores an alternative measurement approach based on formative (causal) indicators and examines the implications of constructing an index rather than a scale of export performance. The aim is to assist researchers in choosing the appropriate measurement model for their needs when conducting substantive export performance studies.

In order to determine the status quo of PLS path modeling in international marketing research, we conducted an exhaustive literature review. An evaluation of double-blind reviewed journals through important academic publishing databases (e.g., ABI/Inform, Elsevier ScienceDirect, Emerald Insight, Google Scholar, PsycINFO, Swetswise) revealed that more than 30 academic articles in the domain of international marketing (in a broad sense) used PLS path modeling as means of statistical analysis. We assessed what the main motivation for the use of PLS was in respect of each article. Moreover, we checked for applications of PLS in combination with one or more additional methods, and whether the main reason for conducting any additional method(s) was mentioned.

The purpose of this paper is to conceptualize a suitable measure for the employee wellbeing construct and validate this tool in Indian workplace settings, especially with reference to IT/ITes and BFSI sectors.

This study is descriptive and cross-sectional in nature. The literature was first reviewed to identify the underlying probable dimensions of employee wellbeing and its corresponding items. These items were then subjected to elaborate discussions with experts from industry as well as academia. The index, thus, developed was administered to collect primary data from employees working in IT/ITeS and BFSI sectors based in Delhi-NCR. PLS SEM 3 was applied as employee wellbeing was construed as a first-order reflective second-order formative construct. Thereafter, it was subjected to suitable assessments of reliability and convergent validity.

The findings reveal that employee wellbeing can be conceptualized as a construct having four dimensions namely, purpose in life (PIL), work–life balance (WLB), job wellness (JW) and physical wellness (PW). It was also revealed that all the dimensions identified in the study capture different facets of the employee wellbeing and collectively define the construct; omission of any items may lead to change in the nature of the construct. This investigation is unique as it frames the index of employee wellbeing with specifications of a formative measurement model. To the best of the authors’ knowledge, no published study so far has measured EWB as a formative construct.

Many earlier studies have incorporated a unidimensional approach to individual wellbeing and lacked a crucial outlook of having multi-dimensional understanding of the employee wellbeing construct in the social and work context. Furthermore, this paper contributes not only to the existing body of knowledge in employee wellbeing, but also brings forth an important aspect of measurement model specification, i.e. formative measurement model by bringing the specific reasons for taking employee wellbeing as a formative concept.

This paper aims to develop a parsimonious and robust formative index for evaluating and measuring the brand relationship quality of automobile brands.

Survey questionnaires were used to collect empirical data from 395 car owners, out of which 362 samples were included in the final analysis. Partial least squares technique was used for index construction.

The empirical findings exhibit that the automobile brand relationship quality (ABRQ) index based on the final set of six indicators effectively captures the conceptual domain of brand relationship quality. In addition, the external validity check affirms positive and significant influence of ABRQ index toward enhancing customer loyalty.

ABRQ index can assist the brand managers and academicians for benchmarking and market strategy formulation while contributing to the limited literature on brand relationship quality. Also, this index having six-indicators can considerably reduce the time and effort of respondents for filling the questionnaires, in turn, improving response rates.

This study represents a novel attempt to formulate a brand relationship quality index using formative measurement indicators, and as per the authors’ knowledge, has not been attempted by prior researchers in this domain.

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 purpose of this paper is to enrich the understanding of how to form a multi-item assessment and what approaches can be applied for researchers.

This study proposes three ways to form a multi-item assessment (i.e. separate, formative and reflective approaches) and further makes a comparison between these three approaches.

The results show that multi-item assessment, particularly for formative and reflective constructs, has greater explanatory power in the research model. Finally, this study provides a roadmap to guide future researchers’ decision strategy for selecting multi-item assessments.

Due to the multi-faceted nature of research, using a single indicator to judge a scholar’s research performance will never reveal a multi-faceted picture and can easily result in measurement bias. In this vein, researchers should use different evaluation approaches and indicators to address various forms of research outcomes. However, prior studies rarely adopt multi-item scales to evaluate research performance and seldom discuss how to build a composite construct of research performance. This study aims to fill this research gap in the literature.

In today's globalized business environment, growing supply chain complexity (SCC) is arguably a major threat to the firm's business continuity with an adverse impact on the firm's competitive advantage and business performance. Researchers, though, investigated the impact of SCC drivers on a firm's operational performance, but the key question “Which supply chain complexity drivers severely impact the supply chain performance (SCP)?” remains largely unanswered from empirical research. The present study aims to decompose the SCC into four major constituting sub-categories (upstream, operational, downstream and external) to explore the causal impact of SCC drivers on SCP in direct and mediated manner.

The indicators applied for measuring constructs in the “Measurement model” are obtained from existing literature to increase the validity and reliability of the model. First, a pilot survey involving 25 SC managers from various manufacturing firms was conducted for indicator refinement and content validation. Second, the large-scale response data were collected through extensive surveys. This research explores the causality by testing the hypothesis applying Structural Equation Modeling (SEM) based on the responses received from 246 firms.

The study investigates the impact of SCC drivers on SCP through direct and mediation effect. The results indicate that upstream and operational SCC drivers play a mediating role in managing SCP. The findings reveal that upstream and operational SCC drivers adversely impact the SCP. Furthermore, the impact of downstream complexity on SCP is moderated through operational complexity drivers. The result explains the theoretical relation among SCC drivers supported by empirical validity.

The outcome offers practical relevance to supply chain (SC) managers in SCC and SCP management. Knowing the effect of SCC drivers among themselves and on SCP will facilitate the SC managers in devising the right strategies. The study provides a framework for prioritizing the resource in addressing the SCC issues among many.

The study addresses the apparent gap in the literature by modeling the impact of SCC drivers on SCP, which remained largely unexplored. First, it contributes to developing complex relationships among SCC drivers. Second, the direct and mediated causal effect of the SCC drivers individually and combinedly on SCP are explicated.