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Book part
Publication date: 18 September 2006

Nathan P. Podsakoff, Wei Shen and Philip M. Podsakoff

Since the publication of Venkatraman and Grant's (1986) article two decades ago, considerably more attention has been directed at establishing the validity of constructs…

Abstract

Since the publication of Venkatraman and Grant's (1986) article two decades ago, considerably more attention has been directed at establishing the validity of constructs in the strategy literature. However, recent developments in measurement theory indicate that strategy researchers need to pay additional attention to whether their constructs should be modeled as having formative or reflective indicators. Therefore, the purpose of this chapter is to highlight the differences between formative and reflective indicator measurement models, and discuss the potential role of formative measurement models in strategy research. First, we systematically review the literature on construct measurement model specification. Second, we assess the extent of measurement model misspecification in the recent strategy literature. Our assessment of 257 constructs in the contemporary strategy literature suggests that many important strategy constructs are more appropriately modeled as having formative indicators than as having reflective indicators. Based on this review, we identify some common errors leading to measurement model misspecification in the strategy domain. Finally, we discuss some implications of our analyses for scholars in the strategic management field.

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Research Methodology in Strategy and Management
Type: Book
ISBN: 978-0-76231-339-6

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Book part
Publication date: 28 September 2015

Md Shah Azam

Information and communications technology (ICT) offers enormous opportunities for individuals, businesses and society. The application of ICT is equally important to…

Abstract

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.

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E-Services Adoption: Processes by Firms in Developing Nations
Type: Book
ISBN: 978-1-78560-325-9

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Article
Publication date: 9 January 2017

Sungbum Park, Heeseok Lee and Seong Wook Chae

Most empirical balanced scorecard (BSC) studies have shown a tendency to wrongly employ reflective indicators instead of the more theoretically suitable formative

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Practical implications

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.

Originality/value

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.

Details

International Journal of Productivity and Performance Management, vol. 66 no. 1
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 1 December 1999

Adamantios Diamantopoulos

While the conceptualization and operationalization of export performance has been receiving increased attention in the literature, practically all multi‐item measures of…

Abstract

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.

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International Marketing Review, vol. 16 no. 6
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 9 October 2018

Ahmet Usakli and Kemal Gurkan Kucukergin

The purpose of this study is to review the use of partial least squares-structural equation modeling (PLS-SEM) in the field of hospitality and tourism and thereby to…

Abstract

Purpose

The purpose of this study is to review the use of partial least squares-structural equation modeling (PLS-SEM) in the field of hospitality and tourism and thereby to assess whether the PLS-SEM-based papers followed the recommended application guidelines and to investigate whether a comparison of journal types (hospitality vs tourism) and journal qualities (top-tier vs other leading) reveal significant differences in PLS-SEM use.

Design/methodology/approach

A total of 206 PLS-SEM based papers published between 2000 and April 2017 in the 19 SSCI-indexed hospitality and tourism journals were critically analyzed using a wide range of guidelines for the following aspects of PLS-SEM: the rationale of using the method, the data characteristics, the model characteristics, the model assessment and reporting the technical issues.

Findings

The results reveal that some aspects of PLS-SEM are correctly applied by researchers, but there are still some misapplications, especially regarding data characteristics, formative measurement model evaluation and structural model assessment. Furthermore, few significant differences were found on the use of PLS-SEM between the two fields (hospitality and tourism) and between the journal tiers (top-tier and other leading).

Practical implications

To enhance the quality of research in hospitality and tourism, the present study provides recommendations for improving the future use of PLS-SEM.

Originality/value

The present study fills a sizeable gap in hospitality and tourism literature and extends the previous assessments on the use of PLS-SEM by providing a wider perspective on the issue (i.e. includes both hospitality and tourism journals rather than the previous reviews that focus on either tourism or hospitality), using a larger sample size of 206 empirical studies, investigating the issue over a longer time period (from 2000 to April, 2017, including the in-press articles), extending the scope of criteria (guidelines) used in the review and comparing the PLS-SEM use between the two allied fields (hospitality and tourism) and between the journal tiers (top-tier and other leading).

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International Journal of Contemporary Hospitality Management, vol. 30 no. 11
Type: Research Article
ISSN: 0959-6119

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Article
Publication date: 1 January 2006

Adamantios Diamantopoulos

To clarify the nature of the error term in formative measurement models, as it had been misinterpreted in prior research.

Abstract

Purpose

To clarify the nature of the error term in formative measurement models, as it had been misinterpreted in prior research.

Design/methodology/approach

The error term in formative measurement models is analytically contrasted with the measurement errors typically found in reflective measurement models.

Findings

It is demonstrated that, unlike in reflective measurement, the error term in formative models is not measurement error but rather a disturbance representing non‐modeled causes. It is also shown that, under certain circumstances, the inclusion of an error term is not necessary/appropriate.

Research limitations/implications

Focus is only on first‐order measurement models; higher‐order specifications are not considered.

Originality/value

The paper helps researchers in their initial specification of formative measurement models as well as their evaluation of the subsequent model estimates, leading to better specifications for formative constructs.

Details

Journal of Modelling in Management, vol. 1 no. 1
Type: Research Article
ISSN: 1746-5664

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Article
Publication date: 2 July 2018

Paulo Duarte and Suzanne Amaro

This paper aims to discuss the estimation of PLS models with second-order formative constructs as existing research has mainly focused on second-order constructs with a…

Abstract

Purpose

This paper aims to discuss the estimation of PLS models with second-order formative constructs as existing research has mainly focused on second-order constructs with a reflective measurement.

Design/methodology/approach

Using a model grounded on Roger’s innovation diffusion theory applied to online travel shopping, an empirical application is used to assess and compare the different approaches used to estimate a formative second-order construct. The proposed model examines the innovations characteristics that have an impact on intentions to purchase travel online, using data from a convenience sample of 1,732 responses.

Findings

The findings show that all approaches produce similar results regarding the path coefficients, the predictive relevance of the model and the explained variance. The main differences between the approaches are related to the weights of the first-order constructs on the second-order construct and the significance of those weights. Several recommendations are made for researchers on which approach to use.

Originality/value

Since most research has focused on second-order constructs with a reflective measurement and there is limited research with formative second-order constructs, this paper provides a comparison of the different approaches typically used to estimate a formative second-order construct and present useful guidelines for researchers to decide the method to analyse a model with second-order constructs and how to assess formative second-order constructs.

研究目的

由于现有文章大多数研究反应性结构的二阶模型, 所以本论文讨论以二阶形成性结构的PLS模型。

研究设计/方法/途径

本论文以罗杰斯的创新扩散模型以基础, 应用其在在线旅游购物行为的研究。通过模型建立和背景研究, 多种预估形成性二阶结构的方法得以比较。建立的模型, 通过1,732份样本采样, 分析了各种对于在线购买旅游产品意图的创新特性。

研究结果

本论文发现, 各种方法产生相似的分析结果, 比如径路系数、模型预测相关、以及被解释变量等。三种方法的主要区别在于, 第一阶段结构与第二阶段结构的比重值, 还有这些比重值的显著程度。本论文结果对于未来理论采用哪种方法做出启示。

研究原创性/价值

由于大多数研究都集中在以反应性二阶结构分析, 很少的文章研究形成性二阶结构。因此, 本论文全面地比较了三种衡量形成性二阶结构的方法, 并且提供有效建议, 采用哪种方式以分析二阶结构, 以及如何衡量形成性二阶结构。

关键词

旅游业、在线旅游购物行为、偏最小二乘回归,二阶形成性结构

纸张类型

研究论文

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Article
Publication date: 13 June 2016

Annamaria Kubovcikova

The purpose of this paper is to test the properties of the well-known three-dimensional adjustment scale, established by Black et al. (1988, 1989), namely, its…

Abstract

Purpose

The purpose of this paper is to test the properties of the well-known three-dimensional adjustment scale, established by Black et al. (1988, 1989), namely, its dimensionality and internal consistency. The theoretical basis of the construct is discussed in relation to formative and reflective measurement approaches.

Design/methodology/approach

Two different ways of organizing the adjustment items (random/non-random) were used to assess the internal consistency of the three-dimensional adjustment scale. The quantitative analysis presented is based on survey data from 468 assigned expatriates in Asia that were subjected to an exploratory and confirmatory factor analysis as well as a structural equation modeling – more specifically the multiple indicators multiple causes model (MIMIC).

Findings

The study revealed that the adjustment construct is possibly misspecified, especially the general adjustment dimension, that was tested as a formative, not a reflective scale. There is further evidence that the wrong measurement approach skewed the coefficient that connects adjustment to performance, which is the key construct in its nomological network. Moreover, the dimensionality and the internal consistency of the scale are deteriorated to a large extent by randomization of the items. The findings highlight the need for a clear concept definition that would lead to an appropriate operationalization of the construct.

Originality/value

The study is one of the few rigorously testing the properties of a construct that has been used for almost 30 years, thus yielding some novel conclusions about its stability and consistency.

Details

Journal of Global Mobility, vol. 4 no. 2
Type: Research Article
ISSN: 2049-8799

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Book part
Publication date: 12 January 2021

G. T. Lumpkin and Robert J. Pidduck

Entrepreneurial orientation (EO) has emerged as a core concept in the field of entrepreneurship. Yet, there continue to be questions about the nature of EO and how best to…

Abstract

Entrepreneurial orientation (EO) has emerged as a core concept in the field of entrepreneurship. Yet, there continue to be questions about the nature of EO and how best to conceptualize and measure it. This chapter makes the case that EO has grown beyond its roots as a firm-level unidimensional strategy construct and that a new multidimensional version of EO is needed to capture the diverse manifestations and venues for entrepreneurial activity that are now evident around the world – global entrepreneurial orientation (GEO). Building on the five-dimension multidimensional view of EO set forth when Lumpkin and Dess (1996) extended the work of Miller (1983) and Covin and Slevin (1989, 1991), the chapter offers an updated definition of EO and a fresh interpretation of why EO matters theoretically. Despite earnest efforts to reconcile the different approaches to EO, in order to move the study of EO and the theoretical conversation about it forward, we maintain that as a group of scholars and a field, we need to acknowledge that two different versions of EO have emerged. Given that, we consider original approaches to measuring EO, evaluate formative measurement models, consider multiple levels of analysis, call for renewed attention to EO configurations, and discuss whether there is a theory of EO.

Details

Entrepreneurial Orientation: Epistemological, Theoretical, and Empirical Perspectives
Type: Book
ISBN: 978-1-83867-572-1

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Article
Publication date: 16 May 2019

Merie Kannampuzha and Kai Hockerts

Social entrepreneurship has become a growing field of research interest. Yet, past research has been held back by the lack of a rigorous measurement instrument. Rather…

Abstract

Purpose

Social entrepreneurship has become a growing field of research interest. Yet, past research has been held back by the lack of a rigorous measurement instrument. Rather than defining social entrepreneurship as an organizational form that a venture does or does not have, this paper agrees with Dees and Anderson (2006) that the construct is better thought of as a set of practices, processes and behaviors that organizations can engage in to a higher or a lesser degree. In other words, the construct is a set of behaviors that any organization can engage in. The purpose of the paper is to develop scale items to measure the construct of organizational social entrepreneurship (OSE).

Design/methodology/approach

Drawing on previous literature, this paper first develops and then validates scales for measuring OSE as a third-order formative construct. As its second order, the scale includes three components that capture the heterogeneity of the OSE concept: social change intention, commercial activity and inclusive governance.

Findings

The OSE scale is developed and tested through a sample of 182 nascent social enterprises from 55 different countries in the world and then revalidated using a second sample of 263 mature social enterprises from 6 European countries. Results suggest that the scale items exhibit internal consistency, reliability, construct validity and nomological validity.

Research limitations/implications

The scale presented here offers an important new venue for social entrepreneurship theorizing. First, it allows scholars to take a broad approach toward a diverse field and to study OSE behavior in any empirical field in which it may occur. Second, the scales also allow for more focused theorizing. Scholars are encouraged to delve into the antecedents of all three components presented here and to study the different performance effects they have in terms of likelihood to survive, growth rate or potential to achieve financial sustainability.

Originality/value

The paper develops a multidimensional construct for OSE. In particular, the authors propose scale items for three central components of social entrepreneurship, namely, social change intentions, commercial activities and inclusive governance. The scales thus measure the three formative dimensions identified by Dees and Anderson (2006) and Defourny and Nyssens (2010).

Details

Social Enterprise Journal, vol. 15 no. 3
Type: Research Article
ISSN: 1750-8614

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