Assessing perceived business success as a reflective-formative (Type II) second-order construct using PLS-SEM approach
This paper describes the process of validating “business success”as a reflective-formative construct using the Partial Least Squares-Structural Equation Modeling (PLSSEM) approach. This second-order latent variable has been operationalized with four dimensions, namely perceived financial performance...
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| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Universiti Malaysia Terengganu
2019
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| Subjects: | |
| Online Access: | http://eprints.sunway.edu.my/1125/1/Tehseen%20Assessing%20perceived%20business.pdf http://eprints.sunway.edu.my/1125/ http://jssm.umt.edu.my/ |
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| Summary: | This paper describes the process of validating “business success”as a reflective-formative construct using the Partial Least Squares-Structural Equation Modeling (PLSSEM) approach. This second-order latent variable has been operationalized with four dimensions, namely perceived financial performance, perceived non-financial
performance, perceived business growth and perceived performance relative to competitors. These dimensions do not share a common theme and are distinctly different.
Moreover, business success is a phenomenon that occurs with the presence of these constructs. In other words, it is formed by these constructs, thus, it should be measured
as a Type II reflective-formative second-order construct. This paper has established the reflective-formative relationship among first-order and second-order constructs.
We recommend considering and measuring business success as a reflective-formative second-order latent variable because the misspecification at second-order construct
could cause drastic changes in R 2 values and in the values of path coefficients. |
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