Studying and modeling theoretical concepts is a cornerstone activity in information systems (IS) research. Researchers have been familiar with one type of theoretical concept, namely behavioral concepts, which are assumed to exist in nature and measured by a set of observable variables. In this paper, we present a second type of theoretical concept, namely forged concepts, which are designed and assumed to emerge within their environment. While behavioral concepts are classically operationalized as latent variables, forged concepts are better specified as emergent variables. Additionally, we propose composite-based structural equation modeling (SEM) as a subtype of SEM that is eminently suitable to analyze models containing emergent variables. We shed light on the composite-based SEM steps: model specification, model identification, model estimation, and model assessment. Then, we present an illustrative example from the domain of IS research to demonstrate these four steps and show how modeling with emergent variables proceeds.
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