Testing moderating effects in PLS path models with composite variables

Georg Fassott, Jörg Henseler, Pedro S. Coelho

Research output: Contribution to journalArticleAcademicpeer-review

32 Citations (Scopus)

Abstract

Purpose The purpose of this paper is to explain how to model moderating effects of composites using partial least squares (PLS) path modeling. It provides the methodological underpinning of moderating effects in general and describes the various approaches for forming the interaction term, i.e., the product indicator approach, the two-stage approach, and orthogonalization. Design/methodology/approach The paper discusses the use of standardized vs unstandardized construct scores and introduces spotlight analysis as a useful way to report findings. Findings Researchers should rely on unstandardized estimates when analyzing moderating effects. Centering or orthogonalization can help improve the interpretability of path coefficients. Practical implications PLS software implementations should facilitate unstandardized estimates. Originality/value This paper formulates step by step guidelines for analyzing moderating effects of composites using PLS path modeling. It is the first to propose spotlight analysis for PLS path modeling.
Original languageEnglish
Pages (from-to)1887-1900
JournalIndustrial management & data systems
Volume116
Issue number9
DOIs
Publication statusPublished - 2016

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Composite materials
Testing
Moderating effect
Partial least squares
Path model
Modeling
Interaction terms
Coefficients
Design methodology
Software

Keywords

  • IR-101907
  • METIS-318585

Cite this

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Testing moderating effects in PLS path models with composite variables. / Fassott, Georg; Henseler, Jörg; Coelho, Pedro S.

In: Industrial management & data systems, Vol. 116, No. 9, 2016, p. 1887-1900.

Research output: Contribution to journalArticleAcademicpeer-review

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AU - Fassott, Georg

AU - Henseler, Jörg

AU - Coelho, Pedro S.

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AB - Purpose The purpose of this paper is to explain how to model moderating effects of composites using partial least squares (PLS) path modeling. It provides the methodological underpinning of moderating effects in general and describes the various approaches for forming the interaction term, i.e., the product indicator approach, the two-stage approach, and orthogonalization. Design/methodology/approach The paper discusses the use of standardized vs unstandardized construct scores and introduces spotlight analysis as a useful way to report findings. Findings Researchers should rely on unstandardized estimates when analyzing moderating effects. Centering or orthogonalization can help improve the interpretability of path coefficients. Practical implications PLS software implementations should facilitate unstandardized estimates. Originality/value This paper formulates step by step guidelines for analyzing moderating effects of composites using PLS path modeling. It is the first to propose spotlight analysis for PLS path modeling.

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