The assessment of the performance of covariance-based structural equation modeling and partial least square path modeling

Zainudin, Awang and Ahmad Nazim, Aimran and Sabri, Ahmad and Asyraf, Afthanorhan (2017) The assessment of the performance of covariance-based structural equation modeling and partial least square path modeling. In: 3rd ISM International Statistical Conference 2016: Bringing Professionalism and Prestige in Statistics, ISM 2016, 9-11 August 2016, University of Malaya Kuala Lumpur.

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Abstract

Structural equation modeling (SEM) is the second generation statistical analysis technique developed for analyzing the inter-relationships among multiple variables in a model. Previous studies have shown that there seemed to be at least an implicit agreement about the factors that should drive the choice between covariance-based structural equation modeling (CB-SEM) and partial least square path modeling (PLS-PM). PLS-PM appears to be the preferred method by previous scholars because of its less stringent assumption and the need to avoid the perceived difficulties in CB-SEM. Along with this issue has been the increasing debate among researchers on the use of CB-SEM and PLS-PM in studies. The present study intends to assess the performance of CB-SEM and PLS-PM as a confirmatory study in which the findings will contribute to the body of knowledge of SEM. Maximum likelihood (ML) was chosen as the estimator for CB-SEM and was expected to be more powerful than PLS-PM. Based on the balanced experimental design, the multivariate normal data with specified population parameter and sample sizes were generated using Pro-Active Monte Carlo simulation, and the data were analyzed using AMOS for CB-SEM and SmartPLS for PLS-PM. Comparative Bias Index (CBI), construct relationship, average variance extracted (AVE), composite reliability (CR), and Fornell-Larcker criterion were used to study the consequence of each estimator. The findings conclude that CB-SEM performed notably better than PLS-PM in estimation for large sample size (100 and above), particularly in terms of estimations accuracy and consistency.

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