PLS 3- Choosing options for Moderators

Questions about the implementation and application of the PLS-SEM method, that are not related to the usage of the SmartPLS software.
Post Reply
MeiPeng
PLS User
Posts: 15
Joined: Sun May 24, 2015 3:33 am
Real name and title: LowMeiPeng

PLS 3- Choosing options for Moderators

Post by MeiPeng »

Dear Experts

I would like to confirm on the choice of moderator's option in PLS version 3.2.4.

If moderator is reflectively measured, choose Product Indicator

If moderator is formatively measured, choose Two Stage approach.

If sample size is less than 200, choose Orthogorization.

Are the above correct?
If yes, my next question is, what is the consequences, if I had opted for the wrong choice? For eg, my moderator is reflective measured, but, I had chosen Two Stage Approach?

If the above is incorrect, could you kindly let me know the correct choices?

Thanking all of you in helping me.

Regards
mei peng
jmbecker
SmartPLS Developer
Posts: 1282
Joined: Tue Mar 28, 2006 11:09 am
Real name and title: Dr. Jan-Michael Becker

Re: PLS 3- Choosing options for Moderators

Post by jmbecker »

Your categorization is not entirely correct.

If moderator (or predictor) is formatively measured, choose Two Stage approach. --> This is correct.

If moderator (and predictor) are both reflectively measured, you may choose any of the three approaches depending on your research objective:
  • Two-stage has the highest power, i.e. it is the most likely approach to detect a significant interaction.
  • Othogonalizing has the smallest bias, i.e., the interaction effect size is most correct and it maximizes the explained variance in your dependent variable.
  • Product-Indicator approach has no particular advantages.

If your sample size is small, you probably want to focus on statistical power and hence should choose the Two-Stage approach.

In general, the difference for reflective constructs is relatively small between the approaches. However, if you have a formative construct and choose the orthogonalization or product-indicator approach, you could get very misleading results.
Thus, I personally usually recommend the Two-Stage approach.

Reference:
Henseler, Jörg and Wynne W. Chin (2010). A Comparison of Approaches for the Analysis of Interaction Effects Between Latent Variables Using Partial Least Squares Path Modeling, Structural Equation Modeling, 17 (1), 82-109.
Dr. Jan-Michael Becker, BI Norwegian Business School, SmartPLS Developer
Researchgate: https://www.researchgate.net/profile/Jan_Michael_Becker
GoogleScholar: http://scholar.google.de/citations?user ... AAAJ&hl=de
Post Reply