Should I use reflective or formative construct?

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Marsha Sabrina
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Real name and title: Marsha Sabrina Lillah

Should I use reflective or formative construct?

Post by Marsha Sabrina »

Dear All,

I have an observed firm performance as dependent variable (i.e. performance measured by ROA, ROE, Tobin's Q, and market to book ratio). Then the independent variable are three type of ownership structure (foreign, managerial, and state ownership). The mediation variable is independent commisioner.
So i am confused how should i model this observed?. Should it be a formative construct or a reflective construct?. Thanks
UmangVarshney
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Joined: Wed Jun 29, 2022 8:40 am
Real name and title: Umang Varshney

Re: Should I use reflective or formative construct?

Post by UmangVarshney »

Hi,
You should go for the formative construct. To understand the reasoning you can read the following paper. It has very nicely explained the difference between the reflective and formative scales.
Petter, S., Straub, D., & Rai, A. (2007). Specifying formative constructs in information systems research. MIS quarterly, 623-656.

All the best!
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