Need help with Variables on SMART-PLS 4

Questions about the implementation and application of the PLS-SEM method, that are not related to the usage of the SmartPLS software.
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PLS Junior User
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Joined: Wed Jun 05, 2024 4:09 am
Real name and title: Dr Doug

Need help with Variables on SMART-PLS 4

Post by douggant »

I have a model with 4 variables (A, B, C and D) where the first 3 connect with the D, pretty straightforward.

However, I have a categorical variable which is Generations and it includes 4 generations. I want to test on Smart-PLS 4 this variable, considering it's part of the hypothesis I made, for example:

D differs across Generations
A differs across generations

The thing is, I've seen examples where people put the categorical variable in the model with 3 of the 4 dummies attached (one serving as a reference) and some where they put all 4. I'm a bit lost right now, I don't know what approach to have.
Can anyone help me out?
SmartPLS Developer
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Joined: Tue Mar 28, 2006 11:09 am
Real name and title: Dr. Jan-Michael Becker

Re: Need help with Variables on SMART-PLS 4

Post by jmbecker »

You cannot analyze a categorical variable directly. As PLS is regression-based you will need to dummy code or something similar. If you dummy code you will always have one (dummy) variable less than categories and the omitted category becomes the reference category. If you would include a dummy for each category you would run into perfect collinearity and the model is not estimable.
Dr. Jan-Michael Becker, BI Norwegian Business School, SmartPLS Developer
GoogleScholar: ... AAAJ&hl=de
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