Specifying formatively-measured constructs in endogenous positions in structural equation models: Caveats and guidelines for researchers

Formatively-measured constructs (FMCs) are increasingly used in marketing research as well as in other disciplines. Although constructs operationalized by means of formative indicators have mostly been placed in exogenous positions in structural equation models, they also frequently occupy structurally endogenous positions. The vast majority of studies specifying endogenously-positioned FMCs have followed the common practice of modeling the impact of antecedent (predictor) constructs directly on the focal FMC without specifying indirect effects via the formative indicators. However, while widespread even in top journals, this practice is highly problematic as it can lead to biased parameter estimates, erroneous total effects, and questionable conclusions. As a result both theory development and empirically-based managerial recommendations are likely to suffer. Against this background, the authors offer appropriate modeling guidelines to ensure that a conceptually sound and statistically correct model specification is obtained when a FMC occupies an endogenous position. The proposed guidelines are illustrated using both covariance structure analysis (CSA) and partial least squares (PLS) methods and are applied to a real-life empirical example. Implications for researchers are considered and ‘good practice’ recommendations offered.     

Psychographic constructs and demographic segments

As marketers attempt to place advertisements based on demographic profiles, the use of psychographic information becomes more important. The purpose of this research is to evaluate the validity of selected psychographic measures as well as to then relate these constructs to demographic segments. The analysis, using LISREL VI, assesses the constructs, which then, based on MANOV, are related to demographic segments. Implications of the study for validating psychographic measures and for applying this knowledge are discussed. © 1995 John Wiley & Sons, Inc.     

The interrelationships between relationship marketing constructs and customer engagement dimensions

The study examines the interrelationships between selected relationship marketing constructs, namely customer satisfaction, trust, perceived value and commitment, and their effect on the dimensions underlying customer engagement. The study is quantitative and an explanatory research design was followed. A total of 489 self-administered questionnaires were collected from customers of short-term insurance providers on the basis of convenience. Customer satisfaction impacts positively on affective commitment and trust. Customer value also impacts positively on affective commitment and trust, while trust impacts positively on affective commitment. Affective commitment in turn impacts positively on the four customer engagement dimensions: interaction, attention, absorption and affection. The research findings offer an initial understanding of the interrelationships between key relationship marketing constructs and their ultimate effect on various customer engagement dimensions. These matters have received little attention in marketing research, and knowledge of the proposed relationships may lead to further research on this topic.     

Engagement,telepresence and interactivity in online consumer experience: Reconciling scholastic and managerial perspectives

We propose a conceptual framework that reconciles the practitioners' view of engagement as central to online best practice and the scholarly view that tends to use other constructs to assess consumer experience. Building on research in e-learning as well as online marketing, we characterize the consumer experiential response to website and environmental stimuli as a dynamic, tiered perceptual spectrum which includes interactivity, telepresence and engagement. We construe engagement as a cognitive and affective commitment to an active relationship with the brand as personified by the website, and we propose dimensions of this construct. We discuss how the constructs of interactivity, flow and involvement are related to but distinct from the constructs within our conceptual framework. We offer suggestions for future empirical research into developing a scale for engagement and assessing its importance and utility.     

Reflective and formative metrics of relationship value: A commentary essay

The Journal of Business Research special issue (61/12) covers controversy about formative versus reflective model specification. This essay comments on that special issue and illustrates specific points relating to the controversy by discussing recent studies of business-to-business relationship value, comparing their differing specifications, and noting that the variations of specification result from quite distinct conceptualizations. The essay makes the more substantive conclusion that the differences in conceptualization result from more than one underlying streams of research and that each stream is conceptually quite distinct and needs to follow its own direction for future research. The specific case of relationship value illustrates the broad necessity for researchers to consider in-depth how they conceptualize models. Other research areas have distinct research streams that lie behind different conceptualizations and specifications that researchers must nurture explicitly if useful ontology is to develop effectively.     

Tailor-made single-item measures of doubly concrete constructs

The present study addresses how to measure three constructs commonly used in advertising research, namely attitude towards the ad, brand attitude and brand purchase intention. The study replicates and extends Bergkvist and Rossiter’s (2007) finding that single-item measures are equally predictively valid as multiple-item measures of basic (doubly concrete – see Rossiter’s 2002 C-OAR-SE procedure) constructs in marketing, namely A_Ad and A_Brand. One extension is that the finding holds for free-standing, tailormade single-item measures, whereas the previous study establishes this result only for single-item measures extracted from multiple-item measures. Another extension is that single-item equivalence of predictive validity further holds for another widely employed dependent variable construct, PI_Brand. The present study goes beyond Bergkvist and Rossiter’s study in that it shows that items commonly used in multiple-item measures of A_Ad and A_Brand vary in their predictive validity and that, in some cases, the differences are substantial. The main finding is the further empirical proof that multiple-item scales are unnecessary for validly measuring basic constructs.     

Retailers' major ethical decision making constructs

The major constructs of the Ferrell and Gresham [Ferrell OC, Gresham L. A Contingency Framework for Understanding Ethical Decision-Making in Marketing. J Mark 1985; (Summer): 87-96.], Hunt and Vitell [Hunt SD, Vitell S. A General Theory of Marketing Ethics. J Macromark 1986; 6 (Spring): 5-16.], and Ferrell et al. [Ferrell OC, Gresham L, Fraedrich JP. A Synthesis of Ethical Decision Models for Marketing. J Macromark 1989; 9(2) (Fall): 55-64.] models were tested using LISREL. Our findings suggest that Friends, Superiors, Business Associates, and Formalization of the Organization are more significant than Moral Philosophy. A new construct Ethicalness, comprised of individual, organizational, and societal value structures yielded a tight multi-dimensional fit that supports Kerlinger's domain theory and is dissimilar to Reidenbach and Robin's (1991) multi-dimensional scale. This research is one of the first to test as many ethical decision making constructs while explaining the multi-dimensional conundrum of ethical/unethical and legal/illegal practices within retailing.     

Religious influences in unrestrained consumer behaviour

Religion is known for transforming human behaviour in many ways. This research investigates the influence of religiosity on two unrestrained buying constructs; impulsive and compulsive buying. The focus of this paper is on both intrinsic and extrinsic dimensions of religiosity. The first study provides important insights into the differential impact of these two dimensions of religiosity on unrestrained buying constructs. The second study explores the underlying mechanism of the relationship between extrinsic religiosity and unrestrained buying behaviours. Results show a negative relationship of intrinsic religiosity and a positive relationship of extrinsic relationship with unrestrained buying constructs. We also found that this relationship for extrinsic religiosity is mediated by susceptibility to interpersonal influence and moderated by long-term orientation. This research explains the differential impact of religion on unrestrained buying behaviour.     

Balancing the sequential logic of quality constructs in manufacturing-supplier relationships — Causes and outcomes

Manufacturers in business markets are experiencing a strong trend towards close versus distant relationships with suppliers. Three key relationship constructs in academic research are trust, commitment, and satisfaction. Although the relevant literature holds some evidence that trust and commitment are antecedent to satisfaction, the possibility that satisfaction plays a key mediation role between trust/commitment and other important outcomes (i.e., coordination, cooperation, and continuity) receives scant examination. This study tests this conceptual model by examining the relationships between manufacturers and suppliers. A random sample of small-to-medium-sized Norwegian manufacturers was contacted by phone in order to identify potential key informants. Shortly thereafter, a total of 581 surveys were mailed to the key informants. Two hundred and twelve surveys were returned, representing a response rate of 36.5%. Results support the conceptual model presented; trust and commitment relate positively to satisfaction; and satisfaction, in turn, relates positively to all three outcomes of coordination, cooperation, and continuity.     

Measuring entrepreneurial passion: Conceptual foundations and scale validation

Along with other affective and emotional dimensions, passion is at the heart of entrepreneurship. Yet past research on entrepreneurial passion (EP) has been hindered by the lack of a sound measurement instrument. Through a series of empirical studies conducted with samples from relevant populations, we develop and validate an instrument to capture EP and its inherent dimensions. We show that the task-specific dimensions of EP (intense positive feelings toward the domains of inventing, founding and developing, and the centrality of these domains to entrepreneurs' self-identity) are conceptually and empirically distinct from one another, and from other emotions and cognitions known to play a role in entrepreneurship. Our theory and results indicate that proper measurement of entrepreneurial passion incorporates the interaction between entrepreneurs' feelings and identity centrality for each domain. We discuss the implications of our model, instrument and findings for future research on the affective components of innovation and entrepreneurship. We also develop specific guidelines for using our validated instrument in future research.     

Reviewing half a century of measuring cross-cultural competence: Aligning theoretical constructs and empirical measures

We provide a comprehensive review of how cross-cultural competence (CCC) has been measured over the past half-century in order to more closely align theoretical constructs and empirical measures. Based on a content analysis of 68 academic and commercial CCC instruments and a supplemental survey of 160 experts, we review the approaches used in these instruments to conceptualize and quantify CCC, discuss their limitations, and recommend best practices and directions for future researchers and practitioners when selecting and using CCC instruments or developing new alternatives.     

A Preliminary Investigation into the Role of Positive Psychology in Consumer Sensitivity to Corporate Social Performance

Research on positive psychology demonstrates that specific individual dispositions are associated with more desirable outcomes. The relationship of positive psychological constructs, however, has not been applied to the areas of business ethics and social responsibility. Using four constructs in two independent studies (hope and gratitude in Study 1, spirituality and generativity in Study 2), the relationship of these constructs to sensitivity to corporate social performance (CSCSP) were assessed. Results indicate that all four constructs significantly predicted CSCSP, though only hope and gratitude interacted to impact CSCSP. Discussion focuses upon these findings, limitations of the study, and future avenues for research.     

Consumer dispositions: Meanings and non-meanings of outgroup favourability

Global brands play an important role for consumers with a preference for goods from places other than their own countries (outgroup disposition). Scholars have studied the phenomenon and proposed a variety of constructs describing outgroup dispositions; however, it is difficult to distinguish these constructs when analysed separately, and practitioners have used them indistinctively. This research contributes to disentangling such a plurality of conceptualisations by deeply analysing four of those constructs. They were conceptually differentiated, had their scales empirically validated in a cross-cultural empirical study (emphasising their discriminancy), and some nomological networks were then proposed. Susceptibility to Global Consumer Culture has its variability explained (directly or indirectly) by Consumer Cosmopolitanism, Openness and Desire to Emulate Global Consumer Culture, and Global Citizenship through Global Brands. Managers of a brand positioned as global should use the outgroup dispositions to identify its target in a precise manner and thus enhance the brand's perception by either promoting the unification of people around the world or showing the brand's role as an ambassador of plurality between people.     

Intrapreneurial intentions versus entrepreneurial intentions: distinct constructs with different antecedents

We posit that entrepreneurship and intrapreneurship are distinct entrepreneurial behaviors that differ in terms of their salient outcomes for the individual. Since individuals are likely to differ in their attitudes to these salient outcomes, and in their entrepreneurial self-efficacy, we hypothesize that a different strength of intention for entrepreneurship versus intrapreneurship will be due to individual differences in self-efficacy and in their attitudes to the outcomes from entrepreneurial, as compared to intrapreneurial, behavior. We find that while self-efficacy is significantly related to both entrepreneurial and intrapreneurial intentions, attitudes to income, ownership, and autonomy relate only to entrepreneurial intentions, while attitude to risk relates only to intrapreneurial intentions.     

Leading the way: Motivating environmental action through perceived marketplace influence

This research explores the perceived marketplace influence (PMI) belief and its role in explaining behavior. Across three studies, we show PMI to be distinct from other efficacy-based constructs and a powerful predictor of pro-environmental and socially-motivated behavior. Specifically, consumers are motivated to act when they believe their behavior influences other marketplace actors. We develop a ten-item scale for PMI and display its predictive and incremental validity in explaining environmental behavior before showing its power to translate environmental concern into corresponding behavior. We then find that PMI predicts social environmentalism and environmental citizenship behaviors, and that these effects are attenuated by consumer skepticism of marketing. While complementing existing efficacy-related beliefs with its explicit marketplace focus, PMI provides an important tool for marketers operating in environmental and prosocial niches by allowing them to understand and target the consumers most likely to adopt their products or attempt to recruit others in environmentally-motivated efforts.     

Anticipated identification costs: Improving assortment evaluation by diagnostic attributes

Consumers often make quick assessments of product assortments, to determine if these are worthwhile for further investigation. They anticipate how difficult it will be to distinguish the various options in the assortment, which will influence their assortment evaluations. We reason that these anticipated identification costs are conceptually and empirically distinct from anticipated decision-making costs, and that extrinsic product attributes, which are not consumable themselves, can reduce anticipated identification costs and improve assortment evaluation, by highlighting intrinsic product differences. In addition, we posit that the impact of such diagnostic extrinsic attributes depends on the assortment's complexity. Results of two experiments support these predictions.     

Operationalizing Trust,Reliance, and Dependence in Business Relationships: Responding to the Ongoing Naming and Cross-Level Problems

Purpose: This article is to test the proposition that the 3 conceptually related constructs of trust, reliance, and dependence are distinct from each other and to test the proposition that the quality of business relationships can be measured with a formative index incorporating trust and reliance.

Methodology/Approach: The authors' propositions are tested with a survey sample of 221 firms in the U.K. construction industry. Exploratory and confirmatory factor analyses are used to analyze the survey data.

Findings: The independence of the 3 focal constructs of trust, reliance, and dependence is confirmed. The formative index is found suitable for evaluating the level of relationship quality in which reliance carries more significant weight than trust.

Research Implications: The separation of the overall construct of “trust” into trust at interpersonal level and reliance at interorganizational level, as found in this study, overcomes the problem existing in past studies that researchers rarely specify at which level trust operates. The clear conceptual distinction between reliance and dependence as found in this study implies that although both operate at the organizational level, they do not have overlapping boundaries. The finding that reliance is a more important impact factor than trust in constructing the formative index supports the notions that reliance is a necessary and sufficient condition for developing sustainable business relationships, and trust is an insufficient condition to sustain an ongoing business relationship.

Practical Implications: Reliance sets the keynote of the business relationship. In contrast, trust as the interpersonal variable only acts as the facilitator to create a favorable social environment. Nevertheless, both trust and reliance have a significant and positive weight in the relationship quality index formed. This means that a business relationship with high levels of both trust and reliance is particularly resilient and stable and is the most successful and desirable one which is frequently oriented toward the long run.

Originality/Value/Contribution: The confirmation of the difference between trust and reliance makes an important contribution to the study of trust in business to business marketing by showing that what has traditionally been treated as theoverall construct of trust can and should be regarded as being made up of two separate constructs: interpersonal trust and interorganizational reliance. The difference between reliance and dependence as an additional finding makes another important contribution by providing conceptual clarity of the two constructs and confirming that there is no overlapping boundary between them. The formative index and the relative importance of its components are another important contribution of this study.     

Customer satisfaction measurement: comparing four methods of attribute categorisations

The issue of how to weight and categorise service attributes has attracted great attention from academics as well as practitioners. The application of an inappropriate method could lead to misleading interpretations and useless or costly actions. We first review several streams of literature concerning the theoretical background of attribute categorisations in relation to customer satisfaction. We then identify four methods that have been developed to categorise attributes into four classes. In the next step we apply these methods in an empirical study. Criteria for distinguishing the considered approaches conceptually and methodologically are proposed, and implications for future research are discussed.     

Integrating organizational learning with high-performance work system and entrepreneurial orientation: a moderated mediation framework

This study proposes a moderated mediation model to investigate the relationship between organizational learning and firm performance. We argue that entrepreneurial orientation mediates the positive effect of organizational learning on firm performance. Furthermore, the relationship between organizational learning and entrepreneurial orientation is strengthened when firms employ a higher level of high-performance work system. Hypotheses are supported by data from 181 firms operating in the manufacturing and service industries in China. Statistical results further reveal that a high-performance work system has different moderating effects on exploitative learning and exploratory learning. This research extends our understanding of organizational learning theory, entrepreneurship and human resource management literature by cross-fertilizing constructs in these fields with empirical evidence.