Quantitative Analysis

with PLS-SEM
Agenda

• Comparing CB-SEM & PLS-SEM

Basic • Modelling in PLS
Concept of
PLS-SEM • Rule of Thumbs

• Create New Project

• Create Model
SmartPLS
• Import Data
Tutorial
• Measurement Model
• Structural Model
SmartPLS an Overview

▪ Partial least squares (PLS) was invented by Herman Wold

(mentor to Karl Jöreskog)
▪ as an analytical alternative for situations where theory is
weak and where the available manifest variables or
measures would likely not conform to a rigorously
specified measurement model (soft modeling)
▪ PLS method is designed to maximize prediction rather
than fit
▪ to maximize the proportion of variance of the dependent
"construct" that is explained by the predictor "constructs.“
Comparing CB-SEM and PLS-SEM (1)
Comparing CB-SEM and PLS-SEM (2)
Basic Concept of SEM
 Latent variable
▪ Cannot be measured directly in a study, but through their
effects on manifest variables (items/dimensions).
▪ There are two types of latent variable: exogenous and
endogenous
▪ Examples of latent variables: QUALITY OF LIFE; INTELLIGENCE

 Manifest/Observed variables
▪ Can be directly measured in a study
▪ Example of manifest variables for Quality of Life: wealth,
employment, physical and mental health & education
▪ Example of manifest variables for Intelligence: vocabulary
size, IQ test score & writing ability
 Also referred as Inner Model— shows
Structural
Model the relationships (paths) between
the latent constructs.

Modelling in
PLS-SEM Also referred as Outer Model—
include the unidirectional predictive
Measurement
Model relationships between each latent
construct and its associated
manifested/observed indicators
Structural Model
 Two types of construct in structural model:
 Exogenous / Independent variables — latent constructs
that do not have any structural path relationships
pointing at them
 Endogenous / Dependent variables — latent target
constructs in the structural model that are explained
by other constructs via structural model relationships
Measurement Model
▪ PLS-SEM can handle both formative and reflective measurement
models

dropping one indicator may not

matter much since the other
indicators are representative
also. The latent variable will
still have the same meaning
after dropping one indicator.

Dropping an indicator in a
formative model is equivalent
to dropping a dimension of
meaning, causing the meaning
of the latent variable to change
Example of Reflective & Formative Indicators (1)

Latent Variable: Satisfaction with hotel accommodations

➢ Reflective model might have the representative measures
➢ “I feel well in this hotel”
➢ “This hotel belongs to my favourites”
➢ “I recommend this hotel to others”
➢ “I am always happy to stay overnight in this hotel.”
➢ Formative model, in contrast, might have the constituent measures
➢ “The room is well equipped”
➢ “I can find silence here”
➢ “The fitness area is good”
➢ “The personnel are friendly”
➢ “The service is good”
Example of Reflective & Formative Indicators (2)

Computer Self-Efficacy
 Reflective – I am capable at performing tasks on my computer.
I feel confident in my ability to perform computer-related tasks.
 Formative – I am confident at my ability to perform tasks in MS Word.
I am skillful at using Excel.

System Quality
 Reflective – Overall, I would rate the system quality of the system highly.
The quality of the system is appropriate for my needs.
 Formative – Reliability, Ease of Use, Complexity, Accessibility, Responsiveness
PLS-SEM Two-Step Process

1 2
Assessing Measurement Assessing Structural Model
Model: • Examining path coefficient
• Examining Validity significant
• Examining Reliability • Examining predictive model
PLS-SEM Rule of Thumbs –
Measurement Model
Validity and Reliability in Reflective
Model
Reliability refers to consistency or stability of measurement.
 Can our measure or other form of observation be confirmed by
further measurements or observations?
 If you measure the same thing would you get the same score?
 Internal consistency: Internal consistency reliability is a measure of
how well the items on a test measure the same construct or idea.
 Are measured with Composite Reliability and Cronbach’s Alpha
 Indicator Reliability:
 Are measured with loading factors for each indicators
Validity and Reliability in Reflective
Model
Validity: refers to the suitability or meaningfulness of the measurement. It indicates how
well an instrument measures the construct it purpose to measure
 Does this instrument describe accurately the construct I am attempting to measure?
 Convergent Validity: measures of constructs that theoretically should be related to
each other are, in fact, observed to be related to each other
 Are measured using average variance extracted (AVE)
 Discriminant validity: measures of constructs that theoretically should not be related to
each other are, in fact, observed to not be related to each other
 Are measured using cross loadings and the Fornell–Larcker criterion
 cross loadings - an indicator’s loading with its associated latent construct should be
higher than its loadings with all the remaining constructs (i.e., the cross loadings)
 the Fornell–Larcker criterion - the AVE of each latent construct should be greater
than the latent construct’s highest squared correlation with any other latent
construct
PLS-SEM Rule of Thumbs –
Structural Model
Structural Model Evaluation Criteria

➢ R square - coefficient of determination, measuring the amount of

variation accounted for in the endogenous constructs by the
exogenous constructs
➢ Level of significance of the path coefficients – assessing prior
hypotheses
➢ Stone–Geisser’s Q2 – measuring model’s capability to predict. The Q²
value is obtained by using a blindfolding procedure
➢ Heterogenity – one consider potential sources of heterogeneity and
test these by means of multigroup comparison or moderator analyses
SmartPLS Tutorial

 Create New Project

 Create Model
 Import Data
 Measurement Model
 Structural Model
Case Study Commitment to Use (COM)
Trust (TR)
User Satisfaction (SAT)
Continuance to Use (CONT)

H1. Komitmen penggunaan (Commitment to Use) mempengaruhi keberlanjutan

penggunaan.
H2. Kepercayaan (Trust) mempengaruhi keberlanjutan penggunaan
H3. Kepuasan penggunaan (User Satisfaction) mempengaruhi keberlanjutan
penggunaan
1. Create New Project
2. Create Model
2. Create Model (lanj.)
3. Import Data
4. Measurement Model Evaluation
5. Structural Model Evaluation
References

 Garson, G. D. (2016). Partial Least Squares: Regression and Structural

Equation Models. Asheboro, NC: Statistical Associates Publishers.
 J. F. Hair, C. M. Ringle, and M. Sarstedt, “PLS-SEM: Indeed a Silver Bullet,”
The Journal of Marketing Theory and Practice, vol. 19. pp. 139–152, 2011.