Evaluating Structural Equation Models with Unobservable Variables and Measurement Error

The statistical tests used in the analysis of structural equation models with unobservable variables and measurement error are examined

Claes Fornell; David F. Larcker

2018

Scholarcy highlights

  • The statistical tests used in the analysis of structural equation models with unobservable variables and measurement error are examined
  • A drawback of the commonly applied chi square test, in addition to the known problems related to sample size and power, is that it may indicate an increasing correspondence between the hypothesized model and the observed data as both the measurement properties and the relationship between constructs decline
  • The authors develop and apply a testing system based on measures of shared variance within the structural model, measurement model, and overall model

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