CB-SEM OR PLS-SEM?

FIVE PERSPECTIVES
AND FIVE
RECOMMENDATIONS

1
THE FIRST SEM ANALYSIS...

TOP-TIER
PUBLICATIONS

...PREDICTED THE BIRTH WEIGHT OF GUINEA PIGS

Wright (1921) | Journal of Agricultural Research
SEM TODAY
SEM TODAY

LISREL PLS

Covariance-based structural equation PLS regression

modeling (CB-SEM) PLS discriminant analysis
PLS path modeling (PLS-PM)
PLS-SEM
...
6
CB-SEM vs. PLS-SEM

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CB-SEM vs. PLS-SEM

If the assumptions of the PLS method are met and it is used appropriately, it
can be a USEFUL DATA ANALYSIS TECHNIQUE.
(Peng and Lai 2012, p. 478)

Researchers should DISCONTINUE the use of PLS.

(Rnkk et al. 2016, p. 24)

There is NO USE FOR PLS

whatsoever. If correctly applied, PLS-SEM indeed can
(Antonakis et al. 2010, p. 1103) be a SILVER BULLET in many research
situations.
(Hair et al. 2016, p. xii)

PLS-SEM could be a very USEFUL ANALYSIS TOOL for

future theory development in management accounting.
(Nitz 2016, p. 31)

PLS consists of a half dozen or so software packages that, though only

lightly documented, seem to be able to conjure path estimates out of
datasets that other METHODOLOGISTS REJECT AS INADEQUATE.
(Westland 2015, p. 31) 8
 PERSPECTIVE #1
CB-SEM AND PLS-SEM
SHOULD YIELD THE
SAME RESULTS

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TWO-FACTOR THEORY
OF INTELLIGENCE
max = rag x gx + ras x sax

TRUE SCORE MODEL

Xi = Ti + Ei
Using raw data input, PLS
makes explicit, albeit
DELIBERATELY
APPROXIMATE,
estimation of each latent
variable as a weighted
aggregate of its
indicators.

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Wold (1982, p. 342)

The key problem with
approximating latent
variables with composites is
that the resulting estimator is
both INCONSISTENT and
BIASED.

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Rnkk et al. (2016, p. 14) | JOM
The only logical and
reasonable action stemming
from objective consideration
of these issues is to
DISCONTINUE THE USE OF
PLS and instead pursue
superior alternatives, namely
the ongoing stream of
methodological innovations in
LATENT VARIABLE-BASED
SEM.

13
Rnkk et al. (2016, p. 24) | JOM
The only logical and
reasonable action stemming
Science does not operate by shutting
from objective consideration
ofdoors.
these issuesCensorship
is to of ideashowever
DISCONTINUE THE USE OF
novel or controversialis
PLS and instead pursue
a dangerous
thing and
superior runs namely
alternatives, against the very nature
the ongoing stream of
of academic
methodological innovations in
discourse.
LATENT VARIABLE-BASED
SEM.(Bollen and Diamantopoulos 2017, p. 13 | Psychological Methods)

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Rnkk et al. (2016, p. 24) | JOM
 PERSPECTIVE #2
ONE SHOULD NOT EXPECT
THE SAME RESULTS FROM
CB-SEM AND PLS-SEM.

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CB-SEM AND PLS-SEM RELY ON DIFFERENT
MEASUREMENT PHILOSOPHIES

CB-SEM treats constructs as PLS-SEM treats constructs as

common factors that explain the composites, which are determinate
covariation between their functions of the other variables in
associated indicators. the model.

Y1 Y1
Y3 Y3
Y2 Y2
 Any evaluation of PLS-SEM vis--vis
common factor-based SEM methods is
like COMPARING APPLES WITH
ORANGES.

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Marcoulides et al. (2012, p. 725) | MISQ
COMMON FACTOR OR COMPOSITE MODEL?

From a philosophical standpoint, there is no

need for modeling constructs as common factors
(...), and reducing SEM to common factor models
is a very restrictive (unnecessarily restrictive, we
would argue) view about SEM (Henseler et al.
2014, p. 184).

Common factor proxies cannot be

assumed to carry greater significance
than composite proxies in regard to
the existence or nature of conceptual
variables (Rigdon 2016, p. 602).

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Henseler et al. (2014) | ORM & Rigdon (2016) | EMJ
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20
SIMULATION STUDY

What are the biases that occur when using (1) composite-based PLS to estimate
common factor models, and (2) common factor-based CBSEM to estimate composite
models?

SIMULATION MODEL

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Sarstedt et al. (2016) | JBR
SIMULATION STUDY

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Sarstedt et al. (2016) | JBR
SIMULATION
STUDY
Common
Factor Model
Data

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SIMULATION
STUDY
Composite
Model Data

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FOLLOW-UP
RESEARCH

25
 PERSPECTIVE #3
CB-SEM AND PLS-SEM
SHOULD YIELD SIMILAR
RESULTS.

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 Empiricism Realism

Conceptual variables must be Conceptual variables exist

defined in terms of data, a function independent of observation
of observed variables. and data.

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HOLISTIC CONSTRUAL

High

Empiricism Realism
Conceptual variable

= Construct

Mathematical operations

Low
Observed variables

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Bagozzi (1994) | JMR

 PERSPECTIVE #4
CB-SEM AND PLS-SEM
WILL NOT YIELD SIMILAR
RESULTS.

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For all methods, no
matter
how impressive their
pedigree, one can find
situations where they do
not work as advertised.
One can always
CONSTRUCT a setup
where a given method
fails

30

Henseler et al. (2014, p. 202) | ORM

LETTING A METHOD FAIL

.6 .6
0
.7 Y1 Y2 .7
.8 .8

31

Rnkk et al. (2013) | ORM

LETTING A METHOD FAIL

.6 .6
0
.7 Y1 Y2 .7
.8 .8

IMPLICATIONS:

32

Rnkk et al. (2013) | ORM

LETTING A METHOD FAIL

0.2% of all PLS studies have this

degree of complexity
.6 .6
0
.7 Y1 Y2 .7

The average number of constructs

.8 .8

in PLS path models is > 7

All prior simulation studies on

PLS-SEM are considerably more
complex

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Rnkk et al. (2013) | ORM

CONCLUSION DOESNT HOLD WHEN
(SLIGHTLY) MODIFYING THE MODEL

.6 .6
0
.7 Y1 Y2 .7
.8 .8

.3

.6

Y3 .7

.8

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Henseler et al. (2014) | ORM

PRIMARY PROBLEMS WHEN USING SEM

SAMPLE SIZE

FEW INDICATORS

EX POST MODIFICATION
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PRIMARY PROBLEMS WHEN USING SEM

SAMPLE SIZE

FEW INDICATORS

EX POST MODIFICATION
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 SAMPLE SIZE

CB-SEM
Inadmissible solutions and pronounced biases at low
sample sizes
Alternative estimators typically lack statistical power

PLS-SEM
Works with small sample sizes. Bootstrapping
preserves the methods basic functionality at low
sample sizes
Broad critique of ten-times rule
Substantial biases in the measurement models at low
sample sizes
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With respect to both composite-based
and factor-based approaches to SEM, if
sample size is small, the best course is
to get more data.
(Rigdon 2016, p. 600).

PLS-SEM can be applied with smaller

samples in many instances when other
methods fail, but the legitimacy of such
analyses depends on the size and the
nature of the population (e.g., in terms
of its heterogeneity). No statistical
methodincluding PLS-SEMcan offset
a badly designed sample.
(Sarstedt et al. 2018, p. 12).

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 PERSPECTIVE #5
CB-SEM AND PLS-SEM
SHOULD CONVERGE ON
THE SAME CONCLUSIONS.

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 CB-SEM and PLS-SEM should converge on the
same answers about relations between conceptual
variables, if both methods are applied under
favorable conditions.
SEM methods parameter estimates convey a
spurious accuracy.
Only replications provide confidence for the
prevalence of an effect.

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5 RECOMMENDATIONS

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#1
FOCUS ON THE ACTUAL PHENOMENON AND DONT
LET THE MODELING GET IN THE WAY OF LEARNING
Acknowledge different preferences depending on
background (psychometrics vs. econometrics)
Avoid ritualistic behavior and cookbook approaches to
statistical analysis

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#2
PUT OTHER DESIGN ASPECTS BACK ON THE TABLE
Differences between the statistical methods are
oftentimes only marginal
Questionnaire design and sampling have a pronounced
effect on the results

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#3
CHOOSE A METHOD CONSISTENT WITH THE MODEL
TYPE
CB-SEM for common factor models, PLS-SEM for
composite models
Consider using PLSc for mixtures of common factor and
composite models

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#4
USE PLS-SEM FOR EXPLORATORY SETTINGS
PLS-SEM allows for a dialogue between the model and
the researcher
Investigate effort in exploration than trying to meet
CB-SEM assumptions, which do not hold exactly anyway
Using PLS-SEM is no fishing expedition but a means to
merge exploration and confirmation in a prediction
context

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#5
CONSIDER ALTERNATIVE EXPLANATIONS
Entertain a conflict between ideas
Compare and report theoretically plausible model
constellations
Use model selection criteria to decide on the most
appropriate model

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MARKO SARSTEDT
marko.sarstedt@ovgu.de
marketing.ovgu.de
Follow me on

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