1 Department of Management, Aarhus BSS, Aarhus University2 Department of Economics and Business Economics, Aarhus BSS, Aarhus University3 Department of Economics and Business Economics, Aarhus BSS, Aarhus University
Towards more liberalised modelling approaches
In this paper we discuss two SEM approaches: an exploratory structural equation modelling based on a more liberalised and inductive philosophy versus the classical SEM based on the traditional hypothetical-deductive approach. We apply these two modelling techniques to data from a consumer survey and compare them based on several criteria, such as coefficients, parsimony, model fit, plausibility, and consistency with the theory. A comparison of the estimates obtained from the two models clearly indicates that it is not at all a trivial matter whether cross-loadings are allowed in a measurement model or not. These results shed serious doubt on the generally accepted rule of thumb according to which (cross) loadings can safely be ignored if they do not have a “practically significant” loading with an absolute value of at least 0.30 or 0.40.