A Critical Look at the Use of SEM in International Business Research

International Marketing Review, Vol. 33, No. 3, pp. 376-404, 2016

29 Pages Posted: 13 Jun 2017 Last revised: 20 Jun 2017

See all articles by Nicole Richter

Nicole Richter

Technical University Hamburg-Harburg (TUHH)

Rudolf R Sinkovics

University of Auckland Business School

Christian M. Ringle

Hamburg University of Technology (TUHH)

Christopher Schlaegel

Otto-von-Guericke-University Magdeburg

Date Written: April 30, 2014

Abstract

Purpose – Structural equation modeling (SEM) has been widely used to examine complex research models in international business and marketing research. While the covariance-based SEM (CB-SEM) approach is dominant, the authors argue that the field’s dynamic nature and the sometimes early stage of theory development more often require a partial least squares SEM (PLS-SEM) approach. The purpose of this paper is to critically review the application of SEM techniques in the field.

Design/methodology/approach – The authors searched six journals with an international business (and marketing) focus (Management International Review, Journal of International Business Studies, Journal of International Management, International Marketing Review, Journal of World Business, International Business Review) from 1990 to 2013. The authors reviewed all articles that apply SEM, analyzed their research objectives and methodology choices, and assessed whether the PLS-SEM papers followed the best practices outlined in the past.

Findings – Of the articles, 379 utilized CB-SEM and 45 PLS-SEM. The reasons for using PLS-SEM referred largely to sampling and data measurement issues and did not sufficiently build on the procedure’s benefits that stem from its design for predictive and exploratory purposes. Thus, the procedure’s key benefits, which might be fruitful for the theorizing process, are not being fully exploited. Furthermore, authors need to better follow best practices to truly advance theory building.

Research limitations/implications – The authors examined a subset of journals in the field and did not include general management journals that publish international business and marketing-related studies. Furthermore, the authors found only limited use of PLS-SEM in the journals the authors considered relevant to the study.

Originality/value – The study contributes to the literature by providing researchers seeking to adopt SEM as an analytical method with practical guidelines for making better choices concerning an appropriate SEM approach. Furthermore, based on a systematic review of current practices in the international business and marketing literature, the authors identify critical challenges in the selection and use of SEM procedures and offer concrete recommendations for better practice.

Keywords: International marketing, International business, Structural equation modelling, Covariance-based SEM, Partial least squares SEM

Suggested Citation

Richter, Nicole and Sinkovics, Rudolf R and Ringle, Christian M. and Schlägel, Christopher, A Critical Look at the Use of SEM in International Business Research (April 30, 2014). International Marketing Review, Vol. 33, No. 3, pp. 376-404, 2016, Available at SSRN: https://ssrn.com/abstract=2984826

Nicole Richter (Contact Author)

Technical University Hamburg-Harburg (TUHH) ( email )

Schwarzenbergstrasse 95
Hamburg, DE Hamburg 21073
Germany

Rudolf R Sinkovics

University of Auckland Business School ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand
+64 9 923 6359 (Phone)

HOME PAGE: http://unidirectory.auckland.ac.nz/profile/rudolf-sinkovics

Christian M. Ringle

Hamburg University of Technology (TUHH) ( email )

Am Schwarzenberg-Campus 4
Hamburg, 21073
Germany

HOME PAGE: http://www.tuhh.de/hrmo

Christopher Schlägel

Otto-von-Guericke-University Magdeburg ( email )

Universitaetsplatz 2
Magdeburg, 39016
Germany

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