Partial Least Squares Structural Equation Modeling-Based Discrete Choice Modeling: An Illustration in Modeling Retailer Choice

Business Research, 1-28

Posted: 4 Jun 2019

See all articles by Joseph F. Hair

Joseph F. Hair

Kennesaw State University

Christian M. Ringle

Hamburg University of Technology (TUHH)

Siggi Gudergan

Newcastle Business School

Christian Nitzl

University of the German Federal Armed Forces - Universität der Bundeswehr München

Dr Con Menictas

Strategic Precision

Date Written: 2019

Abstract

Commonly used discrete choice model analyses (e.g., probit, logit and multinomial logit models) draw on the estimation of importance weights that apply to different attribute levels. But directly estimating the importance weights of the attribute as a whole, rather than of distinct attribute levels, is challenging. This article substantiates the usefulness of partial least squares structural equation
modeling (PLS-SEM) for the analysis of stated preference data generated through choice experiments in discrete choice modeling. This ability of PLS-SEM to directly estimate the importance weights for attributes as a whole, rather than for the attribute’s levels, and to compute determinant respondent-specific latent variable scores applicable to attributes, can more effectively model and distinguish between rational (i.e., optimizing) decisions and pragmatic (i.e., heuristic) ones, when parameter estimations for attributes as a whole are crucial to understanding choice
decisions.

Keywords: Discrete choice modeling, Experiments, Structural equation modeling, Partial least squares, Path modeling

Suggested Citation

Hair, Joseph F. and Ringle, Christian M. and Gudergan, Siggi and Nitzl, Christian and Menictas, Dr Con, Partial Least Squares Structural Equation Modeling-Based Discrete Choice Modeling: An Illustration in Modeling Retailer Choice (2019). Business Research, 1-28, Available at SSRN: https://ssrn.com/abstract=3388670

Joseph F. Hair (Contact Author)

Kennesaw State University ( email )

1000 Chastain Rd
Kennesaw, GA 30144
United States

Christian M. Ringle

Hamburg University of Technology (TUHH) ( email )

Am Schwarzenberg-Campus 4
Hamburg, 21073
Germany

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

Siggi Gudergan

Newcastle Business School ( email )

City Campus East – 231
Newcastle-Upon-Tyne NE1 8ST, NE1 8ST
Australia

Christian Nitzl

University of the German Federal Armed Forces - Universität der Bundeswehr München ( email )

Werner-Heisenberg-Weg 39
Neubiberg
Munich, 85579
Germany

Dr Con Menictas

Strategic Precision ( email )

P.O. Box 3008
Sydney, NSW 1480
Australia

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