Variance-Based Structural Equation Modeling

Partial Least Squares (PLS) is an efficient statistical technique that is highly suited for Information Systems research. In this chapter, the authors propose both the theory underlying PLS and a discussion of the key differences between covariance-based SEM and variance-based SEM, i.e., PLS. In particular, authors: (a) provide an analysis of the origin, development, and features of PLS, and (b) discuss analysis problems as diverse as the nature of epistemic relationships and sample size requirements. In this regard, the authors present basic guidelines for the applying of PLS as well as an explanation of the different steps implied for the assessment of the measurement model and the structural model. Finally, the authors present two examples of Information Systems models in which they have put previous recommendations into effect.