Chapter 3: Path Model Estimation

Learning Outcomes

  1. Learn how the PLS-SEM algorithm functions.
  2. Comprehend the options and parameter settings to run the algorithm.
  3. Understand the statistical properties of the PLS-SEM method.
  4. Explain how to interpret the results.
  5. Apply the PLS-SEM algorithm using the SmartPLS 3 software.

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This chapter covers Stage 4 of the process on how to apply PLS-SEM. Specifically, we focus on the PLS-SEM algorithm and its statistical properties. A basic understanding of the “mechanics” that underlie PLS-SEM, as well as its strengths and weaknesses, is needed to correctly apply the method (e.g., to make decisions regarding software options). Building on these foundations, you will be able to choose the options and parameter settings required to run the PLS-SEM algorithm. After explaining how the PLS path model is estimated, we summarize how to interpret the initial results. These will be discussed in much greater detail in Chapters 4 to 6. This chapter closes with an application of the PLS-SEM algorithm to estimate results for the corporate reputation example using the SmartPLS 3 software.