The Role of Formative Measurement Models in Strategic Management Research: Review, Critique, and Implications for Future Research

Nathan P. Podsakoff, Wei Shen, Philip M. Podsakoff

Research output: Chapter in Book/Report/Conference proceedingChapter

141 Scopus citations

Abstract

Since the publication of Venkatraman and Grant's (1986) article two decades ago, considerably more attention has been directed at establishing the validity of constructs in the strategy literature. However, recent developments in measurement theory indicate that strategy researchers need to pay additional attention to whether their constructs should be modeled as having formative or reflective indicators. Therefore, the purpose of this chapter is to highlight the differences between formative and reflective indicator measurement models, and discuss the potential role of formative measurement models in strategy research. First, we systematically review the literature on construct measurement model specification. Second, we assess the extent of measurement model misspecification in the recent strategy literature. Our assessment of 257 constructs in the contemporary strategy literature suggests that many important strategy constructs are more appropriately modeled as having formative indicators than as having reflective indicators. Based on this review, we identify some common errors leading to measurement model misspecification in the strategy domain. Finally, we discuss some implications of our analyses for scholars in the strategic management field.

Original languageEnglish (US)
Title of host publicationResearch Methodology in Strategy and Management
EditorsDavid Ketchen, Donald Bergh
Pages197-252
Number of pages56
DOIs
StatePublished - Dec 1 2006
Externally publishedYes

Publication series

NameResearch Methodology in Strategy and Management
Volume3
ISSN (Print)1479-8387

ASJC Scopus subject areas

  • Strategy and Management

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    Podsakoff, N. P., Shen, W., & Podsakoff, P. M. (2006). The Role of Formative Measurement Models in Strategic Management Research: Review, Critique, and Implications for Future Research. In D. Ketchen, & D. Bergh (Eds.), Research Methodology in Strategy and Management (pp. 197-252). (Research Methodology in Strategy and Management; Vol. 3). https://doi.org/10.1016/S1479-8387(06)03008-6