ANZMAC2009-389

ANZMAC2009-389 - Page 1 of 9 ANZMAC 2009 Factor Analysis...

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Factor Analysis and Discriminant Validity: A Brief Review of Some Practical Issues Research Methods Andrew M Farrell (corresponding and presenting author) Aston Business School Aston University Birmingham B4 7ET UK Tel: 00 44 (0) 121 204 4874 Fax: 00 44 (0) 121 204 4917 Email: a.m.farrell2@aston.ac.uk John M Rudd Aston Business School Aston University Birmingham B4 7ET UK Tel: 00 44 (0) 121 204 3218 Fax: 00 44 (0) 121 204 4917 Email: j.m.rudd@aston.ac.uk Abstract Growth in availability and ability of modern statistical software has resulted in greater numbers of research techniques being applied across the marketing discipline. However, with such advances come concerns that techniques may be misinterpreted by researchers. This issue is critical since misinterpretation could cause erroneous findings. This paper investigates some assumptions regarding: 1) the assessment of discriminant validity; and 2) what confirmatory factor analysis accomplishes. Examples that address these points are presented, and some procedural remedies are suggested based upon the literature. This paper is, therefore, primarily concerned with the development of measurement theory and practice. If advances in theory development are not based upon sound methodological practice, we as researchers could be basing our work upon shaky foundations. Keywords: Average Variance Extracted, Discriminant Validity, Factor Analysis, Latent Variable Modelling Page 1 of 9 ANZMAC 2009
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Factor Analysis and Discriminant Validity: A Brief Review of Some Practical Issues Introduction It is natural to assume that all research contains some flaws; the myth of the perfect study represents something unattainable. However, without research, theoretical advances in the social sciences, and marketing in particular, would not occur. Consequently, the social science community needs to be confident that theoretical advances are arrived at through both sound conceptual argument and the application of rigorous and relevant methodological techniques. It is the application of two such methodological techniques that this paper focuses upon: factor analysis and discriminant validity testing. Within the social sciences, latent variable modelling, and by implication structural equation modelling (SEM), has become an extremely popular modelling technique (Baumgartner and Homburg, 1996; Steenkamp and van Trijp, 1991). This is partially due to the efficacy of SEM techniques when following Churchill’s (1979) scale development guidelines. The development or assessment of scales is often associated with the application of a factor analysis (either exploratory, EFA, or confirmatory, CFA) and further testing to establish the validity of measures (i.e., convergent, discriminant). In theory, other types of validity (e.g., face, nomological) should have been established prior to data collection. In that sense, we are concerned here with post-hoc measure development practice, and its implications for theory development and advancement. Farrell (2009) calls for a review of discriminant validity assessment in organizational
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ANZMAC2009-389 - Page 1 of 9 ANZMAC 2009 Factor Analysis...

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