1. 1 Using the SmartPLS Software “Structural Model Assessment” All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. Joe F. Hair, Jr. Founder & Senior Scholar Joe F. Hair, Jr. Founder & Senior Scholar

2. 2 Step 3: Assess the Level of R 2 The R² values of the endogenous latent variables are available in the PLS Algorithm default report (PLS → Quality Criteria → Overview), as shown below. The R 2 values of COMP (0.6309), CUSL (0.5620), and LIKE (0.5576) can be considered moderate. In contrast, the R² value of CUSA (0.2919) is rather weak. All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. 2

3. Note: calculation of Q 2 value is shown in a later slide. 3

4. 4 Step 4: Assessing Effect Size – ƒ 2 All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. The ƒ² effect size is a measure of the impact of a specific predictor construct on an endogenous construct. In addition to evaluating the size of the R² values of all endogenous constructs, the ƒ² effect size can be calculated (it is not available from the SmartPLS software output). The ƒ² effect size measures the change in the R² value when a specified exogenous construct is omitted from the model. It is used to evaluate whether the omitted predictor construct has a substantive impact on the R² values of the endogenous construct(s). The formula for calculating the ƒ² effect size is shown on the next slide. Guidelines for assessing ƒ 2 values for the exogenous latent constructs in predicting the endogenous constructs are: Value Effect Size 0.02=small 0.15=medium 0.35=large (Cohen, 1988)

5. 5 All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. Calculating the Effect Size – ƒ 2 The f 2 effect size can be calculated as shown below. In the formula R 2 included and R 2 excluded are the R² values of the endogenous latent variable when a selected exogenous latent variable is included or excluded from the model. The change in the R² values is calculated by estimating the PLS path model twice. It is estimated the first time with the exogenous latent variable included (yielding R 2 included) and the second time with the exogenous latent variable excluded (yielding R 2 excluded). The results of calculating the f 2 for the reputation model example endogenous variables are shown in a later slide.

6. Example: Calculation of f 2 Effect Size As indicated in the previous slide, to compute the f 2 value of a selected endogenous latent construct, we need the R 2 included and R 2 excluded values. The R 2 included results from the overall model estimation were previously shown (Exhibit 6.15). The R 2 excluded value is obtained from a model re-estimation after deleting a specific predecessor of that endogenous latent variable. For example, the endogenous latent variable CUSL has an original R 2 value of 0.562 (R 2 included). If CUSA is deleted from the path model and the model is re-estimated, the R 2 of CUSL has a value of only 0.385 (R 2 excluded). These two values are the inputs for computing the f 2 effect size of CUSA on CUSL. The formula is shown below: 6

7. All rights reserved ©. Cannot be reproduced or distributed without express written permission from Prentice-Hall, McGraw-Hill, SmartPLS, and session presenters. 7 Example: Calculation of f 2 for other endogenous constructs To get the f 2 values you need to run the full model first and determine the R 2 for the endogenous construct you want to evaluate. Next, eliminate one path pointing at the construct you are looking at (simply right click on a construct and delete the predictor construct), and re-run the model. The R 2 with the construct/path will be lower since the predictor construct was removed. Now enter the R 2 included for the selected construct (based on the full model) and the R 2 excluded (based on the reduced model where one path/construct has been deleted) into the formula on the previous slide. The same procedure is followed for the q 2 but instead of entering the R 2 (excluded and included), you use blindfolding to get the Q 2 values for the full model (included) and the reduced model (construct/path deleted).

8. Summary of Results – Path Coefficients, f 2 and q 2 COMPCUSL Path Coefficient f 2 effect size q 2 effect size Path Coefficient f 2 effect size q 2 effect size ATTR0.08610.0110.028 COMP0.00570.0000.101 CSOR0.05890.0050.004 CUSA0.50500.4040.229 LIKE0.34400.1390.081 PERF0.29550.0760.042 QUAL0.42970.1440.062 8 Example interpretation of f 2 : Look under the f 2 column for CUSL. Note the 0.404 is the f 2 effect size for the predictive value of CUSA on CUSL. The 0.404 indicates that CUSA has a large effect in producing the R 2 for CUSL. In contrast, the 0.139 is the f 2 effect size for the predictive value of LIKE on CUSL. The 0.139 indicates that LIKE has close to a medium effect in producing the R 2 for CUSL.

9. 9 All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. Reputation Model Results – Path Coefficients – Guidelines for assessing ƒ 2 values: Value Effect Size Value Effect Size 0.02= small 0.02= small 0.15= medium 0.15= medium 0.35= large 0.35= large

10. Summary of Results – Path Coefficients, f 2 and q 2 CUSALIKE Path Coefficient f 2 effect size q 2 effect size Path Coefficient f 2 effect size q 2 effect size ATTR0.16710.0290.019 COMP0.14550.0180.001 CSOR0.17840.0360.029 CUSA LIKE0.43570.1610.140 PERF0.11700.0110.007 QUAL0.38000.0950.053 10

11. 11 Step 5: Blindfolding and Predictive Relevance – Q 2 All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. In addition to evaluating the magnitude of the R² values as a criterion of predictive accuracy, researchers should also examine the Q² value – which is an indicator of the model’s predictive relevance. The Q ² measure applies a sample re-use technique that omits part of the data matrix and uses the model estimates to predict the omitted part. Specifically, when a PLS-SEM model exhibits predictive relevance, it accurately predicts the data points of the indicators in reflective measurement models of multi-item as well as single-item endogenous constructs (the procedure does not apply to formative endogenous constructs). For SEM models, Q² values larger than zero for a specific reflective endogenous latent variable indicate the path model’s predictive relevance for a particular construct. Q² values of zero or below indicate a lack of predictive relevance. As a relative measure of predictive relevance, values of 0.02, 0.15, and 0.35 indicate that an exogenous construct has a small, medium, or large predictive relevance for a selected endogenous construct.

12. 12 Blindfolding and Predictive Relevance – Q 2 All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. The Q ² value can be calculated by using two different approaches. The cross-validated redundancy approach uses the path model estimates of both the structural model (scores of the antecedent constructs) and the measurement model (target endogenous constructs). An alternative method is the cross-validated communality approach. This method uses only the construct scores estimated for the target endogenous construct (without including the structural model information) to predict the omitted data points. We recommend using the cross-validated redundancy as a measure of Q 2 since it includes the key element of the path model, the structural model, to predict eliminated data points. When you run the blindfolding option for cross-validated redundancy, all constructs in your SEM model are shown (see next slide). You can select multiple latent variables in the dialog box, but you need to run this routine for one reflective target construct at a time – one after the other until all have been tested. Finally, this option is only used with endogenous constructs that are measured reflectively.

13. LV 3 MV 1 MV 2 MV 3 LV 1 LV 2 LV 3 MV 1 MV 2 MV 3 LV 1 LV 2 Step 1: The scores of the endogenous LV(s) are estimated using the scores of the exogenous LVs Step 2: Newly estimated LV scores are used to estimate the missing MV data Cross-validated redundancy Cross-validated communality Only step 2. SmartPLS Predictive Relevance – Blindfolding Redundancy vs. Communality?

14. 14. All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. Running Blindfolding to obtain Q 2 for Endogenous Construct CUSL Note that only CUSL is checked.

15. 15. All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. Blindfolding Results for Endogenous Construct CUSL The result column is at the top right corner (1 – SSE/SSO). For our path model the predictive relevance Q 2 of CUSL has a value of 0.4178, which indicates the model has large predictive relevance for this construct. When blindfolding is run for all endogenous latent constructs in the model they all have Q 2 values considerably above zero, as shown on the next slide. Q 2 value for CUSL Full Base Model

16. Reputation Model – R 2 and Q 2 Measures The table above shows that all Q 2 values are considerably above zero, thus providing support for the reputation model’s predictive relevance for the four endogenous constructs.

17. Computation of q 2 The final assessment addresses the calculation of the q² effect sizes. The calculation of q 2 for the CUSL construct of the reputation model is shown below. To compute the q² value of a selected endogenous latent variable, you need the Q 2 included and Q 2 excluded values. The Q 2 included results for all endogenous constructs from the overall model estimation are available from a previous slide. The Q 2 excluded value is obtained from a model re-estimation after deleting a specific predecessor of that endogenous latent variable. For example, the endogenous latent variable CUSL has an original Q² value of 0.418 ( Q 2 included). If CUSA is deleted from the path model and the model is re-estimated, the Q² of CUSL has a value of only 0.285 ( Q 2 excluded ). These two values are the inputs for computing the q² effect size of CUSA. on CUSL, as shown below: All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. 17

18. 18. All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. PLS Algorithm Results Base Model with CUSA Removed

19. 19. All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. Q 2 value for CUSL with full model Blindfolding Results for CUSL with full Base Model

20. 20. All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. Blindfolding Results for CUSL Reduced Model with CUSA Removed Q 2 value for CUSL with CUSA Removed

21. Summary of Results – Path Coefficients, f 2 and q 2 COMPCUSL Path Coefficient f 2 effect size q 2 effect size Path Coefficient f 2 effect size q 2 effect size ATTR0.08610.0110.028 COMP0.00570.0000.101 CSOR0.05890.0050.004 CUSA0.50500.4040.229 LIKE0.34400.1390.081 PERF0.29550.0760.042 QUAL0.42970.1440.062 21 Example interpretation of q 2 : Look under the q 2 column for CUSL. Note the 0.229 is the q 2 effect size for the predictive relevance of CUSA on CUSL. The 0.229 indicates that CUSA has a medium effect in producing the Q 2 (predictive relevance) for CUSL. In contrast, the 0.081 is the q 2 effect size for the predictive relevance of LIKE on CUSL. The 0.081 indicates that LIKE has a small effect in producing the Q 2 for CUSL.

22. 22 All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters. Reputation Model Results – Path Coefficients – Guidelines for assessing q 2 values: Value Effect Size Value Effect Size 0.02= small 0.02= small 0.15= medium 0.15= medium 0.35= large 0.35= large

23. Summary of Results – Path Coefficients, f 2 and q 2 CUSALIKE Path Coefficient f 2 effect size q 2 effect size Path Coefficient f 2 effect size q 2 effect size ATTR0.16710.0290.019 COMP0.14550.0180.001 CSOR0.17840.0360.029 CUSA LIKE0.43570.1610.140 PERF0.11700.0110.007 QUAL0.38000.0950.053 23 Guidelines for assessing q 2 values associated with predictive relevance (Q 2 ): Value Effect Size Value Effect Size 0.02= small 0.02= small 0.15= medium 0.15= medium 0.35= large 0.35= large

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25. 25. All rights reserved ©. Cannot be reproduced or distributed without express written permission from Sage, Prentice-Hall, SmartPLS, and session presenters.