1. Structural Equation Modeling (SEM)

2. Major application of SEM is to test complex relationships simultaneously Somewhat similar to performing several regression analyses and factor analyses simultaneously SEM is often used in conjunction with Confirmatory Factor Analysis (CFA) In CFA factors are predetermined and then their structure is confirmed through the analysis

3. Strategy, Market orientation, Innovation and performance cuos coos ci crm so ri nri cp dp

4. CUOS- customer oriented strategy COOS- competitor oriented strategy CI- competitor intelligence CRM-customer relationship management SO-service orientation RI-radical market innovation NRI-non radical innovation CP=company performance DP-division performance

5. The model proposed a complex test of many simultaneous regression models indicated by the arrows The independent variables are to the left (where the arrow begins) and the dependent variables are towards the right Each path is a test for one of several hypotheses being tested simultaneously

6. The hypotheses in this case are: Strategy impacts CI, CRM, SO These impact Innovation (both RI and NRI) These impact performance at divisional and company level Each ‘bubble’ is a factor. Each factor may be composed of multiple variables

7. The output gives us regression coefficients Arrows with no numbers indicates that the path specified by that arrow is not significant