Lower bounds on sample size in structural equation modeling
Electronic Commerce Research and Applications
Information Quality in Wikipedia: The Effects of Group Composition and Task Conflict
Journal of Management Information Systems
Journal of Organizational and End User Computing
Novelty-Knowledge Alignment: A Theory of Design Convergence in Systems Development
Journal of Management Information Systems
Exploring the interaction effects of social capital
Information and Management
Consuming information systems: An economic model of user satisfaction
Decision Support Systems
Information Systems and e-Business Management
Understanding the role of satisfaction in the formation of perceived switching value
Decision Support Systems
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A significant amount of information systems (IS) research involves hypothesizing and testing for interaction effects. Chin et al. (2003) completed an extensive experiment using Monte Carlo simulation that compared two different techniques for detecting and estimating such interaction effects: partial least squares (PLS) with a product indicator approach versus multiple regression with summated indicators. By varying the number of indicators for each construct and the sample size, they concluded that PLS using product indicators was better (at providing higher and presumably more accurate path estimates) than multiple regression using summated indicators. Although we view the Chin et al. (2003) study as an important step in using Monte Carlo analysis to investigate such issues, we believe their results give a misleading picture of the efficacy of the product indicator approach with PLS. By expanding the scope of the investigation to include statistical power, and by replicating and then extending their work, we reach a different conclusion---that although PLS with the product indicator approach provides higher point estimates of interaction paths, it also produces wider confidence intervals, and thus provides less statistical power than multiple regression. This disadvantage increases with the number of indicators and (up to a point) with sample size. We explore the possibility that these surprising results can be explained by capitalization on chance. Regardless of the explanation, our analysis leads us to recommend that if sample size or statistical significance is a concern, regression or PLS with product of the sums should be used instead of PLS with product indicators for testing interaction effects.