A critical look at the use of SEM in international business research

What is it about?

We argue that research in the dynamic field of international business (IB) often experiences an early stage of theory development and thus will benefit from the application of a partial least squares SEM approach. To back this argument, we searched six journals with an international business (and marketing) focus over a period of 14 years and screened articles that apply SEM. In addition to assessing whether authors follow best practices for methodology use outlined, we evaluate the research objectives and methodology choices. More specifically, we evaluate whether the methodology choice matches the outlined research objectives. Of the articles, 379 utilized CB-SEM and 45 PLS-SEM. The reasons for using PLS-SEM referred largely to sampling and data measurement issues and did not sufficiently build on the procedure’s benefits that stem from its design for predictive and exploratory purposes. Thus, the procedure’s key benefits, which are particularly fruitful for the process of theorizing, are not fully exploited. Furthermore, authors will benefit and seriously advance theory-building endeavours, when following best practices regarding PLS-SEM.

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Why is it important?

We provide researchers seeking to adopt SEM as an analytical method with practical guidelines for making better choices concerning the most appropriate SEM approach. Furthermore, we identify critical challenges in the selection and use of SEM procedures and offer concrete recommendations for better practice.

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