3 Methodical background:Specification of latent variables, variance-based SEM,operationalization, and research design
53 3 Methodical background: Specification of latent variables, variance-based SEM, operationalization, and research design Subsequent to the conceptualization and the theoretical development of a measurement and driver model of chief executive reputation, the evaluation of the hypotheses inherent to the model calls for the determination of the respective variables. All variables needed for the evaluation of the hypotheses are not directly observable. The perceptions of the CEO abilities, behavior, and character traits by the respondents as well as the trust propensity are per definition anchored internal to the respondents. The measurement of latent variables has to be done with the aid of manifest variables or indicators which are directly observable and in close causal relation to the latent variable. The difficulty lies in the identification of appropriate indicators and the specification of the direction of the causal effect between latent and manifest variables. The development and application of an adequate measurement instrument (“opera- tionalization”) of the latent variables is needed in order to empirically evaluate the theoretically deduced structural model and therewith the postulated relation- ships between the numerous latent constructs. Then, an adequate method can be selected. Finally, an appropriate research design – satisfying goodness of fit criteria of empirical research like objectivity, reliability, and validity (e.g., HAIR ET AL. 2006, p. 8) – has to be developed. This chapter provides an overview of important methodical issues with regard to the measurement of latent variables. First, chapter 3.1 introduces the basic types of specifications of latent variables and a set of...
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