Measurement Model

What is Measurement Model?

The measurement model is a part of the model that represents relationship between the latent variables and their measures (manifest variables). It is generally called the outer models in PLS-SEM.

The basis for determining these relationships is measurement theory.

In short, measurement model assessment aims at ensuring construct validity & reliability.

Validation of the measurement models is a requirement for assessing the structural model.

Components of Measurement Error

Random error (e.g., caused by the order of items in the questionnaire or respondent fatigue) (Heeler & Ray, 1972)
Systematic error, such as method variance (e.g., variance attributable to the measurement method rather than the construct of interest) (Bagozzi et al., 1991)

Effects of Measurement Errors

Xm : Value as measured

Xt : True value

ε : Error terms

εr : Random error

εs : Systematic error

Thus, the main objective of measurement model assessment is to reduce the effect of measurement errors in a data-set.

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