Mikko Rönkkö, Nick Lee, Joerg Evermann, Cameron McIntosh and John Antonakis
Over the past 20 years, partial least squares (PLS) has become a popular method in marketing research. At the same time, several methodological studies have demonstrated problems…
Abstract
Purpose
Over the past 20 years, partial least squares (PLS) has become a popular method in marketing research. At the same time, several methodological studies have demonstrated problems with the technique but have had little impact on its use in marketing research practice. This study aims to present some of these criticisms in a reader-friendly way for non-methodologists.
Design/methodology/approach
Key critiques of PLS are summarized and demonstrated using existing data sets in easily replicated ways. Recommendations are made for assessing whether PLS is a useful method for a given research problem.
Findings
PLS is fundamentally just a way of constructing scale scores for regression. PLS provides no clear benefits for marketing researchers and has disadvantages that are features of the original design and cannot be solved within the PLS framework itself. Unweighted sums of item scores provide a more robust way of creating scale scores.
Research limitations/implications
The findings strongly suggest that researchers abandon the use of PLS in typical marketing studies.
Practical implications
This paper provides concrete examples and techniques to practicing marketing and social science researchers regarding how to incorporate composites into their work, and how to make decisions regarding such.
Originality/value
This work presents a novel perspective on PLS critiques by showing how researchers can use their own data to assess whether PLS (or another composite method) can provide any advantage over simple sum scores. A composite equivalence index is introduced for this purpose.
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Mikko Rönkkö, Nick Lee, Joerg Evermann, Cameron McIntosh and John Antonakis
This study aims to provide a response to the commentary by Yuan on the paper “Marketing or Methodology” in this issue of EJM.
Abstract
Purpose
This study aims to provide a response to the commentary by Yuan on the paper “Marketing or Methodology” in this issue of EJM.
Design/methodology/approach
Conceptual argument and statistical discussion.
Findings
The authors find that some of Yuan’s arguments are incorrect, or unclear. Further, rather than contradicting the authors’ conclusions, the material provided by Yuan in his commentary actually provides additional reasons to avoid partial least squares (PLS) in marketing research. As such, Yuan’s commentary is best understood as additional evidence speaking against the use of PLS in real-world research.
Research limitations/implications
This rejoinder, coupled with Yuan’s comment, continues to support the strong implication that researchers should avoid using PLS in marketing and related research.
Practical implications
Marketing researchers should avoid using PLS in their work.
Originality/value
This rejoinder supports the earlier conclusions of “Marketing or Methodology,” with additional argumentation and evidence.
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Mikko Rönkkö, Monika E. von Bonsdorff and Susanna Mansikkamäki
Entrepreneurial exit research has overlooked the unique context of exits at retirement age when an exit marks the end of an entrepreneurial career (i.e. retirement). To better…
Abstract
Purpose
Entrepreneurial exit research has overlooked the unique context of exits at retirement age when an exit marks the end of an entrepreneurial career (i.e. retirement). To better understand retirement exit decisions and transitions, this study introduces the concept of work ability (i.e. an individual’s ability to meet work demands) into the entrepreneurial exit literature and, based on role theory, hypothesises its effect and interaction with general life satisfaction in explaining the entrepreneurial exits to retirement. The study clarifies the dynamics between the voluntary and non-voluntary aspects behind exit to retirement.
Design/methodology/approach
The authors use mixed-effects ordinal logistic regression with four-wave panel data on 198 Finnish small business entrepreneurs who intend to retire to test hypotheses on the relationship between work ability, general life satisfaction and entrepreneurial exit to retirement.
Findings
The study provides partial support for the hypothesis that work ability negatively impacts entrepreneurial exit to retirement and strong support for the idea that this effect is affected by general life satisfaction. Entrepreneurs who experience higher life satisfaction are likely to retire on their own terms, whereas those less satisfied continue working until declining work ability forces them to retire.
Originality/value
The study contributes to the entrepreneurial exit literature by showing how the exit dynamics unfold in the unique context of entrepreneurial exit to retirement. The theoretical discussion opens up the potential psychological mechanisms behind such dynamics.
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Mikko Rönkkö, Juhana Peltonen and Pia Arenius
Entrepreneurial bricolage has been proposed as a method of alleviating resource constraints of entrepreneurial firms. However, the outcomes of bricolage for a firm may vary…
Abstract
Entrepreneurial bricolage has been proposed as a method of alleviating resource constraints of entrepreneurial firms. However, the outcomes of bricolage for a firm may vary greatly. One of the most pressing issues is to clarify how bricolage may enhance firm growth. Based on case studies, Baker and Nelson (2005) propose that applying bricolage in limited areas (“selective bricolage”) may enable firms to grow, whereas excessive (“parallel”) bricolage may lead to the opposite outcome. However, the process of testing the generalizability of this relationship using quantitative methods has just begun. In this chapter, we describe our efforts to develop a scale that measures bricolage manifestation in firms by using the “environmental domains” of Baker and Nelson (2005) to facilitate quantitative testing of the bricolage–growth relationship.
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Marko Kohtamäki, Sascha Kraus, Markus Mäkelä and Mikko Rönkkö
The study seeks to add to the existing body of knowledge on the link between strategic planning and company performance by exploring the mediating role of personnel commitment to…
Abstract
Purpose
The study seeks to add to the existing body of knowledge on the link between strategic planning and company performance by exploring the mediating role of personnel commitment to strategy implementation and organisational learning. To study the indirect link between strategic planning and company performance, the paper aims to introduce a participative strategic planning construct that may enable firms to: commit personnel to strategy implementation; increase organisational learning; and improve company performance.
Design/methodology/approach
Using data from 160 small and medium‐sized Finnish IT companies, the authors conduct an Mplus‐analysis.
Findings
The findings indicate that participative strategic planning positively affects personnel commitment to strategy implementation, which thereby increases company performance. However, according to the analysis, participative strategic planning does not impact organisational learning, although organisational learning does have a positive impact on company performance.
Research limitations/implications
The results of this study are generalisable to a dynamic industry context of small and medium‐sized IT‐firms operating in a small open economy, such as that of Finland.
Practical implications
The results suggest that managers need to involve personnel in strategic planning to increase personnel commitment to strategy implementation. However, because participative strategic planning does not facilitate organisational learning, managers need to determine other ways to facilitate learning at an organisational level.
Originality/value
The paper highlights the role of participative strategic planning, which facilitates personnel commitment to strategy implementation and thus improves company performance.
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This study aims to correct errors in, and comment on the claims made in the comment papers of Rigdon (2022) and Henseler and Schuberth (2022), and to tidy up any substantive…
Abstract
Purpose
This study aims to correct errors in, and comment on the claims made in the comment papers of Rigdon (2022) and Henseler and Schuberth (2022), and to tidy up any substantive oversights made in Cadogan and Lee (2022).
Design/methodology/approach
The study discusses and clarifies the gap between Rigdon’s notion of scientific realism and the metaphysical, semantic and epistemological commitments that are broadly agreed to be key principles of scientific realism. The study also examines the ontological status of the variables that Henseler and Schuberth claim are emergent using emergence logic grounded in the notion that variables are only truly emergent if they demonstrate a failure of generative atomism.
Findings
In scientific realism, hypothetical causal contact between the unobserved and the observed is a key foundational stance, and as such, Rigdon’s concept proxy framework (CPF) is inherently anti-realist in nature. Furthermore, Henseler and Schuberth’s suggestion that composite-creating statistical packages [such as partial least squares (PLS)] can model emergent variables should be treated with skepticism by realists.
Research limitations/implications
Claims made by Rigdon regarding the realism of CPF are unfounded, and claims by Henseler and Schuberth regarding the universal suitability of partial least squares (PLS) as a tool for use by researchers of all ontological stripes (see their Table 5) do not appear to be well-grounded.
Practical implications
Those aspiring to do science according to the precepts of scientific realism need to be careful in assessing claims in the literature. For instance, despite Rigdon’s assertion that CPF is a realist framework, we show that it is not. Consequently, some of Rigdon’s core criticisms of the common factor logic make no sense for the realist. Likewise, if the variables resulting from composite creating statistical packages (like PLS) are not really emergent (contrary to Henseler and Schuberth) and so are not real, their utility as tools for scientific realist inquiry are called into question.
Originality/value
This study assesses PLS using the Eleatic Principle and examines H&S’s version of emergent variables from an ontological perspective.
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This study aims to determine whether partial least squares path modeling (PLS) is fit for purpose for scholars holding scientific realist views.
Abstract
Purpose
This study aims to determine whether partial least squares path modeling (PLS) is fit for purpose for scholars holding scientific realist views.
Design/methodology/approach
The authors present the philosophical foundations of scientific realism and constructivism and examine the extent to which PLS aligns with them.
Findings
PLS does not align with scientific realism but aligns well with constructivism.
Research limitations/implications
Research is needed to assess PLS’s fit with instrumentalism and pragmatism.
Practical implications
PLS has no utility as a realist scientific tool but may be of interest to constructivists.
Originality/value
To the best of the authors’ knowledge, this study is the first to assess PLS’s alignments and mismatches with constructivist and scientific realist perspectives.
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Jaakko Rönkkö, Mikko Paananen and Aleksi Lahikainen
This study examines the effects of board members’ compensation on the voluntary establishment of an internal audit function in publicly listed firms. While previous studies have…
Abstract
Purpose
This study examines the effects of board members’ compensation on the voluntary establishment of an internal audit function in publicly listed firms. While previous studies have identified some individual determinants related to the voluntary establishment of an internal audit function, the existing evidence on how board members’ compensation affects voluntary use of internal audit is, at best, ambiguous, scarce and incoherent.
Design/methodology/approach
Board compensation is a central incentive instrument in the classic principal–agent relationship between the owners and board members. The theme is empirically examined by using data compiled from Finnish publicly listed companies for the period 2015 to 2018. Since the dependent variable of the study is a binary variable, the logistic regression method was chosen as the statistical method of the study.
Findings
Our results unequivocally show that generous compensation of the board members increases the likelihood of establishing an internal audit function. Thus, we conclude that good corporate governance can be improved through generous compensation of board members.
Originality/value
Identifying the determinants of internal audit is vital to better understand the mechanisms that facilitate firms' improvement of internal control and risk management in terms of voluntarily adopting an internal audit function, and the implementation of good governance in general. Although numerous determinants of internal audit have been identified in previous studies, this study showed that one of the key determinants has so far been overlooked; namely, the remuneration of board members.
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The role of incubators in promoting startup growth has received close research attention, but the findings paint a conflicting picture. This study aims to reduce the ambiguity…
Abstract
Purpose
The role of incubators in promoting startup growth has received close research attention, but the findings paint a conflicting picture. This study aims to reduce the ambiguity surrounding incubator impact by exploring how incubators can support startups with business model innovations – a significant growth factor for startups neglected in the incubation literature.
Design/methodology/approach
Using a multiple-case study design, the authors conducted semistructured interviews with incubator directors and startup founders, offering insights into their experiences. The transcripts were coded following the Gioia method.
Findings
This study shows that incubatees are exposed to and struggle with business model innovation. Therefore, this study explores how incubators can support startups in innovating their business models.
Research limitations/implications
This research reveals the importance of addressing the psychological needs of entrepreneurs in incubators. By offering emotional support, incubators can create a positive psychological environment, helping entrepreneurs face fears and challenges. This highlights the human side of entrepreneurship, which has not been considered in the incubation literature.
Practical implications
Incubator directors can strengthen their programmes’ impact by offering tailored support for business model innovation and facilitating network connections. Policymakers should encourage ecosystem collaboration and allocate resources to effective programmes.
Originality/value
This research fills a gap in the incubation literature by emphasizing the significance and need for support for business model innovation. This study also offers original insights into the psychological dimensions of entrepreneurship.