Structural Equation Modeling

(SEM)

Prepared by
Dr. I. Bernarto
Universitas Pelita Harapan
 What is Structural Equation
Modeling?
• SEM encompasses (meliputi) an entire family of models
known by many names, among them covariance
(=mengukur besarnya hubungan antar 2
variabel/korelasi) structure analysis, latent variable
analysis, confirmatory factor analysis, and often simply
(dengan sederhana) LISREL analysis.
• SEM techniques are distinguished by two characteristics:
• Estimation of multiple and interrelated dependence
relationships
• The ability to represents unobserved concepts in these
relationships and account for measurement error in
the estimation process.
 Simple Regression

Tinggi badan Berat badan

(IV) (DV)

Multiple Regression

Tinggi badan
(IV1)
Berat badan
(DV)
Frekuensi
Cemilan
(IV2)
Analisis Jalur
Tinggi badan
(IV1)
Tekanan
Berat badan
darah
(MedV) (DV)
Frekuensi
Cemilan
(IV2)
 Structural Equation Modeling (SEM)
K1
Kualitas
Kepuasan
poduk
(DV) K2
(IV)

K3

Kualitas
poduk
(IV1)
kepuasan
(DV)
KL1
Kualitas
KL2 layanan
(IV2)

KL3
Kualitas
poduk L1
(IV1)
kepuasan Loyalitas
(MedV) (DV)
L2

Kualitas
layanan L3
(IV2)
What is Structural Equation
Modeling?

X Z
 What is Structural Equation
Modeling?
• The estimation of multiple interrelated dependence
relationships is not the only unique element of structural
equation modeling. SEM also has the ability to incorporate
(menggabungkan) latent variables into the analysis.
• A latent variables is a hypothesized and unobserved
concept that can only be approximated by observable or
measureable variables, are known as manifest variables.
• Measurement error is degree to which the variables we
can measure (the manifest variables) do not perfectly
describe the latent construct(s) of interest.
• All constructs have some measurement error, even with
the best indicator variables.
 What is Structural Equation
Modeling?
• Measurement error is not just caused by inaccurate
responses but occurs when we use more abstract or
theoretical concepts, such as attitude toward a product or
motivations for behavior.
• With concepts such as these, the researcher tries to design
the best questions to measure the concept.
• How do we account (memperhitungkan) for measurement
error? SEM provides the measurement model, which
specifies the rules of correspondence (hubungan) between
manifest and latent variables.
• The measurement model allows the researcher to use one
or more variables for a single independent or dependent
concept and then estimate the reliability.
 What is Structural Equation
Modeling?
• Structural equation modeling provides
(memberikan) the researcher with the ability to
accomodate multiple interrelated dependence
relationships in a single model.
• Its closest analogy is multiple regression, which
can estimate a single relationship (equation).
• But SEM can estimate many equations at once
(sekaligus), and they can be interrelated, meaning
that the dependent variable in one equation can
be an independent variable in other equation(s).
 Path Diagram

X1

H1
H2

H3 H4
X2 y1 y3

H5 H6 H7
X21 X22 X23
H8
X3 y2
 Stages in Structural Equation
Modeling
• Stage 1: Developing a Theoretically Based Model.
• Structural equation modeling is based on causal
relationships, in which the change in one variable
is assumed to result in a change in another
variable.
• The strength and conviction with which the
researcher can assume causation between two
variables lies not in the analytical methods chosen
but in the theoretical justification provided to
support the analyses.
 Stages in Structural Equation
Modeling
• Stage 2: Constructing a Path Diagram of Causal
Relationships.
• We have expressed causal relationships only in terms
of equations. But there is another method of
portraying (menggambarkan) these relationships
called path diagrams, which are especially helpful in
depicting a series of causal relationships.
• A path diagram is more than just a visual portrayal of
the relationships because it allows the researcher to
represent not only the predictive relationships among
constructs, but also associative relationships
(correlations) among constructs and even indicators.
 Stages in Structural Equation
Modeling
• Stage 2: Constructing a Path Diagram of Causal
Relationships.
• A construct can represent a concept as simple as age,
income, or gender, or as complex as socioeconomic status,
knowledge, preference, or attitude.
• A researcher defines path diagrams in terms of constructs
and then find variables to measure each construct.
• A construct is typically represented in a path diagram by an
oval.
• A straight arrow indicates a direct causal relationship from
one construct to another.
• A curved arrow (or a line without arrowheads) between
constructs indicates simply a correlation between constructs.
 Stages in Structural Equation
Modeling
• Stage 2: Constructing a Path Diagram of Causal
Relationships.
• Exogenous constructs, also known as source variables or
independent variables, are not “caused” or predicted by
any other variables in the model; that is, there are no
arrows pointing to these constructs.
• Endogenous, meaning that they are predicted by one or
more other constructs.
• Endogenous constructs can predict other endogenous
constructs (this is where we see the interrelationships that
point to the need for structural models), but an exogenous
construct can be causally related only to endogenous
constructs.
 Stages in Structural Equation
Modeling
• Stage 2: Constructing a Path Diagram of Causal
Relationships.
• Two assumptions underlie path diagrams:
• First, all causal relationships are indicated. Thus,
theory is the basis for inclusion or omission of any
relationship.
• The second asumption relates to the nature of the
causal relationships that are assumed to be linear.
• Nonlinear relationships cannot be directly estimated
in structural equation modeling, but modified
structural models can approximate nonlinear
relationships.
 Linear
Garis
Linier

Gaji
(Rp)

Lama Bekerja
(thn)
 S Curve
Gaji
(Rp)

Lama Bekerja
(thn)
 Stages in Structural Equation
Modeling
• Stage 3: Converting the path diagram into a set
of structural and measurement models (a two-
step process).
Measurement Model
Structural Model

Y2 X Y31

X1 Y3 Y32

Y33
Y1

X2
 Stages in Structural Equation
Modeling
• Stage 3: Converting the path diagram into a set of structural
and measurement models.
• Measurement model:
• The manifest variable we collect from the respondents are
termed indicators in the measurement model, because we use
them to measure, or “indicate”, the latent constructs.
• In the exploratory mode of factor analysis, the researcher
cannot control the loadings.
• In the measurement model, however, the researcher has
complete control over which variables describe each construct.
• Each variable was an indicator of only one construct...although
a variable may be an indicator for more than one construct, this
method is not recommended except in specific situations with
strong theoretical rationale.
 Stages in Structural Equation
Modeling
• Stage 3: Converting the path diagram into a set of structural
and measurement models.
• Measurement model:
• How many indicators should be used per construct?
• The minimum number of indicators for a construct is one, but the
use of only a single indicator requires the researcher to provide
estimates of reliability.
• A construct can be represented with two indicators, but three is the
preffered minimum number of indicators, becasue using only two
indicators increase the chances of reaching an infeasible solution.
• Apart from the theoretical basis that should be used to select
variables as indicators of a construct, there is no upper limit (tidak
ada batas atas) in terms of the number of indicators.
• As a practical matter, however, five to seven indicators should be
represent most constructs.
 Stages in Structural Equation
Modeling
• Stage 3: Converting the path diagram into a set of structural
and measurement models.
• Measurement model:
• A commonly used threshold value for acceptable reliability is 0.70,
although this is not an absolute standard, and values below 0.70
have been deemed acceptable if the research is exploratory in
nature.
• The indicator reliabilities should exceed 0.50,which roughly
corresponds to a standardized loading 0.70.
• Variance extracted measure reflects the overall amount of variance
in the indicators accounted for any the latent construct.
• Higher variance extracted values occur when the indicators are truly
representative of the latent construct.
• Guidelines suggest that the variance extracted values should exceed
0.50 for a construct.
 Stages in Structural Equation
Modeling
• Stage 4: Interpreting and modifying the model.
• Standardized versus unstandardized solutions:
• The standardized coefficients are useful for
determining relative importance, but are sample
specific and not comparable across sampels.
• Because the scale varies for each construct,
however, comparison between coefficients is more
difficult than with the standardized coefficients.
Stage 4: Interpreting and modifying the
model
 Source

• Hair, J. F., Anderson, R. E., Tatham, R. L., &

Black, W. C. (1998). Multivariate Data
Analysis. New Jersey: Prentice Hall.