Last week, I visited UNICEF’s Supply and Logistics headquarters in Copenhagen, together with my International Logistics Management students from Copenhagen Business School. I was very impressed by interesting presentations about UNICEF’s supply chain and the processes of their almost fully automated warehouse. Keep on doing your important work that is essential to fulfill children’s rights to health, education and protection.
The AVE–SV comparison (Fornell & Larcker, 1981) is certainly the most common technique for detecting discriminant validity violations on the construct level. An alternative technique, proposed by Henseler et al. (2015), is the heterotrait–monotrait (HTMT) ratio of correlations (see the video below). Based on simulation data, these authors show for variance-based structural equation modeling (SEM), e.g. PLS, that AVE–SV does not reliably detect discriminant validity violations, whereas HTMT identifies a lack of discriminant validity effectively. Results of a related study conducted by Voorhees et al. (2015) suggest that both AVE–SV and HTMT are recommended for detecting discriminant validity violations if covariance-based SEM, e.g. AMOS, is used. They show that the HTMT technique with a cutoff value of 0.85 – abbreviated as HTMT.85 – performs best overall. In other words, HTMT should be used in both variance-based and covariance-based SEM, AVE–SV should be used only in covariance-based SEM. One might be tempted to prefer inferential tests over such heuristics. However, the constrained ϕ approach did not perform well in Voorhees et al.’s study.
Fornell, C., & Larcker, D. (1981). Evaluating Structural Equation Models with Unobservable Variables and Measurement Error. Journal of Marketing Research, 18 (1) DOI: 10.2307/3151312
Henseler, J., Ringle, C., & Sarstedt, M. (2015). A New Criterion for Assessing Discriminant Validity in Variance-based Structural Equation Modeling. Journal of the Academy of Marketing Science, 43 (1), 115-135 DOI: 10.1007/s11747-014-0403-8
Voorhees, C., Brady, M., Calantone, R., & Ramirez, E. (2015). Discriminant Validity Testing in Marketing: An Analysis, Causes for Concern, and Proposed Remedies. Journal of the Academy of Marketing Science DOI: 10.1007/s11747-015-0455-4
The global not-for-profit organization CDP (formerly the Carbon Disclosure Project) has published a report: Supply Chain Sustainability Revealed: A Country Comparison. The report was written by Accenture Strategy. “While climate and water risks are apparent, the implications for businesses and economies reliant on complex supply chain models are less understood”, says Paul Simpson, CEO, CDP. “The good news is that as companies transform their supply chains into digital supply networks they will gain greater end-to-end visibility, traceability and access to information to report on their compliance progress and mitigate climate risks”, adds Gary Hanifan, managing director, Accenture Strategy. The report reveals that suppliers in France, the UK, Spain and Germany are identified as the most sustainable ones, whereas suppliers in China, Italy and the U.S. turn out to be particularly vulnerable. The report also shows that Brazil, Canada and India must do more to encourage suppliers to report emission reduction initiatives.
In their new editorial, the editors of the Journal of Operations Management highlight five important issues, “many of which continue to be reasons for rejections in the manuscript review process”. First, “it is time to take causality seriously”. Particularly, authors have to take steps toward correcting for endogeneity or demonstrating exogeneity. Second, “know which rules are worth following”. For example, the yes–no rule that a measure is reliable if Cronbach’s α exceeds 0.7 is no longer recommended. Third, “always understand the tools you use”. Here, authors of PLS-based manuscripts routinely fail to discuss the weaknesses of the estimator. Fourth, “be cautious with claims about common method bias”. Particularly, ex-post techniques (e.g., Harman, 1967) do not have much practical value (see, however, my post about the CFA marker technique). Finally, “stay current on methodological developments”. For example, Baron & Kenny (1986) are widely used, although updated approaches have been published. It seems that the JOM editors no longer send manuscripts to the review process that ignore these issues.
Guide, V., & Ketokivi, M. (2015). Notes from the Editors: Redefining Some Methodological Criteria for the Journal. Journal of Operations Management, 37 DOI: 10.1016/S0272-6963(15)00056-X