Article A Critical Examination of Common Beliefs About Partial Least Squares Path Modeling

Partial least squares path modeling (PLS) was developed in the 1960s and 1970s as a method for predictive modeling. In the succeeding years, applied disciplines, including organizational and man-agement research, have developed beliefs about the capabilities of PLS and its suitability for different applications. On close examination, some of these beliefs prove to be unfounded and to bear little correspondence to the actual capabilities of PLS. In this article, we critically examine several of these commonly held beliefs. We describe their origins, and, using simple examples, we demonstrate that many of these beliefs are not true. We conclude that the method is widely misunderstood, and our results cast strong doubts on its effectiveness for building and testing theory in organizational research. Keywords partial least squares, statistical and methodological myths and urban legends, structural equation modeling Partial least squares path modeling (PLS) was developed in the 1960s and 1970s by Herman Wold (cf. Jöreskog & Wold, 1982) as an alternative to LISREL. However, Dijkstra (1983) soon proved that if PLS is used as an estimator for structural equation models (SEMs), the parameter estimates are both inconsistent and biased, leading to abandonment of further development. Nevertheless, PLS experienced a renaissance in more applied disciplines with proponents such as Fornell and Book