A Handbook on SEM

Zainudin Awang - Universiti Sultan Zainal Abidin

CHAPTER 9

THE APPLICATION OF AMOS GRAPHIC

IN POSTGRADUATE RESEARCHES

In this chapter, the discussion is focused on analyzing the theoretical model of a research using
Structural Equation Modeling (SEM) with AMOS Graphic. As has been said earlier, the researcher
could convert the exact research model into AMOS Graphic for further analysis.

9.1 MODELING THE LOYALTY OF BANKING CUSTOMERS

The model for the above study is shown in Figure 1. In this study the researcher was trying to
analyze the inter-relationships among four exogenous constructs, two mediating constructs, and
one endogenous construct in a model. The latent constructs involved in this study are:

1. Perceived Service Quality (PSQ). This latent construct is measured using seven items
namely ps1 to ps7. This is an exogenous construct.

2. Perceived Value (PV). This latent construct is also measured using seven items namely pv1
to pv7. This is an exogenous construct.

3. Communication (COM). This latent construct is measured using four items namely co1 to
co4. This is an exogenous construct.

4. Corporate Image (IMG). This latent construct is measured using eight items namely im1 to
im8. This is an exogenous construct.

5. Customer Satisfaction (CS). This latent construct is measured using five items namely cs1
to cs5. This is a mediating construct.

6. Customer Trust (TRUST). This latent construct is measured using five items namely tr1 to
tr5. This is a mediating construct.

7. Customer Loyalty (CL). This latent construct is measured using six items namely cl1 to cl
6. This is an endogenous construct.

The latent constructs and their respective indicators are modeled in Figure 1.

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Figure 1: The model of Customer Loyalty towards service providers in banking industry

The researcher needs to validate the measurement model for all latent constructs using CFA
before modeling the structural model (SEM). The validation procedure for Unidimensionality,
Validity and Reliability would be carried out using Confirmatory Factor Analysis (CFA). The
Pooled-CFA is more preferred compared to separate CFA for every measurement model.
In this particular study, no pilot test was required, and no EFA was carried out. This is
because the instruments involved have been established and validated by previous researcher and
the present researcher only adapts the instruments. The other reason is because the industry where
the instruments were developed is similar with the present study.

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9.2 MODELING THE LOYALTY OF UNDERGRADUATES TOWARDS

THEIR UNIVERSITY FOR POSTGRADUATE STUDIES

The schematic diagram of the model is shown in Figure 2, and the conversion of schematic
diagram into AMOS graphic is shown in Figure 3.

In this study, the researcher was trying to analyze the inter-relationships among four latent
constructs namely Service Quality, Corporate Image, Students Satisfaction, and Students Loyalty.
In this case Service Quality and Corporate Image are exogenous constructs, Students Satisfaction
is a mediating construct, and Students Loyalty is the endogenous construct. All constructs in the
model are latent. The hypotheses of interest to be tested by the study are shown in Figure 2.

Figure 2: Modeling the loyalty of outgoing undergraduates towards their university for postgraduates

The Schematic diagram in Figure 2 presents five hypotheses of interest to be tested in the study.
The model in this study has four latent constructs namely Service Quality (34 items), Corporate
Image (16 items), Student Satisfaction (9 items), and Students Loyalty (14 items). The Pilot Study

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data were collected using the above items. Using data from Pilot Study, the researcher runs the
Exploratory Factor Analysis (EFA) to determine the dimensionality of items measuring every
construct – whether all items fall into one dimension or fall into several dimensions.

The EFA employed to the Pilot Study data found that every latent construct consist of a few
dimensions where each dimension has certain number of items. Items having low factor loading
(less than 0.6) as well as cross-loading items (factor loading greater than 0.6 for more than one
dimension) were deleted. Now, based on the dimensions and their respective items, the
measurement models for the constructs are developed as shown in Figure 3. At this stage, the
researcher could rename the dimensions accordingly.
For example Service Quality construct has three dimensions - the researcher renamed them as People, Academic, and
Infrastructure – meaning, the quality of the people, quality of academic facilities , and quality of infrastructure
facilities in the university system. In this case, the Service Quality construct is considered a second order construct
since it consists of three sub-constructs.

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Figure 3: The Measurement Model for every construct based on the outcome of EFA
The items for every construct were rearranged in a dimension based on the measurement model in
Figure 3. Using the data from the field study, the researcher would run the Confirmatory Factor
Analysis (CFA) to validate the measurement model (Figure 3). As has been explained in Chapter
3, the CFA procedure is carried out to assess the Unidimensionality, Validity, and Reliability of
the measurement model. Once the above requirements have been achieved, the researcher could
proceed into Structural Equation Modeling or SEM. The structural model for SEM is shown in
Figure 4.

Figure 4: The structural model for running SEM once the CFA is completed.
Note: In some study, the researcher only interested to validate the measurement model of the constructs using CFA,
and the objective of the study does not include modeling using SEM. This is especially true if the researcher is only
developing the measurement model for certain constructs, and has no intention to examine the inter-relationships
among these constructs since the theoretical framework is not yet developed.

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Question: What if, the researcher did not carry out pilot study. He collected all 400 data required
for the project during field study. How he should go about doing EFA and CFA?

Answer: In this case, he needs to split these 400 data randomly into two separate data files – let
name the files as dataset1 and dataset2. Dataset1 consist of 100 data - supposedly from pilot study
and Dataset2 consist of 300 data – supposedly from field study. He could run EFA procedure using
dataset1 to obtain the dimensions and to develop measurement model of the construct, and then to
run the CFA procedure using dataset 2 to validate the measurement model of the construct. Thus,
dataset 2 should contain the variables resulted from EFA.

Caution: The data that has been used to analyze EFA cannot be re-used for analyzing CFA. In
other words, data cannot be recycled. The rationale being – the EFA is assessed based on the Pilot
Study data whereas CFA is assessed based on Field Study data. In reality, the time lapse between
pilot study and field study is too long. On top of that, EFA is carried out with the purpose to
determine the dimensionality of items measuring the construct, whereas CFA is carried out with
the purpose to validate the measurement model of a construct.

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9.3 MODELING THE REPURCHASE INTENTIONS TOWARDS A

PARTICULAR SERVICE PRODUCT

Figure 5: The Standardized Regression Weights

Table 1: The Correlations between Exogenous Constructs in the model

Construct Construct Estimate

Spiritual_Intelligence <--> Spiritual_Congruence -.427
Spiritual_Congruence <--> Product_Image .377
Product_Image <--> Product_Involvement .569
Spiritual_Intelligence <--> Product_Image -.662
Spiritual_Intelligence <--> Product_Involvement -.652
Spiritual_Congruence <--> Product_Involvement .336
Perceived_Control <--> Subjective_Norm .588
Spiritual_Intelligence <--> Perceived_Control -.640
Spiritual_Intelligence <--> Subjective_Norm -.689

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Construct Construct Estimate

Spiritual_Congruence <--> Perceived_Control .552
Spiritual_Congruence <--> Subjective_Norm .587
Product_Involvement <--> Perceived_Control .497
Product_Involvement <--> Subjective_Norm .614
Product_Image <--> Perceived_Control .434
Product_Image <--> Subjective_Norm .473
Note: All correlation between Exogenous Constructs are below 0.85 which indicate no redundancy among constructs
in the model.

Figure 6: The Regression Weights for the model

Figure 6 presents the regression weights or the effects of all exogenous constructs on their
corresponding endogenous constructs. The output also presents the variance of measurement errors
for every items in the model as well as the variance of residuals of the model itself.

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Table 2: The Regression Weights and its Significance

Construct Construct Estimate S.E. C.R. P Result

Attitude <--- Spiritual_Intelligence 0.320 0.156 2.050 0.040 Significant
Attitude <--- Spiritual_Congruence 0.100 0.043 2.300 0.021 Significant
Attitude <--- Product_Image 0.892 0.089 10.036 *** Significant
Attitude <--- Product_Involvement 0.515 0.164 3.146 0.002 Significant
Intention_to_Purchase <--- Attitude 0.259 0.082 3.170 0.002 Significant
Intention_to_Purchase <--- Perceived_Control 0.230 0.088 2.608 0.009 Significant
Intention_to_Purchase <--- Subjective_Norm 0.550 0.113 4.873 *** Significant

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9.4 MODELING THE EFFECTS OF CRISIS RESPONSIBILITY ON

ORGANIZATIONAL REPUTATION

Figure 7: The Standardized Regression weight

Once the output is obtained, the researcher needs to examine whether regression values given
(standardized or unstandardized regression weights) are theoretically correct or not. For example,
theoretically the effects of Crisis Responsibility on Charismatic Leadership, Corporate Credibility,
and Organizational Reputation should be negative. On the other hand, the effects of Charismatic
Leadership and Corporate Credibility on Organizational Reputation should be positive.

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Figure 8: The Regression weight

Table 3: The Path Analysis and its significance

Construct Construct Estimate S.E. C.R. P Result

Charismatic_Leadership <--- Crisis_Responsibility -0.500 .056 -8.891 *** Significant

Charismatic_Leadership <--- Crisis_Responsibility -0.405 .061 -6.672 *** Significant
Corporate_Credibility <--- Crisis_Responsibility -0.223 .044 -5.037 *** Significant
Organizational_Reputation <--- Charismatic_Leadership 0.533 .082 6.479 *** Significant
Organizational_Reputation <--- Corporate_Credibility 0.147 .039 3.822 *** Significant
Organizational_Reputation <--- Crisis_Responsibility -0.500 .056 -8.891 *** Significant
Charismatic_Leadership <--- Crisis_Responsibility -0.405 .061 -6.672 *** Significant

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