Structural equation modelling

Research Proposal
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This analysis is designed to capture the effect of five independent variables - reputation, skill, information exchange, power and flexibility- on trust and the influence of trust on long-term orientation. In doing so, we compare two model specifications using structural equation modelling.


Skill was not found to impact trust. In addition, trust has a significant positive impact on long-term orientation of the relationship among SMEs.
The origins of the structural equation modelling (SEM) have its roots in three disciplines: sociology, psychology and economics. In marketing SEM starts its application in November 1982 in the issue published by the Journal of Marketing Research (Bollen 1989).
SEM grows out of and serves purposes similar to multiple regression, but in a more powerful way which takes into account the modeling of interactions, nonlinearities, correlated independents, measurement error, correlated error terms, multiple latent independents each measured by multiple indicators, and one or more latent dependents also each with multiple indicators. SEM may be used as a more powerful alternative to multiple regression, path analysis, factor analysis, time series analysis, and analysis of covariance. That is, these procedures may be seen as special cases of SEM, or, to put it another way, SEM is an extension of the general linear model (GLM) of which multiple regression is a part.
In this analysis we apply SEM to examine the influence of reputation, flexibility, information exchange, power and skill on trust and consequently on long-term orientation. ...
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