The authors review issues related to the application of structural equation modeling (SEM) in marketing. The discussion begins by considering issues related to the process of applying SEM in empirical research, including model specification, identification, estimation, evaluation, and respecification, and reporting of results. In addition to these process issues, a number of other issues, such as formulation of multiple theoretical models, model error versus sampling error, and relating study objectives to the capabilities of SEM, are considered, and suggestions offered regarding ways that SEM applications might be improved.
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