Role of structural equation modeling in scale development

Purpose - The purpose of this paper is to highlight the role of structural equation modeling (SEM) in scale development and the problems faced by researchers in developing the scale using SEM. Design/methodology/approach - The study thoroughly reviews and analyzes the literature to discuss the role of SEM in scale development. The study was approached purely from a theoretical perspective. Findings - The study found that issues such as multivariate normality, multicollinearity and methods of estimation are often overlooked by researchers when developing scales. The study also observed that the application and reporting of SEM in scale development is not well established. The roles of exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) in the dimensionality of a construct are equivocal. Originality/value - The study has covered all the issues of scale development using SEM including EFA, CFA, dimensionality, multivariate normality and multicollinearity.