Academic journal article Journal of Management Information and Decision Sciences

An Analysis of Difference Score Measures of Latent Business Constructs

Academic journal article Journal of Management Information and Decision Sciences

An Analysis of Difference Score Measures of Latent Business Constructs

Article excerpt

ABSTRACT

This study empirically investigates the reliability and construct validity of difference score measures of latent business constructs in comparison to that of non-difference score measures of latent business constructs. Results provided evidence that question the conventional wisdom that the use of difference scores should be avoided whenever possible. Also, the thorough empirical examination of reliability and construct validity provides a framework for practitioners who wish to properly evaluate different measurement techniques.

INTRODUCTION

Difference scores are created when one measure is subtracted from another to create a measure of distinct construct (Peter, Churchill & Brown, 1993). Several researchers (Peter, Churchill & Brown, 1993; Johns, 1981; Cronbach & Furby, 1970; Nunally, 1959; and Mosier, 1951) have cited potential problems with difference scores, such as problems with reliability, discriminant validity, spurious correlation and variance restriction, which can cause them to perform poorly as measures of latent constructs. There is clearly a need for empirical study of the possible problems encountered when using difference scores to measure latent business constructs. This paper assesses the reliability and validity of difference score measures of latent business constructs in comparison to the reliability and validity of non-difference score alternatives purported to measure the same latent business constructs.

Difference Scores

A significant portion of the literature on difference score measures is in the area of testing and measurement (Cronbach & Furby 1970; Lord, 1958; and Mosier, 1951). In the business area, difference scores have been used mostly in behavior-oriented fields and are generally concerned with the measurement of latent constructs, although there has been application in economics and finance (Ogden, 1990).

The most common methods of expressing difference scores are simple absolute differences, differences between profiles and signed (algebraic) differences (Johns, 1981). Simple absolute differences are considered "simple" in that their components consist of single-item scores or summary scores derived from a scale of items (Johns, 1981). The term absolute implies that the direction of the difference is not important, only the magnitude.

Profiles are graphic summaries of multiple-item measures which retain the identity of each item until all are combined into a summary difference measure (Mosier, 1951). Use of profile differences requires the assumption that the direction of the difference is not important. However, unlike simple absolute differences, profiles have components that consist of more than a single variable (Johns, 1981).

Johns (1981) related that differences between profiles are commonly expressed as:

1 Sum of the absolute differences between parallel profile points to obtain an index of dissimilarity (Bernardin & Alvares, 1975; Green & Organ, 1973).

2 Sum of the squares of the absolute differences between parallel profile points to obtain the index of profile dissimilarity or D2 (Cronbach & Gleser, 1953).

3 Square root of the D2 index (Frank & Hackman, 1975; Senger, 1971). Algebraic, or signed, differences are formed when the direction of the difference is maintained, allowing researchers to consider both magnitude and direction of differences.

While researchers often employ various weighting strategies in the calculation of difference scores, these are primarily study-specific and will not be addressed in this paper. However, the method used to combine component parts into difference score measures must be considered carefully prior to any statistical analysis employed using difference scores as inputs. Peter, Churchill and Brown (1993) describe four areas in which problems may occur with the use of difference scores. …

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