Reciprocal relationships assessment

Instrumental variables, available in WarpPLS starting in version 6.0, can be used to estimate reciprocal (or non-recursive) relationships. For this, you should use the sub-option “Reciprocal stochastic variation sharing”, under the new menu option “Explore analytic composites and instrumental variables”. To illustrate the sub-option “Reciprocal stochastic variation sharing” let us consider a population model with the following links: A > C, B > D, C > D and D > C. To test the reciprocal relationship between C and D you should first control for endogeneity in C and D, due to variation coming from B and A respectively, by creating two instrumental variables iC and iD via the sub-option “Single stochastic variation sharing” and adding these variables to the model. Next you should create two other instrumental variables through the sub-option “Reciprocal stochastic variation sharing”, which we will call here iCrD and iDrC, referring to the conceptual reciprocal links C > D and D > C respectively. (No links between C and D should be included in the model graph, since reciprocal links cannot be directly represented in this version of this software.) The final model, with all the links, will be as follows: A > C, iC > C, B > D, iD > D, iDrC > D and iCrD > C. Here the link iDrC > D represents the conceptual link C > D, and can be used to test this conceptual link; and the link iCrD > C represents the conceptual link D > C, and can similarly be used to test this conceptual link.

Related YouTube video:

Estimate Reciprocal Relationships in WarpPLS

http://youtu.be/jn8VZaOWe90