Regarding EFA

[Surat S]

Respected Sir and group member,

I am analysing factors influencing institutional investor decisions in algorithm based trading. 

Here, it is not possible to include all reflective items ( latent variable causing items)..some will be the formative based items also ( items causing latent variable)..so it would be mixed.

My query is..is it possible to do EFA on formative scale.

There should be alternative way to do that otherwise EFA will be restricted to only marketing based research.

Like what jogging provides u benefits

Socialization, motivation ( all can be interlinked)

But here different items like liquidity, macroeconomic env , issue price etc.

But another question is...here liquidity also varies with macroeconomic env.

So what's the point of reflective vs formative. 

[Neeraj Kaushik]

Dear Surat

Plz refer to https://www.youtube.com/watch?v=GXyZJCkHKQ4&list=PLzUJUtTJcj8SS71HovHrU2HIjoRW7L4sm&index=6&t=72s to get a better understanding of Formative and Reflective constructs.

Constructs are used to measure the opinion/feelings/attitude etc which are intangible and can not be measured in defined units (like that of variables of Physics or chemistry0

Applying EFA on Formative is meaningless as when you say it is a Formative construct, you claim that the various statements are not related. So, when EFA procedure will put some statements in one factor, it'll be difficult to interpret that.

Regarding your second question about how to handle the formative construct, plz use SmartPLS. This procedure will provide you with a score of every construct that can be used for further analysis.

Best wishes

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[Surat S]

Ok sir.

I saw the video ..and I also saw Part 9 of handling formative Construct. It cleared my doubts about reflective vs formative. 

My objective was to find the influencing factors. ( No prior well defined construct in ROL ) 

Probable course of action 

Either i ask them on reflective scale , this can be done by asking them on broad phenomena ( not going into intrinsic details as it can create different parameters) . I can ask broad phenomena in different angles ( supported by LR ).

As this would be stupid question to ask  ...how to satisfy my objective in that case . Can I share items on personal email. ( confidential)

I understand the point of doing EFA on formative items . This will be meaningless .

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