Index Construction with Formative Indicators

Abstract

While the methodological literature is replete with advice concerning the development and validation of multi-item scales based upon reflective measures (e.g., Churchill 1979 Peter 1979, 1981 B6cker 1988 Gerbing and Anderson 1988 Steenkamp and Trijp 1991). The issue of index construction using formative measures has received little attention. Specifically, existing measure development guidelines are based on "conventional wisdom" (c.f. Bollen and Lennox 1991), wherebyitems(i.e., observed variables) comprising a scale are seen as reflective (effect) indicators of an underlying construct (i.e., latent variable).