Unrestricted Factor Analysis: A Powerful Alternative to Confirmatory Factor Analysis

Author(s)

Jan-Benedict E.M. Steenkamp
Alberto Maydeu-Olivares, University of South Carolina - ColumbiaFollow

Document Type

Article

Abstract

The gold standard for modeling multiple indicator measurement data is confirmatory factor analysis (CFA), which has many statistical advantages over traditional exploratory factor analysis (EFA). In most CFA applications, items are assumed to be pure indicators of the construct they intend to measure. However, despite our best efforts, this is often not the case. Cross-loadings incorrectly set to zero can only be expressed through the correlations between the factors, leading to biased factor correlations and to biased structural (regression) parameter estimates. This article introduces a third approach, which has emerged in the psychometric literature, viz., unrestricted factor analysis (UFA). UFA borrows strengths from both traditional EFA and CFA. In simulation studies, we show that ignoring cross-loadings even as low as.2 can substantially bias factor correlations when CFA is used and that even the commonly used guideline RMSEA ≤.05 may be too lenient to guard against non-negligible bias in factor correlations in CFA. Next, we present two empirical applications using Schwartz’s value theory, and electronic service quality. In the first case, UFA leads to much better model fit and more plausible regression estimates. In the second case, the difference is less dramatic but nevertheless, UFA provides richer results. We provide recommendations on when to use UFA vs. CFA.

Digital Object Identifier (DOI)

https://doi.org/10.1007/s11747-022-00888-1

Publication Info

Postprint version. Published in Journal of the Academy of Marketing Science, 2022.

Rights

© Academy of Marketing Science, 2022

This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature’s AM terms of use, but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: https://doi.org/10.1007/s11747-022-00888-1.

APA Citation

Steenkamp, J.-B. E. M., & Maydeu-Olivares, A. (2022). Unrestricted factor analysis: A powerful alternative to confirmatory factor analysis. Journal of the Academy of Marketing Science. https://doi.org/10.1007/s11747-022-00888-1