Modelling with LISREL: A guide for the uninitiated

Abstract

During the last decade, structural equation models with unobservable variables and measurement error have been increasingly applied in the marketing discipline. By far, the most widely used approach has been the covariance structure modelling framework implemented through the LISREL computer programme. However, for many marketing academics LISREL modelling is still something of a mystery. This appears to be partly due to the mathematical complexity of most methodological articles dealing with the LISREL model and partly due to the not‐so‐user‐friendly documentation accompanying the programme. Against this background, the present paper provides a non‐technical introduction into the basic concepts and issues of LISREL modelling, bearing the needs of a potential user in mind. To this end, an eight‐step procedure is followed, encompassing all stages associated with the formulation and testing of a set of hypotheses using the LISREL approach. An illustrative model is used as an example throughout the discussion and an effort is made to draw attention to the potential limitations/problems associated with the approach.