Use of structural equation modeling in operations management research: Looking back and forward

This paper reviews applications of structural equation modeling (SEM) in four major Operations Management journals (Management Science, Journal of Operations Management, Decision Sciences, and Journal of Production and Operations Management Society) and provides guidelines for improving the use of SEM in operations management (OM) research. We review 93 articles from the earliest application of SEM in these journals in 1984 through August 2003. We document and assess these published applications and identify methodological issues gleaned from the SEM literature. The implications of overlooking fundamental assumptions of SEM and ignoring serious methodological issues are presented along with guidelines for improving future applications of SEM in OM research. We find that while SEM is a valuable tool for testing and advancing OM theory, OM researchers need to pay greater attention to these highlighted issues to take full advantage of its potential.