Approaches For Moderation Analysis

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When performing statistical analysis using structural equation modelling, specifically in PLSSEM, there are several approaches for moderation analysis, including:
  • Product- Indicator
  • Two Stage
  • Orthogonalizing 
Prior to that, researcher must identify his or her theoretical frame falls under reflective construct or 
just formative construct. Depending on researcher’s objective, he or she can choose any of the three
approaches. 2-stage approaches has highest power, it is the most likely approaches to create
significant attraction. It is recommended to make use of 2-stage approaches and make analysis.

If researcher has smallest population, he or she suppose to use orthogonalizing because the interaction effect size is the most correct and it maximises explained variance in his or her dependent variable. Product indicator approach has no particular advantage but still if it is formative construct can use product indicator approach Formative construct usually uses Product-indicator. If it is both IV & DV are reflective in nature, that particular time researcher can use 2-stages approach and the last one small biases the interaction size most correct, the thing is that population is very less in the particular stage.
Sources from: Professor Dr. Dileep Workshop on Role of Theory, Moderation & Mediation on 3 August 2019. 

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