PLS Pluses and Minuses In Path Estimation Accuracy

In this paper we ask three questions. Do PLS path estimates compensate for measurement error? Do they capitalize on chance? And is PLS able to more accurately weight measurement indicators so as to make path estimations more accurate? The evidence is quite convincing that PLS path estimates do have all three of these characteristics. Our analysis suggests, however, that measurement error has by far the largest impact, followed by capitalization on chance, with better weighting of indicators having the smallest influence. MIS researchers need to consider how to respond to these findings.